1. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–16–1 Chapter 6 Understanding the Business Market

2. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–26–2 The business market Business buyers are defined as organisations that buy goods and services for: – Making other goods and services. – Reselling to other business users or to consumers. – Conducting the organisations operations.

3. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–36–3 The five business market segments 1The agriculture market. 2The reseller market. 3The government market. 4The services market. 5The non-business, business market.

4. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–46–4 Business-market segments Agribusiness – High value of agricultural commodities produced and sold. – Proportion of farmers decreasing. – Increase in large corporate farms. – As farms become fewer, larger and more sophisticated, manufacturers must change their distribution and promotion strategies to reach the farm market effectively.

5. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–56–5 Agribusiness markets The agriculture market, farming, food processing, and other farming-related businesses. Quick to adopt the Internet. Large buyers of spare parts and repair services who prefer to deal through local dealers. High degree of specialisation in the farming sector.

6. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–66–6 Reseller market The reseller market consists of firms that buy products from suppliers and resell these items essentially in the same form. Buy goods and services for use in operating their business.

7. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–76–7 Government markets The government marketall commonwealth, State and local units buying for government institutions such as schools, offices, hospitals and military establishments. Sellers to governments must understand thetender system. Slow decision-making process. Decision maker may not be the person making the purchase decision or approving the contract.

8. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–86–8 Business services markets Services outnumber producers of tangible goods. Business services markets include: – Transport and goods and handling firms. – Public utilities. – Financial, insurance and real estate. – Entertainment, repairs and personal care.

9. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–96–9 Non-business business market The non-business business marketnon- profit organisations such as churches, colleges, universities, museums, hospitals and other health institutions. These groups of organisations still conduct marketing campaigns to attract consumers for the purpose of sponsorship, donations or assistance for worthwhile causes. E.g. Red Cross appeal.

10. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–10 Characteristics of business market demand Demand is derived from the demand for the ultimate consumer products in which the business product is finally used (e.g. steel). In the short run demand is inelastic, that is demand for a product responds very little to changes in price. Copyright © 1997 by The McGraw-Hill Companies, Inc.

11. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–11 Characteristics of business market demand Demand is widely fluctuating, meaning that demand for most classes of business goods fluctuates considerably more than the demand for consumer products. Buyers are well informed and know the relative merits of alternative sources of supply and competitive products.

12. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–12 Influences on business-market demand The number and types of potential business users. Users buying power. Users buying motives and habits.

13. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–13 Influences on business-market demand Small number of BMs. BMs have larger purchasing power and buy in quantity. BMs are concentrated. Sellers deal direct with business users.

14. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–14 Influences on business-market demand BMs are usually regionally concentrated. BMs can be vertically or horizontally concentrated. BMs buying motives are rational and purchase is methodical and objective.

15. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–15 Business buying behaviour Problem recognitionsomeone in the firm recognises that the firm has a need for a product. Gathering informationdeciding on the specifications for the product to satisfy the need and identifying alternatives.

16. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–16 Business buying behaviour Evaluation of alternativesconsidering such factors as product performance, price, delivery, quality and also suppliers ability to meet commitments. Purchase decisionbuyer decides on a specific brand, model and supplier. Post-purchase behaviourbuyer continues to evaluate the performance of the product and supplier.

17. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–17 Types of buying situations New-task buy New purchase or product category. More people involved in new purchase. Extensive information must be collected and evaluation done on alternative products. Seller displays creative selling ability in satisfying buyer needs.

18. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–18 Types of buying situations Straight re-buy Information needs are minimal. There is no great consideration of alternatives. Buying decision made in the purchasing department. E.g. purchasing of office supplies.

19. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–19 Types of buying situations Modified re-buy A situation in which the buyer wants to change (modify) the product specifications, price, terms or suppliers.

20. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–20 Multiple buying influences, the buying centre Userspeople who actually use the good or service. Influencerspeople who set the specifications of, and help determine aspects of the buying decision because of their expertise, financial position or political power. Deciderspeople who make the actual buying decision regarding the product and supplier. Gatekeeperspeople who control the flow of purchasing information within the organisation, as well as between the firm and potential vendors. Buyerspeople who select the suppliers, arrange the terms of the sale and process the actual purchase orders.

21. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–21 Buying patterns of business users Direct purchase. Frequency of purchases. Size of order. Length of negotiated period. Reciprocity arrangements. Service expectations. Dependability of supply. Leasing instead of buying.

22. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–22 Importance of relationships in business markets Selling and buying decisions dependent on both parties and based on relationship. Buying firms may be dominant in business relationships. Buyer and seller relationships are usually long term.

23. Copyright 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 6–23 Building business trust Heart shareA measure of how customers feel about the firm. Mind shareA measure of how customers think about a firm. Business shareThe proportion of product supplied to firms in the market. Barriers to entry and exit through building strong business relationships.