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Unit 3

Business Buyer Behaviour

Introduction to Business Buyer Behaviour

• Business organizations do not only sell; they also buy

variety of raw material, components, supplies and
business services.
• The organizations that sell goods and services to other
business organizations for use in their production of
products and services are B2B companies or B2B
marketers.

Introduction to Business Buyer Behaviour: Definition

What is business buying behaviour?

• The buying behaviour of the organizations that buy goods and

services for use in production of other products and services
that are sold, rented or supplied further to other business
organizations is termed as business buying behaviour.

• It also include the behaviour of retailing and wholesaling firms

that acquire goods to resell or rent to other at a profit.

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Introduction to Business Buyer Behaviour: Model of Business Buyer Behavior

What is business buying behaviour?
Marketing and other stimuli Within the organization, buying activity consists of two
enter the buying organization major parts: the buying center, composed of all the
and produce certain buyer people involved in the buying decision, and the buying
responses. decision process

1. What buying
decisions do
business buyers
make?
2. Who participates in
the buying process?
3. What can influence
the buyers?
4. How do business
buyers make their
buying decisions?
The model shows that the buying center and the buying decision
process are influenced by internal organizational, interpersonal, and
individual factors as well as external environmental factors

Introduction to Business Buyer Behaviour:

What is Business Market?
Types of B2B Buyers
• A business market comprises of
– Producers | Resellers |Institutions | Government organizations
– that buy variety of raw material, components, supplies and
business services
– to use them for further production of goods and services
• The business market is huge, growing globally and involves many
dollars and variety of goods and services.

Introduction to Business Buyer Behaviour:

Discuss Characteristics of business market and How it differs
from consumer markets?

• Compared to consumer
Characteristics markets:
– Business markets
• Marketing Structure and • have fewer but larger
Demand customers
• Nature of the – Business customers
• are more geographically
Buying Unit concentrated
• Types of Decisions and the – Demand is different
• Demand is derived
Decision Process • Demand is price inelastic
• Demand fluctuates more
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Business Markets

Characteristics • Compared to consumer

• Marketing Structure and purchases:
Demand – Involve more participants in
• Nature of the the decision process
Buying Unit – More professional purchasing
• Types of Decisions and the effort
Decision Process

Business Markets
• Compared to consumer
Characteristics
purchases
• Marketing Structure and –More complex buying decisions
Demand –The buying process is more
• Nature of the formalized
Buying Unit –Buyers and sellers work more
• Nature of Decisions and the closely together and build long-
Decision Process term relationships

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How business market differs from

consumer markets?

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Business or
Industrial
Customers

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Stages in the Business Buying Process

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Business Buying Process: Stage-1

Problem Recognition
• It is the stage where business
organization finds a problem or need
that can be met by acquiring a
product or service.
• Problem recognition can result from:
– Internal Stimuli or
– External Stimuli

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Business Buying Process: Stage-2

General Need Description
• General Need Description
– The business buyer list down
– the general characteristics and
– quantity of a needed item
• The nature of items to be purchased
decide details of general need
description
• Purchase of Complex products
• Purchase of regular used product
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Business Buying Process: Stage-3

Product Specification
• Product Specification
• The buying organization develops
technical details to specify the
best product for them.
• Vendor need product specifications to
offer proposal
Your
Your
Your Org. Customer
Supplier
Org

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Business Buying Process: Stage-3

Product Specification
• For example : list of potential
specifications would include
specifications related to:
• Screen size, battery life,
processor speed, how the
device would connect to
internet
• A list of pre installed
educational apps

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Business Buying Process: Stage-3

Product Specification
• Approaches to write product specification
– Product Value Analysis
• It is an approach to cost reduction where buying
organizations decide what minimum exactly can meet their
requirement
– Early supplier Involvement (ESI) Program
– Early Purchasing Agent Involvement (EPI) Program

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Business Buying Process: Stage-4

Supplier Search
• Supplier Search
– Business buyer set criteria and
conduct search to find suitable
suppliers
• Develop a list of qualified suppliers
• Preliminary communication with
potential suppliers is completed

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Business Buying Process: Stage-5

Proposal Solicitation
• Proposal Solicitation or Request for
Proposals (RFP) Process
– Business buyers invite proposals to bid
on supplying their required
components with detailed
specification

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Business Buying Process: Stage-6

Supplier Selection
• Supplier Selection involves
• Review of proposals
– By the members of the buying center
• List of the Desired supplier
• List of attributes to evaluate supplier and their relative importance.
• Example of attributes
• product and service quality, reputation, on-time delivery, ethical corporate behavior,
honest communication, and competitive prices.

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Business Buying Process: Stage-7

Order Routine Specification
• Final Order or Order Routine Specification:
It involves-
• Details such as technical specifications,
quantity needed, expected delivery time,
return policies, and warranties with the
chosen supplier .

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Business Buying Process: Stage-8

Performance Review
• Performance Review
• In this stage, the buyer reviews
supplier performance by rating
method.
• The performance review may lead the
buyer to
– continue
– modify, or
– drop the arrangement.

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Major types of buying situations

• Straight Re-buy
– It is a routine purchase decision
– Buyer re-order without modification
– For least risky and inexpensive products
– Past performance of products purchased and behaviour of supplier is referred before placing order
• Modified Re-buy
– It may be routine decision, Some time for new variant, sometime to respond to market feedback
– but not with existing supplier
– Buying Company is not satisfied with the product performance or behaviour of supplier or with both
• New Task (New Purchase)
– It is a situation where company is buying for first time
– Need of new purchase arise due to new product development
– No previous experience or limited knowledge
– More involved decision making 28

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Comparison of different buying situations

Stages of the buying process Buying Situations
New Modified Straight
Task Rebuy Rebuy
Problem recognition Yes Maybe No
General need description Yes Maybe No
Product specification Yes Yes Yes
Supplier search Yes Maybe No
Proposal solicitation Yes Maybe No
Supplier selection Yes Maybe No
Order routing specification Yes Maybe No
Performance review Yes Yes Yes

Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying
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and Creative Marketing (Boston: Allyn & Bacon, 1967), p.14.

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Buying Roles in Industrial Marketing

Buying in Industrial Marketing is done
through

Buying Center

Buying Roles

Initiators Users Influencers Gatekeepers Deciders

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Initiators
• Initiators are the people within the organization who first see the need
for the product.
• But they don’t stop there; whether they have the ability to initiate the
final decision of what to buy or not, they get the ball rolling.
• Sometimes they initiate the product value analysis.
Users
• Users are the people within the organization that actually use the
product.
• They are operate, use or experiment with what is purchased
• For example: Machines Operators, Bus Operators, or all those who are
experimenting with material in R& D center
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Influencers
• Influencers are people who may or may not use the product but have
experience or expertise that can help improve the buying decision.
• For example, an engineer may prefer a certain product because he has
the operational understanding of that product and try to persuade
others that it is the best choice.
• People from Quality Control department are also the influencers

Gatekeepers
• Gatekeepers, are the people who will decide why and when
supplier get access to members of the buying center.
• Buying assistants, Staff and Personal assistants act like
gatekeepers
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Deciders
• The decider is the person or a team of members who makes
the final purchasing decision.
• The decider consider all inputs of other members of buying
center
• These have deciding authority due to their position and role
assigned

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Major Influences on Business Buyers

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