B2B Buying Behaviour

Lecture 4

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learning objectives• Understand the nature and structure of B2B buying

• Appreciate the differences between B2B buying and consumer buying

• Analyze the buying process and the reasons why purchasing varies across different buying situations

• Link B2B buying with the development of marketing strategy

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B2B marketing defined

B2B marketing is the management process responsible for the facilitation

of exchange between producers of goods and services and their

organisational customers

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B2B and Consumer Markets

B2B customers • Purchase products to

meet specific business needs

• Emphasise economic benefits

• Use formal, lengthy purchasing policies and processes

Consumer customers• Purchase products to

meet individual or family needs

• Emphasise psychological benefits

• Buy on impulse or with minimal processes

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B2B and Consumer Markets

B2B customers • Involve large groups in

purchasing decisions• Buy large quantities

infrequently • Want a customised product

package

Consumer customers• Purchase as individuals or

as a family unit• Buy small quantities

frequently• Are content with

standardised product

packages

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B2B and Consumer Markets

B2B customers• Experience major

problems if supply fails• Find switching

suppliers difficult• Negotiate on price

Consumer customers• Experience minor

irritation if supply fails• Find switching

suppliers easy• Accept stated price

B2B and Consumer Markets

B2B customers• Purchase direct from

suppliers• Justify an emphasis on

personal selling

Consumer customers• Purchase from

intermediaries• Justify an emphasis on

mass media

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Education 2006

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Types of B2B Customers

• Commercial enterprises• Government bodies• Institutions

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Characteristics of B2B Markets

Nature of demand Structure of demand

Complexity of buying process

Buyer-seller relationships

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Education 2006

Derived Demand

Goodyear’s RunOnFlat Tyres are featured on•BMWs, •Ferraris, •Corvettes, •Maseratis, and •Mercedes

Source: © Goodyear Dunlop Tyres EuropeB.V. http://eu.goodyear.com

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Education 2006

Joint Demand

Demand for Samsung’s Solid State Disk (SSD) is tightly coupled with the demand for computers and other devices with memory chips

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Inelastic Demand

Elasticity of demand refers to the extent to which the quantity of a

product demanded changes when its price changes;

If a product has inelastic demand, demand does not change due to

price changes

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Advantages of Single Sourcing

• Improved communications

• Increased responsiveness

• Shared design of quality control systems

• Elimination of supplier switching costs

• Improvement in product cost effectiveness

• Reduced prices through larger volume

• Reduced prices through reduced supplier costs

• Enhanced ability to implement JIT systems

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Disadvantages of Single Sourcing

• Increased costs through lack of competitive pressure

• Increased supply vulnerability

• Reduced market intelligence and flexibility

• Improved supplier appraisal capacity

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Advantages and Disadvantages of Multiple Sourcing

Advantages• Increased competitive

pressure• Improved supply continuity• Improved market

intelligence • Improved supplier appraisal

effectiveness

Disadvantages• Perceived lack of

commitment• Increased costs• Less supplier

investment• Reduced willingness to

adapt• Higher operating costs

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Purchase Significance

New Task

Routinere-buy

Modified re-buy

Question for discussion

From the supplier’s point of view, how might the marketing approaches aimed at a customer making a new task purchase differ from those aimed at a routine re-buy customer?

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Buying Decision-Making Process

Precipitation

Supplierselection

Commitment

Product specification

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Buying Centres

Initiator

Influencer

Decider

Purchaser

User

User

Influencer

Decider

Buyer

Gatekeeper

Consumer B2B

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Buying Criteria: Economic Influences

Appropriate prices

Qualityconsistency

Productspecification

Supply reliabilityand continuity

Customerservice

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Approaches to Supplier Handling

Adversarial• Multiple suppliers• Regular price quotes• Adversarial negotiations• Sporadic communication• Little cooperation• Quality and time scales to meet

lowest expectations• Emphasis on lowest unit price

Collaborative• Few suppliers• Long-term relationship• Partnerships• Frequent, planned communication• Integrated operations• Quality and time scales ‘designed in’• Emphasis on lowest overall cost

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Relationship Life Cycle

Awareness

Exploration

Expansion

Commitment

Dissolution

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Buying Criteria: Non-Economic Influences

Prestige

FriendshipCareer security

Other personal needs Trust

Question for discussionYou are the purchasing manager of a large organisation with anenormous annual spend. Most of your contracts are awarded bytender. What would your attitude be to the following offers frompotential suppliers, and to what extent would they influence yourdecision-making:

(a)a bottle of whiskey at Christmas? (b)an invitation to lunch to discuss your requirements? (c) an offer of the free use of the supplier’s managing director’s Spanish

villa for two weeks? (d) £1500?