Analyzing Business Markets and Buyer Behavior

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Analyzing Business Markets and Buyer Behavior

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Analyzing Business Markets and Buyer Behavior

  1. 1. Chapter 7 Analyzing Business Markets and Buyer Behavior PowerPoint by Karen E. James Louisiana State University - Shreveport
  2. 2. Objectives <ul><li>Understand the nature of the business market and how it differs from the consumer market. </li></ul><ul><li>Learn how institutions and government agencies buy. </li></ul><ul><li>Identify the different buying situations faced by organizational buyers. </li></ul>
  3. 3. Objectives <ul><li>Identify the participants in the business buying process and the various influences impacting business buying decisions. </li></ul><ul><li>Understand how business buyers make their decisions. </li></ul>
  4. 4. Organizational Buying <ul><li>Organizational buying is: </li></ul><ul><ul><li>“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.” </li></ul></ul>
  5. 5. Organizational Buying <ul><li>Compared to Consumer Markets, Business Markets have . . . </li></ul><ul><ul><li>Fewer buyers </li></ul></ul><ul><ul><li>Larger buyers </li></ul></ul><ul><ul><li>Geographically concentrated buyers </li></ul></ul><ul><ul><li>Close relationships with their supplier-customers </li></ul></ul>
  6. 6. Organizational Buying <ul><li>Fluctuating demand </li></ul><ul><li>Derived demand </li></ul><ul><li>Inelastic demand </li></ul><ul><li>Professional purchasing </li></ul><ul><li>Multiple buying influences </li></ul><ul><li>Multiple sales calls </li></ul><ul><li>Direct purchasing </li></ul><ul><li>Reciprocity </li></ul><ul><li>Leasing </li></ul>Other Business Market Characteristics
  7. 7. Organizational Buying <ul><li>The Business Market Includes For-Profit Companies and Two Specialized Groups: </li></ul><ul><ul><li>The institutional market </li></ul></ul><ul><ul><ul><li>Schools, hospitals, prisons, etc. with captive audiences </li></ul></ul></ul><ul><ul><ul><li>Cost and quality standards drive purchases </li></ul></ul></ul><ul><ul><li>The government market </li></ul></ul><ul><ul><ul><li>Bidding process awards contracts </li></ul></ul></ul>
  8. 8. Organizational Buying <ul><li>Buying Situations </li></ul><ul><li>Straight rebuy </li></ul><ul><li>Modified rebuy </li></ul><ul><li>New task </li></ul><ul><li>Routine reorders from approved vendor list </li></ul><ul><li>Low involvement, minimal time commitment </li></ul><ul><li>Example: copier paper </li></ul>
  9. 9. Organizational Buying <ul><li>Buying Situations </li></ul><ul><li>Straight rebuy </li></ul><ul><li>Modified rebuy </li></ul><ul><li>New task </li></ul><ul><li>Specifications, prices, delivery terms or other aspects require modification </li></ul><ul><li>Moderate level of involvement and time commitment </li></ul><ul><li>Example: desktop computers </li></ul>
  10. 10. Organizational Buying <ul><li>Buying Situations </li></ul><ul><li>Straight rebuy </li></ul><ul><li>Modified rebuy </li></ul><ul><li>New task </li></ul><ul><li>Purchasing a product or service for the first time </li></ul><ul><li>High level of involvement and time commitment; multiple influences </li></ul><ul><li>Example: selecting a web site design firm or consultant </li></ul>
  11. 11. Organizational Buying <ul><li>Systems Buying </li></ul><ul><ul><li>A single provider provides the total package for the buyer’s needs </li></ul></ul><ul><ul><li>May involve turnkey solutions </li></ul></ul><ul><li>Systems Selling </li></ul><ul><ul><li>Manufacturers sell entire systems </li></ul></ul><ul><ul><li>Supplier provides all MRO items </li></ul></ul>
  12. 12. Participants in Business Buying <ul><li>Initiators </li></ul><ul><li>Users </li></ul><ul><li>Influencers </li></ul><ul><li>Deciders </li></ul><ul><li>Approvers </li></ul><ul><li>Buyers </li></ul>Buying center members fill one or more roles in the purchase decision process: <ul><li>Gatekeepers </li></ul>
  13. 13. Influences on Business Buyers <ul><li>Major Influences </li></ul><ul><li>Environmental </li></ul><ul><li>Organizational </li></ul><ul><li>Interpersonal </li></ul><ul><li>Individual </li></ul><ul><li>Demand level </li></ul><ul><li>Economic outlook </li></ul><ul><li>Interest rates </li></ul><ul><li>Technological change </li></ul><ul><li>Politics/regulations </li></ul><ul><li>Competition </li></ul><ul><li>Concerns for social responsibility </li></ul>
  14. 14. Influences on Business Buyers <ul><li>Major Influences </li></ul><ul><li>Environmental </li></ul><ul><li>Organizational </li></ul><ul><li>Interpersonal </li></ul><ul><li>Individual </li></ul><ul><li>Objectives </li></ul><ul><li>Policies </li></ul><ul><li>Procedures </li></ul><ul><li>Organizational structures </li></ul><ul><li>Systems </li></ul>
  15. 15. Influences on Business Buyers <ul><li>Major Influences </li></ul><ul><li>Environmental </li></ul><ul><li>Organizational </li></ul><ul><li>Interpersonal </li></ul><ul><li>Individual </li></ul><ul><li>Interests </li></ul><ul><li>Authority </li></ul><ul><li>Status </li></ul><ul><li>Empathy </li></ul><ul><li>Persuasiveness </li></ul>
  16. 16. Influences on Business Buyers <ul><li>Major Influences </li></ul><ul><li>Environmental </li></ul><ul><li>Organizational </li></ul><ul><li>Interpersonal </li></ul><ul><li>Individual </li></ul><ul><li>Age </li></ul><ul><li>Income </li></ul><ul><li>Education </li></ul><ul><li>Job position </li></ul><ul><li>Personality </li></ul><ul><li>Risk attitudes </li></ul><ul><li>Culture </li></ul>
  17. 17. Purchasing/Procurement Process <ul><li>Problem recognition </li></ul><ul><li>General need description </li></ul><ul><li>Product specification </li></ul><ul><li>Supplier search </li></ul><ul><li>Proposal solicitation </li></ul><ul><li>Supplier selection </li></ul><ul><li>Order-routine specification </li></ul><ul><li>Performance review </li></ul>Eight Buyphases of Industrial Buying

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