Marketing ch 6 – summary

Business buyer behavior: the buying behavior of organizations that buy goods and services for use in the
production of other products and services that are sold, rented or supplied to others.
¨ includes the behavior of retailing and wholesaling.
¨ firms that acquire goods to resell to others a profit.

Q- Business buying behavior refers to the buying behavior of organization that buying all of the
following:
1- Products for use in production of other products.
2- Services for use in production of other services.
3- Products purchased to rent to others.

Q- Business buyer behavior refers to the ________.

buying behavior of 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.

Q- In one way or other, most large companies sell to ___:

Ans: other organizations.

Business buying process: the decision process by which business buyers determine which products and
services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers
and brands.
Q- In the business buying process, business buyers determine which products and services their
organizations need to purchase (True).

Q- In the business buying process, the buyer and seller are relatively less dependent on each
other.(False).

Q- The decision process by which business buyers determine which products and services their
organizations need to purchase and then find, evaluate, and choose among alternative suppliers and
brands is known as Business Buying process.

Business-to-business (B-to-B) marketers must understand business markets and business buyer behavior.
The business market is huge,

Business markets involves far more dollars & times than do consumer markets.
Many sets of business purchases were made for only one set of consumer purchase.
Business markets are like consumer markets.
- Business markets differ in many ways from consumer markets.
The main differences are in market structure and demand, the nature of buying unit, and the types of decision
& the decision process.

Q- When compared to consumer markets, business markets are:

Ans: Huge.
Q- the business and consumer markets differ?
- Market structure and demand
- Nature of the buying unit
- Types of decision
- Decision processes
Q- The main differences between business and consumer markets are in market structure and demand,
the nature of the buying unit, and the types of decisions and the decision process involved. (True)

Q-Most businesses that manufacture products for the consumer market also sell directly to consumers.
(False)

Q- Which of the following is NOT part of the business market?

A) Kruger Group sells interior security systems to resorts.
B) A country club buys safety equipment for its swimming pool.
C) Maria Theresa shops for her family's groceries at the local Whole Foods store.
D) A firm buys laptops from Dell for company salespeople to use when traveling.
E) Airmark sells a vinyl printing press to a manufacturer of plastic storage containers

Q- Business markets are similar to consumer markets in that ________.

Ans: both involve people who assume buying roles and make purchase decisions to satisfy needs.

Q- Differences between business markets and consumer markets include all of the following:
A) nature of the buying unit
B) market structure and demand
C) number of buyers
E) types of decisions and the decision process

Differences between consumer & business markets are in:

Market structure and demand: Business markets typically deal with far fewer but far larger buyers. They are
more geographically concentrated.

Business markets have far fewer but far larger buyers than the consumer marketer does.
Even in large business markets, a few buyers often account for most of the purchasing.

¨ Many business markets have inelastic and more fluctuating demand.

¨ The demand for business products is not much affected by price changes (short run). A small
percentage increase in consumer demand can cause large increases in business demand.
Q- The business marketer normally deals with far fewer but far larger buyers than the consumer
marketer does. (True).
Q- The demand for many business goods tends to change more slowly than the demand for consumer
goods. (False).

Q- The business marketer normally deals with ________ than the consumer marketer does.
Ans: far fewer but far larger buyers

Derived demand: is ultimately comes from the demand for consumer goods.

Consumers buy Intel processors only when they buy PCs, tablets, smartphones, and other devices with Intel
processors inside them from producers such as HP, Dell, Lenovo, Samsung, Sony, and Toshiba.
Q- Derived demand refers to the business demand that ultimately comes from the demand for consumer
goods. (True).
Q- Business demand ultimately derives from the demand for consumer goods. (True).
Q- Business demand that ultimately comes from the demand for consumer goods is known as
Derived demand.
Q- Green Bees, a popular American heavy-metal band, will perform in Berlin during Christmas. There is
a high demand for concert tickets among fans worldwide who are looking forward to the much-awaited
performance. In this instance, the high demand for tickets for the Green Bees concert is representative of
Derived demand.

Q- Demand for outboard motors depends on consumers purchasing fishing boats. This is an
example of Derived demand.

Q- Jeremy's, a handbag manufacturer in Lower Manhattan, procures a large stock of leather in

anticipation of brisk sales of handbags during December. This is an example of a(n Derived Demand

• Inelastic and more fluctuating demand - demand for many business products is not affected much by
price changes, especially in the short run.
• And the demand for many business goods and services tends to change more—and more quickly—than
does the demand for consumer goods and services.
¨ Small percentage increase in consumer demand can cause large increases in business demand.

Q- Why is demand in the business market mostly inelastic?

Answer: The total demand for many business products is not much affected by price changes, especially in the
short run. A drop in the price of leather will not cause shoe manufacturers to buy much more leather unless it
results in lower shoe prices that, in turn, increase consumer demand for shoe.

Q- The Pure Drug Company produces insulin, a product with a very stable demand. Even though the
price changed several times in the past two years, the demand for Pure Drug's insulin remained relatively
unaffected. In this instance, the demand for insulin is representative of ________ demand.
Ans: inelastic

Q-In business markets with inelastic demand ________.

the total demand for products is not much affected by short-term price changes.

Q-A university enrolled 200 graduate students in the Fall of 2015. However, the enrollment rate was only
slightly affected following a 12-percent hike in tuition the following fall.
This illustrates inelastic demand.

B-to-B marketers: sometimes promote their products directly to final consumers to increase business demand.

Nature of the Buying Unit: Business buyers usually face more complex buying decisions than do consumer
buyers.

Compared with consumer purchases, a business purchase usually involves:

• more decision participants
• more professional purchasing effort.
• More buyer and seller interaction

B-to-B marketers now face a new breed of higher-level, better-trained supply managers (buyers). Therefore,
companies must have well-trained marketers and salespeople to deal with these well-trained buyers.
Business purchases tend to have the following characteristics.
• Business buyers face more complex buying decisions than consumer buyers.
• involve large sums of money.
• complex technical and economic considerations.
• There are interactions among people at many levels of the buyer’s organization.
• The process tends to be longer and more formalized.
• involve detailed product specifications and careful supplier searches.
• involve written purchase orders and formal approval.
• Buyer and seller are often much more dependent on each other.

Q- Which of the following is true about business purchases?

Business purchases involve more professional purchasing effort than consumer purchases.
Q- A business purchase usually involves:
A) more decision participants
B) more professional purchasing effort
C) trained purchasing agents
D) high-level trained supply managers
E) manufacturing representatives Except.

Q- Since business marketers have fewer buyers than consumer marketers, business buyers often face
more complex buying decisions than do consumer buyers.

B-to-B marketers may roll up their sleeves and work closely with their customers during all stages of the
buying process—from:
-helping customers
-define problems,
-finding solutions,
-supporting after-sale operation.

They often customize their offerings to individual customer needs. In the short run, sales go to suppliers who
meet buyers’ immediate product and service needs. In the long run, however,

business-to-business marketers keep customers by meeting current needs and by partnering with them to help
solve their problems.

Supplier development: Systematic development of networks of supplier-partners to ensure a dependable

supply of products and materials for use in making products or reselling them to others.

Walmart doesn’t have a “Purchasing Department”; it has a “Supplier Development Department.” The giant
retailer knows that it can’t just rely on spot suppliers who might be available when needed. Instead, Walmart
manages a robust network of supplier-partners that help provide the hundreds of billions of dollars of goods that
it sells to its customers each year.

Q- The owners of a manufacturing firm in Ohio have developed a core network of suppliers to ensure an
uninterrupted supply of products. This is an example of _Supplier development.

business markets are similar to consumer markets.

this model looks a lot like the model of consumer buyer behavior presented in Figure 5.1.
But there are some major differences, especially in the nature of the buying unit, the types of decisions made,
and the decision process.
• Marketing stimuli 4Ps:
- Product
- Price
- Place
- Promotion
• Th environment stimuli:
- Economic
- Political
- Culture
- Competitive

At the most basic level, marketers want to know how business buyers will respond to various marketing stimuli.

model of business buyer behavior. In this model,

marketing and other stimuli affect the buying organization and produce certain buyer responses.
To design good marketing strategies, marketers must understand what happens within the organization to
turn stimuli into purchase responses.
Within the organization, buying activity consists of two major parts:
- the buying center, composed of all the people involved in the buying decision,
- the buying decision process.

The model shows that the buying center and the buying decision process are influenced by internal
organizational, interpersonal, and individual factors as well as external environmental factors.

The model suggests four questions about business buyer behavior:

• What buying decisions do business buyers make?
• Who participates in the business buying process?
• What are the major influences on buyers?
• How do business buyers make their buying decisions?

Buyer responses:
• Product or service choice
• Supplier choice
• Order quantities
• Delivery terms and times
• Service terms
• Payment

Q- A marketer wanting to determine business buyer behavior is most likely to ask which of the following
questions? What are the major influences on buyers?

Business buyer behavior

Major types of buying situations
Straight rebuy: A business buying situation in which the buyer totally recorders something without any
modifications.
Q- In which of the following would the buyer reorder a product without any modifications?
Straight rebuy.
Q Sigma Inc., a software firm based in California, reordered 50 printers from the designated provider
without any modifications. This is an example of Straight rebuy.
Q-In a straight rebuy, the "in" suppliers try to maintain product and service quality to keep the business.
Q-Gina Parker owns an ad agency in Baton Rouge. She regularly purchases cleaning supplies for her
custodial staff, using the same vendor and ordering relatively consistent amounts of the same products on
each purchase. This is an example of Straight rebuy.

Q- Which of the following is most likely true about a straight rebuy?

A straight rebuy is handled on a routine basis by the purchase department.

Q- In a straight rebuy, the buyer wants to alter product specifications, prices, terms, or suppliers(False).

Modified rebuy: a business buying situation in which the buyer wants to modify product specifications, prices,
terms, or suppliers.
Q- In a ________ situation, the "in" suppliers may become nervous and feel pressured to put their best
foot forward to protect an account and the "out" suppliers may see the present situation as an
opportunity to make a better offer and gain new business. Modified rebuy.
In a(n) ________ situation, the buyer wants to revise product specifications, prices, terms, or suppliers.
Modified rebuy.

In Modified rebuy, the "out" suppliers view the situation as an opportunity to gain new business.

Q- Ralph works for a manufacturing company in Ohio. Recently, he called in a department manager to
assist in the purchase of some heavy machinery. After consulting the department manager, Ralph is
considering a change in product specifications and characteristics and expects suppliers to meet his
requirements. Which of the following is evident here? modified rebuy.

Q- Sheffield Cargo serves both consumer and business markets, but most of its revenue comes from its
business customers. Of late, the business customers of Sheffield Cargo have demanded a change in the
packaging of heavy cargo along with a more sophisticated and user-friendly extranet framework.
Sheffield Cargo is under pressure to offer better products and services or risk losing a huge portion of its
customers. This is an example of: a Modified rebuy situation.

New task: a business buying situation in which the buyer purchases a product or service for the first time.
New task, a company buys a product or a service for the first time.

Q- A new task situation presents the greatest opportunity and the greatest challenge to the marketer.

Q- Peter Adams, an entrepreneur, decided to start a new technology venture. As he needed servers and
computers for his company, he decided to order these from a local vendor who was offering attractive
discounts. In this instance, Peter: faces a new task situation.

Q- Rudolf Technologies Inc. decided to enter the automobile service market. Consequently, the company
decided to procure the tools and machines needed from a reputable supplier. Rudolf Technologies is
facing a new task situation.
Q- A company buying a product or service for the first time faces a new task situation (True).

Q- Systems selling (solutions selling): Buying a packaged solution to a problem from a single seller, thus
avoiding all the separate decisions involved in a complex buying situation.

Systems selling is buying a complete solution to a problem from a single seller.

Q- Solutions selling is often a key business marketing strategy for winning and holding account.
Discussion Questions
How would the purchase of a chair like the one you are sitting in be different for the University versus an
end consumer like yourself buying a chair for your desk?
It may be difficult for students with no business buying experience to grasp the difference between business and
consumer buying. Students will note how the university needs to buy more, that they need to ask users about the
chairs, that they will organize more intricately for the buying effort, and that they will work with the vendors for
reduced prices for bulk purchases. In addition, this can tie directly to the major types of buying situations.

How could the chair be a straight rebuy versus a modified rebuy? What implications would the different
situation make on the process?
In addition to these three situations, many business buyers prefer to buy a complete solution to a problem
from a single seller rather than buying separate products and services from several suppliers and putting
them together.
The sale often goes to the firm that provides the most complete system for meeting the customer’s needs
and solving its problems.
Such systems selling (or solutions selling) is often a key business marketing strategy for winning and holding
accounts.

Participants in the business buying process.

Buying Centre: all the individuals and units that play a role in the purchase decision-making process.

Includes all members of the organization who play any of five roles in the purchase decision process.

Q- The decision-making unit of a purchasing organization is called its buying center.

Q- The buying center is a fixed and formally identified unit within the buying organization. (False).
1. Users: Members of the buying organization who will actually use the purchased product or service.
- Users are those that will use the product or service.
users initiate the buying proposal and help define product specifications.

Q- Phoi Nguyen, a manufacturing mechanic, determines that the molds for manufacturing plastic jar lids
are wearing out sooner than expected. Phoi contacts her manager to request that the parts be reordered.
In this instance, Phoi played the role of a user.

2. Influencers: refers to people in an organization’s buying Centre who affect the buying decision.; who help
define specifications and provide information for evaluating alternatives.

Q-Influencers refers to members of the buying organization who help define specifications and provide
information for evaluating alternatives.
- Technical personnel are particularly important influencers.

Q- Eric Mason, an employee of Huntington Steelworks, is responsible for defining product specifications
and providing relevant information for evaluating alternatives in his organization's buying center. Eric,
whose opinions affect the buying decisions of his organization to a great extent, is most likely aInfluencers.

Q- Marissa Hopkins, a hospital nurse, notices that the gurneys used in the hospital are not durable
enough. She informed the hospital authorities about Grace Care Inc., a new company selling lightweight
and durable gurneys. In this instance, Marissa played the role of a influencer.

Q- In new product buying, the users are often the influencer.

Q- Influencers often help define specifications and also provide information for evaluating alternatives
(True).
3. Buyers: People in an organization’s buying Centre who make an actual purchase. Negotiators.

Q- Buyers have formal authority to select the supplier and arrange terms of purchase.

Q- Buyers may help shape product specifications, but their major role is to select vendors and to negotiate.
Q- Dora has formal authority to select the suppliers and arrange terms of purchase for many of the items
her firm uses. Her role in the buying center is that of a Buyer.

4. Deciders: have formal or informal power to select or approve the final suppliers.
- In routine buying, the buyers are often the deciders, or at least the approvers.
Q- In routine buying, buyers are often the Decider, or at least the approver.
Q- In routine buying situations, which of the following members of the buying center has formal or
informal power to select or approve the final suppliers? decider

Q- Jason Perkins has the informal power to approve the final suppliers in his organization. In other
words, Jason plays the role of a(n) Decider in his organization's buying center.

Q- A technician in a hospital told the chief dentist, Dr. Albrecht, that the hospital should purchase
equipment that would sterilize the dentists' tools without using any water because water tends to affect
the durability of the tools over time. Dr. Albrecht located some articles on chemical sterilizers and
gathered more information on how they worked. After talking to salespeople, Dr. Albrecht finally placed
his order for the machine. In this instance, Dr. Albrecht played the role of a Decider.

5. Gatekeepers: controls the flow of information to others in the buying center

- Purchasing agents often have authority to prevent salespersons from seeing users or deciders.
- Other gatekeepers include technical personnel and even personal secretaries.
Q- Paul, a purchasing agent for Kiel Inc., has the authority to prevent salespersons from seeing the
decision makers in his organization. Which of the following best describes Paul's position? Gatekeeper.

The buying center is not a fixed and formally identified unit within the buying organization. It is a set of buying
roles assumed by different people for different purchases. Within the organization, the size and makeup of the
buying center will vary for different products and for different buying situations.

Q-Who among the following does NOT participate in the purchase decision process of a buying
organization?
A) individuals who use the product or service
B) individuals who influence the buying decision
C) individuals who make the buying decision
D) individuals who supply raw materials
E) individual who control the flow of information to others.

• The buying center concept presents a major marketing challenge given the varied groups involved in the
decision.
• Who participates in the decision?
§ Relative influence on decision by various participants
§ Evaluation criteria used by various participants.
§ Are there Informal participants involved in decision.
Q- Within the organization, buying activity consists of two major parts: the buying center and the buying
decision process. ( True).
Who does the buying of the trillions of dollars’ worth of goods and services needed by business
organizations?
• The decision-making unit of a buying organization is called its buying center.
This group includes the actual users of the product or service, those who make the buying decision,
those who influence the buying decision, those who do the actual buying, and those who control buying
information.

Many businesses buying decisions result from the complex interactions of ever-changing buying center
participants.

The buying center usually includes some obvious participants who are involved formally in the buying
decision.
For example, the decision to buy a corporate jet will probably involve the company’s CEO, the chief pilot, a
purchasing agent, some legal staff, a member of top management, and others formally charged with the buying
decision.

It may also involve less obvious, informal participants, some of whom may make or strongly affect the buying
decision. Sometimes, even the people in the buying center are not aware of all the buying participants.
For example, the decision about which corporate jet to buy may be made by a corporate board member who
has an interest in flying and who knows a lot about airplanes. This board member may work behind the scenes
to sway the decision.

Major influences on business buyers

Business buyers respond to both economic (like lowest price) and personal factors.

Business buying decisions are affected by an incredibly complex combination of influences, but with an extra
layer of organizational factors thrown into the mix.

lists various groups of influences on business buyers:

§ Environmental,
§ Organizational,
§ Interpersonal,
§ Individual.

• Economic Factors
Price
Service
• Personal Factors
Emotion

Today, most B-to-B marketers recognize that emotion plays an important role in business buying
decisions.

Business buyers are subject to many influences when they make their buying decisions.
Economic factors are very important to most buyers, especially in a tough economy. However,
business buyers respond to both economic and personal factors. Far from being cold, calculating, and
impersonal, business buyers are human and social as well.
Environmental factors:
•Economic like level of primary demand or economic outlook
•Supply of key materials. More willing to have larger inventories of scarce materials.
•Technological
•Political
•Competitive
•Culture and customs

Q- The major influences on the buying process at General Aeronautics Limited include supply conditions
and technological changes, which would both be categorized as Environmental factors.

Q- Which of the following is an environmental factor that influences business buyers?

supply of key materials.

Q- Culture and customs can strongly influence business buyer reactions to the marketer's behavior and
strategies, especially in the international marketing environment.

Business buyers are heavily influenced by the many factors in the current and expected economic environment.
The business buyer must watch these factors, determine how they will affect the buyer, and try to turn
these challenges into opportunities.

Q- Business buyers are heavily influenced by factors in the current and expected economic environment,
such as level of primary demand

Organizational factors:
•Objectives
•Strategies
•Structure
•Systems
•Procedures

Organizational factors are also important, and each buying organization has its own.
The business marketer must understand these factors well.

Q- Which of the following is an organizational factor that influences business buyers Company procedures

Q- Factors such as a firm's objectives, procedures, and systems are examples of Organizational influences
on the business buyer behavior.

Q- The management's directive to reduce the number of steel suppliers refers to the influence of
Organizational factors affecting the business buying behavior of Alpha

Questions such as these arise:

How many people are involved in the buying decision?
Who are they?
What are their evaluative criteria?
What are the company’s policies and limits on its buyers?
Interpersonal factors:
•Influence
•Expertise
•Authority
•Dynamics

The buying center usually includes many participants who influence each other, so

interpersonal factors also influence the business buying process.

However, it is often difficult to assess such interpersonal factors and group dynamics.
Buying center participants do not wear tags that label them as “key decision maker” or “not influential.”

Q- Which of the following factors influencing the business buying process do marketers typically find
most difficult to assess? Interpersonal.

Nor do buying center participants with the highest rank always have the most influence.

Interpersonal factors are often very subtle.

business marketers must try to understand these factors and design strategies that take them into
account.

Q- If a buying center is most influenced by authority in the business buying process, it can be safely
concluded that Interpersonal factors have a major influence on its buying behavior.

Individual factors:

•Age/education
•Job position
•Motives
•Personality
•Preferences
•Buying style

The business buying process:

Stages of the business buying process. New task buying usually goes through all stages, modified and straight
rebuys usually do not.

Problem recognition:
¨ General need description
¨ product specification
¨ supplier search à
¨ proposal solicitation
¨ supplier selection
¨ order routine specification
¨ performance review.

Problem recognition
The first stage of the business buying process in which someone in the company recognizes a problem or need
that can be met by acquiring a good or a service. Internally, comes from inside like a machine breaks down.
Externally, the buyer may get an idea at a trade show.

General need description

The stage in the business buying process in which a buyer describes the general characteristic and quantity of a
needed item.

Product specification
The stage of the business buying process in which the buying organization decides on and specifies the best
technical product characteristics for a needed item. Product value analysis is a cost reductive approach in which
components are studied carefully to determine if they can be redesigned, standardized, or made less costly.

Supplier search
The stage of the business buying process in which the buyer tries to find the best vendors. Salespeople should
watch for companies in the process of searching for suppliers and make certain
that their firm is considered.

Proposal solicitation
The stage of the business buying process in which the buyer tries to find the best vendors. The buyer invites
qualified suppliers to submit proposals. Business marketers have to research write and present, they have to
make sure their company standout from the competition

Supplier selection
The stage of the business buying process in which the buyer reviews proposals and selects a supplier or
suppliers. Often want more suppliers so not dependent.

Order-routine specification
The stage of the business buying process in which the buyer writes the final order with the chosen suppliers,
listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties.
Many large buyers now practice vendor-managed inventory, they turn over ordering and inventory
responsibilities to their suppliers.

Q- After searching extensively for vendors, Shalina D'Souza, the owner of a manufacturing firm, selected
Texcom Technologies Inc. as her firm's primary supplier of bearings and shafts of a specific dimension.
Shalina is currently preparing an order form that specifies the number of shafts needed and the expected
time of delivery. In other words, she is preparing the order routine specification.

Performance review
The stage of the business buying process in which the buyer assesses the performance of the supplier and
decides to continue, modify, or drop the arrangement.

E-procurement and online purchasing

Advances in information technology have changed the face of b-to-b marketing.

¨ E-procurement
¨ Purchasing through electronic connections between buyers and sellers, usually online.
•Reverse auction, put your purchasing request online.
•Trading exchanges, companies work collectively to facilitate the trading process.
•Company buying site.
•Extranet links, connections with key suppliers.

Institutional and government market

Institutional market
Schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in
their care. Often have low budgets and do not need profits.
For instance,
a purchasing agent of a hospital has to find good health food for the lowest price.

Government market
Governmental units-federal, state, and local- that purchase or rent goods and services for carrying out the main
functions of government.
Often major buyers of goods and services. Usually award the contract to the lowest bidder. Tend to favor
domestic suppliers.