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Business Markets and Business Buyer Behavior

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Define the business market and how it differs from consumer markets. Identify the major factors that influence business buyer behavior ... Persuasiveness. Key Factors ... – PowerPoint PPT presentation

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Title: Business Markets and Business Buyer Behavior


1
Business Markets and Business Buyer Behavior
  • Chapter 6

2
Learning Goals
  • Define the business market and how it differs
    from consumer markets
  • Identify the major factors that influence
    business buyer behavior
  • List and define the steps in the business buying
    decision process
  • Compare the institutional and government markets
    and explain how they make their buying decisions

3
Case StudyUPS
  • Customer Needs
  • Consumers need fast, friendly, low-cost package
    delivery
  • Business needs are more complex
  • Shipping part of complex logistics process
    including purchasing, inventory, order status,
    invoices, payments, returns
  • Services
  • Its 360,000 people and 88,000 vehicles offer
    ground, air, freight worldwide
  • Helps customer navigate the complexities of
    international shipping
  • Offers a wide range of financial services
  • Provides consulting services to improve logistics
    operations

4
Definition
  • Business Buyer Behavior
  • The buying behavior of organizations that buy
    goods and services for use in the production of
    other products and services that are sold,
    rented, or supplied to others.
  • Also included are retailing and wholesaling
    firms that acquire goods for the purpose of
    reselling or renting them to others at a profit.

Goal 1 Define the business market
5
Characteristics of Business Markets
  • Sales in the business market far exceed sales in
    consumer markets.
  • Business markets differ from consumer markets in
    many ways.
  • Marketing structure and demand
  • Nature of the buying unit
  • Types of decisions and the decision process

Goal 1 Define the business market
6
Business Markets
  • Compared to consumer markets
  • Business markets
  • have fewer but larger customers
  • Business customers
  • are more geographically concentrated
  • Demand is different
  • Demand is derived
  • Demand is price inelastic
  • Demand fluctuates more

Characteristics
  • Marketing Structure and Demand
  • Nature of the Buying Unit
  • Types of Decisions and the Decision Process

Goal 1 Define the business market
7
Business Markets
Characteristics
  • Compared to consumer purchases
  • Involve more buyers in the decision process
  • More professional purchasing effort
  • Intel Lilly IBM Boeing
  • Marketing Structure and Demand
  • Nature of the Buying Unit
  • Types of Decisions and the Decision Process

Goal 1 Define the business market
8
Business Markets
  • Compared to consumer purchases
  • More complex buying decisions
  • The buying process is more formalized
  • Buyers and sellers work more closely together and
    build long-term relationships

Characteristics
  • Marketing Structure and Demand
  • Nature of the Buying Unit
  • Types of Decisions and the Decision Process

Goal 1 Define the business market
9
Business Buyer Behavior
  • Major Types of Buying Situations
  • Straight rebuy
  • Reordering without modification
  • Modified rebuy
  • Requires modification to prior purchase
  • New task
  • First-time purchase

Goal 1 Define the business market
10
Business Buyer Behavior
  • Systems Selling
  • Buying a packaged solution to a problem from a
    single seller.
  • Often a key marketing strategy for businesses
    seeking to win and hold accounts.

Goal 1 Define the business market
11
Business Buyer Behavior
  • Buying Center
  • The decision-making unit of a buying organization
  • Includes all individuals and units that
    participate in the decision making

Goal 1 Define the business market
12
Business Buyer Behavior
Members of the Buying Center
  • Users
  • Buyers
  • Influencers
  • Deciders

Gatekeepers
Goal 1 Define the business market
13
Major Influences on Business Buyers
Key Factors
  • Economic trends
  • Supply conditions
  • Technological, political and competitive changes
  • Culture and customs
  • Environmental
  • Organizational
  • Interpersonal
  • Individual

Goal 2 Identify the major factors that
influence business buyer behavior
14
Major Influences on Business Buyers
Key Factors
  • Objectives
  • Policies
  • Procedures
  • Organizational structure
  • Systems
  • Environmental
  • Organizational
  • Interpersonal
  • Individual

Goal 2 Identify the major factors that
influence business buyer behavior
15
Major Influences on Business Buyers
Key Factors
  • Influence of members in the buying center
  • Authority
  • Status
  • Empathy
  • Persuasiveness
  • Environmental
  • Organizational
  • Interpersonal
  • Individual

Goal 2 Identify the major factors that
influence business buyer behavior
16
Major Influences on Business Buyers
Key Factors
  • Personal characteristics of members in the buying
    center
  • Age and income
  • Education
  • Job position
  • Personality
  • Risk attitudes
  • Buying styles
  • Environmental
  • Organizational
  • Interpersonal
  • Individual

Goal 2 Identify the major factors that
influence business buyer behavior
17
Stages in the Business Buying Process
  • Stage 1 Problem Recognition
  • Stage 2 General Need Description
  • Stage 3 Product Specification
  • Value analysis helps to reduce costs
  • Stage 4 Supplier Search
  • Supplier development

Goal 3 List and define the steps in the
business buying decision process
18
Stages in the Business Buying Process
  • Stage 5 Proposal Solicitation
  • Stage 6 Supplier Selection
  • Stage 7 Order-Routine Specification
  • Blanket contracts are often used for
    maintenance, repair and operating items.
  • Stage 8 Performance Review

Goal 3 List and define the steps in the
business buying decision process
19
Business Buying on the Internet
  • E-procurement is growing rapidly
  • Online auctions and online trading exchanges
    (e-marketplaces) account for much of the online
    purchasing activity
  • E-procurement offers many benefits
  • Access to new suppliers
  • Lower purchasing costs
  • Quicker order processing and delivery

Goal 3 List and define the steps in the
business buying decision process
20
Institutional and Government Markets
  • Institutional Markets
  • Consist of churches, schools, prisons, hospitals,
    nursing homes and other institutions that provide
    goods and services to people in their care.

Goal 4 Compare the institutional and government
markets
21
Institutional and Government Markets
  • Institutional Markets
  • Often characterized by low budgets and captive
    patrons.
  • Marketers may develop separate divisions and
    marketing mixes to service institutional markets.

Goal 4 Compare the institutional and government
markets
22
Government Markets
  • More than 82,000 buying units in the U.S.
  • Require suppliers to submit bids and often give
    job to lowest bidder
  • Favor domestic suppliers
  • Much red tape can exist

Goal 4 Compare the institutional and government
markets
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