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Principles of Marketing 06 Business Markets and Business Buyer Behavior

The document outlines the characteristics of business markets and business buyer behavior, highlighting that business markets have fewer but larger buyers, with demand being derived from consumer demand and often more inelastic. It describes the buying process involving various types of buying situations such as straight rebuy, modified rebuy, and new task, as well as the roles of participants in the buying center. The document also details the stages of the business buying process from problem recognition to performance review.

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nasty0cruz
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39 views19 pages

Principles of Marketing 06 Business Markets and Business Buyer Behavior

The document outlines the characteristics of business markets and business buyer behavior, highlighting that business markets have fewer but larger buyers, with demand being derived from consumer demand and often more inelastic. It describes the buying process involving various types of buying situations such as straight rebuy, modified rebuy, and new task, as well as the roles of participants in the buying center. The document also details the stages of the business buying process from problem recognition to performance review.

Uploaded by

nasty0cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BUSINESS MARKETS

AND BUSINESS
BUYER BEHAVIOR
Chapter 06
Principles of Marketing
Prepared by: Robert V. Espiritu
Characteristics of a Business Market

Market Structure and Demand


◦ Business markets contain fewer but larger buyers.
◦ Business buyer demand is derived from final consumer
demand.
◦ Demand in many business is more inelastic – not affected as
much in the short run by price changes.
◦ Demand in business markets fluctuates more, and more
quickly.
Inelastic demand vs. fluctuating demand
◦ Many business markets have inelastic ◦ Business markets have more fluctuating
demand; that is, the total demand demand. The demand for
for many business products is not much many business goods and services tends
affected by price changes, especially to change more—and more quickly—
in the short run. A drop in the price of than the demand for consumer goods and
leather will not cause shoe manufacturers services does.
to buy much more leather unless it results ◦ A small percentage increase in consumer
in lower shoe prices that, in demand can cause large increases in
turn, will increase the consumer demand business demand. Sometimes a rise of
for shoes. only 10 percent in consumer demand can
cause as much as a 200 percent rise in
business demand during the next period.
Characteristics of a
Business Market
Nature of the Buying Unit
◦ Business purchases
involve more buyers.
◦ Business buying involves
a more professional
purchasing effort.
Characteristics of a Business
Market
Types of Decisions and the Decision Process
◦ Business buyers usually face more complex buying
decisions.
◦ The business buying process is more formalized.
◦ In business buying, buyers and sellers work more
closely together and build close long-term
relationships.
BUSINESS BUYER BEHAVIOR
Major Types of
Buying Situations
◦Straight rebuy
◦Modified rebuy
◦New task
◦Systems selling or
solutions selling
Major Types of
Buying Situations
Straight rebuy
◦ A business buying situation in which
the buyer routinely reorders something
without any modifications.
Modified rebuy
◦ A business buying situation in which
the buyer wants to modify the product
specifications, prices, terms or
suppliers.
Major Types of
Buying Situations
New task
◦ A business buying situation in which the
buyer purchases a product or service for
the first time.
Systems selling or solutions selling
◦ Buying a packaged solution to a
problem from a single seller, thus
avoiding all the separate decisions
involved in a complex buying situation.
Participants in the Business Buying Process

Buying Center
◦ All the individuals and units that play a role in the purchase
decision-making process.
◦ Users
◦ Influencers
◦ Buyers
◦ Deciders
◦ Gatekeepers
Participants ◦ Users – are members of the organization who
will use the product or service. In many cases
in the they initiate the buying proposal and help
define product specifications.
Business ◦ Influencers – often help define specifications

Buying and also provide information for evaluating


alternatives. Technical personnel are
Process particularly important influencers.
◦ Buyers – have formal authority to select the
supplier and arrange terms of purchase.
Participants Buyers may help shape specifications, but
their major role is in selecting vendors and
in the negotiating.

Business ◦ Deciders – have formal or informal power to


select or approve the final suppliers. In
Buying routine buying the buyers are often the
deciders.
Process ◦ Gatekeepers – control the flow of information
to others.
Major Influences
On Business
Buying Behavior
BUSINESS
BUYING
PROCESS
Business Buying Process

Problem recognition General need description


◦ The first stage of the ◦ The state in which the
business buying process company describes the
in which someone in the general characteristics
company recognizes a and quantity of a needed
problem or need that can item.
be met by acquiring a
good or service.
Business Buying Process

Product specification Supplier search


◦ The stage in which the ◦ The stage of the business
buying organization buying process in which
decides on and specifies the buyer tries to find the
the best technical product best vendors.
characteristics for a
needed item.
Business Buying Process

Proposal solicitation Supplier selection


◦ The stage in which the ◦ The stage in which the
buyer invites qualified buyer reviews proposals
suppliers to submit and selects a supplier or
proposals. suppliers.
Business Buying Process

Order-routine specification Performance review


◦ The stage in which the ◦ The stage in which the
buyer writes the final buyer assess the
order with the chosen performance of the
supplier(s), listing the supplier and decides to
technical specifications, continue, modify or drop
quantity, expected time of the arrangement.
delivery, return policies
and warranties.
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