2. Chapter 6 Business Markets And Buying Behavior

3. 6 | 3Copyright © Houghton Mifflin Company. All rights reserved. Objectives Become familiar with various types of business markets Identify major characteristics of business customers and transactions Understand several attributes of demand for business products Become familiar with major components of a buying center Describe industrial classification systems and explain how they can be used to identify and analyze business markets

4. 6 | 4Copyright © Houghton Mifflin Company. All rights reserved. Business Market Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations (B2B).

5. 6 | 5Copyright © Houghton Mifflin Company. All rights reserved. B2B Success Long-term mutually profitable relationships Co-develop products Timely exchanges at competitive prices

6. 6 | 6Copyright © Houghton Mifflin Company. All rights reserved. Categories Of Business Markets 1.Producer 2.Reseller 3.Government 4.Institutional

7. 6 | 7Copyright © Houghton Mifflin Company. All rights reserved. Producer Market Individuals and business organizations that purchase products to make profits by using them to produce other products or using them in their operations.

8. 6 | 8Copyright © Houghton Mifflin Company. All rights reserved. Number of Establishments In Industry Groups

9. 6 | 9Copyright © Houghton Mifflin Company. All rights reserved. Reseller Markets Intermediaries that buy finished goods and resell them for profit.

10. 6 | 10Copyright © Houghton Mifflin Company. All rights reserved. Factors Considered When Making Business Purchase Decisions Level of demand Space required relative to potential profit Ease of placing orders Availability of technical assistance Training programs from producers Competes or complements

11. 6 | 11Copyright © Houghton Mifflin Company. All rights reserved. Government Markets Federal, state, county, or local governments that buy goods and services to support their internal operations and provide products to their constituencies.

12. 6 | 12Copyright © Houghton Mifflin Company. All rights reserved. Institutional Markets Organizations with charitable, educational, community, or other nonbusiness goals.

13. 6 | 13Copyright © Houghton Mifflin Company. All rights reserved. Dimensions Of Marketing B2B Characteristics of transactions Attributes of customers Customer primary concerns Methods of buying Types of purchases Demand

14. 6 | 14Copyright © Houghton Mifflin Company. All rights reserved. B2B Transaction Characteristics Larger Expensive Frequent replenishing Long-term agreement Discussions/negotiations Several decisionmakers Reciprocity

15. 6 | 15Copyright © Houghton Mifflin Company. All rights reserved. Reciprocity An arrangement unique to business marketing in which two organizations agree to buy from each other.

16. 6 | 16Copyright © Houghton Mifflin Company. All rights reserved. B2B Customer Attributes Require detailed information –Product features –Technical specifications Personal goals influence decision Agents seek psychological satisfaction –Advancement –Financial rewards

17. 6 | 17Copyright © Houghton Mifflin Company. All rights reserved. B2B Customers Primary Concerns Price Quality Service Relationship

18. 6 | 18Copyright © Houghton Mifflin Company. All rights reserved. Methods Of B2B Buying Description Inspection Sampling Negotiation

19. 6 | 19Copyright © Houghton Mifflin Company. All rights reserved. Types Of B2B Purchases New-Task Straight Rebuy Modified Rebuy

20. 6 | 20Copyright © Houghton Mifflin Company. All rights reserved. New-Task Purchase An initial purchase by an organization of an item to be used to perform a new job or solve a new problem.

21. 6 | 21Copyright © Houghton Mifflin Company. All rights reserved. Straight Rebuy Purchase A routine purchase of the same products by a business buyer.

22. 6 | 22Copyright © Houghton Mifflin Company. All rights reserved. Modified Rebuy Purchase A new-task purchase that is changed on subsequent orders or when the requirement of a straight rebuy purchase are modified.

23. 6 | 23Copyright © Houghton Mifflin Company. All rights reserved. Business Product Demand Derived Inelastic Joint Fluctuating US Economic Outlook

24. 6 | 24Copyright © Houghton Mifflin Company. All rights reserved. Derived Demand Demand for industrial products that stems from demand for consumer products.

25. 6 | 25Copyright © Houghton Mifflin Company. All rights reserved. Inelastic Demand Demand that is not significantly altered by a price increase or decrease. Prices for Manufactured Goods

26. 6 | 26Copyright © Houghton Mifflin Company. All rights reserved. Joint Demand Demand involving the use of two or more items in combination to produce a product.

27. 6 | 27Copyright © Houghton Mifflin Company. All rights reserved. Fluctuating Demand When demand for a business product is derived by consumer demand, causing it to fluctuate enormously

28. 6 | 28Copyright © Houghton Mifflin Company. All rights reserved. Business Buying Decisions Buying Behavior Buying Center Stages of Process Influences

29. 6 | 29Copyright © Houghton Mifflin Company. All rights reserved. Business (Organizational) Buying Behavior The purchase behavior of producers, government units, institutions, and resellers.

30. 6 | 30Copyright © Houghton Mifflin Company. All rights reserved. Buying Center The people within an organization who make business purchase decisions. Purchasing Agent

31. 6 | 31Copyright © Houghton Mifflin Company. All rights reserved. Business Buying Decision Process And Factors That May Influence It

32. 6 | 32Copyright © Houghton Mifflin Company. All rights reserved. Value Analysis An evaluation of each component of a potential purchase.

33. 6 | 33Copyright © Houghton Mifflin Company. All rights reserved. Vendor Analysis A formal, systematic evaluation of current and potential vendors.

34. 6 | 34Copyright © Houghton Mifflin Company. All rights reserved. Multiple Sourcing An organization’s decision to use several suppliers.

35. 6 | 35Copyright © Houghton Mifflin Company. All rights reserved. Sole Sourcing An organization’s decision to use only one supplier. Buyers select the sole source option when...

36. 6 | 36Copyright © Houghton Mifflin Company. All rights reserved. Using Industrial Classification Systems Identifying Potential Business Customers Estimating Purchase Potential

37. 6 | 37Copyright © Houghton Mifflin Company. All rights reserved. North American Industry Classification System (NAICS) An industry classification system that generates comparable statistics among the United States, Canada, and Mexico. North American Industry Classification System

38. 6 | 38Copyright © Houghton Mifflin Company. All rights reserved. SIC/NAICS For Manufacturers Of Magnetic And Optical Media

39. 6 | 39Copyright © Houghton Mifflin Company. All rights reserved. Input-Output Data Information that identifies what types of industries purchase the products of a particular industry.