Chapter 6
Business Markets and
Business Buyer
Behavior
Last Week

Consumer Behavior
 What
is it?
 Why is it important?
2
Learning Goals
1.
2.
3.
Define the business market and how it differs from
consumer markets
Identify the major factors that influence business
buyer behavior
List and define the steps in the business buying
decision process
3
Why Bother?
A business market comprises all the
organizations that buy goods and services
for use in the production of other products
and services that are sold, rented, or
supplied to others.
 The business market is huge, growing
globally and involves many dollars and
goods.

4
Case Study
UPS
Services
Customer Needs


Consumers need fast,
friendly, low-cost package
delivery
Business needs are more
complex
 Shipping part of complex
logistics process
including purchasing,
inventory, order status,
invoices, payments,
returns




360,000 people and 88,000
vehicles offer ground, air,
freight worldwide
Helps customer navigate the
complexities of international
shipping
Offers a wide range of
financial services
Provides consulting services
to improve logistics
operations
These UPS ads target businesses as
a supply chain solution
6-6
7
Learning Goals
1.
2.
3.
Define the business market and how it differs from
consumer markets
Identify the major factors that influence business
buyer behavior
List and define the steps in the business buying
decision process
8
Definition

Business Buyer Behavior:
 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.
 Also included are retailing and wholesaling
firms that acquire goods for the purpose of
reselling or renting them or others at a profit.
9
Characteristics of Business Markets
Business Markets
Characteristics

Compared to
consumer markets:




Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process
Business markets


Business customers


have fewer but larger
customers
are more geographically
concentrated
Demand is different

Demand is derived
Demand is price inelastic

Demand fluctuates more

11
Characteristics of Business
Markets
Contain fewer, but
larger buyers
Marketing Structure
and Demand
Customers are more
geographically concentrated
Buyer demand is derived from
final consumer demand
Demand is often more
inelastic
Demand often fluctuates
more, and more quickly
12
Business Markets
Characteristics



Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process

Compared to consumer
purchases:

Involve more buyers in
the decision process
 More professional
purchasing effort
13
Characteristics of Business
Markets
Nature of the Buying Unit
Business
buying
involves a
more
professional
purchasing
effort
Business
buying
involves
more buyers
(participants)
14
Business Markets
Characteristics



Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process

Compared to consumer
purchases
More
complex buying
decisions
The buying process is
more formalized
Buyers and sellers work
more closely together and
build long-term
relationships
15
Characteristics of Business
Markets
Business
buyers
usually face
more
complex
buying
decisions.
Types of Decisions
and the Decision
Process
Business
buying
process is
more
formalized.
In business
buying,
buyers and
sellers work
more closely
together.
16
Model of Business Buyer Behavior
The Environment
Marketing
Stimuli:
•Product
•Price
•Place
•Promotion
Other Stimuli:
•Economic
•Technological
•Political
•Cultural
•Competitive
The Buying
Organization
The buying
center
Buying decision
process
(Interpersonal and
individual influences)
(Organizational
Influences)
Buyer Responses
Product or
service choice
Supplier Choice
Order Quantities
Delivery terms
and times
Service terms
Payment
17
Business Buyer Behavior
Major Types of Buying Situations
Involved Decision Making


Straight rebuy


Modified rebuy


Reordering without modification
Requires modification to prior purchase
New task

First-time purchase
18
Major Types of Buying
Situations
Involved Decision
Making
New Task Buying
Modified Rebuy
Straight Rebuy
19
T23
Stages of the Buying Process
Stages of the buying process
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routing specification
Performance review
Buying Situations
New
Task
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Modified
Rebuy
Maybe
Maybe
Yes
Maybe
Maybe
Maybe
Maybe
Yes
Straight
Rebuy
No
No
Yes
No
No
No
No
Yes
Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying
and Creative Marketing (Boston: Allyn & Bacon, 1967), p.14.
Business-to-Business Company
DuPont Chemicals




Established in 1802 with gunpowder as its first
product
In 1910 moved away from explosives with the first
non-leather material, which was snatched up for
upholstery and automobile parts
Today, the firm delivers science-based solutions
that make real differences in people's lives around
the world in areas such as food and nutrition, health
care, apparel, safety and security, construction,
electronics and transportation
Revenue of $27 billion
Business-to-Business Company
DuPont Chemicals

Examples of B2B markets and products:







Heath Care - Medical fabrics to provide comfort and safety
to surgeons
Automobile – airbag fibers and engineering plastics for
safety
Dental – filaments for toothbrushes
Glass – technology to reduce glare and noise, save
energy, protect against breakage
Footware – flexibility for rubber, strength of plastic
Farming – pesticides
Guitar manufacturers – DuPont product give the look of
vintage lacquer
Business Buyer Behavior

Systems Selling
 Buying
a packaged solution to a problem from
a single seller.
 Often a key marketing strategy for businesses
seeking to win and hold accounts.
 Customization ????
23
Business Buyer Behavior

Buying Center
 The
decision-making unit of a buying
organization
 Includes all individuals and units that
participate in decision making
24
Participants in the Business Buying
Process
Users
Initiators
Influencers
Gatekeepers
Buyers
Deciders
Approvers
25
Discussion Question
What are the
advantages and
disadvantages of
buying from
single suppliers
versus multiple
suppliers?
Learning Goals
1.
2.
3.
4.
Define the business market and how it differs from
consumer markets
Identify the major factors that influence business
buyer behavior
List and define the steps in the business buyingdecision process
Compare the institutional and government markets
and explain how they make their buying decisions
27
Major Influences on Business
Buyers
Major Influences on Business
Buyers
Key Factors
Environmental
Organizational
Interpersonal
Individual




Economic trends
Supply conditions
Technological,
political and
competitive changes
Culture and customs
29
Major Influences on Business
Buyers
Key Factors
Environmental
Organizational
Interpersonal
Individual





Objectives
Policies
Procedures
Organizational
structure
Systems
30
Major Influences on Business
Buyers
Key Factors
Environmental
Organizational
Interpersonal
Individual

Influence of
members in the
buying center
 Authority
 Status
 Empathy
 Persuasiveness
31
Major Influences on Business
Buyers
Key Factors
Environmental
Organizational
Interpersonal
Individual

Personal
characteristics of
members in the buying
center






Age and income
Education
Job position
Personality
Risk attitudes
Buying styles
32
Learning Goals
1.
2.
3.
Define the business market and how it differs from
consumer markets
Identify the major factors that influence business
buyer behavior
List and define the steps in the business buying
decision process
34
Stages in the Business Buying
Process
Business Buying on the Internet


E-procurement is growing rapidly
Business buyers may purchase
electronically by:




Electronic data interchange links (EDI)
The Internet
Online auctions and online trading
exchanges (e-marketplaces)
account for much of the online
purchasing activity
E-procurement offers many
benefits:



Access to new suppliers
Lower purchasing costs
Quicker order processing and
delivery
36
Benefits and Problems Created
by Buying on the Internet

Benefits:


Shave transaction costs
 Reduce time between
order and delivery
 Create more efficient
purchasing systems
 Forge more intimate
relationships
 Level the playing field
Problems:
 Cut
purchasing jobs
 Erode supplier-buyer
loyalty
 Create potential
security disasters
37
Institutional and Government
Markets
Institutional Markets
Low Budgets
Captive Patrons
Government Markets
Public Review
Negotiated
Contracts
Red Tape is
Common
Noneconomic
Criteria
Some Buying
Online
38
Learning Goals
1.
2.
3.
Define the business market and how it differs from
consumer markets
Identify the major factors that influence business
buyer behavior
List and define the steps in the business buying
decision process
39