Business Market & Business

Buying Behaviour

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Prof.
Prof. Aparna
Aparna Kanchan
Kanchan
What is Business Buying Behavior?

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

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What is Business Market?

A business market comprises all the

organizations that buy goods and services
for use in the production of other products
and services that are sold, rented, or
supplied to others.

The business market is huge and involves

many more dollars and goods than do
consumer markets.

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Characteristics of Business Markets
Market Structure and Demand

• Fewer, larger buyers

• Geographically concentrated
• Demand derived from consumers
• Inelastic demand
• Fluctuating demand

Nature of the Buying Unit

• More buyers
• More professional purchasing
effort

Types of Decisions & the

Decision Process

• More complex decisions

• Process is more formalized
• Buyer and seller are more
dependent on each other
• Build close long-term relationships
with customers 4
Industrial vs. consumer markets
Aspect Industrial market Consumer market
Buying objective Enable production Personal need satisfaction
Buying motive Mainly rational Also emotional
Purchasing function Professional buying Consumers
Decision making Many persons involved, Often impulsive, without
much discussion consulting others
Characteristics Negotiations, intense Often without negotiation, little
interaction interaction
Product & market Large Lim ited
knowledge
Order size Often large Mostly small
Demand Derived, fluctuation Autonomous, relatively stable

Price elasticity Rather inelastic Rather elastic

Num ber of customers Mostly lim ited Very large

Spread of customers Sometim es large Large spread

geographic concentration

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 Model of Business Buyer Behaviour
Marketing and
Product Other Stimuli Economic
Price Technological
Place Political
Promotion Cultural

The Buying Organization

Organizational The Buying Center
Interpersonal
Influences and Individual
Buying Decision
Process
Influences

Product or Service Delivery Terms

Choice Buyer’s Response and Times
Supplier Choice Service Terms
Order Quantities Payment
Business Buying Behavior- Major Influencers

• Economic factors
• Personal factors
• Environmental factors
• Organizational factors
• Interpersonal factors

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Business Buying Behavior- Major Influencers

Economic factors: Personal factors:

• Price • Emotion
• Service

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Business Buying Behavior- Major Influencers

• Environmental factors

• Demand for product • Technology

• Economic outlook • Culture
• Cost of money • Politics
• Resource availability • Competition

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Business Buying Behavior- Major Influencers

• Organizational factors

• Objectives
• Policies
• Procedures
• Structure
• Systems

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Business Buying Behavior- Major Influencers

Interpersonal factors

• Motives
• Perceptions
• Preferences
• Age
• Income
• Education
• Attitude toward risk

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Business Buying Situation

New Task Buying

Involved Decision

Modified Rebuy
Making

Straight Rebuy
Examples of Purchasing Situations

Straight rebuy Modified rebuy New task

Routine task New task

Low risk High risk

Stages in the Business Buying process
Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Routine Specification

Performance Review
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Participants in the Business Buying Process:
The Buying Center

Gatekeepers Users

Buying
Deciders Center Influencers

Buyers

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 Major Influences on Business Buying

Environmental
Economic, Technological, Political, Competitive & Cultural

Organizational
Objectives, Policies, Procedures,
Structure, & Systems
Interpersonal
Authority, Status, Empathy &
Persuasiveness
Individual
Age, Education, Job Position, Personality &
Risk Attitudes

Buyers

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Buyer

•Formal authority to sign contracts

•Member of purchasing department

•Influences the vendor selection

•Not in technical details

•Main criteria: price + terms and conditions

of the contract

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User

•Person working with the product

•Interested in benefits and unobstructed

function of the product to buy

•Large knowhow and preconceived opinion

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Influencer

•A person with high technical knowledge

and practical experience

•definition of minimum requirements on

technical or company standards

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Gatekeeper

•Controls the flow of information within the

buying center

•Assistant of decision maker

•Influence by preparing the decision and

the relevant documents

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Decider

•Right to say yes or no

•Mightiest person

Initiator

•Person who brings new ideas and solutions

into the company

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Business Buying Behaviour

E-Procurement and Buying on the Internet

Online purchasing

• Company buying sites

• Extranets

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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

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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

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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 25
 THANK - YOU

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Prof. Aparna Kanchan