Slide 0 in Chapter 7

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Chapter 7 Analyzing Business Markets and Buyer
Behavior
PowerPoint by Karen E. James Louisiana State
University - Shreveport
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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.

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Objectives

• Identify the participants in the business buying
  process and the various influences impacting
  business buying decisions.
• Understand how business buyers make their
  decisions.

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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.

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Organizational Buying
Compared to Consumer Markets, Business Markets
Have
Fewer buyers
Larger buyers
Geographically concentrated buyers
Closer relationships with suppliers/customers
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Organizational Buying
Fluctuating demand
Multiple sales calls
Other Business Market Characteristics
Inelastic demand
Derived demand
Leasing
Reciprocity
Professional purchasing
Direct purchasing
Multiple buying influences
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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

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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?

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Organizational Buying
Fedmarket assists those businesses seeking to do
business with the federal government.
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Organizational Buying

• Buying Situations
• Straight rebuy
• Modified rebuy
• New task

• Routine reorders from approved vendor list
• Low involvement, minimal time commitment
• Example copier paper

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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

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Organizational Buying

• Buying Situations
• Straight rebuy
• Modified rebuy
• New task

• Purchasing a product or service for the first
  time
• High level of involvement and time commitment
  multiple influences
• Example selecting a web site design firm or
  consultant

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Organizational Buying

• Systems Buying
• A single provider provides the total package for
  the buyers needs
• May involve turnkey solutions
• Systems Selling
• Manufacturers sell entire systems
• Supplier provides all MRO items

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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?

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Participants in Business Buying
Roles Played in a Buying Center
Initiators
Approvers
Users
Deciders
Influencers
Buyers
Gatekeepers
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Influences on Business Buyers
Figure 7-1 Major Influences on Business Buying
Behavior
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Influences on Business Buyers

• Demand level
• Economic outlook
• Interest rates
• Technological change
• Politics/regulations
• Competition
• Concerns for social responsibility

• Major Influences
• Environmental
• Organizational
• Interpersonal
• Individual

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Influences on Business Buyers

• Major Influences
• Environmental
• Organizational
• Interpersonal
• Individual

• Objectives
• Policies
• Procedures
• Organizational structures
• Systems

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Influences on Business Buyers
Plastics.com offers buyers and sellers of
plastics a marketplace plus news and information
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Influences on Business Buyers

• Major Influences
• Environmental
• Organizational
• Interpersonal
• Individual

• Interests
• Authority
• Status
• Empathy
• Persuasiveness

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Influences on Business Buyers

• Major Influences
• Environmental
• Organizational
• Interpersonal
• Individual

• Age
• Income
• Education
• Job position
• Personality
• Risk attitudes
• Culture

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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?

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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