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22 views

Chap 06

Uploaded by

duchongho1506
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PRINCIPLES OF

MARKETING
Chapter Six
Business Markets and Business Buyer Behavior

© Pearson Education MBA Trần Tấn Hoan


Learning Objectives
After 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 influence business buyer behavior

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

4. Compare the institutional and government markets and explain


how institutional and government buyers make their buying
decisions
I Business Markets

Chapter II Business Buyer Behavior

Outline III Institutional and Government Markets


Business Markets

• Business buying process is the process where business buyers determine which
products and services are needed to purchase and then find, evaluate, and choose
among alternative suppliers and brands.

Business markets differ from consumer markets in:

• Market structure and demand

• Nature of the buying unit

• Types of decisions and the decision-making process


Business Markets

Market Structure and Demand

• Fewer and larger buyers

• Derived demand
 Inelastic demand

 Fluctuating demand

Supplier development is the systematic development of networks of supplier-partners


to ensure an appropriate and dependable supply of products and materials that they will
use in making their own products or resell.
Business Buyer Behavior
• Business buyer behavior refers to the buying behavior of the organizations that buy goods and
services for use in production of other products and services that are sold, rented, or supplied to
others.
• Also included are retailing and wholesaling firms that acquire goods to resell or rent to others for
profit.
Business Buyer Behavior
Marketing Stimuli
Similar to consumer buying, business buying
consists of the four Ps:
• Product
• Price
• Place
• Promotion

Additional stimuli include major economic forces:


• Political
• Economic
• Technological
• Cultural
• Competitive
Business Buyer Behavior
Buyer Responses to Marketing Stimuli

• Product or service choice

• Supplier choice

• Order quantities

• Delivery

• Service

• Payment terms

Marketers must understand what happens within the organization


and turn stimuli into purchase responses.
Business Buyer Behavior
A Model of Business Buyer Behavior
Business Buyer Behavior

Major Types of Buying Situations

• Straight rebuy is a routine purchase decision


such as a reorder without any modification.

• Modified rebuy is a purchase decision that


requires some research where the buyer wants
to modify the product specification, price,
terms, or suppliers.

• New task is a purchase decision that requires


thorough research such as a new product.
Business Buyer Behavior
Major Types of Buying Situations

Systems selling involves the purchase of a


packaged solution from a single seller.

Two-step process of selling:

• Interlocking products

• System of production, inventory


control, distribution, and other services
to meet the buyer’s need for a smooth-
running operation
Business Buyer Behavior
Participants in the Business Buying Process

The buying center is all of the individuals and units that play a role in the purchase
decision-making process:

• Users

• Influencers

• Buyers

• Deciders

• Gatekeepers
Business Buyer Behavior
Participants in the Business Buying Process

• Users are those that will use the product or service.

• Influencers help define specifications and provide


information for evaluating alternatives.

• Buyers have formal authority to select the supplier


and arrange terms of purchase.

• Deciders have formal or informal power to select


and approve final suppliers.

• Gatekeepers control the flow of information.


Business Buyer Behavior

Participants in the Business Buying Process

The buying center provides a major challenge:

• Who participates in the process

• Their relative authority

• What evaluation criteria each participant uses

• Informal participants
Business Buyer Behavior

Participants in the Business Buying Process

• Economic factors

• Personal factors

• Environmental factors

• Organizational factors

• Interpersonal factors
Business Buyer Behavior
Major Influences on Business Buyers

Economic factors: Personal factors:


• Price • Emotion
• Service
Business Buyer Behavior
Major Influences on Business Buyers

Environmental factors:
• Demand for product • Technology
• Economic outlook • Culture
• Cost of money • Politics
• Resource availability • Competition
Business Buyer Behavior
Major Influences on Business Buyers
Organizational factors:
• Objectives
• Policies
• Procedures
• Structure
• Systems

Copyright © 2009 Pearson Education South Asia


6-18
Pte Ltd
Business Buyer Behavior
Major Influences on Business Buyers

Interpersonal factors:

• Motives

• Perceptions

• Preferences

• Age

• Income

• Education

• Attitude toward risk


Business Buyer Behavior
The Buying Process

1. Problem recognition

2. General need description

3. Product specification

4. Value analysis

5. Supplier search

6. Proposal solicitation

7. Supplier selection

8. Order-routine specifications

9. Performance review
Business Buyer Behavior

Problem recognition occurs when someone in the


company recognizes a problem or need.

Internal stimuli

• Need for new product or production


equipment

External stimuli

• Idea from a trade show or advertising


Business Buyer Behavior
The Buying Process
• General need description describes the characteristics and quantity of the needed
item.
• Product specification describes the technical criteria.
• Value analysis is an approach to cost reduction where components are studied to
determined if they can be redesigned, standardized, or made with less costly methods of
production.
Business Buyer Behavior
The Buying Process
• Supplier search involves compiling a list of qualified suppliers.
• Proposal solicitation is the process of requesting proposals from qualified suppliers.

Copyright © 2009 Pearson Education South Asia


6-23
Pte Ltd
Business Buyer Behavior
The Buying Process
• Supplier selection is the process when
the buying center creates a list of desired
supplier attributes and negotiates with
preferred suppliers for favorable terms
and conditions.

• Order-routine specifications is the final


order with the chosen supplier and lists
all of the specifications and terms of the
purchase.

• Performance review involves a critique


of supplier performance to the purchase
terms.
Business Buyer Behavior
E-Procurement and Buying on the Internet
Online purchasing
• Company buying sites
• Extranets

Advantages
• Access to new suppliers
• Lowers costs
• Speed in order processing and delivery
• Share information
• Disadvantages
Sales
• Can erode relationships as buyers search
• Service and support for new suppliers
• Lack of security
Institutional and Government Markets
E-Procurement and Buying on the Internet
• Institutional markets consist of hospitals, nursing homes, and
prisons that provide goods and services to people in their care.
• Characteristics
• Low budgets
• “Captive” audience
Institutional and Government Markets
• Government markets tend to favor domestic
suppliers and require suppliers to submit bids and
normally award to the lowest bidder
• Carefully monitored
• Affected by similar environmental factors
• Good credit
• Non-economic factors
• Minority suppliers
• Depressed suppliers
• Small businesses
Copyright © 2009 Pearson Education South Asi Pte
6-27
Ltd

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