Chapter 7 Analyzing Business Markets and Buyer Behavior

Chapter 7 Analyzing Business Markets and Buyer Behavior Power. Point by Karen E. James Louisiana State University - Shreveport © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 0

Objectives § Understand the nature of the business market and how it differs from the consumer market. § Learn how institutions and government agencies buy. § Identify the different buying situations faced by organizational buyers. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 1

Objectives § Identify the participants in the business buying process and the various influences impacting business buying decisions. § Understand how business buyers make their decisions. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 2

Organizational Buying § Organizational buying is: “the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. ” © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 3

Organizational Buying § Compared to Consumer Markets, Business Markets have. . . – Fewer buyers – Larger buyers – Geographically concentrated buyers – Close relationships with their supplier-customers © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 4

Organizational Buying Other Business Market Characteristics § Fluctuating demand § Multiple buying influences § Derived demand § Inelastic demand § Multiple sales calls § Professional purchasing § Direct purchasing § Reciprocity § Leasing © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 5

Organizational Buying § The Business Market Includes For-Profit Companies and Two Specialized Groups: – The institutional market l Schools, hospitals, prisons, etc. with captive audiences l Cost and quality standards drive purchases – The government market l Bidding © 2003 Prentice Hall, Inc. process awards contracts To accompany A Framework for Marketing Management, 2 nd Edition 6

Organizational Buying Situations § Straight rebuy § Modified rebuy § New task © 2003 Prentice Hall, Inc. § Routine reorders from approved vendor list § Low involvement, minimal time commitment § Example: copier paper To accompany A Framework for Marketing Management, 2 nd Edition 7

Organizational Buying Situations § Straight rebuy § Modified rebuy § New task § Specifications, prices, delivery terms or other aspects require modification § Moderate level of involvement and time commitment § Example: desktop computers © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 8

Organizational Buying Situations § Purchasing a product or service for the first time § Straight rebuy § High level of involvement and time commitment; multiple influences § Modified rebuy § New task § Example: selecting a web site design firm or consultant © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 9

Organizational Buying § Systems Buying – A single provider provides the total package for the buyer’s needs – May involve turnkey solutions § Systems Selling – Manufacturers sell entire systems – Supplier provides all MRO items © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 10

Participants in Business Buying center members fill one or more roles in the purchase decision process: § Initiators § Deciders § Users § Approvers § Influencers § Buyers §Gatekeepers © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 11

Influences on Business Buyers Major Influences § Environmental § Organizational § Interpersonal § Individual © 2003 Prentice Hall, Inc. § Demand level § Economic outlook § Interest rates § Technological change § Politics/regulations § Competition § Concerns for social responsibility To accompany A Framework for Marketing Management, 2 nd Edition 12

Influences on Business Buyers Major Influences § Objectives § Policies § Environmental § Organizational § Procedures § Interpersonal § Organizational structures § Individual § Systems © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 13

Influences on Business Buyers Major Influences § Interests § Authority § Environmental § Organizational § Interpersonal § Status § Empathy § Persuasiveness § Individual © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 14

Influences on Business Buyers Major Influences § Age § Income § Environmental § Education § Organizational § Job position § Interpersonal § Personality § Individual © 2003 Prentice Hall, Inc. § Risk attitudes § Culture To accompany A Framework for Marketing Management, 2 nd Edition 15

Purchasing/Procurement Process Eight Buyphases of Industrial Buying § Problem recognition § Proposal solicitation § General need description § Supplier selection § Product specification § Supplier search © 2003 Prentice Hall, Inc. § Order-routine specification § Performance review To accompany A Framework for Marketing Management, 2 nd Edition 16