To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 7©2003 Prentice Hall, Inc.

Chapter 7Chapter 7

Analyzing Business Analyzing Business Markets and Buyer Markets and Buyer

BehaviorBehavior

PowerPoint by Karen E. JamesPowerPoint by Karen E. JamesLouisiana State University - ShreveportLouisiana State University - Shreveport

To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 7©2003 Prentice Hall, Inc.

ObjectivesObjectives

Understand the nature of the business market and how it differs from the consumer market.

Learn how institutions and government agencies buy.

Identify the different buying situations faced by organizational buyers.

To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 7©2003 Prentice Hall, Inc.

ObjectivesObjectives

Identify the participants in the business buying process and the various influences impacting business buying decisions.

Understand how business buyers make their decisions.

To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Organizational buying is:

“the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.”

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Compared to Consumer Markets, Business Markets have . . .

– Fewer buyers

– Larger buyers

– Geographically concentrated buyers

– Close relationships with their supplier-customers

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Fluctuating demand

Derived demand

Inelastic demand

Professional purchasing

Multiple buying influences

Multiple sales calls

Direct purchasing

Reciprocity

Leasing

Other Business Market Characteristics

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

The Business Market Includes For-Profit Companies and Two Specialized Groups:

– The institutional marketSchools, hospitals, prisons, etc. with captive

audiencesCost and quality standards drive purchases

– The government marketBidding process awards contracts

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Buying Situations

Straight rebuy

Modified rebuy

New task

Routine reorders from approved vendor list

Low involvement, minimal time commitment

Example: copier paper

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Buying Situations

Straight rebuy

Modified rebuy

New task

Specifications, prices, delivery terms or other aspects require modification

Moderate level of involvement and time commitment

Example: desktop computers

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Buying Situations

Straight rebuy

Modified rebuy

New task

Purchasing a product or service for the first time

High level of involvement and time commitment; multiple influences

Example: selecting a web site design firm or consultant

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 7©2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Systems Buying

– A single provider provides the total package for the buyer’s needs

– May involve turnkey solutions Systems Selling

– Manufacturers sell entire systems– Supplier provides all MRO items

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 7©2003 Prentice Hall, Inc.

Participants in Business Participants in Business BuyingBuying

Initiators

Users

Influencers

Deciders

Approvers

Buyers

Buying center members fill one or more roles in the purchase decision process:

Gatekeepers

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Influences on Business BuyersBuyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Demand level

Economic outlook

Interest rates

Technological change

Politics/regulations

Competition

Concerns for social responsibility

To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Influences on Business BuyersBuyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Objectives

Policies

Procedures

Organizational structures

Systems

To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Influences on Business BuyersBuyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Interests

Authority

Status

Empathy

Persuasiveness

To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 7©2003 Prentice Hall, Inc.

Influences on Business Influences on Business BuyersBuyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Age

Income

Education

Job position

Personality

Risk attitudes

Culture

To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 7©2003 Prentice Hall, Inc.

Purchasing/Procurement Purchasing/Procurement ProcessProcess

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order-routine specification

Performance review

Eight Buyphases of Industrial Buying