Marketing Management- Business Buyer Behaviour

1. By- Prachi Agarwal

2. Business Buyer Behaviour??
 Business buyer behaviour is the intent and behaviour
shown by companies and employees into making
purchases for the organization. Business buying behaviour
is the concept of understanding the needs and wants of a
business and making appropriate purchases, which
ultimately help a company get profits.
 Companies have specific roles allotted to employees, who
responsible for making business purchases. This role is
often known as business buyer. Business buyer behaviour
can be understood on the basis of the business buying
process, which helps companies to get the best raw
material & goods, which can be processed to get maximum
output and returns.

8. Steps in Business Buying Process

9.  A Problem Is Identified-The purchasing process does not
begin until someone identifies a problem within the
organization, which can be solved by purchasing a good or
service. Anyone within the organization can initiate this -- from
a customer service rep out of printer paper -- to the CEO who
decides that it's time to expand to a larger facility. In some
instances, a sales person may help someone in the organization
to identify a need that no one had previously recognized.
 General Need Description-After a problem is identified, the
organization determines which product or service is required.
When an office is out of printer paper, the office manager may
decide that more paper is needed. However, a software engineer
in the same company might suggest that the organization
become paperless by providing all employees in the office with
tablet computers.

10.  Product Specification-Once the general need is agreed upon
by those who have purchasing authority in that organization,
they will then narrow down the options by specifying what the
product or service must offer. If they have decided on tablets,
they would then specify the size they want, how much memory
the tablets offer, and so on. If they decide on paper, then they
would determine the quantity and quality of paper required.
 Supplier Search-The third step of the buying process involves
looking for potential suppliers. If the company doesn't already
have an established relationship with a vendor that offers the
product, then often the company must look online, attend trade
shows or contact suppliers by telephone. Purchasers determine if
the suppliers are reputable, financially stable and if they'll be
around for future requirements.

11.  Request for Proposals-For large purchases, organizations
usually write out a formal RFP, a Request for Proposal, and
then send it to their preferred suppliers. Alternatively, they
may make the process public so that anyone can send in a
proposal. For smaller purchases, this could be as simple as
looking at the price on a website.
 Supplier Selection-In this part of the process, supplier
proposals and prices are evaluated to determine who is
offering the best price and the best quality. Often, price
alone is enough to win an organization's business, as many
businesses will weigh the price against financing options,
supplier reputation and whether or not a supplier can
provide the organization with future goods and services.

12.  Order Specification-Once the winning supplier has been
selected, the organization places the order. This may involve
establishing credit with the supplier, agreeing on terms, as well
as reviewing shipment times and any other deliverables that may
come with the sale, such as installation or product training.
 Performance Review-After the product has been delivered or
the service has been performed, the organization will review the
purchase to see if it meets acceptable standards. For larger
purchases, this could be a formal review involving key decision
makers in the organization and the supplier's sales staff. For
smaller purchases, it is often informal. For example, if the
company ordered a box of paper that arrived late or was
damaged, the company may decide not to buy from that supplier
again, without ever informing the supplier of a problem.

13. Differences between Consumer
and Business Buyer Behaviour
Business Needs vs. Consumer Wants
 Most consumer goods are discretionary products people may want but
don’t necessarily need, for example entertainment services, consumer
electronics or vacation travel. Consumer buying behavior is based on
perceived characteristics such as style, fashion or peer acceptance.
Emotional factors play a big part in consumers’ purchase decisions. So
consumer marketing focuses on stimulating discretionary buying
behavior through persuasive messaging and media investments to
generate demand.
 In contrast, businesses usually come prepared to buy a solution to a
need – products that are required for daily operations, or to solve a
specific business problem. Their need pre-exists. Product performance
characteristics are far more important than the image of the product.
Business buyers are less emotional and more task oriented. It’s simply
a matter of finding the supplier who can best fulfill that need.

14. Smaller & Highly Specialized Markets
 Business marketers generally sell to narrower vertical
markets substantially smaller than most consumer
markets. B2B marketers may target only a few hundred
prospects but consumer markets can number in the
millions. Due to the smaller size it’s often possible to
identify and profile all the prospects within a
particular business market and approach each with
customized marketing communications and in-person
sales contact.

15. Individual Business Buyers Represent Higher Value
 Business marketers focus on fewer, more intimate and
longer-term customer relationships. Sales involve
significantly higher average dollar amounts to smaller
groups of customers with exponentially greater
lifetime values. A few large customers can easily
account for the majority of a B2B company’s revenue.
Due to the significantly higher transaction amounts
and lifetime values, B2B tactics can accommodate a
higher marketing investment per contact.

16. Closer Proximity & Higher Degree of
Independence
 In consumer marketing, the relationship often ends
with a remote transaction made through a retailer. The
manufacturer rarely makes personal contact with the
consumer. In business marketing, the buyer-seller
proximity is reversed. In most cases the supplier visits
the customer in person and establishes a true one-to-
one relationship with the customer over an extended
period of time.

17. Product Importance
 The physical product is of greatest importance in consumer
markets. In B2B markets, the purchase extends beyond the
product and includes an array of economic, technical and
personal relationships between buyer and seller.
 While the product quality is important, this must be
matched by quality and reliability of the relationship. The
buyer depends on the supplier for many things beyond the
product itself, including an assured supply of materials,
service, efficient order handling, delivery, and often
extension of credit. These factors can have more influence
than having the perfect product, since supply chain
complications cost the customer in terms of stock,
downtime, lost orders, etc.

18. More Complex Products Requiring
Customization
 Many business products are specialized and require a high
degree of technical customization for specific applications.
Even everyday products tend to be more complicated
because of their use and application in specialized business
processes. The widely varying needs of business customers
dictates highly personalized marketing, including
customized products, services and prices. Even meeting
buyers’ basic operational buying needs typically requires
some level of customization to logistics quantities, delivery
and invoicing.

19. Stronger Customer-Centric Focus
 B2B marketing requires that all parts of the business
be customer-oriented and that all marketing decisions
are based on a complete and accurate understanding
of customers’ needs. B2B companies are usually closer
to their customers and more knowledgeable about
their needs than the typical consumer company.

20. Expert Buyers & Multiple Decision Makers
 Consumer purchases typically involve an individual
decision maker in a single-step transaction. Compared
with consumer decision making, business buying
behavior is characterized by a formal multi-step
process conducted professionally over a period of time,
involving many people interacting within a formal
organization.


21. Longer & More Formal Buying Process
 Every business organization has formal purchasing
policies, procedures and levels of purchasing authority that
don’t exist for consumers. Business buying processes are
complex and highly structured requiring multiple steps
drawn out over a period of time and involving a wide range
of individuals representing various areas of expertise or
interest from within the organization.
 Marketers must recognize when it’s time to stop nurturing
leads through marketing channels and hand those
prospects off to the sales team. Conversely, sales must
recognize when to recycle dormant leads back to
marketing for further nurturing.

22. Buying Situations in
Industrial/Business Market
 New task – The purchase is done for the first time with no purchasing
experience, and extensive search is done to evaluate options. The
greater the cost or risk involved, more the expertise of decision making
participants is needed. For example, an organisation buying raw
materials to manufacture laptops for the first time.
 Modified rebuy – Due to change in preferences or entry of a substitute
product in the market, organisations are forced to modify an existing
product to suit the target market. The modifications can be change in
product characteristics, price, quality, suppliers, etc. To meet these
production requirements, marketers look for inventory or raw
materials that meet the organisations objectives. The people involved
in buying process have basic information and need to study the
alternatives suiting the organisation’s needs. This process is less risky
and less time consuming as compared to “New Task” buying situation.
The information in this scenario is gathered on alternatives. For
example, a school buying latest model of school buses with larger
capacity to add to the existing fleet of mini-buses.

23.  Straight rebuy – in this buying the organisations
rebuy products and services from the same suppliers.
Suppliers usually proactively visit the organisations to
take the orders in advance to maintain their market
share. The people involved in the buying process have
relatively good experience of buying and need no
additional information on products and services.
There is no risk involved because of past experience of
purchasing the same products and services. For
example, laptop manufacturer buying raw materials
from the same suppliers to meet the production
demand.

24. Buying Roles in Industrial
Marketing
 The decision making unit of a buying organization is called its buying
center – all the individuals and units that play a role in the business
purchase decision making process. This group includes the actual users
of the product or service , those who make the buying decision, those
who influence the buying decision , those who do the actual buying
and those who control buying .
Kinds Of Buying Roles
• Initiator
• Users
• Influencer
• Deciders
• Approvers
• Buyers
• Gatekeepers

25.  Initiators – Those who request that something be
purchased. They may be users or others in the
organization. For example- for office equipment’s, the
initiative may be taken by administrative department.
 Users – Those who will use the product or services .In
many cases the users initiate the buying proposal and
help define the product requirements.
 Influencers – People who influence the buying
decision . They often help define specification and also
provide information for evaluating alternatives.
Technical persons are generally important influencers.

26.  Deciders – People who decide on product requirements or on
suppliers and those who have authority to select the suppliers. For
major purchase , the final decision will be taken by top management.
 Approvers –People who authorize the proposed action of deciders and
buyers.
 Buyers –People who have formal authority to select the supplier and
arrange the purchase terms. Buyers paly their major role in selecting
vendors and negotiating. In more complexes the buyers might include
high level managers.

Gatekeepers- People who have the power to prevent sellers or
information from reaching members of the buying center. For example
–purchasing agents , receptionists may prevent salespersons from
contacting users or deciders.

27. Factors that Influence Business
Buyer
1) External factors
 Economic condition: A major impact on the buying decisions and the
strategies are caused by the fluctuations in the money markets and the rate of
interests. Both interest rate and business buying have an opposite relation, a
decrease in interest rates leads to higher purchase rate.
 Political environment: A change in the government policy makes an impact
on the economy, which further leads to affecting the business buying decision
of the products. Later, it also changes the B2B purchase decision.
 Competition: In the industry, the main motto of any business is to always stay
ahead of their competitors therefore when a business’s competition moves
ahead and is changing their product or if they are enjoying in the market
because of their suppliers, the businesses tend to change their trends and this
also leads to a change in the business buying decision.
 Social environment: Societies and cultures are evolving day by day and the
businesses have to keep up with those changes by following updated
procedures to meet these changes.

28. 2) Internal Factors
 Business objectives: The goals and objectives act as a major element as to
what the business will purchase. If an organization wants to acquire a market
by selling cheaper goods they will need to find a supplier with low costs.
Though if a business wants to sell better quality products then they might have
to look for a very good supplier. The buying behavior depends on the goals and
objectives of the businesses.
 Technological factors: While buying a new product the decision makers
always consider the existing technology. Few purchases are done to change the
current technology. They also make sure that the new products are compatible
with the technology or not. Therefore somehow the technology acts as a factor
influencing the business buying decisions.
 Manpower Skills: These skills are as important as the decisions makers and
the products since they are the ones, who are going to use the new purchases
made and are going to make the most of it. Particularly the equipment and
machineries. In this way it influences the business buying decisions

29. 3) Individual and Interpersonal Factor
 Individual Factors: It includes as social status, age or
cultural background of the decision makers, also
influence the buying decisions.
 Interpersonal Conflict: This leads to a change in the
results taken by the decision makers. Thus the
relationship and the attitude among the decision
makers play a very important role in the business
buying

30. 4) Conditional Factors
 Present Financial Condition:If a B2B organization is
running low on cash, it might decide to make a purchase
from its current supplier who offers credit for long. Also if
an organization does not have enough of money for a
particular purchase, it might then just go for a cheaper and
easily available product that is inside their budget.
 Availability: There are times when some buying decisions
cannot hang around; the organizational buyers may go to
new suppliers who are willing to supply products, if the
present suppliers fail to supply the exact product needed