1. Business Markets and Business Buyer Behaviour
Chapter 8
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Principles of Marketing, Sixth Canadian Edition

2. Learning Objectives
After studying this chapter, you should be able to:
Define the business market and explain how business markets differ from consumer markets
Identify the major factors that influence business buyer behaviour
List and define the major steps in the business buying-decision process
Compare the institutional and government markets and explain how they make their buying decisions
Principles of Marketing, Sixth Canadian Edition

3. Characteristics of Business Markets
Business purchase decisions pose greater risk due to their size and more serious consequences of making a bad decision
Market structure and demand
Fewer but larger buyers
Customers are more geographically concentrated
Business demand is derived from consumer demand
Inelastic demand that can fluctuate quickly
Nature of the buying unit
Involve more buyers
More professional purchasing effort
Types of decisions and process
More complex buying decisions
More formalized process
Buyers and sellers work closely and build relationships
Table 8.1
Principles of Marketing, Sixth Canadian Edition

4. Model of Business Buyer Behaviour
Straight rebuy: routine reorder with no modifications
Modified rebuy: some modification to product specifications, prices, terms, or suppliers
New task: first time purchase of a product or service
Systems selling: buying a packaged solution to a problem
Figure 8.1
Principles of Marketing, Sixth Canadian Edition

5. Participants in Business Buyer Behaviour
Buying centre: all those involved in business buying, may not be a formal unit
Buying roles:
Users
Influencers
Salesperson’s challenge:
To understand who participates,
What role they play, and
How much influence they have in the decision
Buyers
Deciders
Gatekeepers
Principles of Marketing, Sixth Canadian Edition

6. Influences on Business Buyer Behaviour
Figure 8.2
Principles of Marketing, Sixth Canadian Edition

7. The Business Buying Process
New task buying situations usually follow all eight steps
Straight/modified rebuy situations may skip steps
Figure 8.3
Principles of Marketing, Sixth Canadian Edition

8. Business Buying on the Internet
Eprocurement growing rapidly: $272 billion in 2005, approximately 18% of all B2B transactions
Reverse auctions: invite suppliers to bid for contracts
Majority of purchases are for materials, repair, and operations (MRO) versus capital items
Advantages:
Lower transaction/order processing costs
Less paperwork
Lower prices
Faster delivery
Frees personnel to focus on more strategic issues
Disadvantages:
Transaction-oriented medium can erode buyer-seller relationships
Potential security problems
Principles of Marketing, Sixth Canadian Edition

9. Institutional/Government Markets
Institutional markets:
Schools, hospitals, nursing homes, prisons
Large demands, low budgets, captive patrons
Focus on low prices that meet minimum standards
Government markets:
Federal, provincial, municipal
Huge ongoing requirements
Open bidding, low price that meet buying specifications wins
Governments favour domestic suppliers, may use large projects for regional development purposes
May require separate selling effort
Principles of Marketing, Sixth Canadian Edition

10. In Conclusion… The learning objectives for this chapter were:
Define the business market and explain how business markets differ from consumer markets
Identify the major factors that influence business buyer behaviour
List and define the major steps in the business buying-decision process
Compare the institutional and government markets and explain how they make their buying decisions
Principles of Marketing, Sixth Canadian Edition