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TOPIC 2 Business Buying Behavior. Course Learning Outcomes (CLO) :. CLO 1 : Describe Business Marketing, Business Buying Behaviour And Business Marketing Mix In Planning Marketing Strategy. (C2). 2.1 THE BUYING OBJECTIVES FOR BUSINESS MARKETING. INTRODUCTION.

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course learning outcomes clo

Course Learning Outcomes (CLO) :

CLO 1 :

Describe Business Marketing, Business Buying Behaviour And Business Marketing Mix In Planning Marketing Strategy. (C2)

introduction
INTRODUCTION
  • For developing effective marketing strategy, BUSINESS marketers need to understand not only the nature of business buying but also the BUSINESS buying behavior.
  • The buying objectives for business marketing :i) Delivery / Availability ii) Product Quality iii) Lowest Price iv) Services

v) Supplier Relationship

vi) Personal objectives

the buying objectives for business marketing
The buying objectives for business marketing

The purchase/materials management objective is defined as buying the right items in the right quantity, at the right price, for delivery at the time and place. It is the management’s problem to define what is ‘right’ for each dimension.

The objective of purchasing function are briefly stated as follow :

slide15

Robinson, Faris and Wind develpoedeight phases of buying decision process in industrial market in 1967 and called the process Buyphases.

slide17

PHASES IN BUYING DECISION PROCESS

Buying is an organisational- decision making process. There are eight phases or stages in the buying decision process, indicating the logical sequence of activities.

slide41

TYPES OF PURCHASES OR BUYING SITUATIONS

There are three common types of buying situations, called buyclasses;

slide50

THE ROLES OF BUYING CENTRE

users

buyers

Initiators

gatekeepers

influencers

deciders

slide51

The Initiators

  • This is the person who initiates the whole buying process.
  • This category includes individuals who first recognise a problem or a need, which could be resolved by purchase of a product or a service. The initiators could be any individuals in the buying firm.
  • Often the users of a product/service play the role of the initiators.
slide52

Example :When a machine is not working properly and downtime becomes unaceptable, the plant manager may write a memorandum to the chief executive officer or finance director asking for funds to purchase a new machine.The plant manager is playing the role of initiator.

slide53

The buyers

  • This is the person or department that executes the formal purchase.
  • This role is usually performed by people from the purchasing department and involves issuing legal documents to suppliers to complete the purchase.
  • The major roles or responsibilities of buyer are;
  • Obtaining quotations or offer from suppliers
  • supplier evaluation and selection
  • negotiation
  • processing purchase orders
  • expediting deliveries, and generally
  • implementing policies of theorganisations
slide54

The users

  • This is the person or department that will be using the product to be purchased.
  • This includes individuals who use the product or services that is to be purchased. Often users play the role of the initiators.
  • The influence of the users in purchasing decisions may vary from minor to major. They may define the specifications of the needed product. They mat be shopfloor workers, maintenance engineers, or R&D engineers.
slide55

The influencers

  • This is the person or department which provides advice or exerts influence on the purchase decision.
  • They are individuals who could influence the buying decision.
  • Influence can come from expertise and knowledge.
  • Generally, technical people (such as design engineers, quality control engineers) have a substantial influence on purchase decisions.
  • Sometimes individuals outside the organisation, who are experts or consultants, play the role of influencers, by drawing specifications of products or services.
slide56

The decider

  • This is the person who gives the final approval to go ahead with the purchase.
  • The approver often takes the recommendations of the influencer and other members of the buying centre.
  • The actual buying decisions are made by the deciders. The deciders may be on or more individuals involved in the buying decision. It its very important to identify the deciders, although at times it may be a difficult task. Generally, for routine purchase the buyer (or purchase executive) may be the decider. But, for high-value and technically complex products, senior executive are the deciders.
slide57

The gatekeepers

  • This role can be intended or unintended.
  • They are the individuals who could control or filter the flow of the information regarding products and services to the members of the buying center.
  • Sometimes the gatekeepers may control sales people`s meetings with the members of the buying center. Gatekeepers are often the assistants or junior persons attached to purchase or materials manager.
slide58

Business marketers, after understanding the roles of the buying-center members, must identify the individuals and groups who are the members of buying center.

The emphasis in the buying center is on the organisational groups, that is, the functional areas, which participate in the buying decision process. These areas are explained in the following section.

slide62

QUESTION:

1. For the following scenarios, comment on the buying situations and suggest appropriate strategies for these situations.

2.Identify the model of the organizational buying behavior that the company use.

slide63

Susan is a senior marketing manager of a five star hotel in Singapore. The hotel has a contract with an important Japanese customer which provides for suites for for the latter’s guests. One early morning (2 a.m) a guest of the Japanese company arrives at the hotel but was turned away by the front desk. All the suites were taken that morning. The Japanese guest had to carry his luggage himself to a neighbouring hotel to get a suite. A senior manager from the Japanese company called later that day to express outrage. They had booked a suite that day, but a hotel staff forgot to record the booking. They threatened to terminate the contract.

What should Susan do?

slide64

THE MODELS OF ORGANIZATIONAL BUYING BEHAVIOR

THE

SETH

MODELS

THE WEBSTERS

AND

WIND MODELS

slide67

THE WEBSTER AND WIND MODEL

OF ORGANISATIONAL

BUYING BEHAVIOUR

  • This is quite a comprehensive model. it considers four sets of variables which affect the buying-decision making process in a firm. These are;
  • 1. Environmental variables
  • 2. Organisationalvariables
  • 3. Buying Center variables
  • 4. Individual variables
slide68

!. Environmental variables include ;

Physical

technological

economic

political

legal

labour unions

cultural

customer demands

competition

supplier information

slide69

For example, in a recessionary economic condition, business firms minimise the quantity of item purchased. The environment factors influence the buying decisions of individual organisations.

The organisational variables include;

Objectives

goals

Organisation structure

purchasing policies and procedures

degree of centralisation in purchasing

evaluation and reward system.

slide70

These variables particulary influence the composition and functioning of the buying centre, and also, the degree of centralisation or decentralisation in the purchasing function in the buying organisation.

The functioning of buying centre is influenced by the organisational variables, the environmental variables, and the individual variables. The output of the group decision making process of the buying centre includes solutions to the buying problems of the organisation and also the satisfaction of personal goals of individual members of the buying centre.

.

slide71

The strengths of the model, develop in 1972, are that it is comprehensive, generally applicable, analytical, and that it identifies many key variables which could be considered while developing marketing strategies by industrial marketers. However, the models is weak in explaining the specific of the variables.

.

slide72

Component (1)

Component (2)

Component (3)

Situational

Factors

  • Differences among individual buyers caused by factors ;
  • Background of individual
  • their information surces
  • active search
  • perceptual
  • satisfaction with past purchase

Variables that determine if the buying decision is autonomous or joint.

Product specific;

-Time pressure

-Perceived risk

-Type of purchase

(B) Company specific factors, including;

-company size

-company orientation

-degree of centralisation

Methods used for conflict resolution in joint-decision making process;

-problem solving

-persuasion

-bargaining

-politicking

Supplier

Or brand

choice

THE SETH MODEL OF INDUSTRIAL BUYING BEHAVIOR

slide73

The sheth model of industrial

Buyer behavior

ProfesorJagdish N Sheth developed the Sheth model in 1973. This model, emphasises the joint decision-making by two or more individuals, and the psychological aspects of the decision making individuals in the business buying behavior.

slide74

The model includes three components and situational factors, which determine the choice of a supplier ar a band in the buying decision making process in a organisation. The difference among the individual buyers expectations (Component 1) are caused by the factors;

The background of individuals

their information sources

active search

perceptual distortion

satisfaction with past purchase

slide75

The background of individuals depend upon their education, role in the organisation, and life style. The factor perceptual distortion means the extent to which each individual participant modifies information to make it consitent with his existing belief and previous experience. It is difficult to measure perceptual distortion, although techniques such as factor analysis and perceptual mapping are available for this purpose.

slide76

In Component (3), in the model indicates the methods used for conflict resolution in joint-decision making process. Problem-solving and persuasion methods are used when there is an agreement about the organisational objective. If there is no such agreement, bargining takes places. Conflict about the style of decision making is resolved by politicking.

slide77

In Situation factors, can be varied like economic conditions, labour disputes, mergers and acquisitions.

The model does not explain their influence on the buying process.

slide78

FLASHBACK

Pre Test

refleksi kendiri

Sigma is in the steel productions business and is based in China.

  • Rhema is in electronic component manufacturing and is based in Taiwan.
  • What are the environmental factors that would have a major impact on the business of the two companies?
  • How are the factors similar or different for the companies?
RefleksiKendiri