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PoM 6th ed. chapter 06

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Business markets and business buyer behaviour

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PoM 6th ed. chapter 06

  1. 1. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.1 it’s good and good for you Chapter 6 Business markets and business buyer behaviour
  2. 2. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.2 Business markets and business buying behaviour • Business markets • Business buyer behaviour • The business buying process • E-procurement: buying on the Internet • Institutional and government markets Topic outline
  3. 3. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.3 Business buyer behaviour refers to the buying behaviour of organisations that buy goods and services for use in the production of other products and services that are sold, rented or supplied to others. Business buying process is the decision process by which business buyers determine which products and services their organisations need to purchase and then find, evaluate and choose among alternative suppliers and brands. Business markets
  4. 4. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.4 Business markets (Continued) Market structure and demand Fewer and larger buyers Derived demand • Inelastic demand • Fluctuating demand Buyer and seller dependency
  5. 5. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.5 Business markets (Continued) • More complex • More decision participants • More professional purchasing effort Decision process
  6. 6. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.6 Business markets (Continued) Supplier development Systematic development of networks of supplier–partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell. Decision process
  7. 7. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.7 Business buyer behaviour The model of business buyer behaviour Figure 6.2 Major influences on business buyer behaviour
  8. 8. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.8 Business buyer behaviour (Continued) Straight rebuy is a routine purchase decision such as reorder without any modification. Modified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms or suppliers. New task is a purchase decision that requires thorough research such as a new product. Major types of buying situations
  9. 9. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.9 Business buyer behaviour (Continued) Systems selling involves the purchase of a packaged solution from a single seller. Major types of buying situations
  10. 10. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.10 Business buyer behaviour (Continued) Buying center is all of the individuals and units that participate in the business decision-making process. – Users – Influencers – Buyers – Deciders – Gatekeepers Participants in the business buying process
  11. 11. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.11 Business buyer behaviour (Continued) • Buying center provides a major challenge. • Who participates in the process? – Their relative authority – What evaluation criteria each participant uses – Informal participants. Participants in the business buying process
  12. 12. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.12 Business buyer behaviour (Continued) Users are those that will use the product or service. Influencers help define specifications and provide information for evaluating alternatives. Buyers have formal authority to select the supplier and arrange terms of purchase. Deciders have formal or informal power to select or approve the final suppliers. Gatekeepers control the flow of information to others. Participants in the business buying process
  13. 13. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.13 Business buyer behaviour (Continued) Major influences on business buyers Economic Factors Price Service Personal Factors Emotion
  14. 14. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.14 Business buyer behaviour (Continued) Major influences on business buyers Environmental factors Demand for product Economic outlook Cost of money Supply of Materials Technology Culture Politics Competition
  15. 15. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.15 Business buyer behaviour (Continued) Objectives Policies Procedures Structure Systems Major influences on business buyers Organisational factors
  16. 16. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.16 Business buyer behaviour (Continued) Motives Perceptions Preferences Age Income Education Attitude toward risk Major influences on business buyers Individual factors
  17. 17. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.17 The buying process Business buyer behaviour (Continued) Figure 6.3 Stages of the business buying process
  18. 18. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.18 Business buyer behaviour (Continued) Problem recognition occurs when someone in the company recognises a problem or need. • Internal stimuli – Need for new product or production equipment. • External stimuli – Idea from a trade show or advertising. The buying process
  19. 19. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.19 Business buyer behaviour (Continued) General need description describes the general characteristics and quantity of a needed item. Product specification describes the best technical product characteristics for a needed item. Value analysis is an approach to cost reduction where components are studied to determine if they can be redesigned, standardised or made with less costly methods of production. The buying process
  20. 20. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.20 Business buyer behaviour (Continued) Supplier search is the stage of the business buying process in which the buyer tries to find the best vendors. Proposal solicitation is the stage of the business buying process in which the buyer invites qualified suppliers to submit proposals. The buying process
  21. 21. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.21 Business buyer behaviour (Continued) Supplier selection is the process when the buyer reviews proposals and selects a supplier or suppliers. Order-routine specifications sees the buyer write the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties. The buying process
  22. 22. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.22 Business buyer behaviour (Continued) Performance review involves the buyer assessing the performance of the supplier and deciding to continue, modify or drop the arrangement. The buying process
  23. 23. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.23 Business buyer behaviour (Continued) • Online purchasing • Company-buying sites • Extranets E-procurement
  24. 24. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.24 Business buyer behaviour (Continued) • Advantages – Access to new suppliers – Lowers costs – Speeds order processing and delivery – Shares information – Sales – Service and support • Disadvantages – Can erode relationships as buyers search for new suppliers – Security E-procurement
  25. 25. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.25 Institutional and government markets Institutional markets consist of schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care. • Characteristics – Low budgets – ‘Captive’ audience
  26. 26. Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013 Slide 6.26 Institutional and government markets (Continued) Government markets tend to favour domestic suppliers and require suppliers to submit bids and normally award to the lowest bidder. • Affected by environmental factors • Non-economic factors considered – Minority suppliers – Depressed suppliers – Small businesses.

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