2. Business Markets
• Marketers are just as concerned with
meeting the needs of business
customers as they are of meeting
those of consumers.
• A business market (B2B market)
consists of individuals, organizations,
or groups that purchase a specific
kind of product for one of three
purposes: resale, direct use in
producing other products, or use in
general daily operations.
3. Marketing to Business Markets
• Marketing to businesses employ the same concepts – defining target
markets, understanding buying behavior, and developing effective marketing
mixes.
• However, there are important structural and behavioral differences in
business markets.
• Business markets have relatively smaller customer populations,
• Quantity purchased,
• Buying method differ significantly
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4. 4 Categories of Business Markets
• Producer Markets
• Are individuals and business organizations that purchase products for the purpose of making a profit by
using them to produce other products or using them in their operations
• Reseller Markets
• Consist of intermediaries, such as wholesalers and retailers, which buy finished goods and resell them for
a profit
• Government Markets
• Can be federal, state, county or local governments that spend money for a wide range of goods and
services to support their internal operations and provide citizens with such products as highways,
education, water service, energy, and national defense.
• Institutional Markets
• Organizations with charitable, educational, community, or other nonbusiness goals
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6. Characteristics ofTransactions with Business Customers
• Large orders
• Expensive items
• Extended negotiations
• Reciprocity – an arrangement in which two organizations agree to buy from
each other
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7. Attributes of Business Customers
• Generally better informed,
require detailed information
• May require technical
specifications
• Builds partnerships, suppliers and
their customers build and
maintain mutually beneficial
relationships
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8. Primary Concerns of Business Customers
• Price is an essential consideration for business customers because it influences operating
costs, and costs of goods sold, which affects selling price, profit margin, and ultimately the
ability to compete.
• Most business customers try to maintain a specific level of quality in the products they
buy. Oftentimes they have a set of expressed characteristics called specifications.
• Services – inventory maintenance, on-time delivery, repair services etc.
• Developing and maintaining relationships with suppliers, by building trust with a particular
supplier, buyers can reduce search efforts, and uncertainty about prices.
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9. Methods of Business Buying
• Most business customers follow the steps:
• Description – products are standardized, and graded according to certain characteristics
• Inspection – business buyers base their purchase decisions on the condition and characteristics
of products
• Sampling – entails evaluating a portion of a product on the assumption that its characteristics
represent the entire lot
• Negotiation – some purchases of business are based on negotiated contracts
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10. Types of Business Purchases
• One of three types:
• New-task purchase – an organization makes initial purchase of an item to be used to
perform a new job or solve a new problem. Requires development of product
specifications, vendor specifications, and procedures for future purchases.
• Straight rebuy purchase – occurs when buyers purchase the same products routinely
under approximately the same terms of sale. Requires little information for routine
purchase decisions and tend to use familiar suppliers that have provided satisfactory
service in the past.
• Modified rebuy purchase – a new task purchase is altered after two or three orders, or
requirements associated with a straight rebuy purchase are modified. A business buyer
might seek faster delivery, lower prices, or a different quality level of product
specifications.
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11. Demand for Business Products
• Derived Demand
• Demand for business products that stems from demand for consumer products.
• Inelastic Demand
• Demand that is not significantly affected by a price increase or decrease
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12. Demand for Business Products
• Joint Demand
• Occurs when two or more items are used in combination to produce a product.
• Fluctuating Demand
• Since demand for business products is derived from consumer demand, it is subject to
dramatic fluctuations.
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14. Business (Organizational) Buying Behavior
• Refers to the purchase behavior of producers, government units, institutions, and
resellers.
• The Buying Center
• the people within the organization who make business purchase decisions
• They include:
• Users – members who actually use the product
• Influencers – often technical personnel who help develop product specifications and evaluate
alternatives
• Buyers – select suppliers and negotiate terms of purchase
• Deciders – choose the products
• Gatekeepers – control the flow of information to and among the different roles in the buying center.
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15. Stages of the Business Buying Decision Process
Recognize
Problem
Develop
Product
Specifications
to solve
Problem
Search for and
evaluate
possible
products and
suppliers
Select Product
and Supplier
and order
product
Evaluate
Product and
Supplier
Performance
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16. Stages of the Business Buying Decision Process
• In the first stage, one or more individuals recognize that a problem or need exists.
• The second stage is the development of product specifications, requires that buying center
participant assess the problem or need and determine what is necessary to resolve or
satisfy it.
• The third stage is searching and evaluating potential products and suppliers. Search
activities may involve looking at company files, and trade directories, contacting suppliers
for information, soliciting proposals from known vendors, and examining various online
and print publications.
• Value analysis – examines quality, design, materials and possibly item reduction or deletion
• Vendor analysis – a formal and systematic evaluation of current and potential vendors
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17. Stages of the Business Buying Decision Process
• The results of deliberations and assessments are used in the fourth stage of the process to
select the product to be purchased and the supplier. In some cases, the buyer selects
several suppliers, a process known as multiple sourcing. At times only one supplier is
selected, called sole sourcing.
• During the fifth stage, the products performance is evaluated by comparing it with
specifications. The suppliers performance is also evaluated during this stage.
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18. Influences on the Buying Decision Process
• Environmental
• Competitive factors, economic factors, political forces, legal and regulatory forces,
technological changes, sociocultural issues
• Organizational
• Objectives, purchasing policies, resources, buying center structure
• Interpersonal
• Cooperation, conflict, power relationships
• Individual
• Age, education level, personality, tenure, position in the organization
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