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Business Markets and Business Buyer Behavior

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making process. 6-5. Business Markets. Market Structure and Demand ... Cost of money. Resource availability. 6-21. Technology. Culture. Politics. Competition ... – PowerPoint PPT presentation

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Title: Business Markets and Business Buyer Behavior


1
Principles of Marketing
6
  • Business Markets and Business Buyer Behavior

2
Business Markets
  • Business buying process is the process where
    business buyers determine which products and
    services are needed to purchase and then find,
    evaluate, and choose among alternative brands

6-4
3
Business Markets
  • Differ from consumer markets in
  • Market structure and demand
  • Nature of the buying unit
  • Types of decisions and the decision-
  • making process

6-5
4
Business Markets
  • Market Structure and Demand
  • Fewer and larger buyers
  • Geographic concentration
  • Derived demand
  • Inelastic demand
  • Fluctuating demand
  • Buyer and seller dependency

6-6
5
Business Markets
  • Market Structure and Demand
  • Supplier development is the systematic
    development of networks of supplier-partners to
    ensure an appropriate and dependable supply of
    products and materials that they will use in
    making their own products or resell

6-7
6
Business Buyer Behavior
  • Marketing Stimuli
  • Similar to consumer buying, business buying
    consists of the four Ps
  • Product
  • Price
  • Place
  • Promotion

6-8
7
Business Buyer Behavior
  • Business buyer behavior refers to the buying
    behavior of the organizations that buy goods and
    services for use in production of other products
    and services that are sold, rented, or supplied
    to others. Also included are retailing and
    wholesaling firms that acquire goods to resell or
    rent to others for profit.

6-9
8
Business Buyer Behavior
  • Marketing Stimuli
  • Additional stimuli include major economic forces
  • Political
  • Economic
  • Technological
  • Cultural
  • Competitive

6-10
9
Business Buyer Behavior
  • Buyer Responses to Marketing Stimuli
  • Product or service choice
  • Supplier choice
  • Order quantities
  • Delivery
  • Service
  • Payment terms

6-11
10
Business Buyer Behavior
  • Buyer Responses to Marketing Stimuli
  • Marketers must understand what happens within the
    organization and turn stimuli into purchase
    responses

6-12
11
Business Buyer Behavior
  • Major Types of Buying Situations
  • Straight rebuy
  • Modified rebuy
  • New task

6-13
12
Business Buyer Behavior
  • Major Types of Buying Situations
  • Straight rebuy is a routine purchase decision
    such as a reorder without any modification
  • Modified rebuy is a purchase decision that
    requires some research where the buyer wants to
    modify the product specification, price, terms,
    or suppliers
  • New task is a purchase decision that requires
    thorough research such as a new product

6-14
13
Business Buyer Behavior
  • Major Types of Buying Situations
  • Systems selling involves the purchase of a
    packaged solution from a single seller
  • Two-step process of selling
  • Interlocking products
  • System of production, inventory control,
    distribution, and other services to meet the
    buyers need for a smooth-running operation

6-15
14
Business Buyer Behavior
  • Participants in the Business Buying Process
  • Buying center is all of the individuals and units
    that participate in the business decision-making
    process
  • Users
  • Influencers
  • Buyers
  • Deciders
  • Gatekeepers

6-16
15
Business Buyer Behavior
  • Participants in the Business Buying Process
  • Users are those that will use the product or
    service
  • Influencers help define specifications and
    provide information for evaluating alternatives
  • Buyers have formal authority to select the
    supplier and arrange terms of purchase
  • Deciders have formal or informal power to select
    and approve final suppliers
  • Gatekeepers control the flow of information

6-17
16
Business Buyer Behavior
  • Major Influences on Business Buyers
  • Economic factors
  • Personal factors
  • Environmental factors
  • Organizational factors
  • Interpersonal factors

6-19
17
Business Buyer Behavior
  • Major Influences on Business Buyers
  • Economic factors
  • Price
  • Service
  • Personal factors
  • Emotion

6-20
18
Business Buyer Behavior
Major Influences on Business Buyers Environmental
Factors
  • Demand for product
  • Economic outlook
  • Cost of money
  • Resource availability
  • Technology
  • Culture
  • Politics
  • Competition

6-21
19
Business Buyer Behavior
  • Major Influences on Business Buyers
  • Organizational factors
  • Objectives
  • Policies
  • Procedures
  • Structure
  • Systems

6-22
20
Business Buyer Behavior
Major Influences on Business Buyers
  • Interpersonal factors
  • Motives
  • Perceptions
  • Preferences
  • Age
  • Income
  • Education
  • Attitude toward risk

6-23
21
Business Buyer Behavior
  • The Buying Process
  • Problem recognition
  • General need description
  • Product specification
  • Value analysis
  • Supplier search
  • Proposal solicitation
  • Supplier selection
  • Order-routine specifications
  • Performance review

6-24
22
Business Buyer Behavior
  • Problem recognition occurs when someone in the
    company recognizes a problem or need
  • Internal stimuli
  • Need for new product or production equipment
  • External stimuli
  • Idea from a trade show or advertising

6-25
23
Business Buyer Behavior
  • The Buying Process
  • General need description describes the
    characteristics and quantity of the needed item
  • Product specification describes the technical
    criteria
  • Value analysis is an approach to cost reduction
    where components are studied to determined if
    they can be redesigned, standardized, or made
    with less costly methods of production

6-26
24
Business Buyer Behavior
  • The Buying Process
  • Supplier search involves compiling a list of
    qualified suppliers
  • Proposal solicitation is the process of
    requesting proposals from qualified suppliers

6-27
25
Business Buyer Behavior
  • The Buying Process
  • Supplier selection is the process when the buying
    center creates a list of desired supplier
    attributes and negotiates with preferred
    suppliers for favorable terms and conditions
  • Order-routine specifications is the final order
    with the chosen supplier and lists all of the
    specifications and terms of the purchase

6-28
26
Business Buyer Behavior
  • The Buying Process
  • Performance review involves a critique of
    supplier performance to the purchase terms

6-29
27
Business Buyer Behavior
  • E-Procurement and Buying on the Internet
  • Online purchasing
  • Company buying sites
  • Extranets

6-30
28
Business Buyer Behavior
  • E-Procurement and Buying on the Internet
  • Advantages
  • Access to new suppliers
  • Lowers costs
  • Speed in order processing and delivery
  • Share information
  • Sales
  • Service and support

6-31
29
Business Buyer Behavior
  • E-Procurement and Buying on the Internet
  • Disadvantages
  • Can erode relationships as buyers search for new
    suppliers
  • Security

6-32
30
Institutional and Government Markets
  • Institutional markets consist of hospitals,
    nursing homes, and prisons that provide goods and
    services to people in their care
  • Characteristics
  • Low budgets
  • Captive audience

6-33
31
Institutional and Government Markets
  • Government markets tend to favor domestic
    suppliers and require suppliers to submit bids
    and normally award to the lowest bidder
  • Carefully monitored
  • Affected by similar environmental factors
  • Good credit
  • Non-economic factors
  • Minority suppliers
  • Depressed suppliers
  • Small businesses

6-34
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