Chapter 7
Analyzing
Business Markets
and Buyer
Behavior
PowerPoint by Karen E. James
Louisiana State University - Shreveport
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 0 in Chapter 7
Objectives
 Understand the nature of the business
market and how it differs from the
consumer market.
 Learn how institutions and government
agencies buy.
 Identify the different buying situations
faced by organizational buyers.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 1 in Chapter 7
Objectives
 Identify the participants in the
business buying process and the
various influences impacting business
buying decisions.
 Understand how business buyers
make their decisions.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 2 in Chapter 7
Organizational Buying
 Organizational buying is:
“the decision-making process by
which formal organizations
establish the need for purchased
products and services and identify,
evaluate, and choose among
alternative brands and suppliers.”
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 3 in Chapter 7
Organizational Buying
Compared to Consumer Markets,
Business Markets Have:
Fewer buyers
Larger buyers
Geographically
concentrated buyers
Closer relationships with
suppliers/customers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 4 in Chapter 7
Organizational Buying
Fluctuating
demand
Multiple sales
calls
Other
Business
Market
Characteristics
Inelastic
demand
Leasing
Professional
purchasing
Derived
demand
Reciprocity
Direct
purchasing
Multiple buying influences
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 5 in Chapter 7
Organizational Buying
 The Business Market Includes For-Profit
Companies and Two Specialized Groups:
– The institutional market
• Schools, hospitals, prisons, etc. with captive
audiences
• Cost and quality standards drive purchases
– The government market
• Bidding process awards contracts
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 in Chapter 7
Discussion Scenario
Your firm is interested in targeting
the government market.
How might this decision influence the
marketing mix?
How is selling to the government
market different from selling to other
business markets? How do needs
differ?
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 7 in Chapter 7
Organizational Buying
Fedmarket
assists those
businesses
seeking to do
business with
the federal
government.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 8 in Chapter 7
Organizational Buying
Buying Situations
 Straight rebuy
 Modified rebuy
 New task
©2003 Prentice Hall, Inc.
 Routine reorders
from approved
vendor list
 Low involvement,
minimal time
commitment
 Example: copier
paper
To accompany A Framework for Marketing Management, 2nd Edition
Slide 9 in Chapter 7
Organizational Buying
Buying Situations
 Straight rebuy
 Modified rebuy
 New task
 Specifications,
prices, delivery
terms or other
aspects require
modification
 Moderate level of
involvement and
time commitment
 Example: desktop
computers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 10 in Chapter 7
Organizational Buying
Buying Situations
 Purchasing a
product or service
for the first time
 Straight rebuy
 High level of
involvement and
time commitment;
multiple influences
 Modified rebuy
 New task
 Example: selecting
a web site design
firm or consultant
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 in Chapter 7
Organizational Buying
 Systems Buying
– A single provider provides the total
package for the buyer’s needs
– May involve turnkey solutions
 Systems Selling
– Manufacturers sell entire systems
– Supplier provides all MRO items
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in Chapter 7
Discussion Scenario
Suppose that your company has
decided to bid on a theme park
development project using a
systems selling approach.
What types of tasks might your
proposal include? Is systems selling
appropriate for this project?
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in Chapter 7
Participants in Business Buying
Roles Played in a Buying Center
Approvers
Initiators
Users
Deciders
Influencers
Buyers
Gatekeepers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 14 in Chapter 7
Influences on Business Buyers
Figure 7-1:
Major Influences on
Business Buying Behavior
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 15 in Chapter 7
Influences on Business Buyers
Major Influences
 Environmental
 Organizational
 Interpersonal
 Individual
©2003 Prentice Hall, Inc.
 Demand level
 Economic outlook
 Interest rates
 Technological
change
 Politics/regulations
 Competition
 Concerns for social
responsibility
To accompany A Framework for Marketing Management, 2nd Edition
Slide 16 in Chapter 7
Influences on Business Buyers
Major Influences
 Objectives
 Policies
 Environmental
 Organizational
 Procedures
 Interpersonal
 Organizational
structures
 Individual
 Systems
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 17 in Chapter 7
Influences on Business Buyers
Plastics.com
offers buyers
and sellers of
plastics a
marketplace
plus news and
information
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 18 in Chapter 7
Influences on Business Buyers
Major Influences
 Interests
 Authority
 Environmental
 Organizational
 Interpersonal
 Status
 Empathy
 Persuasiveness
 Individual
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 19 in Chapter 7
Influences on Business Buyers
Major Influences
 Age
 Income
 Environmental
 Education
 Organizational
 Job position
 Interpersonal
 Personality
 Individual
©2003 Prentice Hall, Inc.
 Risk attitudes
 Culture
To accompany A Framework for Marketing Management, 2nd Edition
Slide 20 in Chapter 7
Discussion Scenario
Age, income, and education are three
individual factors which may influence
business purchasing behavior.
How do these factors influence
purchasing behavior? Do individual
factors influence decision making to the
same degree as environmental,
organizational, or interpersonal factors?
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 21 in Chapter 7
Purchasing/Procurement Process
Eight Buyphases of Industrial Buying
Problem Recognition
General Need Description
Product Specification
Supplier Search
Proposal Solicitation
Supplier Selection
Order-Routine Specification
Performance Review
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 22 in Chapter 7