This document provides an overview of key concepts from Chapter 7 of the marketing management textbook. It discusses the differences between business and consumer markets, the various participants in organizational buying processes, and how business buyers make purchasing decisions. It also addresses how companies can build strong relationships with business customers and the purchasing behaviors of institutional and government buyers. The chapter questions guide the content, which includes definitions, examples, and diagrams.

2. Marketing Management
Arab World Edition
Kotler, Keller, Hassan, Baalbaki and Shamma
Chapter 7
Analyzing
Business Markets

3. Chapter Questions
1. What is the business market, and how does it differ from
the consumer market?
2. What buying situations do organizational buyers face?
3. Who participates in the business-to-business buying
process?
4. How do business buyers make their decisions?
5. How can companies build strong relationships with business
customers?
6. How do institutional buyers and government agencies do
their buying?
Copyright © 2012 Pearson Education 7-2

4. What is Organizational Buying?
Chapter Question 1:
What is the business
market, and how does it
differ from the consumer
market?
Copyright © 2012 Pearson Education 7-3
Organizational buying refers to 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.

5. What is Organizational Buying?
Chapter Question 1:
What is the business
market, and how does it
differ from the consumer
market?
Copyright © 2012 Pearson Education 7-4
Top Business Marketing Challenges:
• Expand understanding of customer needs
• Compete globally as China and India reshape markets
• Master analytical tools and improve quantitative skills
• Reinstate innovation as an engine of growth
• Create new organizational models and linkages

6. Chapter Question 1:
What is the business
market, and how does it
differ from the consumer
market?
Copyright © 2012 Pearson Education 7-5
The Business Market vs the
Consumer Market
B2B markets usually have important differences:
• Fewer, larger buyers
• Close supplier-customer
relationships
• Professional purchasing
• Multiple buying influences
• Multiple sales calls
Bridgestone Tire Company exemplifies a
supplier who generates good business from
fewer, but larger, business buyers.

7. Chapter Question 1:
What is the business
market, and how does it
differ from the consumer
market?
Copyright © 2012 Pearson Education 7-6
The Business Market vs the
Consumer Market
Differences of B2B markets (continued):
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically
concentrated buyers
• Direct purchasing
Real estate then suffered from the severe
economic downturn.

8. Chapter Question 2:
What buying situations do
organizational buyers face?
Copyright © 2012 Pearson Education 7-7
Buying Situations
Three types of buying situations:
• Straight rebuy
• Modified rebuy
• New task
Systems Buying and Selling
Many business buyers prefer to buy a total solution from one seller.

9. Participants in the Business
Buying Process
Chapter Question 3:
Who participates in the
business-to-business
buying process?
Copyright © 2012 Pearson Education 7-8
The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers

10. Participants in the Business
Buying Process
Chapter Question 3:
Who participates in the
business-to-business
buying process?
Copyright © 2012 Pearson Education 7-9
Concerns to business marketers:
• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?

11. The Purchasing/Procurement
Process
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-10
• Business buyers seek to obtain the highest benefit
package (economic, technical, service, and social) in
relation to a market offering’s costs.
• To make comparisons, they will try to translate all
costs and benefits into monetary terms.

12. Stages in the Buying Process
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-11
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review

13. Stages in the Buying Process
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-12
Table 7.1: Buygrid Framework

14. Supplier search
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-13
Companies that purchase over the internet are using electronic
marketplaces in several forms:
• Catalog sites
• Vertical markets
• Auction and tender information sites
• Spot markets
• Private exchanges
• Barter markets
• Buying alliances

15. Supplier search
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-14
Methods of e-procurement
• Websites organized using vertical hubs
• Websites organized using functional hubs
• Direct extranet links to major suppliers
• Buying alliances
• Company buying sites
Zawya is a leading business
information company serving the
high-end business and financial
professional community.

16. Supplier Selection
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-15
To rate and identify the most attractive suppliers, buying
centers often use a supplier-evaluation model such as the one
shown in Table 7.2.
Table 7.2: An Example of Vendor Analysis

17. Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-16
To command price premiums in competitive B2B markets,
firms must create compelling customer value propositions. The
first step is to research the customer.
Here are a number of productive research methods:
• Internal engineering
assessment
• Field value-in-use assessment
• Focus-group value assessment
• Direct survey questions
• Conjoint analysis
• Benchmarks
• Compositional approach
• Importance ratings

18. Order-Routine Specification
Chapter Question 4:
How do business buyers
make their decisions?
Copyright © 2012 Pearson Education 7-17
After selecting suppliers, the buyer negotiates the final order.
Considerations include:
• Stockless purchase plans
• Vendor-managed inventory
• Continuous replenishment

19. Managing Business-to-Business
Customer Relationships
Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-18
Ford’s ‘customized fleet solutions’
help build long-term business
relationships between the company
and its business clients.
The strongest B2B relationship
depends on the type of purchase/sale
being made.
Closer relationships are often
beneficial to both supplier and
customer.

20. Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-19
• Research supports greater vertical coordination between
buying partners and sellers - creating more value for both.
• Building trust is a pre-requisite.
The Benefits of Vertical
Coordination

21. Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-20
The Benefits of Vertical
Coordination
Fig. 7.1: Trust Dimensions

22. Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-21
The Benefits of Vertical
Coordination
Four factors affecting buyer-supplier relationships:
• Availability of alternatives
• Importance of supply
• Complexity of supply
• Supply market dynamism

23. Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-22
The Benefits of Vertical
Coordination
Eight categories of buyer-supplier relationships:
• Basic buying and selling
• Bare bones
• Contractual transaction
• Customer supply
• Cooperative systems
• Collaborative
• Mutually adaptive
• Customer is king

24. Chapter Question 5:
How can companies build
strong relationships with
business customers?
Copyright © 2012 Pearson Education 7-23
Business Relationships: Risks
and Opportunism
Risks:
• Specific investments are those expenditures tailored to a
particular company and value chain partner.
• Opportunism is some form of cheating or undersupply
relative to an implicit or explicit contract.

25. Institutional and Government
Markets
Chapter Question 6:
How do institutional buyers
and government agencies
do their buying?
Copyright © 2012 Pearson Education 7-24
The institutional market:
•Schools, hospitals, nursing homes, prisons, and other institutions
that must provide goods and services to people in their care.
•Often institutional purchasers must find items whose quality exceeds
minimum requirements, but also with low prices.

26. Institutional and Government
Markets
Chapter Question 6:
How do institutional buyers
and government agencies
do their buying?
Copyright © 2012 Pearson Education 7-25
The government market:
• In most countries, government organizations are a major buyer of
goods and services.
• Governments have enormous purchasing power in the Arab world
– very high share of GNP.
• Fortunately for businesses of all sizes, many governments have
been trying to simplify the contracting procedure and make
bidding more attractive.

27. Credits
• Slide 1 OttmarBierwagen:
• Slide 5 Camera Press Ltd: Jurgen Tap / Hochzwei / Gamma
• Slide 6 Alamy Images: Jack Hobhouse
• Slide 14 Zawya:
• Slide 16 James C. Anderson, James A. Narus, and Wouter van Rossum, “Customer
Value Propositions in Business Markets,” Harvard Business Review, March 2006, pp.
2–10; James C. Anderson and James A. Narus, “Business Marketing: Understanding
What Customers Value,” Harvard Business Review, November 1998, pp. 53–65;
James C. Anderson and James A. Narus, “Capturing the Value of Supplementary
Services,” Harvard Business Review, January 1995, pp. 75–83; James C. Anderson,
Dipak C. Jain, and Pradeep K. Chintagunta, “A Customer Value Assessment in
Business Markets: A State-of-Practice Study,” Journal of Business-to-Business
Marketing, 1, no. 1, January 1993, pp. 3–29; www.ricsa.net;
www.engineeringnews.co.za/article/new-technologynegates- traditional-soil-
compaction-methods-2008-02-15
• Slide 18 ‘Ford Customized Fleet Solutions’. Granted with permission by Al Tayer
Motors LLC
• Slide 20 Glen Urban, “Where Are You Positioned on the Trust Dimensions?,” in Don’t
Just Relate-Advocate: A Blueprint for Profit in the Era of Customer Power (Wharton
School Publishers, 2005),