1. Business Markets and Business Buyer Behavior
Chapter 6
Business Markets and Business Buyer Behavior

2. Last Week
Consumer Behavior
What is it?
Why is it important?

3. Learning Goals
Define the business market and how it differs from consumer markets
Identify the major factors that influence business buyer behavior
List and define the steps in the business buying decision process

4. Why Bother?
A business market comprises all the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
The business market is huge, growing globally and involves many dollars and goods.

5. Case Study UPS Services Customer Needs
360,000 people and 88,000 vehicles offer ground, air, freight worldwide
Helps customer navigate the complexities of international shipping
Offers a wide range of financial services
Provides consulting services to improve logistics operations
Customer Needs
Consumers need fast, friendly, low-cost package delivery
Business needs are more complex
Shipping part of complex logistics process including purchasing, inventory, order status, invoices, payments, returns

6. These UPS ads target businesses as a supply chain solution
6 - 6

8. Learning Goals
Define the business market and how it differs from consumer markets
Identify the major factors that influence business buyer behavior
List and define the steps in the business buying decision process

9. Definition Business Buyer Behavior:
The buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
Also included are retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them or others at a profit.

10. Characteristics of Business Markets

11. Business Markets Characteristics Compared to consumer markets:
have fewer but larger customers
Business customers
are more geographically concentrated
Demand is different
Demand is derived
Demand is price inelastic
Demand fluctuates more
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process

12. Characteristics of Business Markets
Contain fewer, but
larger buyers
Characteristics of Business Markets
Customers are more
geographically concentrated
Buyer demand is derived from
final consumer demand
Marketing Structure and Demand
Demand is often more inelastic
Demand often fluctuates more, and more quickly

13. Business Markets Characteristics Compared to consumer purchases:
Involve more buyers in the decision process
More professional purchasing effort
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process

14. Characteristics of Business Markets
Nature of the Buying Unit
Business buying involves a more professional purchasing effort
Business buying involves more buyers (participants)

15. Business Markets Characteristics Compared to consumer purchases
More complex buying decisions
The buying process is more formalized
Buyers and sellers work more closely together and build long-term relationships
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process

16. Characteristics of Business Markets
Types of Decisions and the Decision Process
Business buyers usually face more complex buying decisions.
Business buying process is more formalized.
In business buying, buyers and sellers work more closely together.
Build Long-Term Partnerships

17. Model of Business Buyer Behavior
Buyer Responses
Product or
service choice
Supplier Choice
Order Quantities
Delivery terms
and times
Service terms
Payment
The Environment
Marketing
Stimuli:
Product
Price
Place
Promotion
Other Stimuli:
Economic
Technological
Political
Cultural
Competitive
The Buying
Organization
The buying
center
Buying decision
process
(Interpersonal and
individual influences)
(Organizational
Influences)

18. Business Buyer Behavior
Major Types of Buying Situations
Straight rebuy
Reordering without modification
Modified rebuy
Requires modification to prior purchase
New task
First-time purchase
Involved Decision Making

19. Major Types of Buying Situations
New Task Buying
Involved Decision Making
Modified Rebuy
Straight Rebuy

20. Stages of the Buying Process
Stages of the buying process Buying Situations
New Modified Straight
Task Rebuy Rebuy
Problem recognition Yes Maybe No
General need description Yes Maybe No
Product specification Yes Yes Yes
Supplier search Yes Maybe No
Proposal solicitation Yes Maybe No
Supplier selection Yes Maybe No
Order routing specification Yes Maybe No
Performance review Yes Yes Yes
Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying
and Creative Marketing (Boston: Allyn & Bacon, 1967), p.14.

21. Business-to-Business Company DuPont Chemicals
Established in 1802 with gunpowder as its first product
In 1910 moved away from explosives with the first non-leather material, which was snatched up for upholstery and automobile parts
Today, the firm delivers science-based solutions that make real differences in people's lives around the world in areas such as food and nutrition, health care, apparel, safety and security, construction, electronics and transportation
Revenue of $27 billion

22. Business-to-Business Company DuPont Chemicals
Examples of B2B markets and products:
Heath Care - Medical fabrics to provide comfort and safety to surgeons
Automobile – airbag fibers and engineering plastics for safety
Dental – filaments for toothbrushes
Glass – technology to reduce glare and noise, save energy, protect against breakage
Footware – flexibility for rubber, strength of plastic
Farming – pesticides
Guitar manufacturers – DuPont product give the look of vintage lacquer

23. Business Buyer Behavior
Systems Selling
Buying a packaged solution to a problem from a single seller.
Often a key marketing strategy for businesses seeking to win and hold accounts.
Customization ????

24. Business Buyer Behavior
Buying Center
The decision-making unit of a buying organization
Includes all individuals and units that participate in decision making

25. Participants in the Business Buying Process
Users
Initiators
Influencers
Gatekeepers
Buyers
Deciders
Approvers

26. Discussion Question
What are the advantages and disadvantages of buying from single suppliers versus multiple suppliers?

27. Learning Goals
Define the business market and how it differs from consumer markets
Identify the major factors that influence business buyer behavior
List and define the steps in the business buying-decision process
Compare the institutional and government markets and explain how they make their buying decisions

28. Major Influences on Business Buyers

29. Major Influences on Business Buyers
Key Factors
Economic trends
Supply conditions
Technological, political and competitive changes
Culture and customs
Environmental
Organizational
Interpersonal
Individual

30. Major Influences on Business Buyers
Key Factors
Objectives
Policies
Procedures
Organizational structure
Systems
Environmental
Organizational
Interpersonal
Individual

31. Major Influences on Business Buyers
Key Factors
Influence of members in the buying center
Authority
Status
Empathy
Persuasiveness
Environmental
Organizational
Interpersonal
Individual

32. Major Influences on Business Buyers
Key Factors
Personal characteristics of members in the buying center
Age and income
Education
Job position
Personality
Risk attitudes
Buying styles
Environmental
Organizational
Interpersonal
Individual

33. Discussion Question Buyer Behavior
Your job selling Coca-Cola to your old college has proven more difficult than you imagined. There seem to be many influences on your buyer’s behavior that you did not expect.
What environmental factor might exist?
Organizational factors?
Interpersonal factors?
Individual factors?
The price of sugar increases which would increase the price of your soda. At the same time, students might switch to water whose price might not be affected by this increase in sugar prices. Also, culture and customs might change. In fact people are currently moving away from soda and toward healthier drinks. The competitive situation might change where Pepsi has redesigned their manufacturing and can lower their prices far below Coca-Cola’s prices.
Organizationally, the company might be too lazy to consider a new vendor. If all is working well with Pepsi, they might figure “if it ain’t broke, don’t fix it”
Interpersonal dynamics might come into play. Perhaps the Pepsi rep has become very close with the decision makers over time. Perhaps the buying center doesn’t get along well and tries to minimize their interactions by reducing decisions.
Perhaps the manager of dining services used to work for Pepsi. People tend to feel very strongly regarding the taste of Pepsi over Coke and perhaps all the members feel that Pepsi tastes better.

34. Learning Goals
Define the business market and how it differs from consumer markets
Identify the major factors that influence business buyer behavior
List and define the steps in the business buying decision process

35. Stages in the Business Buying Process

36. Business Buying on the Internet
E-procurement is growing rapidly
Business buyers may purchase electronically by:
Electronic data interchange links (EDI)
The Internet
Online auctions and online trading exchanges (e-marketplaces) account for much of the online purchasing activity
E-procurement offers many benefits:
Access to new suppliers
Lower purchasing costs
Quicker order processing and delivery

37. Benefits and Problems Created by Buying on the Internet
Shave transaction costs
Reduce time between order and delivery
Create more efficient purchasing systems
Forge more intimate relationships
Level the playing field
Problems:
Cut purchasing jobs
Erode supplier-buyer loyalty
Create potential security disasters

38. Institutional and Government Markets
Low Budgets
Captive Patrons
Institutional Markets
Public Review
Red Tape is
Common
Government Markets
Noneconomic
Criteria
Negotiated
Contracts
Some Buying
Online
The collection or sequence of forms and procedures required to gain bureaucratic approval for something, especially when oppressively complex and time-consuming.

39. Learning Goals
Define the business market and how it differs from consumer markets
Identify the major factors that influence business buyer behavior
List and define the steps in the business buying decision process