Definition
Business Markets and
Business Buyer Behavior
Business Buyer Behavior:
ƒ The buying behavior of organizations that buy
goods and services for use in the production of
other products and services that are sold, rented,
or supplied to others.
ƒ Also included are retailing and wholesaling firms
that acquire goods for the purpose of reselling or
renting them to others at a profit.
Chapter 6
6-1
Characteristics of
Business Markets
Business Markets
ƒ Sales in the business market far exceed sales
in consumer markets.
ƒ Business markets differ from consumer
markets in many ways.
Characteristics
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
• Marketing structure and demand
• Nature of the buying unit
• Types of decisions and the decision process
6-2
Marketing Structure and
Demand
6-3
Nature of the
Buying Unit
Compared to consumer markets:
ƒ Business markets
Compared to consumer purchases:
ƒ Involve more buyers in the decision
process
ƒ More professional purchasing effort
• have fewer but larger customers
ƒ Business customers
• are more geographically concentrated
ƒ Demand is different
• Demand is derived
• Demand is price inelastic
• Demand fluctuates more
6-4
6-5
1
Types of Decisions and the
Decision Process
Business Buyer Behavior
Compared to consumer purchases
ƒ More complex buying decisions
ƒ The buying process is more formalized
ƒ Buyers and sellers work more closely together
and build long-term relationships
Major Types of Buying Situations
ƒ Straight rebuy
• Reordering without modification
ƒ Modified rebuy
• Requires modification to prior purchase
ƒ New task
• First-time purchase
6-6
Business Buyer Behavior
6-7
Business Buyer Behavior
Systems Selling
Buying Center
ƒ Buying a packaged solution to a
problem from a single seller.
ƒ Often a key marketing strategy for
businesses seeking to win and hold
accounts.
ƒ The decision-making unit of a buying
organization
ƒ Includes all individuals and units
that participate in the decision
making
6-8
6-9
Business Buyer Behavior
Major Influences on
Business Buyers
Members of the Buying Center
Key Factors
Users
Buyers
ƒ Environmental
ƒ Organizational
ƒ Interpersonal
ƒ Individual
Influencers
Deciders
Gatekeepers
6 - 10
6 - 11
2
Environmental
Organizational
Economic trends
Supply conditions
Technological, political and competitive changes
Culture and customs
Objectives
Policies
Procedures
Organizational structure
Systems
6 - 12
Interpersonal
6 - 13
Individual
Influence of members in the buying center
ƒ Authority
ƒ Status
ƒ Empathy
ƒ Persuasiveness
Personal characteristics of members in the
buying center
ƒ Age and income
ƒ Education
ƒ Job position
ƒ Personality
ƒ Risk attitudes
ƒ Buying styles
6 - 14
Stages in the Business
Buying Process
6 - 15
Stages in the Business
Buying Process
Stage 1: Problem Recognition
Stage 2: General Need Description
Stage 3: Product Specification
Stage 5: Proposal Solicitation
Stage 6: Supplier Selection
Stage 7: Order-Routine
Specification
ƒ Value analysis helps to reduce costs
Stage 4: Supplier Search
ƒ Blanket contracts are often used for
maintenance, repair and operating
items.
ƒ Supplier development
Stage 8: Performance Review
6 - 16
6 - 17
3
Business Buying
on the Internet
Institutional and
Government Markets
ƒ E-procurement is growing rapidly
ƒ Online auctions and online trading
exchanges (e-marketplaces) account for
much of the online purchasing activity
ƒ E-procurement offers many benefits:
Institutional Markets
ƒ Consist of schools, prisons,
hospitals, nursing homes and other
institutions that provide goods and
services to people in their care.
• Access to new suppliers
• Lower purchasing costs
• Quicker order processing and delivery
6 - 18
6 - 19
Institutional and
Government Markets
Institutional Markets
ƒ Often characterized by low budgets
and captive patrons.
ƒ Marketers may develop separate
divisions and marketing mixes to
service institutional markets.
6 - 20
4