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

©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 Fewer buyers Larger buyers Geographically concentrated buyers Closer relationships with suppliers/customers Compared to Consumer Markets, Business Markets Have:

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 5 in Chapter 7 Organizational Buying Leasing Multiple buying influences Fluctuating demand Reciprocity Inelastic demand Professional purchasing Direct purchasing Derived demand Multiple sales calls 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 Discussion Scenario Your firm is interested in targeting the government market. How might this decision influence the marketing mix? How is selling to the government market different from selling to other business markets? How do needs differ?

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 8 in Chapter 7 Organizational Buying Fedmarket assists those businesses seeking to do business with the federal government.

©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  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 10 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 11 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 12 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 13 in Chapter 7 Discussion Scenario Suppose that your company has decided to bid on a theme park development project using a systems selling approach. What types of tasks might your proposal include? Is systems selling appropriate for this project?

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 14 in Chapter 7 Participants in Business Buying Gatekeepers Roles Played in a Buying Center Influencers Users Initiators Buyers Deciders Approvers

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 15 in Chapter 7 Influences on Business Buyers Figure 7-1: Major Influences on Business Buying Behavior

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 16 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 17 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 18 in Chapter 7 Influences on Business Buyers Plastics.com offers buyers and sellers of plastics a marketplace plus news and information

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 19 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 20 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 21 in Chapter 7 Discussion Scenario Age, income, and education are three individual factors which may influence business purchasing behavior. How do these factors influence purchasing behavior? Do individual factors influence decision making to the same degree as environmental, organizational, or interpersonal factors?

©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 22 in Chapter 7 Purchasing/Procurement Process Eight Buyphases of Industrial Buying Problem Recognition General Need Description Product Specification Supplier Search Proposal Solicitation Supplier Selection Performance Review Order-Routine Specification