Analyzing Business

Markets
Discussion Questions
1. What is the business market, and how does it differ
from the consumer market?
2. What buying situations do organizational buyers face?
3. Who participates in the B2B buying process?
4. How do business buyers make their decisions?
5. How can companies build strong relationships with
business customers?
6. How do institutional buyers and government agencies
do their buying?
 Organizational Buying
The decision-making process by which
formal organizations establish the need
for purchased products and services and
identify, evaluate, and choose among
alternative brands and suppliers.

-- F. Webster Jr and Y. Wind

 Business Markets
Transportation &
Distribution

Agriculture Construction

Forestry
Manufacturing

Communications
Banking & Finance
 Business Markets
Differences to the Consumer Market Geographically
Concentrated

Fewer, Larger
Buyers

Professional
Buyers

Multiple Personal
Sales Calls Relationships
 Business Markets
Differences to the Consumer Market

Derived Demand

Inelastic Demand

Demand
• Derived
• Inelastic
• Fluctuating
Fluctuating Demand
Buying Situations

New Task
Straight Rebuy

Modified Rebuy
Systems Buying and Selling
 Systems Buying and Selling
Selling to the Indonesian Government The Indonesian government
requested bids to build a cement factory near Jakarta. A U.S. firm made
a proposal that included choosing the site, designing the factory, hiring
the construction crews, assembling the materials and equipment, and
turning over the finished factory to the Indonesian government. A
Japanese firm, in outlining its proposal, included all these services, plus
hiring and training the workers to run the factory, exporting the cement
through its trading companies, and using the cement to build roads and
new office buildings in Jakarta. Although the Japanese proposal
involved more money, it won the contract. Clearly, the Japanese viewed
the problem as not just building a cement factory (the narrow view of
systems selling) but as contributing to Indonesia’s economic
development. They took the broadest view of the customer’s needs,
which is true systems selling.
Business Buying Participants

Initiator/ Influencer Decider

Users

Gatekeeper Approver
Buyers
Buying Center Influences

Participants differ by:

• Interest
• Authority
• Status
• Persuasiveness
• Decision criteria

Rational & Emotional

Targeting Firms and Buying Centers

Who to target?

Small sellers concentrate on reaching the key buying influencers.

Larger sellers go for multilevel in-depth selling to reach as many
participants as possible.
Purchasing/Procurement Process

Diverse supplier base

business buyers seek to obtain the

highest benefit package (economic,
technical, service, and social) in relation
to a market offering’s costs
Benefits vs. Costs
Stages in the Buying Process

Problem
Description and
Recognition
Characteristics Supplier
Search

Proposal
Solicitations

Performance Order Supplier

Review Specification Selection
Stages in the Buying Process

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

External stimuli
• Trade show visit
• Advertisement
 Stages in the Buying Process

Description and Technical specifications

Characteristics
• Reliability
• Durability
• Price

Product value analysis

 Stages in the Buying Process

Supplier
Search

Trade directories
Trade advertisements
Trade shows

E-Procurement Lead generation

 Stages in the Buying Process

Proposal
Solicitations

Formal presentation

Written
Stages in the Buying Process

Supplier
Selection

Supplier-evaluation model
Number of suppliers
 Stages in the Buying Process

Order
Specification Stockless
purchase
plan
Technical specifications
Quantity
Delivery time
Return policy
Warranties
 Stages in the Buying Process

Performance
Review

End user evaluations

9
Weighted-score
method
7 4
 Buygrid Framework
Table 7.1
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
Buyphases

4. Supplier search Yes Maybe No

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
 Managing B2B Relationships
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.

Online social media

One-to-one Marketing
Institutional and Governments Markets
Prisons

Government
agencies

Schools

Hospitals