Business Markets and Business Buying Behavior

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Business Markets and Business Buying Behavior

• Mag. Maria Peer

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What is organizational buying?

• The decision-making process by which formal
  organizations establish the needs for purchased
  procucts and services
• and identify, evaluate and choose among
  alternative brands and suppliers.

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Business market

• all organizations that acquire goods and services
  used in the production of other poducts or
  services that are sold, rented or supplied to
  others.
• Major industries agriculture, forestry and
  fisheries, mining, manufacturing, construction,
  transportation, communication, public utilities,
  banking, finance, insurance, distribution and
  services

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Characteristics of Business Markets
Fewer buyers
Larger buyers
Close supplier-customer relationship
Geographically concentrated buyers
Derived demand
Inelastic demand
Fluctuating demand
Professional purchasing
Several buying influences
Multiple sales calls
Direct purchasing
Reciprocity
Leasing
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Buying situations

• Straight rebuy the purchasing department
  reorders on a routine basis
• Modified rebuy the buyer wants to modify product
  specifications, prices, delivery requirements, or
  other terms.
• New task A purchaser buys a product or service
  for the first time. The greater the cost or risk,
  the larger the number of decision participants
  and the greater the information gathering

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Systems Buying and Selling

• Business buyers prefer to buy a total solution of
  their problem from one seller (major weapons and
  communication systems)
• Sellers have adopted systems selling as a
  marketing tool. Auto parts manufacturers sell
  whole systems such as the seating system, the
  braking system or the door system
• Systems contracting is a variant of system
  selling a single supply source provides the
  buyer with his entire requirement of MRO supplies
  (maintenance, repair, operating)

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The Buying Center

• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• gatekeepers

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Major influences

• Environmental factors
• Organizational factors
• Interpersona factors
• Individual factors
• Cultural factors

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The Purchasing Procurement Process - Buyphases

• Problem Recognition
• General Need Description
• Product Specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification
• Performance review

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Institutional Markets

• Consists of schools, hospitals, nursing homes,
  prisons and other institutions that provide goods
  and services for people in their care.
• Suppliers must be prepared to adapt their offers
  to the special needs and procedures found in
  institutional and government markets