2. Business Markets and Business Buying Behavior The
nature and scope of the business market
• Major categories of business buyers.
• The differentiating characteristics of
business markets.
• What determines business market
demand.
• The buying processes in business
markets.
3. • The business market consists of individuals and
organizations that buy goods and services to:
– Make other goods and services. Resell to other
business users or to consumers.
– Conduct the organization ’ s operations.
Business marketing is the marketing of goods and
services to business users, as contrasted to ultimate
consumers.
4. Major Categories of the Business
Market
• Producers
consisting of firms which transform raw materials
or components into a finished product.
• The reseller market
consisting of firms that buy products from
supplier organizations and resell these items
unchanged to their customers.
• The government market
including all federal, state, and local units buying for
government institutions such as schools, offices,
hospitals, and military bases.
5. Major Categories of the Business
Market
• The “ non-business ” business market, or
institutions
consisting of nonprofit organizations such as
churches, colleges, and museums.
• The services market
including firms that sell services to other
organizations.
6. Types of business products
• Major equipment:
– capital expenditures, large or expensive
machinery.
• Accessory equipment:
– less expensive, may be billed as an expense.
• Raw materials:
– unprocessed products such as agricultural or
mineral products.
7. Types of business products
• Component parts:
– semi-finished products ready for assembly, or
requiring little preparation for assembly.
• Processed materials:
– Materials used in manufacturing, which have
undergone process from the raw material state.
• Supplies:
– Consumable products which do not become part
of the finished product
8. Demand characteristics differentiate the business
market from the consumer market
• Demand is derived from the demand for the
consumer products in which the business item
is used.
• Joint demand occurs when two or more items
are used together in a final product.
9. Demand characteristics differentiate the business
market from the consumer market
• In the short run demand is inelastic, that is,
demand for a product responds very little to
changes in price when:
– The cost of a single part or material is a small
portion of the total cost of the finished product.
– If the part or material has no substitute.
10. Demand characteristics differentiate the business
market from the consumer market
• Demand is widely fluctuating, meaning that
demand for most classes of business goods
fluctuates considerably more than the
demand for consumer products.
• The buyers are well informed and know the
relative merits of alternative sources of supply
and competitive products.
11. The factors affecting the market for
business products
• The number and types of potential business
users.
• Their buying power, buying motives, and
buying habits.
12. Business buying has become an important part of
overall strategy for three reasons
• Companies are making less and buying more.
• Intense quality and time pressure increases
the need for reliable suppliers.
• Firms are choosing fewer suppliers and
entering into long-term “ partnering ”
relationships with them: Strategic Alliances
13. There are three classes of business buying situations
(also called buy classes)
• New-task buying (the most difficult and
complex buying situation), which is the first-
time purchase of a major product.
• Straight re-buy. This is a routine, low-
involvement purchase.
14. • Modified re-buy.
The buying situation is somewhere between
the other two in terms of:
– The time and people involved, the information
needed, and the location of buying authority.
15. Buying Center
A Buying Center is all the individuals or groups
who are involved in the purchase decision-
making process. Buying Center members perform
the following roles:
• Initiators:
Those who originally suggested the purchase.
• Users:
People who actually use the product.
16. • Influencers:
People who help to set the product specifications
because of their expertise, financial position, or
political power.
• Deciders:
The people who make the actual buying decision
regarding the product and supplier.
• Gatekeepers:
People who control the flow of purchasing information
within the organizations as well as between the firm
and potential vendors.
• Buyers:
People who arrange the terms of the sale and process
the actual purchase orders.
