PRINCIPLES OF MARKETING

BUSINESS MARKETS & BUSINESS BUYER

BEHAVIOUR
 Learning Objectives
Topic Outline

List the characteristics of business markets

Outline the model of business buyer behaviour

Identify the steps of the business buying process

Discuss reseller buyer behaviour

Compare and contrast business markets, institutional markets

and government markets
 Introduction

We looked at Final consumer buying

behaviour and factors that influence it. Now,
we’ll do the same for business customers—
those that buy goods and services for use in
producing their own products and services or
for resale to others.

Let’s zoom in on services!

 Business buyer behaviour

In essence,

• Business buyer behaviour - The buying

behaviour 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.
• Retailing and wholesaling firms are also
included.
 Business buyer behaviour

Business buyers need to determine which

products and services their organizations
need to purchase and then find, evaluate,
and choose among alternative suppliers
and brands.
This is known as business buying process.
 BUSINESS MARKET

Business buyer behaviour and the

business buying process occur within the
Business Market.

WHAT IS THE BUSINESS

MARKET?
 CHARACTERISTICS OF THE
BUSINESS MARKET
Business markets contain fewer but larger buyers.
Market structure
•
Business buyer demand is derived from final consumer demand.
and demand Demand in many business markets is more inelastic—not affected
as much in the short run by price changes.
Demand in business markets fluctuates more and more quickly.

Nature of the
Business purchases involve more buyers.
buying unit Business buying involves a more professional
purchasing effort.

Business buyers usually face more complex buying decisions.

Types of decision The business buying process is more formalized.
and decision In business buying, buyers and sellers work more closely together
process and build close long-term relationships.
 A Model of Business Buyer
Behaviour

Four questions emerge:

1. What buying decisions do business
buyers make?
2. Who participates in the buying process?
3. What are the major influences on
buyers?
4. How do business buyers make their
buying decisions?
 Major Type of Buying Situations

What buying decisions do business buyers make?

There are three major types of buying situations;
a. Straight rebuy - the buyer routinely reorders
something without any modifications.
b. Modified rebuy - A business buying situation in
which the buyer wants to modify product
specifications, prices, terms, or suppliers.
c. New task - A business buying situation in
which the buyer purchases a product or service
for the first time.
Major types of buying situation

Buying a complete solution to a

problem from a single seller rather
than
separate products and services
Systems selling
from several suppliers and putting
them together.
The sale often goes to the firm that
provides the most complete system (or solutions selling)
for meeting the customer’s needs
and solving its problems.
 Participants in the Business Buying
Process

Who participates in the buying process?

The decision-making unit of a buying

organization is called its buying center
—all the individuals and units that
play a role in the business purchase
decision-making process.
Participants in the Business Buying
Process
Users
Members of the buying organization who
will actually use the purchased product or
service.

Influencers
Gatekeepers People in an organization’s buying center
People in an organization’s buying center who affect the buying decision; they
who control the flow of information to often help define specifications and also
others. provide information for evaluating
alternatives.

Deciders
Buyers
People in an organization’s buying center
People in an organization’s buying center
who have formal or informal power to
who make an actual purchase.
select or approve the final suppliers.
What are the major influences on buyers?
How do business buyers make
their buying decisions?
 The buying process
General need description
a buyer describes the general
1. Problem recognition characteristics and quantity of
a
Someone in the company needed item.
Product specification
recognizes a problem or
need that can be The buying organization decides
on and specifies the best technical
met by acquiring a good or
a service. product characteristics for a needed
item.

Performance review Supplier search

The buyer assesses the The stage of the business
performance buying process
of the supplier and decides to in which the buyer tries to
continue, find the best
modify, or drop the arrangement. vendors.

Order-routine specification
Proposal solicitation
The buyer writes the final order
with the chosen supplier(s), listing the the buyer invites qualified
technical specifications, quantity needed, Supplier selection suppliers to submit
expected time of delivery, return policies,
The buyer proposals.
and warranties.
reviews proposals
and
selects a supplier
or suppliers.
 Resellers

• Resellers are companies that sell goods

and services produced by other firms
without materially changing them.
• Large wholesalers, brokers, and retailers
are typical resellers.
• Large resellers wield considerable
power on producers as they provide
customers and influence prices.
 NON-BUSINESS MARKETS

So far we have looked at business buyers,

but what about non business markets?

Government market
Governmental units—federal, state,
Institutional market
and
Schools, hospitals, nursing
local—that purchase or rent goods
homes, prisons,
and
and other institutions that services for carrying out the main
provide goods
functions of government.
and services to people in their
care.