Chapter 7

1. Chapter 7 Analyzing Business Markets and Buyer Behavior PowerPoint by Karen E. James Louisiana State University - Shreveport To accompany A Framework for Marketing Management, 2nd Edition

2. Objectives • 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

3. Objectives • 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

4. Organizational 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

5. Organizational 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

6. Fluctuating demand Derived demand Inelastic demand Professional purchasing Multiple buying influences Multiple sales calls Direct purchasing Reciprocity Leasing Organizational Buying Other Business Market Characteristics To accompany A Framework for Marketing Management, 2nd Edition

7. Organizational Buying • The Business Market Includes For-Profit Companies and Two Specialized Groups: • The institutional market • Schools, hospitals, prisons, etc. with captive audiences • Cost and quality standards drive purchases • The government market • Bidding process awards contracts To accompany A Framework for Marketing Management, 2nd Edition

8. Buying Situations Straight rebuy Modified rebuy New task Routine reorders from approved vendor list Low involvement, minimal time commitment Example: copier paper Organizational Buying To accompany A Framework for Marketing Management, 2nd Edition

9. 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 Organizational Buying To accompany A Framework for Marketing Management, 2nd Edition

10. 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 Organizational Buying To accompany A Framework for Marketing Management, 2nd Edition

11. Organizational 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

12. Initiators Users Influencers Deciders Approvers Buyers Participants in Business Buying Buying center members fill one or more roles in the purchase decision process: • Gatekeepers To accompany A Framework for Marketing Management, 2nd Edition

13. Major Influences Environmental Organizational Interpersonal Individual Demand level Economic outlook Interest rates Technological change Politics/regulations Competition Concerns for social responsibility Influences on Business Buyers To accompany A Framework for Marketing Management, 2nd Edition

14. Major Influences Environmental Organizational Interpersonal Individual Objectives Policies Procedures Organizational structures Systems Influences on Business Buyers To accompany A Framework for Marketing Management, 2nd Edition

15. Major Influences Environmental Organizational Interpersonal Individual Interests Authority Status Empathy Persuasiveness Influences on Business Buyers To accompany A Framework for Marketing Management, 2nd Edition

16. Major Influences Environmental Organizational Interpersonal Individual Age Income Education Job position Personality Risk attitudes Culture Influences on Business Buyers To accompany A Framework for Marketing Management, 2nd Edition

17. Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review Purchasing/Procurement Process Eight Buyphases of Industrial Buying To accompany A Framework for Marketing Management, 2nd Edition