Chapter 6
Business Market and Business
Buyer Behavior
BUSINESS MARKETS
BUSINESS BUYER BEHAVIOUR
Objectives
Outline THE BUSINESS BUYING PROCESS
E. PROCUREMENT: BUYING ON THE INTERNET
INSTITUTIONAL AND GOVERNMENT MARKETS
What is market?
Market is a space where the process of buying and selling occurs.
Business Markets
Refers to the buying behavior of the organizations that buy goods and services for use
in the production of other products and services that are sold, rented, or supplied to
others.
Market structure, Demand and Nature of the buying unit
Market structure refers to how different industries are
classified and differentiated based on their degree and
nature of competition for services and goods.
* Perfect competition - homogenous goods perfect
information.
* Oligopoly market- Few sellers
* Monopoly market- Single seller
* Monopolistic competition- many markets offering
different products.
Demand refers to how different industries are
classified and differentiated based on their degree
and nature of competition for services and goods.
Nature of Buying Unit involves more decision
participants and more professional purchasing
efforts. The more complex the purchase , the more
likely it is the several people will participate in the
decision making process.
Types of Decisions and the Decision Process
Business buyers usually face more complex buying
decisions than do consumer buyers.
The business buying process also tends to be longer and
more formalized.
The buyer and seller are often much more dependent on
each other.
Supplier development is the systematic development of
networks of supplier-partners to ensure an appropriate
and dependable supply of products and materials for use
in making products or reselling them to others.
What is behaviour?
It means the way of buying.
Business buying Behaviour
A process by which an organization purchased goods or services
needed on their production process.
Major types of Buying Situations
1 2 3
Straight
Rebuy
The buyer reorders
something without any
modifications.
Modified
Rebuy
The buyer wants to modify
product specifications,
prices, terms, or suppliers.
New Task
A company buying a product or
service for the first time faces
Participants in the Business Buying
Process
The decision-making unit of a buying organization is called
its buying center. It consists of all the individuals and units
that play a role in the business purchase decision-making
process.
Users - are members of the organization who will use the
product or service. In many cases, users initiate the buying
proposal and help define product specifications.
Influencers - often help define specifications and also
provide information for evaluating alternatives. Technical
personnel are particularly important influencers.
Buyers - have formal authority to select the supplier and
arrange terms of purchase. Buyers may help shape product
specifications, but their major role is in selecting vendors
and negotiating.
Deciders - have formal or informal power to select or
approve the final suppliers. In routine buying, the buyers
are often the deciders, or at least the approvers.
Gatekeepers - control the flow of information to others.
Major Influences in Business Buying
The business Buying Process
1. Problem recognition: someone in the company
recognises a problem or need that can be met by
acquiring a good or a service.
2. General need description: is the stage in the
business buying process in which a buyer describes
the general characteristics and quantity of a needed
item
The business Buying Process
3. Product specification is the stage in the business
buying process in which the buying organisation
decides on and specifies the best technical product
characteristics for a needed item.
4. Supplier search is the stage in which the buyer tries
to find the best vendors.
The business Buying Process
5. Proposal solicitation is the stage in which the buyer
invites qualified suppliers to submit proposals.
6. Supplier selection is the stage in which the buyer
reviews proposals and select a supplier or suppliers.
The business Buying Process
7. Order-routine specification is the stage in which
the buyer writes the final order with the chosen
supplier(s), listing the technical specifications,
quantity needed, expected time of delivery, return
policies and warranties.
8. Performance review is the stage in which the buyer
assesses the performance of the supplier and decided
to continue, modify or drop the arrangement.
What is E-procurement ?
It involves purchasing through
electronic connections between
buyers and sellers, usually online.
This can be via reverse auctions,
trading exchanges, company buying
sites and extranet links. Benefits of
e-procurement are lower
transaction costs and efficient
purchasing.
?
But wait…
There’s More!
Institutional and Government Markets
» Institutional Market consists of schools,
hospitals, nursing homes, prisons and other
institutions that provide goods and services to
people in their care.
» Government markets consist of governmental
units (federal, state and local) that purchase
or rent goods and services for carrying out the
main functions of government.
Thank you for listening!
Presented By: Erica Dela Fuente
Rabang
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