Chapter 8 Analyzing Business Markets and Business Buying Behavior by PowerPoint by Milton M. Pressley University of New Orleans

Kotler on Marketing Many businesses are wisely turning their suppliers and distributors into valued partners.

Chapter Objectives In this chapter, we focus on six questions: What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business buying process? What are the major influences on organizational buyers? How do business buyers make their decisions? How do institutions and government agencies do their buying?

What is Organizational Buying? The business market versus the consumer market Business market Fewer buyers Larger buyers Close supplier-customer relationship Geographically concentrated buyers

What is Organizational Buying? Derived demand Inelastic demand Fluctuating demand Professional purchasing

What is Organizational Buying? Several buying influences Multiple sales calls Directed purchasing Reciprocity Leasing

What is Organizational Buying? Buying Situations Straight rebuy Modified rebuy New Task Systems Buying and Selling Systems buying Turnkey solution Systems selling

Discussion Question What are some of the benefits to an organization that can be derived from a single source solution, or a systems buying arrangement with a prime contractor? What are some of the potential pitfalls? What can the company do to protect itself from these hazards?

Participants in the Business Buying Process The Buying Center Initiators Users Influencers Deciders Approvers Buyers Gatekeepers Key buying influencers Multilevel in-depth selling

Major Influences on Buying Decisions Interpersonal and Individual Factors Cultural Factors France Germany Japan Korea Latin America

The Purchasing/ Procurement Process Incentive to purchase Three Company Purchasing Orientations Buying Orientation Commoditization Multisourcing Procurement Orientation Materials requirement planning (MRP) Supply Chain Management Orientation

Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations (Buyclasses) Buyclasses New Modified Straight Task Rebuy 1. Problem recognition Yes Maybe No 2. General need description 3. Product specification Buyphases 4. Supplier search 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review

The Purchasing/ Procurement Process General Need Description and Product Specification Product value analysis Supplier Search Vertical hubs Functional hubs Direct extranet links to major suppliers Buying alliances Company buying sites Request for proposals (RFPs)

Table 8-2: An Example of Vendor Analysis Attributes Rating Scale Importance Weights Poor (1) Fair (2) Good (3) Excellent (4) Price .30 x Supplier reputation .20 Product reliability Service reliability .10 Supplier Flexibility Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5

The Purchasing/ Procurement Process Customer value assessment Routine-order products Procedural-problem products Political-problem products Order-Routine Specification Blanket contract Stockless purchase plans Performance Review Buyflow map