7

Analyzing
Business Markets

Marketing Management, 13th ed

 Chapter Questions

• What is the business market, and how

does it differ from the consumer
market?
• What buying situations do
organizational buyers face?
• Who participates in the business-to-
business buying process?

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 Chapter Questions

• How do business buyers make their

decisions?
• How can companies build strong
relationships with business customers?
• How do institutional buyers and
government agencies do their buying?

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 What is Organizational Buying?

Organizational buying refers

to the decision-making process by
which formal organizations establish
the need for purchase of products and
services, and identify, evaluate, and
choose among alternative brands
and suppliers.

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 Characteristics of Business Markets

• Fewer, larger buyers • Multiple sales calls

• Close supplier- • Derived demand
customer • Inelastic demand
relationships • Fluctuating demand
• Professional • Geographically
purchasing concentrated buyers
• Many buying • Direct purchasing
influences

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 Buying Situation

Straight
Straight rebuy
rebuy

Modified
Modified rebuy
rebuy

New
New task
task

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 Systems Buying and Selling

Turnkey solution System

desired; subcomponents
bids solicited assembled

Prime Second-tier
contractors contractors

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 The Buying Center
Initiators
Initiators

Users
Users

Influencers
Influencers

Deciders
Deciders

Approvers
Approvers

Buyers
Buyers

Gatekeepers
Gatekeepers

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 Stages in the Buying Process:
Buyphases
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review

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 Table 7.2 Buygrid Framework

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 Order Routine Specification

Stockless
purchase plans

Vendor-managed
inventory

Continuous
replenishment

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 Factors Affecting
Buyer-Supplier Relationships

Availability of Importance of
alternatives supply

Complexity of Supply market

supply dynamism

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 Institutional and Government
Markets
• Institutions:
• Buying objective may not be to make profit
• Neither it is cost minimization
• Government:
• Elaborate procedure
• Call for bids and the lowest bidder is often selected
• Elaborate procedures and should meet legal
requirements
• Director General for supplies and disposal
(DGS&D)
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