0. Business Markets and Business Buyer Behavior
Chapter 6

1. 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

2. Case Study UPS Customer Needs Services
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
Services
Its 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

3. 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 to others at a profit.
Goal 1: Define the business market

4. Characteristics of Business Markets
Sales in the business market far exceed sales in consumer markets.
Business markets differ from consumer markets in many ways.
Marketing structure and demand
Nature of the buying unit
Types of decisions and the decision process
Goal 1: Define the business market

5. 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
Goal 1: Define the business market

6. Business Markets Characteristics Compared to consumer purchases:
Involve more buyers in the decision process
More professional purchasing effort
Intel Lilly IBM Boeing
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Goal 1: Define the business market

7. 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
Goal 1: Define the business market

8. 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
Goal 1: Define the business market

9. 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.
Goal 1: Define the business market

10. Business Buyer Behavior
Buying Center
The decision-making unit of a buying organization
Includes all individuals and units that participate in the decision making
Goal 1: Define the business market

11. Business Buyer Behavior
Members of the Buying Center
Users
Buyers
Influencers
Deciders
Gatekeepers
Goal 1: Define the business market

12. Major Influences on Business Buyers
Key Factors
Economic trends
Supply conditions
Technological, political and competitive changes
Culture and customs
Environmental
Organizational
Interpersonal
Individual
Goal 2: Identify the major factors that influence business buyer behavior

13. Major Influences on Business Buyers
Key Factors
Objectives
Policies
Procedures
Organizational structure
Systems
Environmental
Organizational
Interpersonal
Individual
Goal 2: Identify the major factors that influence business buyer behavior

14. Major Influences on Business Buyers
Key Factors
Influence of members in the buying center
Authority
Status
Empathy
Persuasiveness
Environmental
Organizational
Interpersonal
Individual
Goal 2: Identify the major factors that influence business buyer behavior

15. 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
Goal 2: Identify the major factors that influence business buyer behavior

16. Stages in the Business Buying Process
Stage 1: Problem Recognition
Stage 2: General Need Description
Stage 3: Product Specification
Value analysis helps to reduce costs
Stage 4: Supplier Search
Supplier development
Goal 3: List and define the steps in the business buying decision process

17. Stages in the Business Buying Process
Stage 5: Proposal Solicitation
Stage 6: Supplier Selection
Stage 7: Order-Routine Specification
Blanket contracts are often used for maintenance, repair and operating items.
Stage 8: Performance Review
Goal 3: List and define the steps in the business buying decision process

18. Business Buying on the Internet
E-procurement is growing rapidly
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
Goal 3: List and define the steps in the business buying decision process

19. Institutional and Government Markets
Institutional Markets
Consist of churches, schools, prisons, hospitals, nursing homes and other institutions that provide goods and services to people in their care.
Goal 4: Compare the institutional and government markets

20. Institutional and Government Markets
Institutional Markets
Often characterized by low budgets and captive patrons.
Marketers may develop separate divisions and marketing mixes to service institutional markets.
Goal 4: Compare the institutional and government markets

21. Government Markets More than 82,000 buying units in the U.S.
Require suppliers to submit bids and often give job to lowest bidder
Favor domestic suppliers
Much “red tape” can exist
Goal 4: Compare the institutional and government markets