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Business Markets and Business Buyer Behavior Chapter 6.

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Presentation on theme: "Business Markets and Business Buyer Behavior Chapter 6."— Presentation transcript:

1 Business Markets and Business Buyer Behavior Chapter 6

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

3 3 Learning Goals 1. Define the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying decision process

4 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 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 Services 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

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

7 7

8 8 Learning Goals 1. Define the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying decision process

9 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 11 Business Markets Compared to consumer markets: Business 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 Characteristics Marketing Structure and Demand Nature of the Buying Unit Types of Decisions and the Decision Process

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

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

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

15 15 Business Markets Marketing Structure and Demand Nature of the Buying Unit Types of Decisions and the Decision Process 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 Characteristics

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

17 17 Model of Business Buyer Behavior 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) Buyer Responses Product or service choice Supplier Choice Order Quantities Delivery terms and times Service terms Payment

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

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

20 Stages of the Buying Process NewModifiedStraight TaskRebuyRebuy Problem recognitionYesMaybeNo General need descriptionYesMaybeNo Product specificationYesYesYes Supplier searchYesMaybeNo Proposal solicitationYesMaybeNo Supplier selectionYesMaybeNo Order routing specificationYesMaybeNo Performance review YesYesYes T23 Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying and Creative Marketing (Boston: Allyn & Bacon, 1967), p.14. Stages of the buying process Buying Situations

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

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

27 27 Learning Goals 1. Define the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying- decision process 4. Compare the institutional and government markets and explain how they make their buying decisions

28 Major Influences on Business Buyers

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

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

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

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

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 buyers behavior that you did not expect. 1. What environmental factor might exist? 2. Organizational factors? 3. Interpersonal factors? 4. Individual factors?

34 34 Learning Goals 1. Define the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying decision process

35 Stages in the Business Buying Process

36 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 37 Benefits and Problems Created by Buying on the Internet Benefits: 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 38 Public Review Red Tape is Common Red Tape is Common Government Markets Noneconomic Criteria Noneconomic Criteria Negotiated Contracts Negotiated Contracts Some Buying Online Some Buying Online Institutional and Government Markets Low Budgets Captive Patrons Institutional Markets

39 39 Learning Goals 1. Define the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying decision process


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