Course Code: MKT401

Course Title: Marketing Management

Lecture : Analyze Business Markets

Week No: 07

Reference Book: Marketing Management by Kotler

Keller (14 edition)
Department of Business Administration
Contents of Presentation

• What is the business market, and how does it differ from the
consumer market?
• What buying situations do organizational buyers face?
• Who participates in the business-to-business buying process?
• How do business buyers make their decisions?
• How can companies build strong relationships with business
customers?
• How do institutional buyers and government agencies do their
buying?
 Organizational Buying
Business Market:
• Organizations that acquire goods and services used in the production
of other products or services that are sold, rented, or supplied.
 Characteristics of Business Market
• Fewer Larger buyers
• Close supplier-customer relationship
• Professional Purchasing
• Multiple buying influences
• Multiple Sale Calls
• Derived demand
• Inelastic Demand
• Fluctuating Demand
• Geographically concentrated buyers
• Direct purchasing
Buying Situations

Straight Re-buy
• Routine
• Suppliers make efforts for quality maintenance
• Propose automatic reordering system
Modified Re-buy:
• Modify product specifications, prices, delivery requirements
• Required additional participants of both sides
New Task:
• First time purchase
• Greater cost or risk, involvement of larger people
• Stages: awareness, evaluation, trial and adoption
• Supplier’s image and brand promise is important
System Buying
• Buying total solution
• Single supplier provides buyer with entire requirements
(maintenance, Repair, and operating)
• Prime contractor
• Second tier contractors
• Firms must compete on price, quality, reliability
Buyer Centre
Decision making unit
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers
Buying centre influences
• Participants with different interest, authority, motives
• Engineer: maximize performance of product
• Production: ease of use and reliable supply
• Financial person: economies of purchase
• Unions: safety issues.
• Participants’ perceptions, preferences and attitude towards risk,
buying style play role
• Keep it simple, want the best, want everything done.
• Age, income, education, job position, personality.
Stages in Buying Process
1. Problem Recognition:
• Internal stimulus
• External stimulus
2. General Need Description and Product
• Develop technical specifications
• Specified standards
3. Supplier Search:
• Trade directories
• Contact with other companies
• Trade advertisements
• Internet
• Set up external links to suppliers
4. Proposal Solicitation:
• Document describe value and benefits in customer terms
• If item is complex or expensive buyer require detail
• After evaluation buyer invites suppliers for formal presentation.

5. Supplier Selection
• Specific desired supplier attributes
• Importance of each attribute
Overcoming Price Pressure
• Showing total cost leadership
• Value comparison with competitors
• Restrictive conditions
• Limited quantities
• No refunds
• No adjustments
• No service
• Solutions to enhance customer revenue
• Solutions to decrease customer risks
• Solutions to reduce customer costs.
6. Order-Routine Specification
• Blanket contract
• Vendor managed inventory
• Continuous replenishment program
7. Performance Review:
• Users evaluation
• Weighted score method
Managing B2B Customer Relationships
• Relationship Depends on four factors
• Availability of alternatives
• Importance of supply
• Complexity of supply
• Supply market dynamics
Business Relationships: Risks and Opportunism
• Specific Investment
• Sensitive cost and information needs to be exchanged but
• Buyer or supplier may be vulnerable.
• Buyers’ inability to measure vendor performance create vacuum for
cheating
Institutional and Government Markets
• Institutional Market: Schools, colleges, hostels, hospitals, and others
that provide goods and services to people in their care.
• Government market
• Suppliers submit bids
• Negotiated contract basis
• Require considerable paper work
• Delay in decision making
• Meeting legal requirements
Class Discussion
What are similarities between selling product to consumer and
customers?
What are differences between selling product to consumer and
customers?
Reference No. 01 Topic: Analyze Business Markets
Reference No. 02 Topic: Organizational buyer’s Face
Reference No. 03 Topic: Business-to-Business Buying Process
Reference No. 04 Topic: Institutional Buyers & Government Agencies
References / Resources

1. P.Kotler, and K.Keller (2012). Marketing Management, New jersey, United State America:
Pearson Education , chapterNo.7, Analyze Business Markets, Page No.182-208 .

2. Retrieved from : https://www.slideshare.net/kaorumatsubarabuttercup/analyzing-

business-markets-and-business-buying-behavior

3. Retrieved from : https://www.slideshare.net/keiyaa/ch7-kotler-and-keller-presentation

4. Retrieved from :
https://afnanhossain.weebly.com/uploads/2/6/1/5/26152362/chapter_7.pdf