chapter 06 marketing
TRANSCRIPT
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Business Markets and BusinessBusiness Markets and BusinessBuyer BehaviorBuyer Behavior
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Principles ofPrinciples ofMarketingMarketingPrinciples ofPrinciples ofMarketingMarketing
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Learning ObjectivesAfter studying this chapter, you should be able to:1. Define the business market and explain how
business markets differ from consumer markets
2. Identify the major factors that influencebusiness buyer behavior
3. List and define the steps in the business buying-decision process
4. Compare the institutional and governmentmarkets and explain how institutional andgovernment buyers make their buying decisions
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Chapter Outline
1. Business Markets
2. Business Buyer Behavior
3. Institutional and GovernmentMarkets
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Business Markets
Business buying process is the process
where business buyers determine whichproducts and services are needed topurchase and then find, evaluate, andchoose among alternative brands
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Business Markets
Differ from consumer markets in:
Market structure and demand Nature of the buying unit
Types of decisions and the decision-
making process
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Business MarketsMarket Structure and Demand
Fewer and larger buyers Geographic concentration
Derived demand
Inelastic demand Fluctuating demand
Buyer and seller dependency
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Business MarketsMarket Structure and Demand
Supplier development is the systematicdevelopment of networks of supplier-partners to ensure an appropriate anddependable supply of products andmaterials that they will use in making
their own products or resell
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Business Buyer BehaviorMarketing Stimuli
Similar to consumer buying, business buyingconsists of the four Ps
Product
Price Place
Promotion
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Business buyer behavior refers to thebuying behavior of the organizations thatbuy goods and services for use inproduction of other products and servicesthat are sold, rented, or supplied toothers. Also included are retailing andwholesaling firms that acquire goods to
resell or rent to others for profit.
Business Buyer Behavior
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Business Buyer BehaviorMarketing Stimuli
Additional stimuli include major economicforces
Political
Economic Technological
Cultural
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Business Buyer BehaviorBuyer Responses to Marketing Stimuli
Product or service choice Supplier choice
Order quantities
Delivery Service
Payment terms
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Business Buyer BehaviorBuyer Responses to Marketing Stimuli
Marketers must understand what happenswithin the organization and turn stimuliinto purchase responses
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Business Buyer BehaviorMajor Types ofBuying Situations
Straight rebuy Modified rebuy
New task
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Business Buyer BehaviorMajor Types ofBuying Situations
Straight rebuy is a routine purchase decision such
as a reorder without any modification
Modified rebuy is a purchase decision that requiressome research where the buyer wants to modifythe product specification, price, terms, or
suppliers
New task is a purchase decision that requiresthorough research such as a new product
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Business Buyer BehaviorMajor Types ofBuying Situations
Systems selling involves the purchase of apackaged solution from a single sellerTwo-step process of selling: Interlocking products
System of production, inventory control,distribution, and other services to meetthe buyers need for a smooth-runningoperation
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Business Buyer BehaviorParticipants in the Business BuyingProcess
Buying center is all of the individuals andunits that participate in the businessdecision-making process
Users Influencers
Buyers Deciders Gatekeepers
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Business Buyer BehaviorParticipants in the Business BuyingProcess
Users are those that will use the product or serviceInfluencers help define specifications and provide
information for evaluating alternativesBuyers have formal authority to select the supplier
and arrange terms of purchase
Deciders have formal or informal power to selectand approve final suppliersGatekeepers control the flow of information
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Business Buyer BehaviorParticipants in the Business BuyingProcess
Buying center provides a major challenge Who participates in the process
Their relative authority
What evaluation criteria each participantuses
Informal participants
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Business Buyer BehaviorMajor Influences on Business Buyers
Economic factors Personal factors
Environmental factors
Organizational factors Interpersonal factors
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Business Buyer Behavior
Economic factors: Price
Service
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Major Influences on Business Buyers
Personal factors: Emotion
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Business Buyer Behavior
Demand for product
Economic outlook
Cost of money
Resource availability
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Technology
Culture
Politics
Competition
Major Influences on Business BuyersEnvironmental Factors
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Business Buyer BehaviorMajor Influences on Business Buyers
Organizational factors Objectives
Policies
Procedures Structure
Systems
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Business Buyer Behavior
Interpersonal factors
Motives Perceptions
Preferences
Age
Income Education
Attitude toward risk
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Major Influences on Business Buyers
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Business Buyer Behavior
Problem recognition occurs when someone in
the company recognizes a problem orneed
Internal stimuli Need for new product or production
equipment External stimuli
Idea from a trade show or advertising
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Business Buyer BehaviorThe BuyingProcess
General need description describes the
characteristics and quantity of the needed item
Product specification describes the technicalcriteria
Value analysis is an approach to cost reductionwhere components are studied to determined ifthey can be redesigned, standardized, or madewith less costly methods of production
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Business Buyer BehaviorThe BuyingProcess
Supplier search involves compiling a list ofqualified suppliers
Proposal solicitation is the process ofrequesting proposals from qualifiedsuppliers
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Business Buyer BehaviorThe BuyingProcess
Supplier selection is the process when the buying
center creates a list of desired supplierattributes and negotiates with preferredsuppliers for favorable terms and conditions
Order-routine specifications is the final order withthe chosen supplier and lists all of thespecifications and terms of the purchase
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Business Buyer BehaviorThe BuyingProcess
Performance review involves a critique ofsupplier performance to the purchaseterms
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Business Buyer Behavior
Online purchasing Company buying sites
Extranets
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E-Procurement and Buying on the Internet
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Business Buyer BehaviorE-Procurement andBuying on the Internet
Advantages Access to new suppliers Lowers costs Speed in order processing and delivery Share information Sales Service and support
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Business Buyer BehaviorE-Procurement andBuying on the Internet
Disadvantages Can erode relationships as buyers search
for new suppliers
S
ecurity
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Institutional and
Government MarketsInstitutional markets consist of hospitals,
nursing homes, and prisons that provide
goods and services to people in their care Characteristics
Low budgets
Captive audience
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Institutional and
Government MarketsGovernment markets tend to favor domestic
suppliers and require suppliers to submit bidsand normally award to the lowest bidder
Carefully monitored Affected by similar environmental factors Good credit Non-economic factors
Minority suppliers Depressed suppliers Small businesses
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PowerPoint created by:Ronald Heimler
Dowling College, MBA
Georgetown University, BS BusinessAdministration Adjunct Professor, LIM College, NY Adjunct Professor, Long Island University,
NY Lecturer, California Polytechnic State
University, Pomona, CA President, Walter Heimler, Inc.