Business Market & Buying Behaviour

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Information about Business Market & Buying Behaviour

Published on March 7, 2009

Author: anand_16c

Source: slideshare.net

Copyright© 2008. IAME – Anand Choudhary

It’s a 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. Copyright© 2008. IAME – Anand Choudhary

It’s a 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.

Fewer, larger buyers: The business marketer deals with fewer ,but larger buyers than the consumer marketer does. Close supplier-customer relationships : Because of small customer base and power of large customers there is frequent customization of their offerings. Professional purchasing : Goods are normally purchased by trained purchasing agents who must understand constraints and requirements Copyright© 2008. IAME – Anand Choudhary

Fewer, larger buyers: The business marketer deals with fewer ,but larger buyers than the consumer marketer does.

Close supplier-customer relationships : Because of small customer base and power of large customers there is frequent customization of their offerings.

Professional purchasing : Goods are normally purchased by trained purchasing agents who must understand constraints and requirements

Copyright© 2008. IAME – Anand Choudhary Several buying influences : More people typically influence business buying decisions. Multiple sales calls : Involvement of more players leads to multiple sales calls to win most business orders. Derived demand : The demand for business goods is derived from the demand of consumer goods.For this reason the business marketer must closely monitor the buying patterns. Inelastic demand : the demand is not much affected by price changes in many business goods and services. Fluctuating demand : the demand of business goods tends to be more volatile when compared to consumer goods.

Copyright© 2008. IAME – Anand Choudhary Geographically concentrated buyers : The geographic concentration of products helps to reduce selling costs.Business marketers also should monitor regional shifts of certain industries. Direct purchasing : Business buyers often buy directly from manufacturers rather than through intermediaries.Especially that are technically complex or expensive(such as mainframes or aircraft)

Straight re-buy Modified re-buy New task Copyright© 2008. IAME – Anand Choudhary

Straight re-buy

Modified re-buy

New task

Many business buyers prefer to buy a total solution to a problem from one seller called Systems Buying . Copyright© 2008. IAME – Anand Choudhary

Many business buyers prefer to buy a total solution to a problem from one seller called Systems Buying .

Initiators Users Influencers Deciders Approvers Buyers Gatekeepers Copyright© 2008. IAME – Anand Choudhary

Initiators

Users

Influencers

Deciders

Approvers

Buyers

Gatekeepers

Price-oriented customers ( transactional selling ) Solution-oriented customers ( consultative selling ) Gold-standard customers ( quality selling ) Strategic-value customers ( enterprise selling ) Copyright© 2008. IAME – Anand Choudhary

Price-oriented customers ( transactional selling )

Solution-oriented customers ( consultative selling )

Gold-standard customers ( quality selling )

Strategic-value customers ( enterprise selling )

Routine products ( e.g., office supplies ) Leverage products ( e.g., engine piston ) Strategic products ( e.g., mainframe computers ) Bottleneck products ( e.g., spare parts ) Copyright© 2008. IAME – Anand Choudhary

Routine products ( e.g., office supplies )

Leverage products ( e.g., engine piston )

Strategic products ( e.g., mainframe computers )

Bottleneck products ( e.g., spare parts )

Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review Copyright© 2008. IAME – Anand Choudhary

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order-routine specification

Performance review

Recognize a problem or need. Recognition by: Internal stimuli External stimuli Copyright© 2008. IAME – Anand Choudhary

Recognize a problem or need.

Recognition by:

Internal stimuli

External stimuli

Identify needed item’s general characteristics and required quantity. General characteristics: reliability, durability, or price. Copyright© 2008. IAME – Anand Choudhary

Identify needed item’s general characteristics and required quantity.

General characteristics: reliability, durability, or price.

Create product technical specification. Product Value Analysis (PVA). Copyright© 2008. IAME – Anand Choudhary

Create product technical specification.

Product Value Analysis (PVA).

Identify appropriate suppliers through: Trade directories Contact with other companies Trade advertisements Trade shows Put products, prices, and other information on Internet. Copyright© 2008. IAME – Anand Choudhary

Identify appropriate suppliers through:

Trade directories

Contact with other companies

Trade advertisements

Trade shows

Put products, prices, and other information on Internet.

Buyer invite qualified suppliers to submit proposals. Formal presentation from a few suppliers. Copyright© 2008. IAME – Anand Choudhary

Buyer invite qualified suppliers to submit proposals.

Formal presentation from a few suppliers.

Buying center specifies desired supplier attributes and indicate their relative importance. Copyright© 2008. IAME – Anand Choudhary Attributes Rating Scale Importance Weights Poor (1) Fair (2) Good (3) Excellent (4) Price .30 X Supplier reputation .20 X Product reliability .30 X Service reliability .10 X Supplier flexibility .10 x Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5

Buying center specifies desired supplier attributes and indicate their relative importance.

Negotiation for: Final order Listing Technical specifications Quality needed Expected time of delivery Return policies warranties “ OTIFNE” term summarizes three desirable outcomes of a B-to-B transaction. OT – deliver on time ( 80 %) IF – in full ( 90 %) NE – no error ( 70 %) Overall performance: 80% x 90% x 70% = only 50%! Copyright© 2008. IAME – Anand Choudhary

Negotiation for:

Final order

Listing

Technical specifications

Quality needed

Expected time of delivery

Return policies

warranties

“ OTIFNE” term summarizes three desirable outcomes of a B-to-B transaction.

OT – deliver on time ( 80 %)

IF – in full ( 90 %)

NE – no error ( 70 %)

Overall performance: 80% x 90% x 70% = only 50%!

Three methods: Buyer may contact end users and ask for their evaluation. Buyer may rate supplier on several criteria using weighted score method. Buyer might aggregate cost of poor performance to come up with adjusted costs of purchase. Copyright© 2008. IAME – Anand Choudhary

Three methods:

Buyer may contact end users and ask for their evaluation.

Buyer may rate supplier on several criteria using weighted score method.

Buyer might aggregate cost of poor performance to come up with adjusted costs of purchase.

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