Chapter 8 Analyzing Business Markets and Business Buying Behavior by
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1 Chapter 8 Analyzing Business Markets and Business Buying Behavior by PowerPoint byMilton M. PressleyUniversity of New Orleans
2 Kotler on MarketingMany businesses are wisely turning their suppliers and distributors into valued partners.
3 Chapter Objectives In this chapter, we focus on six questions: What is the business market, and how does it differ from the consumer market?What buying situations do organizational buyers face?Who participates in the business buying process?What are the major influences on organizational buyers?How do business buyers make their decisions?How do institutions and government agencies do their buying?
4 What is Organizational Buying? The business market versus the consumer marketBusiness marketFewer buyersLarger buyersClose supplier-customer relationshipGeographically concentrated buyers
5 What is Organizational Buying? Derived demandInelastic demandFluctuating demandProfessional purchasing
6 What is Organizational Buying? Several buying influencesMultiple sales callsDirected purchasingReciprocityLeasing
7 What is Organizational Buying? Buying SituationsStraight rebuyModified rebuyNew TaskSystems Buying and SellingSystems buyingTurnkey solutionSystems selling
8 Discussion QuestionWhat are some of the benefits to an organization that can be derived from a single source solution, or a systems buying arrangement with a prime contractor? What are some of the potential pitfalls? What can the company do to protect itself from these hazards?
9 Participants in the Business Buying Process The Buying CenterInitiatorsUsersInfluencersDecidersApproversBuyersGatekeepersKey buying influencersMultilevel in-depth selling
10 Major Influences on Buying Decisions Interpersonal and Individual FactorsCultural FactorsFranceGermanyJapanKoreaLatin America
11 The Purchasing/ Procurement Process Incentive to purchaseThree Company Purchasing OrientationsBuying OrientationCommoditizationMultisourcingProcurement OrientationMaterials requirement planning (MRP)Supply Chain Management Orientation
12 Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations (Buyclasses)BuyclassesNewModifiedStraightTaskRebuy1. Problem recognitionYesMaybeNo2. General need description3. Product specificationBuyphases4. Supplier search5. Proposal solicitation6. Supplier selection7. Order-routine specification8. Performance review
13 The Purchasing/ Procurement Process General Need Description and Product SpecificationProduct value analysisSupplier SearchVertical hubsFunctional hubsDirect extranet links to major suppliersBuying alliancesCompany buying sitesRequest for proposals (RFPs)
14 Table 8-2: An Example of Vendor Analysis AttributesRating ScaleImportanceWeightsPoor(1)Fair(2)Good(3)Excellent(4)Price.30xSupplier reputation.20Product reliabilityService reliability.10Supplier FlexibilityTotal score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
15 The Purchasing/ Procurement Process Customer value assessmentRoutine-order productsProcedural-problem productsPolitical-problem productsOrder-Routine SpecificationBlanket contractStockless purchase plansPerformance ReviewBuyflow map