Marketing Management 2 March 2011

Business Markets and Business Buyer Behaviour

Business Buyer Behaviour: the buying behaviour of organisations which purchase goods and service for use in the production of other products and services or to resell them or rent them out to others Business Buying Process: the decision buying process taken by business buyers in selecting the products and services which their organisations need. This also involves finding, evaluating, and choosing amongst alternative suppliers and brands Business markets operate behind the scenes from the eyes of consumers

Business Markets Business markets are far bigger and involve far more money than consumer markets Plenty of business markets collectively form one consumer market Both business and consumer markets involve people and the satisfaction of needs, wants and demands Major differences between consumer and business markets –Market structure and demand –Nature of Buying unit –Types of decisions and the decision process

Market Structure and Demand Business markets contain fewer but larger buyers Business buyer demand is derived from final consumer demand Demand in business markets are inelastic – less price sensitive in the short run Demand in business markets fluctuates more, and more quickly

Nature of Buying Unit Business purchases involve more buyers More professional purchasing efforts Business to business markets now involve better trained and higher level supply chain managers Buying committees with senior management is also a growing phenomena Companies now need better trained marketers and sales staff to better deal with trained supply chain managers

Types of Decisions and Decision Process Business Buyers face more complex buying decisions Business buying process is far more formalised Buyers and sellers work more closely together and are more dependent on each other compared to consumer markets Buyers and sellers build close long-term relationships in business markets

Business Buyer Behaviour

Major Types of Buying Situations

New Task – a business buying situation in which the buyer purchases a product or a service for the very first time Modified Rebuy – a business buying process where the buyer wants to modify product specifications, prices, terms or suppliers Straight Rebuy – a business buying situation where the buyer routinely reorders the same products without altering the orders Businesses prefer to purchase a complete solution to a problem from a single seller – a complete system to meet customer needs

Participants in the Buying Process The decision making unit of a buying organisation is called the buying centre Buying centre consists of all units that play a role in the purchase decision-making process Users: people who use products and services with an organisation Influencers: the people within the organisation’s buying centre who affect the buying decision Buyers: people in the buying centre who make the purchase Deciders: people in the buying centre who have power to select and approve the final suppliers Gatekeepers: people in the buying centre who control the flow of information to others

Influences on Business Buyers Business Buyers respond to both economic and personal factors Environmental Factors – economic, supply, technological, political and regulatory, competitive, culture and customs Organisational Factors – objectives, policies, procedures, organisational structure, systems Interpersonal Factors – authority, status, empathy, persuasiveness Individual Factors – Age, Income, Education, Position, Personality, Risk attitude

Influences on Business Buyers

Business Buying Process

See you next time. Cheers Guys!