Business Markets

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 Business Buyer Behavior
• Marketing and other stimuli affect the buying organization and produce certain
buyer responses.

• These stimuli enter the organization and are turned into buyer responses.

• In order to design good marketing strategies, the marketer must understand

what happens within the organization to turn stimuli into purchase responses.

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 Business Buyer Behavior
Major Influences

• Environmental factors include economic, technological, political, competitive, and social and
cultural developments.
• Organizational factors are also important. Each buying organization has its own objectives,
policies, procedures, structure, and systems.
• The buying center usually includes many participants who influence each other, so interpersonal
factors also influence the business buying process.
• It is often difficult to distinguish interpersonal factors and group dynamics.
• Individual factors are affected by personal characteristics such as age, income, education,
professional identification, personality, and Management
Framjaun_Marketing attitudes toward
Lecture risk.
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 Business Markets
The business market consists of all the organizations that acquire goods and services
used in the production of other products or services that are sold, rented, or supplied
to others.

Transportation
& Distribution

Agriculture Construction

Manufacturing
Forestry

Communications
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Banking & Finance
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 Institutional and Governments
Markets
Prisons

Government
agencies

Schools

Hospitals
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 Business Markets
Many of the buying behaviors exhibited by organizations are similar to those of
institutions and governments. However, there are certain special features in this
part of the B2B market.

-Many institutions are characterized by having low budgets and captive clients.
Hospitals, for example, decide what quality of food to buy for patients.
-The goal is not profit, because the food is part of the total service package. But low
quality food can damage the hospitals reputation.

-Governments typically require that sellers submit bids and most often award the
contract to the lowest bidder. The US government bought goods and services of
$220 billion in 2009, making it the largest customer in the world.

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 Business Markets
Differences to the Consumer Market Geographically
Concentrated

Fewer, Larger
Buyers
Professional
Buyers
Other differences include:
•Multiple buying influences – Such as buying
committees, which can be comprised of
technical experts and senior management.

•Direct purchasing – Often large volume Multiple

customers purchase directly from manufacturer, Personal
rather than intermediaries Sales Calls
Relationships
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 Business Markets
B2B marketers face similar challenges as do B2C marketers.

Similarities to the Consumer Market

• Understanding deep customer needs
• Identify areas for growth
• Improving value management techniques
• Calculating better marketing metrics
• Competing and growing in global markets
• Countering product commoditization
• Gain support for the marketing concept
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 Buying Situations

New Task
Straight Rebuy

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Modified Rebuy
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 Business Buying Participants

Initiator/ Influencer Decider

Users

Gatekeeper Approver
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 Buying Center
The Buying Centre or Decision Making Unit (DMU)
A group of individuals responsible for buying process in an
Organisation. Usually comprises of cross functional
Competencies
1. Initiator: HR, User Dept
2. Influencers: affecting buying decisions: Procurement

Dept

3. Decider: : Evaluation Team

4. Approver: have the formal power to approve or reject a

selection decision made by the buyer

5. Gatekeepers: control the flow of information: Audit

Dept, Procurement Dept

6. Buyer: select the product

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 Buying Center Influences

Participants differ by:

• Interest
• Authority
• Status
• Persuasiveness
• Decision criteria

Buying centers can have multiple participants, with a variety of backgrounds,

such as finance, engineering, production staff, and/or senior managers.

These differences must be taken into account as sales messages must be

structure not to overly appeal to one participant, at the risk of alienating another.

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 Targeting Firms and Buying Centers

Who to target?

Once target firms are identified the firm must

determine how best to sell to them. Marketers
must determine:

•Who are the major decision makers?

•What decisions do the influence?
•What is their level of influence?
•What evaluation criteria do they use?
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 Purchasing/Procurement Process
Buyers typically seek to obtain the highest benefit
package from the products and services they
purchase, in relation to the overall costs of the
offering.
To compare the offerings of one company to
another, they will translate the costs and benefits
into monetary terms.
Diverse supplier base
As such, the marketer must develop a profitable
offering that delivers superior customer value.

Purchasing departments have been elevated

in the hierarchy of many organizations.

Firms are actively seeking out women and

minority owned firms in order to diversify their
supplier base.
Benefits vs. Costs
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 The Business Buying Process

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 Stages in the Buying Process

Description and
Characteristics

Performance Order
Review Specification

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 Stages in the Buying Process
Problems can be discovered from internal or external stimuli.
A broken machine, low stock levels, or a new product being developed.
External stimuli can trigger the process as well.

Internal stimuli
•New product being developed
•Broken machine
•Low stock level

External stimuli
•Trade show visit
•Advertisement
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 Stages in the Buying Process
Product value analysis is an approach to cost reduction that studies whether
components can be redesigned or standardized or made by cheaper methods of
production without affecting the product performance.

Description and Technical specifications

• Reliability
Characteristics
• Durability
• Price

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Product value analysis
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 Stages in the Buying
Process
The suppliers task is to ensure that they are considered
could be – in the market and searching for a supplier.
when customers are– our

Marketing must work together with sales to define what makes a “sales ready”
prospect and cooperate to send the right messages via sales calls, trade shows,
online activities, PR, events, direct mail, and referrals.

Trade directories
Trade advertisements
Trade shows
Lead generation
(Creating and capturing interests)

E-Procurement
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 Formal presentation

Written
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 Buyers will often specify and rank desired supplier attributes, often using a supplier-
evaluation model.
In some cases, companies are reducing the overall number of suppliers they deal with.
They want to choose suppliers who can be responsible for large component systems.
Marketers should develop compelling value propositions and understand how buyers
arrive at their valuations.

Supplier-evaluation model
Number of suppliers

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After selecting suppliers, the buyer negotiates the final order. Depending on the product, the
buyer may end up leasing the product.
Advantages of leasing include: Latest product, better service, conservation of capital, and tax
advantages.
For maintenance, repair, and operating (MRO) items, buyers are beginning to use stockless
purchase plans, (blanket contracts) that establish long-term relationships. Here the supplier
agrees to resupply the buyer as needed, at agreed upon prices, over a specific period of time.

Order Technical specifications

Specification Stockless
Quantity purchase
plan
Delivery time
Return policy
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Buyers periodically review the performance of chosen suppliers using one of three
methods.
Performanc
1.Buyers contact end users and ask for their evaluations of the product/supplier
2.Rate the supplier on several criteria using a weighted-score method.
e Review
3.Aggregate the cost of poor performance to come up with adjusted costs of purchase,
including price.

Performance
Review

9
End user evaluations
Weighted-score
method
7 4
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 Buy-grid Framework
Buyclasses
Modified Straight
New Task
Rebuy Rebuy
1. Problem Recognition Yes Maybe No
2. General need description Yes Maybe No
3. Product specification Yes Yes Yes
4. Supplier search Yes Maybe No
Buyphases

5. Proposal solicitation Yes Maybe No

6. Supplier Selection Yes Maybe No
7. Order-routine specification Yes Maybe No
8. Performance review Yes Yes Yes

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 Managing B2B Relationships
Online social media

One-to-one Marketing

• Buyers and sellers are exploring different ways to manage their relationships. Closer
relationships are driven in part by supply chain management, early supplier
involvement, and purchasing alliances.
• Cultivating the right relationships is paramount for any holistic marketing program.

• Marketers are focusing more on attracting and retaining the right customers,
developing one-to-one marketing approaches.
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 Buyer-Seller Relationship Categories

Cooperative systems

Collaborative

Customer is king

Contractual transactionFramjaun_Marketing Management Lecture Mutually adaptive

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 E-Procurement

• Purchasing through
electronic connections
between buyers and
sellers – usually online.

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 International Business
Management
Questions
1. Vesti-One Store was set-up in the late 2000s as an upscale dress shop in the fashionable shopping
location of Floreal, catering to a wealthy, mature clientele. Many other specialty shops lined the main
avenue over the next few years. But as Floreal began to attract an affluent, younger, and more
demographically diverse population, the once-popular shopping location was increasingly perceived as
dull and snobby. By the late 2010s, many of these specialty shops suffered financially. Most shops
attracted only passing tourists who enjoyed browsing through the displays of alligator belts and shoes,
piles of scented soaps, and useless flowered parasols, often laughing at the ridiculously high prices.
Owners of Vesti-One had noticed the shifts in population and buying behavior of the typical shopper by
the late 2010s. In fact, the owners had observed that the once-fashionable shopping location of Floreal
no longer attracted a "typical shopper." The wealthy, mature clientele had been replaced with affluent
families with children, a mix of other cultures comprising of Asian and foreigners including Chinese and
Bangladeshis. Specialty items at Vesti-One gradually disappeared, replaced by non-branded apparels,
colognes, and imitation jewelries Other owners followed suit in the early 2010s, bringing local fast
foods, mini-markets and a barber shop in the main avenue in Floreal

• Explain the cultural shift evidenced in this scenario.

• What characteristics of the typical consumer might the owners of Vesti-One be able to observe?

• You are the Sales Representative of a supplier of store fixtures and equipment and you have been
assigned to make a sale proposal about a new model of mannequins (dummies) to Vesti-One. Explain
your strategy to secure and conclude the sale.
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