Transcript Slide 1

Ch 6 -0
Copyright © 2011 Pearson Education
Principles of Marketing,
Arab World Edition
Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki
CHAPTER SIX
Business Markets and Business
Buyer Behavior
Lecturer: Insert your name here
Ch 6 -1
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Chapter Learning Outcomes
Topic Outline
6.1 Business Markets
6.2 Business Buyer Behavior
6.3 The Business Buying Process
6.4 E-Procurement: Buying on the Internet
6.5 Institutional and Government Markets
Ch 6 -2
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Business Markets
Business Buyer Behavior and Business Buying Process
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.
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.
Ch 6 -3
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A business market comprises all the
organizations that buy G/S to use in the
production of other P/S, or for the purpose
of reselling or renting them to others at a
profit
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Business Markets
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Differences between consumer &
business markets
Market structure and demand
• Business
marketer: Fewer but larger buyers
• Business
markets geographically concentrated
• Business
D is derived from D of consumer goods.
• Many
business markets have inelastic D, it is not
affected much by price changes
• Business
markets have more fluctuating D that
change more quickly than D for consumer D
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Differences between consumer & business
markets
Nature of the buying unit
• Business
purchase involves more decision
participants & a more professional purchasing
effort.
• Business
buying is done by trained purchasing
agents who spend working lives learning how to
buy better.
• More
complex purchase, more people will
participate in decision-making process.
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Differences between consumer & business
markets
Types of decisions and the decision process
• Business
buyers face more complex buying decisions
than do consumer.
• Purchases
involve large sums of money, complex
technical & eco considerations, & interactions among
many people at many levels of buyer’s organization.
• Business
buying process tends to be more formalized
than consumer buying process.
• Buyer
& seller are more dependent on each other Supplier development
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Business Markets
Market Structure and Demand
Fewer and larger buyers
Geographic concentration
Derived demand
• Inelastic demand
• Fluctuating demand
Buyer and seller dependency
Ch 6 -9
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Business Buyer Behavior
The Model of Business Buyer Behavior
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Business Markets
Types of Decisions and the Decision Process
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.
Ch 6 -11
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Business Buyer Behavior
Ch 6 -12
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Business Buyer Behavior
Major Types of Buying Situations
Straight rebuy is a routine purchase decision such as
reorder without any modification. It is usually handled
on a routine basis by the purchasing department
Modified rebuy: Buyer wants to modify P specifications,
prices,or suppliers. It involves more decision
participants than does the straight rebuy.
New task: it requires research such as a new product.
greater cost or risk, larger decision participants &
greater efforts to collect information will be.
Ch 6 -13
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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 buyer’s need for a smoothrunning operation
Ch 6 -14
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Business Buyer Behavior
Participants in the Business Buying Process
Buying center is all of the individuals and units
that participate in the business decisionmaking process
– Users
– Influencers
– Buyers
– Deciders
– Gatekeepers
Ch 6 -15
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Business Buyer Behavior
Participants in the Business Buying Process
Buying center provides a major challenge
Who participates in the process
• Their
relative authority
• What
evaluation criteria each participant uses
• Informal
participants
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.
Ch 6 -17
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Business Buyer Behavior
Major Influences on Business Buyers
Economic Factors
Personal Factors
Price
Emotion
Service
Ch 6 -18
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Major influences on business buyers
When suppliers’ offers are very similar,
business buyers have little basis for strictly
rational choice. They can buy from any
supplier, buyers can allow personal factors
to play a role in decisions.
When competing products differ greatly,
business buyers are more accountable for
their choice and tend to pay more attention
to economic factors.
Ch 6 -19
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Major influences on business buyers
• Environmental
factor is shortages in key
materials. Many companies are now more willing
to buy and hold larger inventories of scarce
materials to ensure adequate supply.
• Each
participant in business buying-decision
process brings in personal motives, perceptions,
& preferences.
• These
individual factors are affected by personal
characteristics such as age, income, education,
professional identification, personality, &
attitudes toward risk.
Business Buyer Behavior
Major Influences on Business Buyers
Environmental Factors
Demand
for
product
Resource
availability
Economic
outlook
Technology
Politics
Ch 6 -21
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Cost of
money
Culture
Competition
Business Buyer Behavior
Major Influences on Business Buyers
Organizational Factors
Objectives
Policies
Procedures
Structure
Systems
Ch 6 -22
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Business Buyer Behavior
Major Influences on Business Buyers
Interpersonal Factors
Ch 6 -23
Authority
Status
Empathy
Persuasiveness
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Business Buyer Behavior
Major Influences on Business Buyers
Individual Factors
Motives
Perceptions
Preferences
Age
Income
Education
Attitude
toward risk
Ch 6 -24
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The Business Buying Process
Ch 6 -25
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The Business Buying Process
Problem Recognition
Problem recognition occurs when someone in the company
recognizes a problem or need.
Internal stimuli
•
Need for new product or production equipment
External stimuli
•
Ch 6 -26
Idea from a trade show or advertising
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The Business Buying Process
General Need Description and Product Specifications
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 determine if they can be
redesigned, standardized, or made with less costly methods of
production.
Ch 6 -27
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The Business Buying Process
Supplier Search and Proposal Solicitation
Supplier search involves compiling a list of qualified
suppliers.
Proposal solicitation is the process of requesting proposals
from qualified suppliers.
Ch 6 -28
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Business Buyer Behavior
Supplier Selection and Order Routine Specifications
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.
Ch 6 -29
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The Business Buying Process
Performance Review
Performance review involves a critique of supplier
performance to the purchase terms.
It may lead the buyer to continue, modify, or drop the
arrangement.
Ch 6 -30
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E-Procurement: Buying on The Internet
E-Procurement
•
Online purchasing (reverse auctions or trading exchanges)
•
Company-buying sites
•
Extranets
Ch 6 -31
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The Business Buying Process
E-Procurement
Advantages
• Access to new suppliers
• Lowers costs
• Speeds order processing
and delivery
• Shares information
• Sales
• Service and support
Ch 6 -32
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Disadvantages
• Can erode relationships
as buyers search for new
suppliers
• Security
Institutional and Government Markets
Institutional 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
Ch 6 -33
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Institutional and Government Markets
Government markets
Government markets tend to favor domestic suppliers and
require suppliers to submit bids and normally award to the
lowest bidder.
Noneconomic criteria play a role:
• Depressed business firms and areas
• Small business firms
• Minority-owned firms
• Business firms that avoid race, gender or age discrimination
Ch 6 -34
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Ch 6 -35
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