This chapter discusses analyzing business markets. It outlines that organizational buying involves establishing need, identifying, evaluating, and choosing suppliers. Business markets have fewer and larger buyers than consumer markets, and closer supplier-customer relationships. There are three types of buying situations: straight rebuy, modified rebuy, and new task. The chapter also describes the various participants in the business buying process and the stages of the buying process. It notes that closer relationships between suppliers and customers are being explored through approaches like supply chain management and purchasing alliances. Business marketers must form strong bonds with customers and provide added value, while also managing risks and opportunism. The chapter concludes with a brief description of institutional and government markets.

1. Chapter 7: Analyzing Business Markets
1. Organizational buying is the decision-making process by which formal
organizations establishes the need for purchased products and services and identify,
evaluate and choose among alternative brands and suppliers.
2. Business Markets as compared with Consumer Markets have fewer, larger
buyers, have close supplier-customer relationship and more geographically
concentrated buyers.
3. Three types of buying situations are the (1) straight rebuy, (2) modified rebuy and
(3) new task.
4. Many business buyers prefer to buy a total solution to a problem from one seller. This
is called systems buying.
5. Participants in the business buying process include: (1) initiators (2) users (3)
influencers (4) deciders (5) approvers (6) buyers (7) gatekeepers
6. Purchasing departments were perceived to occupy a low position in the
management hierarchy, in spite of often managing more than half the company’s
costs. However, nowadays, most purchasing professionals describe their jobs as more
strategic, technical, team oriented and involving more responsibility than ever before.
7. Stages in the buying process include: (1) problem recognition (2) general need
description (3) product specification (4) supplier search (5) proposal solicitation (6)
supplier selection (7) order-routine specification (8) performance review
8. To improve effectiveness and efficiency, business suppliers and customers are
exploring different ways to manage their business relationships. Closer
relationships are driven in part by supply chain management, early supplier
involvement and purchasing alliances.
9. Business marketers must form strong bonds and relationships with their customers
and provide them added value. However, in establishing these relationships, risks and
opportunisms arise in the form of taking advantage of the business situations. These
risks and opportunism should be assessed and calculated to determine its business
effects.
10. Institutional & Government Markets consist of schools, hospitals, nursing
homes, prisons and other institutions that provide goods and services to people in their
care. Buyers for government organizations tend to require a great deal of paperwork
from their vendors and to favor open bidding and domestic companies. Suppliers must
be prepared to adapt their offers to the special needs and procedures found in
institutional and government markets.
Ronaldo S. Batisan (Dec. 1, 2009)