Chapter 6

Q What is Business Market?

A business market is a market in which buyers are organizations (firms, non-profit
organizations, governments...) who buy goods and services for use in the production
of other products and services or for the purpose of reselling or renting them to others
at a profit.

Q Types of Buying Situations

There are three types of buying situations that have an impact on the way that the
DMU is organized and how products and suppliers are selected: Straight re-buy,
modified re-buy, and new-task purchase.

 Straight re-buy - The buyer reorders without requesting any product or

service modifications. The buyer simply chooses a supplier from an approved
list based on past buying satisfaction. Because it is a routine reordering
situation, the supplier may propose an automatic reordering system both to
save purchasing time and to reduce the risk of losing profitable, regular
purchases.

 Modified re-buy - Although the company has prior experience of the product,
the particular purchase situation demands some degree of customization, such
as changes in the product specification, price, terms or supplier. Approved
suppliers, including those currently under contract to the customer, may use
the purchasing opportunity to make a better offer to the customer in order to
win new business.

 New-task purchase - A company buying a product or service for the first

time may have no experience of supplier capabilities or performance
evaluation. Consequently, the greater the cost or risk, the larger the DMU and
its informational requirements. The new-task situation represents the
marketer's greatest opportunity and challenge: the aim is to reach as many key
buying influencers as possible, and to provide help and information.

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Q Participants in the Business Buying Process?
 1. Initiators—Users or others in the organization who request that something
be purchased.
 2. Users—Those who will use the product or service. In many cases, the users
initiate the buying proposal and help define the product requirements.
 3. Influencers—People who influence the buying decision, often by helping
define specifications and providing information for evaluating alternatives.
 4. Deciders—People who decide on product requirements or on suppliers.
 5. Approvers—People who authorize the proposed actions of deciders or
buyers.
 6. Buyers—People who have formal authority to select the supplier and
arrange the purchase terms. Buyers may help shape product specifications, but
they play their major role in selecting vendors and negotiating. In more
complex purchases, buyers might include high-level managers.
 7. Gatekeepers—People such as purchasing agents and receptionists who
have the power to prevent sellers or information from reaching members of
the buying center.

Q Describe Stages of the business buying process?

1. Problem recognition: The buying starts when a person recognizes a problem
or need. He wants a product that can meet this need. This is called problem
reorganization.
2. General needs description: After recognizing a need, general needs
description is the next step. It describes the characteristics and quality of the
items. The expert team tries to improve durability, price, reliability, core
value, and other attributes.
3. Product specification: Next the organization develops product specifications
with the help of an engineering team. Cost reduction is an important issue in
this product specification.
4. Supplier search: In this stage, a buyer wants the best supplier. Buyers can
make a short list of qualified suppliers, search on Google, and watch a review
on YouTube, by contracting them.

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 5. Proposal solicitation: In this stage, the buyer invites qualified suppliers to
submit their proposals. Some suppliers offer their sample of the product to the
buyer; refer to their websites or promotional materials.
6. Supplier selection: Here, the buyer reviews the supplier’s proposals and
selects the best one among them. In this selection, the members make a list of
desired supplier attributes and their importance.
7. Order-routine specification: In this business buying process, the buyer
prepares a formal written order for the chosen suppliers. It is known as an
order-routine specification.
8. Performance review: Here, the buyer reviews the supplier’s whole
performance. The buyer asks their users about the products and services and
requests them to rate their satisfaction. The performance review helps the
buyer to take any decision to continue the business or modify or drop.
In all, this is a simple view of the eight stages of the business buying process.