chapter 06 marketing

8/9/2019 Chapter 06 Marketing

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Business Markets and BusinessBusiness Markets and BusinessBuyer BehaviorBuyer Behavior

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Principles ofPrinciples ofMarketingMarketingPrinciples ofPrinciples ofMarketingMarketing


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Learning ObjectivesAfter studying this chapter, you should be able to:1. Define the business market and explain how

business markets differ from consumer markets

2. Identify the major factors that influencebusiness buyer behavior

3. List and define the steps in the business buying-decision process

4. Compare the institutional and governmentmarkets and explain how institutional andgovernment buyers make their buying decisions

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Chapter Outline

1. Business Markets

2. Business Buyer Behavior

3. Institutional and GovernmentMarkets

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Business Markets

Business buying process is the process

where business buyers determine whichproducts and services are needed topurchase and then find, evaluate, andchoose among alternative brands

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Business Markets

Differ from consumer markets in:

Market structure and demand Nature of the buying unit

Types of decisions and the decision-

making process

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Business MarketsMarket Structure and Demand

Fewer and larger buyers Geographic concentration

Derived demand

Inelastic demand Fluctuating demand

Buyer and seller dependency

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Business MarketsMarket Structure and Demand

Supplier development is the systematicdevelopment of networks of supplier-partners to ensure an appropriate anddependable supply of products andmaterials that they will use in making

their own products or resell

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Business Buyer BehaviorMarketing Stimuli

Similar to consumer buying, business buyingconsists of the four Ps

Product

Price Place

Promotion

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Business buyer behavior refers to thebuying behavior of the organizations thatbuy goods and services for use inproduction of other products and servicesthat are sold, rented, or supplied toothers. Also included are retailing andwholesaling firms that acquire goods to

resell or rent to others for profit.

Business Buyer Behavior

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Business Buyer BehaviorMarketing Stimuli

Additional stimuli include major economicforces

Political

Economic Technological

Cultural

Competitive6-10


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Business Buyer BehaviorBuyer Responses to Marketing Stimuli

Product or service choice Supplier choice

Order quantities

Delivery Service

Payment terms

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Business Buyer BehaviorBuyer Responses to Marketing Stimuli

Marketers must understand what happenswithin the organization and turn stimuliinto purchase responses

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Business Buyer BehaviorMajor Types ofBuying Situations

Straight rebuy Modified rebuy

New task

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Straight rebuy is a routine purchase decision such

as a reorder without any modification

Modified rebuy is a purchase decision that requiressome research where the buyer wants to modifythe product specification, price, terms, or

suppliers

New task is a purchase decision that requiresthorough research such as a new product

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Systems selling involves the purchase of apackaged solution from a single sellerTwo-step process of selling: Interlocking products

System of production, inventory control,distribution, and other services to meetthe buyers need for a smooth-runningoperation

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Business Buyer BehaviorParticipants in the Business BuyingProcess

Buying center is all of the individuals andunits that participate in the businessdecision-making process

Users Influencers

Buyers Deciders Gatekeepers

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Users are those that will use the product or serviceInfluencers help define specifications and provide

information for evaluating alternativesBuyers have formal authority to select the supplier

and arrange terms of purchase

Deciders have formal or informal power to selectand approve final suppliersGatekeepers control the flow of information

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Buying center provides a major challenge Who participates in the process

Their relative authority

What evaluation criteria each participantuses

Informal participants

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Business Buyer BehaviorMajor Influences on Business Buyers

Economic factors Personal factors

Environmental factors

Organizational factors Interpersonal factors

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Economic factors: Price

Service

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Major Influences on Business Buyers

Personal factors: Emotion


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Demand for product

Economic outlook

Cost of money

Resource availability

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Technology

Culture

Politics

Competition

Major Influences on Business BuyersEnvironmental Factors


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Business Buyer BehaviorMajor Influences on Business Buyers

Organizational factors Objectives

Policies

Procedures Structure

Systems

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Interpersonal factors

Motives Perceptions

Preferences

Age

Income Education

Attitude toward risk

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Major Influences on Business Buyers


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Problem recognition occurs when someone in

the company recognizes a problem orneed

Internal stimuli Need for new product or production

equipment External stimuli

Idea from a trade show or advertising

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Business Buyer BehaviorThe BuyingProcess

General need description describes the

characteristics and quantity of the needed item

Product specification describes the technicalcriteria

Value analysis is an approach to cost reductionwhere components are studied to determined ifthey can be redesigned, standardized, or madewith less costly methods of production

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Supplier search involves compiling a list ofqualified suppliers

Proposal solicitation is the process ofrequesting proposals from qualifiedsuppliers

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Supplier selection is the process when the buying

center creates a list of desired supplierattributes and negotiates with preferredsuppliers for favorable terms and conditions

Order-routine specifications is the final order withthe chosen supplier and lists all of thespecifications and terms of the purchase

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Performance review involves a critique ofsupplier performance to the purchaseterms

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Online purchasing Company buying sites

Extranets

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E-Procurement and Buying on the Internet


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Business Buyer BehaviorE-Procurement andBuying on the Internet

Advantages Access to new suppliers Lowers costs Speed in order processing and delivery Share information Sales Service and support

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Business Buyer BehaviorE-Procurement andBuying on the Internet

Disadvantages Can erode relationships as buyers search

for new suppliers

S

ecurity

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Institutional and

Government MarketsInstitutional markets consist of hospitals,

nursing homes, and prisons that provide

goods and services to people in their care Characteristics

Low budgets

Captive audience

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Institutional and

Government MarketsGovernment markets tend to favor domestic

suppliers and require suppliers to submit bidsand normally award to the lowest bidder

Carefully monitored Affected by similar environmental factors Good credit Non-economic factors

Minority suppliers Depressed suppliers Small businesses

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PowerPoint created by:Ronald Heimler

Dowling College, MBA

Georgetown University, BS BusinessAdministration Adjunct Professor, LIM College, NY Adjunct Professor, Long Island University,

NY Lecturer, California Polytechnic State

University, Pomona, CA President, Walter Heimler, Inc.

chapter 06 marketing

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