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Business Markets and Business Buyer Behavior






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Business Markets and Business Buyer Behavior. Chapter 7. Objectives. Be able to define the business market and explain how business markets differ from consumer markets. Know the major factors that influence business buyer behavior. Objectives.
Business Markets and Business Buyer Behavior

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Business markets and business buyer behaviorSlide 1

Business Markets and Business Buyer Behavior

Chapter 7

ObjectivesSlide 2

Objectives

  • Be able to define the business market and explain how business markets differ from consumer markets.

  • Know the major factors that influence business buyer behavior.

Objectives1Slide 3

Objectives

  • Understand the steps in the business buying decision process.

  • Understand institutional and government markets and how buyers in these markets make their buying decisions.

Case studySlide 4

Sells jets exclusively for corporate use

300 – 500 customers worldwide

Rational, objective, and human factors influence business buyer’s decisions

Multiple people are involved in the decision

Buying influences include the CEO, pilot, board members, even spouses

Company has been highly successful

Case Study

Gulfstream Aerospace

DefinitionSlide 5

Definition

  • Business Buyer Behavior:

    • The buying behavior of organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit.

Business marketsSlide 6

Business Markets

  • Characteristics of Business Markets

    • Sales in the business market far exceed sales in consumer markets.

    • Business markets differ from consumer markets in many ways.

      • Marketing structure and demand

      • Nature of the buying unit

      • Types of decisions and the decision process

Business markets1Slide 7

Marketing Structure and Demand

Nature of the Buying Unit

Types of Decisions and the Decision Process

Compared to consumer markets:

Business markets

have fewer but larger customers

Business customers

are more geographically concentrated

Demand is different

Demand is derived

Demand is price inelastic

Demand fluctuates more, and changes morequickly

Business Markets

Characteristics

Business markets2Slide 8

Marketing Structure and Demand

Nature of the Buying Unit

Types of Decisions and the Decision Process

Compared to consumer purchases:

Business purchases involve more buyers in the decision process.

Purchasing efforts are undertaken by professional buyers.

Business Markets

Characteristics

Business markets3Slide 9

Marketing Structure and Demand

Nature of the Buying Unit

Types of Decisions and the Decision Process

Compared to consumer purchases:

Business buyers face more complex buying decisions.

The buying process is more formalized.

Buyers and sellers work more closely together and build long-term relationships.

Business Markets

Characteristics

Business buyer behaviorSlide 10

Business Buyer Behavior

  • Major Types of Buying Situations

    • Straight rebuy

      • Reordering without modification

    • Modified rebuy

      • Requires modification to prior purchase

    • New task

      • First-time purchase

Business buyer behavior1Slide 11

Business Buyer Behavior

  • Systems Selling:

    • Buying a packaged solution to a problem from a single seller.

      • Convenience is a major benefit

    • Often a key marketing strategy for businesses seeking to win and hold accounts.

Business buyer behavior2Slide 12

Users

Buyers

Influencers

Deciders

Business Buyer Behavior

Participants in the Business Buying Process

  • Gatekeepers

Major influences on business buyersSlide 13

Environmental

Organizational

Interpersonal

Individual

Economic trends

Supply conditions

Technological change

Regulatory and political environments

Competitive developments

Culture and customs

Major Influences on Business Buyers

Key Factors

Major influences on business buyers1Slide 14

Environmental

Organizational

Interpersonal

Individual

Objectives

Policies

Procedures

Organizational structure

Systems

Major Influences on Business Buyers

Key Factors

Major influences on business buyers2Slide 15

Environmental

Organizational

Interpersonal

Individual

Authority

Status

Empathy

Persuasiveness

Major Influences on Business Buyers

Key Factors

Major influences on business buyers3Slide 16

Environmental

Organizational

Interpersonal

Individual

Authority

Age

Education

Job position

Personality

Risk attitudes

Major Influences on Business Buyers

Key Factors

Business buying processSlide 17

Business Buying Process

  • Eight Stages:

    • Stage 1: Problem Recognition

    • Stage 2: General Need Description

    • Stage 3: Product Specification

      • Value analysis helps to reduce costs

    • Stage 4: Supplier Search

      • Supplier development

Business buying process1Slide 18

Business Buying Process

  • Eight Stages:

    • Stage 5: Proposal Solicitation

    • Stage 6: Supplier Selection

    • Stage 7: Order-Routine Specification

      • Blanket contracts are often used for maintenance, repair and operating items.

    • Stage 8: Performance Review

Business buying process2Slide 19

Business Buying Process

  • Business Buying on the Internet

    • E-procurement is growing rapidly.

    • Reverse auctions account for much of the online purchasing activity.

    • E-procurement offers many benefits:

      • Access to new suppliers

      • Lower purchasing costs

      • Quicker order processing and delivery

Institutional and government marketsSlide 20

Institutional and Government Markets

  • Institutional Markets

    • Consist of churches, schools, prisons, hospitals, nursing homes and other institutions that provide goods and services to people in their care.

Institutional and government markets1Slide 21

Institutional and Government Markets

  • Institutional Markets

    • Often characterized by low budgets and captive patrons.

    • Marketers may develop separate divisions and marketing mixes to service institutional markets.

Institutional and government markets2Slide 22

Institutional and Government Markets

  • Government Markets

    • Governmental units – federal, state, and local – that purchase or rent goods and services for carrying out the main functions of government.

Institutional and government markets3Slide 23

Institutional and Government Markets

  • Government Markets

    • More than 82,000 buying units.

    • Require suppliers to submit bids.

    • Favor domestic suppliers.

    • Extensive paperwork is required from suppliers.

Institutional and government markets4Slide 24

Institutional and Government Markets

  • Government Markets

    • Government buyers often favor:

      • Depressed business firms and areas

      • Small businesses

      • Minority-owned businesses

      • Firms which practice non-discriminatory practices

Institutional and government markets5Slide 25

Institutional and Government Markets

  • Government Markets

    • Most firms that sell to government buyers are not marketing oriented.

    • Some companies have separate government marketing departments.

    • Much of government buying has migrated online.


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