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Business Markets and Buying Behavior

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Presentation on theme: "Business Markets and Buying Behavior"— Presentation transcript:

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: IBM 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 What is a 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

4 Characteristics of Business Markets
Few, large buyers Geographically concentrated Derived demand - comes from consumers at the end of the channel Inelastic demand

5 Business Markets vs. Consumer Markets
Nature of the Buying Unit More participants in the purchase Professional purchasing effort Few participants in the purchase “Amateur” purchasing effort 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 Simpler decisions Usually limited risk No formal info search or decision Buyer and seller have limited interface Psychology can be important Marketing Mix Predominantly sales force Price is often negotiated Advertising and other communications are frequently technical Mostly mass communications Price is fixed Advertising is emotional or rational; reminder, persuasive, comparative, or awareness Source: Adapted fromPrentice Hall

6 Model of Business Buyer Behavior
Marketing and Other Stimuli Product Price Place Promotion Economic Technological Political Cultural The Buying Organization Interpersonal and Individual Influences The Buying Center Organizational Influences Buying Decision Process Buyer’s Response Delivery Terms and Times Service Terms Payment Product or Service Choice Supplier Choice Order Quantities Source: Prentice Hall

7 Participants in the Business Buying Process
Gatekeepers Users Buying Center Deciders Influencers Buyers Source: Prentice Hall

8 Business Buying Situations
New Task Buying Modified Rebuy Involved Decision Making Straight Rebuy

9 Business Buying Situations NEW BUY
(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)

10 Business Buying Situations STRAIGHT REBUY
(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

11 Business Buying Situations MODIFIED RE-BUY
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

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