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
– Close relationships with their
supplier-customers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 4 in Chapter 7
Organizational Buying
Other Business Market Characteristics
 Fluctuating
demand
 Multiple buying
influences
 Derived demand
 Multiple sales calls
 Inelastic demand
 Direct purchasing
 Professional
purchasing
 Reciprocity
©2003 Prentice Hall, Inc.
 Leasing
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
©2003 Prentice Hall, Inc.
process awards contracts
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 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 7 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 8 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 9 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 10 in Chapter 7
Participants in Business Buying
Buying center members fill one or more
roles in the purchase decision process:
 Initiators
 Deciders
 Users
 Approvers
 Influencers
 Buyers
Gatekeepers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 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 12 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 13 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 14 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 15 in Chapter 7
Purchasing/Procurement Process
Eight Buyphases of Industrial Buying
 Problem
recognition
 Proposal
solicitation
 General need
description
 Supplier selection
 Product
specification
 Supplier search
©2003 Prentice Hall, Inc.
 Order-routine
specification
 Performance
review
To accompany A Framework for Marketing Management, 2nd Edition
Slide 16 in Chapter 7