1) The document discusses business markets and business buying behavior, outlining major categories of business buyers like producers, resellers, government, and non-profits. 2) It describes demand characteristics that differentiate business markets, like demand being derived from consumer products and fluctuating more than consumer demand. 3) The buying process in business markets involves multiple individuals and groups in a buying center that perform roles like initiating purchases, using products, influencing specifications, deciding, and processing orders.

1. Business Markets

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.