Unit 4 – Chapter 6

Business Markets and buyer

behaviour
Business Buyer (B2B) Behaviour

Business buyer behaviour refers to the buying

behaviour of the organizations that buy goods
and services to use in production of other
products and services that are sold, rented or
supplied to others.

The primary concept is that in selling to final

buyers, firm’s marketing to business customers
must build profitable relationships by creating
superior customer value.
 B2B - Buying Behaviour

The buying behaviour for business buyers composes of a:

Buying Centre – composes all the persons involved in

the buying process i.e. who makes/influences the
decisions.

Business buying process – the decision process by

which business buyers determine which products and
services their organization needs to purchase, find,
evaluate and choose among alternative suppliers and
brands.
 Business Markets

Business Markets are HUGE and can be very profitable.

However these businesses thrive through the maintenance of
relationships/partnerships. One way this is accomplished is
via Supplier Development.

Supplier Development is the systematic development of a

networks supplier-partners to ensure an appropriate and
dependable supply of products and materials for the making
of products or for re-sale. E.g. Manufacturing industry.
 Business Buying Behavior

There are four (4) primary factors that

distinguishes the Business Buyer behaviour
(B2B) from the Consumer Buying behaviour
(C2B) :

1. Market Structure and demand

2. The nature of the buying unit
3. Types of decision
4. The decision process
 1. B2B: Market structure pg. 196

The business buying structure has fewer but LARGER buyers than the
consumer market. They operate primarily on derived demand.

Derived Demand comes from the demand for a particular good or

service from customers; i.e. the more the customer demands a product,
the more the business’ supplies (stock up).

Inelastic demand is the demand for a good or service that does not
increase or decrease in response to a change in price. Eg. Water,
electricity, leather, etc

Fluctuating demand is when due to certain factors, the demand

gets lesser or higher. Eg. A 40% increase or decrease in the price
of paper.. Will it affect the amount the company purchases?
2. Nature of the Buying Unit pg 197

Based on the structure of the business, purchasing

decisions involve:

• More participants – Committees, Focus groups

Executive team, consultants

• More professional approach – Purchasing agents,

brand managers, account executives
2. Nature of the Buying Unit pg 197

More Complex – More money, requires technical

expertise, affects more people, decision takes longer

Formalized - Standard operating procedures (SOP’s),

Pro forma Invoices, detailed documentation – pre and
post purchase

Buyer to Seller dependency- buyer has a need, the

business offers a solution- mutually profitable
relationship/partnership.
3. Types of Buying Situations pg 200
Buying situation speaks to the type of purchases made for
B2B.
➢ New task – is when the buyer purchases a product or
services for the first time.
➢ Straight rebuy – the buyers reorders something
without any modifications. Eg. Ink toner for a printer
➢ Modified rebuy – the buyers want to modify (change)
product specifications, prices, terms or supplier. Eg. paper
➢ Systems Selling (Solutions) - the offering of a packaged
solution to a problem from a single seller, thus avoiding all the
separate decisions involved in the complex buying situation
Eg. Nikon using UPS as their superior logistics partner to
transport, distribute, track, deliver their products.
Participants in the Business Buying process

The persons/participants involved in the b2b buying process are:

➢ Users – persons who use the product or service, usually the

end user.

➢ Influencers –persons who provide information for evaluation

of alternatives or offer expertise/advise.

➢ Deciders – the persons who have the power to select or

approve the final supplier

➢ Buyers – person who has the authority to make the purchase.

➢ Gatekeepers – control the flow of information to others .

4. The Business Buying Process
4. The Business Buying Process

Lets consider the purchasing of a photocopier

machine
❖ Problem Recognition – this is 1st stage of the
business buying process where someone in the
company recognizes a problem or need that can
be met by acquiring good or service eg, the
copier broke down
❖ General need description – buyer describes the
general characteristics and quantity of the item
needed. Eg. Need a copier for the records dept.
4. The Business Buying Process

❖ Product specification – the buying organization

decides on and specifies the best technical
product characteristics for a needed item..Eg.
Sales rep. or technician seek information and
give advice what to buy.

❖ Supplier Search- Buyers tries to find the best

vendors …. Eg. Look for info online, several
quotes for a new machine from different
vendors.
4. The Business Buying Process
❖ Proposal Solicitation – the buyer invites
qualified suppliers to submit proposals.. Eg. A
sales rep gives a presentation/ formal proposal re
a solution; In govt. a procurement process
occurs.

❖ Supplier Selection – the buyer reviews

proposals and selects a supplier(s)…. Eg. After
much deliberation the company makes a decision
and which vendor/solution they will go with.
 4. The Business Buying Process
❖ Order Routine specification – the buyer writes
the final order with the chosen supplier which can
include technical specifications, return policies,
and warranties.

❖ Performance Review – the buyers assesses the

performance of the supplier and decides to
continue, modify, or drop the arrangement.
 E-Procurement

E-Procurement is purchasing through electronic

connections between buyers and sellers.
Types of e-procurement:
• Reverse Auctions – invite suppliers to bid
• Trading exchange – online collective trading
• Company buying site – direct link to the company
re orders
• Extranet links – sellers and buyers can interact,
share information
E-Procurement
 Institutional Markets

Institutional Markets consist of hospitals, school,

nursing homes, prisons and other institutions that
provide goods and services to people in their care.

- This is a HUGE market to capture and maintain.

Eg. US prison annual expenditure is $47 billion a year,
and spends on average $29,000 on one prisoner
per annum.
Government Markets
Major Influences on Business Buyers

Other factors that affect B2B buying behaviour:

➢ Environmental – generally things that a marketer
cannot control/predict e.g. Changes in the economy,
supply/demand, political stability
➢ Organizational – Change in the companies
structure, strategies, leadership etc.
➢ Interpersonal - Influence of key decision makers
(“Its not who you know, but who knows you”)
➢ Individual - Influence by personal perceptions,
motives, intuition etc.
B2B - Environmental factors
B2B – Organizational factors
B2B – Interpersonal factors
Difference between C2B & B2B

Criteria C2B B2B

Number of buyers Large Small

Size of orders Small Large

Value of orders Low High

Purchase initiative Self Others

Level of risk Low to Medium Medium to high

Complexity of decision Low to Medium Medium to high

Information search Short Long