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Business Market & Buying Behavior (Ppt 2003)


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Business Market & Buying Behavior (Ppt 2003)

  1. 2. <ul><li>ANALYZING BUSINESS MARKET </li></ul><ul><li>BUSINESS BUYING BEHAVIOR </li></ul>
  2. 3. <ul><li>Decision making process </li></ul><ul><li>To purchase products and services </li></ul><ul><li>To Identify, evaluate and choose among alternative brands and suppliers. </li></ul>
  3. 4. Business market have several characteristics that contrast sharply with those of consumer markets. 1. Fewer Buyers : Business marketer normally deals with far fewer buyers than the consumer marketer does. 2. Larger Buyers : A few large buyers do most of the purchasing in such industries as aircraft ,engineering & defense. 3. Close Supplier-Customer Relationship : B ecause of the smaller customer base & the importance & power of the larger customers, suppliers are frequently expected to customize their offering to individual needs. Sometimes buyer request sellers to change their practice & performance.
  4. 5. 1. Straight Rebuy: 2. Modified Rebuy: 3. New buy: Low involvement More involvement
  5. 6. <ul><li>Initiators: Those Who request something to be purchased. (can be Users or others in the Firm) </li></ul><ul><li>Users: Those who will use the product or service. </li></ul><ul><li>Influencers: People who influence the buying decision. Also help define specifications & provides information for evaluating alternatives. </li></ul>
  6. 7. <ul><li>Deciders: People who decides on product requirements or on suppliers. </li></ul><ul><li>Approvers: Who authorized the propose actions of deciders or buyers. </li></ul><ul><li>Buyers: People who have authority to select the supplier & arrange the purchase term. </li></ul><ul><li>Gate Keepers: Who have the power to prevent sellers or information from reaching members of the buying center. </li></ul>
  7. 8. <ul><li>Business buyers respond to many influences when they make their decision. </li></ul><ul><li>When supplier offers are similar ,business buyers can satisfy the purchasing requirements with any supplier. </li></ul><ul><li>When supplier offers differ substantially, business buyers are more accountable for their choices and pay more attention to economic factor. </li></ul>
  8. 9. <ul><li>1 .Environmental factors: </li></ul><ul><li>Close attention to present and expected economic factors. </li></ul><ul><li>Make long term contracts with suppliers. </li></ul><ul><li>2 .Organizational factors: </li></ul><ul><li>Every Organization structures & policies vary from others. </li></ul><ul><li>So because of this above reason buying business behavior is affected inside the organization </li></ul>
  9. 10. <ul><li>3 .Interpersonal & Individual Factors: </li></ul><ul><li>Buying decision is influenced due to the interests ,status ,age and authority of the business buying. </li></ul><ul><li>Also influenced by likes and dislike of business buyers. </li></ul><ul><li>4 .Cultural Factors: </li></ul>
  10. 11. Influences on buying decision & ENVIRONMENTAL FACTOR 1 . Level of Demand 2. Economic Output 3. Interest Rate 4 . Rate of Technology change 5. Political Developments 6. Competitive Developments 7. Social Responsibility ORGANIZATIONAL FACTOR 1. Objectives 2. Policies 3. Procedure 4. Firm Structure 5. Systems INDIVIDUAL FACTOR <ul><li>Age </li></ul><ul><li>Income </li></ul>3 . Education 4. Job Position 5. Personality 6. Risk Attitudes INTERPERSONAL FACTOR 1. Interest 2. Authority 3. Status 4. Empathy
  11. 12. <ul><li>Three Ways of Company's Purchasing Orientations: </li></ul><ul><li>1.Buying Orientation: </li></ul><ul><li>* focus on short term & tactical </li></ul><ul><li>Two tactics: </li></ul><ul><li>Commoditization : firm imply that product is commodity & care only about price </li></ul><ul><li>Multisourcing : firm use several sources & make them compete for shares of company’s purchase. </li></ul><ul><li>2.Procurement Orientation: </li></ul><ul><li>* focus on quality & cost ,long term contracts. </li></ul><ul><li>* nice relation with suppliers. </li></ul><ul><li>3.Supply Chain Management Orientation: </li></ul><ul><li>* more strategic. </li></ul><ul><li>* firm focus on improvement of value chain. </li></ul>
  12. 13. <ul><li>Marketers need to understand how business purchasing dept works . </li></ul><ul><li>Peter kraljic distinguished 4 product-related purchasing process </li></ul><ul><li>1.Routine Products: These product have low value and cost to the customer involves low risk. (e.g. stationary) </li></ul><ul><li>2.Leverage Products: These Products have high value and cost to the customer but involves little risk of supply.(e.g. engine piston) </li></ul><ul><li>3.Strategic Products: Such products have high value and cost to the customer also involves high risk.(e.g. main frame computers) </li></ul><ul><li>4.Bottleneck Products: Such products have low value and cost to the customer but they involve some risk.(e.g. spare parts) </li></ul><ul><li>Note: purchasing process will vary with different types of products. </li></ul>
  13. 14. <ul><li>Robinson & Associates have identified eight stages & called them Buyphases. </li></ul><ul><li>There are eight steps in business buying process: </li></ul><ul><li>1.Problem Recognition: </li></ul><ul><li>2.General Need Description: </li></ul><ul><li>3.Product Specification: </li></ul><ul><li>4.Supplier Search: </li></ul><ul><li>5.Proposal Solicitation: </li></ul><ul><li>6.Supplier Selection: (blanket contracts) </li></ul><ul><li>7.Order-Routine Specification: </li></ul><ul><li>8.Performance Review: </li></ul>
  14. 15. <ul><li>Institutional Markets consists of hospitals, schools, nursing homes, prisons and other institution that must provides goods and services to people in their care. </li></ul><ul><li>In major countries, government organization are major buyer of goods and services. </li></ul><ul><li>Government organizations typically require suppliers to submit bids and normally they awards the contract to the lowest bidder. </li></ul><ul><li>In some cases ,the government will make allowance for the supplier’s reputation for completing project on time. </li></ul><ul><li>Government organization tends to favor domestic supplier over foreign supplier. </li></ul>