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

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 1 in Chapter 7 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 Slide 2 in Chapter 7 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 Slide 3 in Chapter 7 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 Slide 4 in Chapter 7 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 Slide 5 in Chapter 7 Organizational Buying  Fluctuating demand  Derived demand  Inelastic demand  Professional purchasing  Multiple buying influences  Multiple sales calls  Direct purchasing  Reciprocity  Leasing Other Business Market Characteristics

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 6 in Chapter 7 Organizational Buying  The Business Market Includes For-Profit Companies and Two Specialized Groups: –The institutional market Schools, hospitals, prisons, etc. with captive audiences Cost and quality standards drive purchases –The government market Bidding process awards contracts

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

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 8 in Chapter 7 Organizational Buying 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 Slide 9 in Chapter 7 Organizational Buying Buying Situations  Straight rebuy  Modified rebuy  New task  Purchasing a product or service for the first time  High level of involvement and time commitment; multiple influences  Example: selecting a web site design firm or consultant

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 10 in Chapter 7 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 Slide 11 in Chapter 7 Participants in Business Buying  Initiators  Users  Influencers  Deciders  Approvers  Buyers Buying center members fill one or more roles in the purchase decision process:  Gatekeepers

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 12 in Chapter 7 Influences on Business Buyers Major Influences  Environmental  Organizational  Interpersonal  Individual  Demand level  Economic outlook  Interest rates  Technological change  Politics/regulations  Competition  Concerns for social responsibility

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 13 in Chapter 7 Influences on Business Buyers Major Influences  Environmental  Organizational  Interpersonal  Individual  Objectives  Policies  Procedures  Organizational structures  Systems

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 14 in Chapter 7 Influences on Business Buyers Major Influences  Environmental  Organizational  Interpersonal  Individual  Interests  Authority  Status  Empathy  Persuasiveness

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 15 in Chapter 7 Influences on Business Buyers Major Influences  Environmental  Organizational  Interpersonal  Individual  Age  Income  Education  Job position  Personality  Risk attitudes  Culture

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 16 in Chapter 7 Purchasing/Procurement Process  Problem recognition  General need description  Product specification  Supplier search  Proposal solicitation  Supplier selection  Order-routine specification  Performance review Eight Buyphases of Industrial Buying