BUSINESS MARKETS & BUSINESS BUYER BEHAVIOR Kotler, P. & Armstrong, G., 2006, Principles of Marketing, New Jersey: Pearson Education, Inc., Ch.6 Session 3 9/17/2011

CHARACTERISTICS OF BUSINESS MARKETS Marketing Structure & Demand Contain fewer but larger buyers More geographically concentrated Demand is derived from final consumer demand Demand is more inelastic Demand fluctuates more, and more quickly Nature of the Buying Unit Business purchases involves more buyers Involves a more professional purchasing effort Types of decisions & the Decision Process Usually face more complex buying decisions The decision process is more formalized Buyers & sellers work more closely together & build close long-run relationships Session 3 9/17/2011

DEFINITIONS Business buyer behavior is the buying behavior of the organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit. Business buying process is the decision process by which business buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose among alternative suppliers and brands. Session 3 9/17/2011

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 Session 3 9/17/2011

Major Influences on Business Buyer Behavior Environmental Economic developments Supply Conditions Technological change Political and regulatory Competitive Developments Culture and customs Organizational Objectives Policies Procedures Structure Systems Interpersonal Authority Status Empathy Persuasiveness Individual Age Education Job Position Personality Risk Attitudes Buyers Session 3 9/17/2011

BUYING CENTER USERS are members of the organization who will use the products or services. INFLUENCERS often help define specifications and also provide information for evaluating alternatives. BUYERS are the people who make an actual purchase. DECIDERS are people in the organization’s buying center who have formal or informal power to select or approve the final suppliers. GATEKEEPERS are people in the organization’s buying center who control the flow of information to others. Session 3 9/17/2011

The Business Buying Process Stage 1. Problem Recognition Stage 2. General Need Description Stage 3. Product Specification Stage 4. Supplier Search Stage 5. Proposal Solicitation The Business Buying Process Stage 6. Supplier Selection Stage 7. Order-Routine Specification Stage 8. Performance Review Session 3 9/17/2011

MAJOR TYPES OF BUYING SITUATIONS A business buying situations in which the buyer routinely reorders something without any modifications Straight Rebuy A business buying situations in which the buyer wants to modify product specifications, prices, terms, or suppliers Modified rebuy A business buying situations in which the buyer purchases a product or service for the first time New task Session 3 9/17/2011