1. Business Markets and Buying Behavior Professor Chip Besio Cox School of Business Southern Methodist University

2. Business-to-Business Marketing Sales to businesses rather than consumers Example: Dell Business-to-Business - sale of a personal computer to be used in an office environment Consumer Marketing - sale of a personal computer for use by a student while at college

3. Business Market - Business Market - all organizations that buy goods and services to use in the production of other products and services that are sold, rented, or supplied to others Business markets involve many more dollars and items do consumer markets WHAT ARE BUSINESS MARKETS

4. THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS Slide 6-6 Business Marketing Industrial Markets (Industrial Firms)Industrial Markets (Industrial Firms) Reseller Markets (Resellers)Reseller Markets (Resellers) Government Markets (Government Units)Government Markets (Government Units) Global Organizational Markets

5. Few, large buyers Geographically concentrated Derived demand - comes from consumers at the end of the channel Inelastic demand CHARACTERISTICS OF ORGANIZATIONAL MARKETS

6. Slide 6-7 TYPE AND NUMBER OF ORGANIZATIONIAL CUSTOMERS IN THE U.S.

7. MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND GOVERNMENT MARKETS Slide 6-9 North American Industry Classification System (NAICS)North American Industry Classification System (NAICS) North American Product Classification System (NAPCS)

8. NAICS breakdown for information industries sector: NAICS code 51 (abbreviated)

9. Key characteristics of organizational buying behavior

10. Key Organizational Buying Criteria

11. Nature of the Buying Unit More participants in the purchase Professional purchasing effort More participants in the purchase Professional purchasing effort Nature of the Buying Unit Few participants in the purchase “Amateur” purchasing effort Few participants in the purchase “Amateur” purchasing effort Types of Decisions & Decision Process Types of Decisions & Decision Process More complex decisions Often higher risk; more at stake Process is more formalized Buyer/seller depend on one another Build close long-term relationships with customers Types of Decisions & Decision Process Types of Decisions & Decision Process Simpler decisions Usually limited risk No formal info search or decision Buyer and seller have limited interface Psychology can be important Source: Adapted fromPrentice Hall Marketing Mix Predominantly sales force Price is often negotiated Advertising and other communications are frequently technical Predominantly sales force Price is often negotiated Advertising and other communications are frequently technical Marketing Mix Mostly mass communications Price is fixed Advertising is emotional or rational; reminder, persuasive, comparative, or awareness Mostly mass communications Price is fixed Advertising is emotional or rational; reminder, persuasive, comparative, or awareness Organizational Markets Consumer Markets Comparing consumer and organizational purchases

12. Comparing the stages in consumer and organizational purchases

13. CHARACTERISTICS OF ORGANIZATIONAL BUYING The Buying Center: A Cross-Functional Group  Buying Center Buying Center  Buying Committee  People in the Buying Center

14. CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-22 The Buying Center: A Cross-Functional Group  Roles in the Buying Center Users Influencers Buyers Deciders Gatekeepers

15. Buying Center Buying Center UsersGatekeepers DecidersInfluencers Buyers Source: Prentice Hall Participants in the Business Buying Process

16. Segmentation variables and breakdowns for U.S. organizational markets

17. Straight Rebuy New Task Buying Modified Rebuy Involved Decision Making Business Buying Situations

18. How the buying situation affects buying center behavior

19. (Rarest, most complex type) Big buying unit Many people involved Lots of indirect influence Slower-than-usual processes High risk Buying unit gathers and weighs lots of information Anyone can win Performance matters (price not always as much) Business Buying Situations New Buy

20. (Most common, most simple) Small buying unit (generally one person) Low perceived risk So long as quality is acceptable … "In supplier” wins "Out suppliers" can’t get an appointment “Out supplier” salespeople must wait for "in supplier" to fail or requirements to change Business Buying Situations Straight Rebuy

21. A window of opportunity for other suppliers An "aging" new task or a "rejuvenated" straight re-buy Compared to new buy: Smaller buying unit More rapid decision Less risk Performance and price considered Compared to straight re-buy: Larger buying unit Slower decision More risk Business Buying Situations Modfied Rebuy

22. Slide 6-42 NAVIGATING THE NAICS GOING ONLINE

23. 1. What is the three-digit industry subsector code for food manufacturing? Going Online

24. Slide 6-44 2. What is the six-digit U.S. code for dog and cat food manufacturing? Going Online

25. Slide 6-45 3. How many establishments and what is the value of shipments sold by the U.S. dog and cat food manufacturing industry based on the latest government statistics? Going Online