ANALYZING BUSINESS MARKETS AND BUSINESS BUYING BEHAVIORS CHAPTER 7 ANALYZING BUSINESS MARKETS AND BUSINESS BUYING BEHAVIORS

BUSINESS-TO-BUSINESS MARKET Business-to-Business Consumer Market Market 1. Businesses 2. Government/Military 3. Institutions Business Business Consumers

ORGANIZATIONAL BUYING Business vs. Consumer Market: Mrk.Characteristics Consumer Business Number of buyers Many Few Size of Buyers Small Large Supplier Relations No Close Concentration No. Yes Demand Unpredictable Derived Demand Elastic Inelastic

ORGANIZATIONAL BUYING (CONT.) Mrk.Characteristics Consumer Business Demand Normal Fluctuating Professional Purchasing No Yes Purchasing Middlemen Direct Buying Influence No Yes Reciprocity No Yes Leasing Some Heavy

BUYING SITUATION (A)New Task (B)Modified Re-buy (C)Straight Re-buy Buy-grid Model (A) (B) (C) Problem recognition Yes Maybe No Need Description Yes Maybe No Product Specification Yes Yes Yes

BUYING SITUATION (CONT.) Buy-grid model (cont.) (A) (B) (C) Supplier search Yes Maybe No Proposal solicitation Yes Maybe No Supplier selection Yes Maybe No Supplier selection Yes Maybe No Order-routine Spec. Yes Maybe No Performance Review Yes Yes Yes

PARTICIPATION IN BUSINESS BUYING System Buying/Selling: System contracting: Single supply source provides the entire requirement of MRO. Large scale projects such as dams, refineries, steel factories. Buying Centers: Initiators Users Influencers Deciders Approvers Buyers Gatekeepers

PARTICIPANTS IN THE BUSINESS BUYING(CONT.) Major Influences In Business Buying: Environmental factors: Demand economic outlook interest rate Technology political life Competition social responsibility;

PARTICIPANTS IN THE BUSINESS BUYING (CONT.) Major Influences in Business Buying (cont.): Organizational factors: Purchasing department upgrading.. Cross-functional roles. Centralized purchasing. Decentralized purchasing for small ticket items. Internet purchasing. Long term contract. Purchasing-performance evaluation. Lean production-high quality and JIT inventory planning. Interpersonal factors: Interest, authority, status, empathy and persuasiveness. Individual factors: Age,income, education, job position, personality,risk attitudes Cultural factors