To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 7©2003 Prentice Hall, Inc.

PowerPoint by Karen E. James Louisiana State University - Shreveport

Chapter 7

Analyzing Analyzing Business Markets Business Markets

and Buyer and Buyer BehaviorBehavior

To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 7©2003 Prentice Hall, Inc.

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.

To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 7©2003 Prentice Hall, Inc.

Objectives

Identify the participants in the business buying process and the various influences impacting business buying decisions.

Understand how business buyers make their decisions.

To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 7©2003 Prentice Hall, Inc.

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.”

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 7©2003 Prentice Hall, Inc.

Organizational Buying

Fewer buyersFewer buyers

Larger buyersLarger buyers

Geographically Geographically concentrated buyersconcentrated buyers

Closer relationships with Closer relationships with suppliers/customerssuppliers/customers

Compared to Consumer Markets, Business Markets Have:

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 7©2003 Prentice Hall, Inc.

Organizational Buying

Leasing

Multiple buying influences

Fluctuating demand

Reciprocity

Inelastic demand

Professional purchasing

Direct purchasing

Derived demand

Multiple sales calls

Other Other Business Business

Market Market CharacteristicsCharacteristics

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 7©2003 Prentice Hall, Inc.

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 7©2003 Prentice Hall, Inc.

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?

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 7©2003 Prentice Hall, Inc.

Organizational Buying

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 7©2003 Prentice Hall, Inc.

Organizational Buying

Buying Situations

Straight rebuy

Modified rebuy

New task

Routine reorders from approved vendor list

Low involvement, minimal time commitment

Example: copier paper

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 7©2003 Prentice Hall, Inc.

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 7©2003 Prentice Hall, Inc.

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 7©2003 Prentice Hall, Inc.

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

To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 7©2003 Prentice Hall, Inc.

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?

To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 7©2003 Prentice Hall, Inc.

Participants in Business Buying

Gatekeepers

Roles Played in a Buying Center

Influencers

Users

Initiators

Buyers

Deciders

Approvers

To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Figure 7-1: Major Influences on

Business Buying Behavior

To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

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 18 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Objectives

Policies

Procedures

Organizational structures

Systems

To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Plastics.com offers buyers and sellers of plastics a marketplace plus news and information

To accompany A Framework for Marketing Management, 2nd Edition Slide 20 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Interests

Authority

Status

Empathy

Persuasiveness

To accompany A Framework for Marketing Management, 2nd Edition Slide 21 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Age

Income

Education

Job position

Personality

Risk attitudes

Culture

To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in Chapter 7©2003 Prentice Hall, Inc.

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?

To accompany A Framework for Marketing Management, 2nd Edition Slide 23 in Chapter 7©2003 Prentice Hall, Inc.

Purchasing/Procurement Process

Eight Buyphases of Industrial BuyingProblem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Performance Review

Order-Routine Specification