BUSINESS BUYER

B E H AV I O R
CONTENTS
1. Characteristics of business markets
2. Participants in the business buying process
3. The business buyer behavior model
4. Major influences in business buyers
5. The business buyer process
6. Major types of buying situations

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 • Business Market: Comprises all the organizations
B U S I N E S S that buy goods and services for use in the production
MARKET of other products and services that are sold, rented, or
supplied to others
• Business buying: refers to the process of
determining the business's needs for products or
services and making decisions for these business
purchases.

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 CHARACTERISTICS OF BUSINESS MARKETS
1. Contain fewer, but larger buyers
2. Buyer demand is derived from final consumer demand
3. Demand is often more inelastic; Demand in business
markets remains consistent and unaffected by changes in
prices.
4. Business markets can facilitate business between
companies that are far away from each other in terms of
location.
5. Business markets grow and shrink depending on how many
customers are purchasing a final version of a product.
 CHARACTERISTICS OF BUSINESS MARKETS
6. Purchases made in a business market might involve several
buyers.
7. Selling and advertising in a business market requires a high
degree of professionalism.
8. Business markets can present more complex purchasing
decisions than consumer markets.
9. Making purchases in a business market is a formal process.
10.Business markets facilitate long-term professional
relationships between buyers and sellers.
 THE BUYING CENTER
• The purchasing business organization has its own decision
making unit which is referred to as its buying center which
includes all the units and individuals that are involved in the
business decision making process
• It includes everyone who is part of the decision
• In a business setting, major purchases typically require input
from various parts/department/sections of the organization.
• A buying center for marketing might include; Users,
Influencers, Deciders, Buyers and Gatekeepers
PA R T I C I PA N T S I N T H E B U S I N E S S B U Y I N G P R O C E S S

Users
Influencers
Decision-
Factors
Making Unit
Situational
of a Buying
Unexpected
Organization
Roles is Called Its Buyers
Include Buying
Attitudes
Center.
of
Others
Deciders
Gatekeepers
 FUNCTIONS OF THE BUYING CENTER
1. Users - The users will be the ones to use the product, initiate the purchase
process, generate purchase specs, and evaluate product performance
after the purchase.
2. Influencers - The influencers are the personnel who help develop specs
and evaluate alternate products.
3. Deciders - Deciders choose the products.
4. Buyers - Buyers select suppliers and negotiate the terms of purchase.
5. Gatekeepers - Gatekeepers are typically secretaries and personnel. They
control the flow of information to and among others within the buying
center. Buyers who deal directly with a vendor are gatekeepers.
MODEL OF BUSINESS BUYER BEHAVIOR
 MAJOR INFLUENCES IN BUSINESS BUYERS

Environmental
Organizational
• Economic developments
• Objectives
Interpersonal
• Supply Conditions
Individual
Authority
• Policies
Age
• Technological change
Status Education Buyers
• Procedures
Job Position
• Political and regulatory
Empathy Personality
developments • Organizational
Risk Attitudes
Structure
Persuasiveness
• Competitive Developments
• Systems
• Culture and customs
BUSINESS BUYING PROCESS

Problem Description of Specification Search of

Recognition General Need of Product Supplier

Order-
Proposal Selection of Performance
Routine
Solicitation Supplier Review
Specification
 1. PROBLEM RECOGNITION
• The first stage is to recognize there's an operational
problem or need and that buying materials or a
service may be a solution
• The external or internal stimuli result in the creation
of such a recognized problem
• In the case of internal stimuli. The management of
the organization may determine to manufacture a
new product. Or any production machine becomes
damaged that needs certain new parts. Another
internal reason may be that the supplier is not
providing effective goods at a fair price.
• On the other hand, the external elements may be in
the form of any new idea of a product. Even at a
trade show or seeing new advertisements.

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 2. DESCRIPTION OF GENERAL
NEED
• The problem identified is defined
clearly.
• Buying center participants assess
problem and need to determine what
is necessary to resolve/satisfy it
• Description of the needs is prepared,
showing general characteristics and
the quantity of the required product.

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3 . S P E C I F I C AT I O N O F P R O D U C T/ S E R V I C E
• The organization prepares a detailed list of the technical
specifications of the desired product.
• Value analysis is conducted
• In value analysis, careful studies are made to determine the cost
reduction production process. Particularly for the redesigning or
standardization of the desired product or service. So the
professional team covers the best features and characteristics
required in purchasing the product. Therefore the selling
organizations can also use this step to increase their sales.
 4. SEARCH OF SUPPLIER
• This phase pertains to the search for the
qualified suppliers among the potential sources.
• The marketer has to ensure that he is in the list
of potential suppliers. For this to happen, he has
to make periodic visits to all potential
companies and create awareness. Brochures
have to be circulated and advertisements
placed in specific media like trade journals.
• This phase only involves making a list of
qualified suppliers.

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 5 . P R O P O S A L S O L I C I TAT I O N
• The lists of qualified suppliers are now further shortened based on
some critical factors.
• Then the purchasing departments ask for proposals to be sent by
each supplier.
• After evaluations, based on the specified criteria, some firms are
asked to come over for formal presentations.
• The proposal must include product specification, price, delivery
period, payment terms, taxes of experts and duties applicable,
transportation cost, cost of transit insurance and any other relevant
cost or free service provided.
• For purchase of routine products or services, phases 4 and 5 may
occur simultaneously as the buyer may contact the qualified
suppliers to get the latest information on prices and delivery
periods.
• For technically complex products and services, a lot of time is spent
in analysing proposals in terms of comparison on products services,
deliveries and the landed cost.

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 6. SELECTION OF SUPPLIER
• Each of the supplier’s presentations
are rated according to certain
evaluation models.
• The buying organisation may also
attempt to negotiate with its preferred
suppliers for better prices and terms
before making a final decision.

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7 . O R D E R - R O U T I N E S P E C I F I C AT I O N

• After the suppliers have been selected, the buyer negotiates the final
order, listing the technical specifications, the quantity needed, the
expected time of delivery, return policies, warranties etc.
• In case of maintenance, repair and operating items, buyers are
increasingly moving towards blanket contracts rather than periodic
purchase orders.
• Blanket contracting leads to more single sources buying and ordering
of more items from that single source. This system brings the supplier
in closer with the buyer and makes it difficult for out-suppliers to
break in unless the buyer becomes dissatisfied with the in-suppliers’
prices, quality or service.
 8.PERFORMANCE REVIEW
• Vendor’s performance is reviewed in this stage.
• Users may be contacted by purchasers in order
to enquire about the rate of satisfaction.
• The purchaser is led by performance review to
continue, drop or modify the arrangements.
• The seller’s/Marketer’s duty is similar that he
should observe the same components that are
considered by the purchaser in order to confirm
that expected level of satisfaction is provided by
the seller.

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 TYPES OF BUYING
S I T U AT I O N S
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 1. STRAIGHT REBUY
• The purchaser reorders something in
this situation without any alteration.
• The purchase department makes
purchases on a routine basis.
• The purchaser just selects from a list of
different suppliers on the basis of his
past purchasing satisfaction.
• The quality of product or service should
be properly maintained by the “in”
suppliers.

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 2. MODIFIED REBUY
• The prices, specifications of product, terms or
suppliers are modified by the purchaser in this
situation.
• There are many decision participants in modified
rebuy as compared to straight rebuy.
• The “in” suppliers get pressure or nervousness in
this situation regarding to provide the beat quality
of product or services to keep the customers
satisfied.
• Modified rebuy situation serves as an opportunity
to the “out” suppliers to create an effective offer
and acquire new business.

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 3 . N E W TA S K
• In case of new task situation, a product or service is
purchased by the business organization for the first
time.
• In such situation, increased risk or cost may result into
larger portion of decision participants and higher their
struggle to gather the information.
• New task situation serves as challenge and opportunity
to the marketer. The marketer applies a number of
basic purchasing effects along with the provision of
assistance & information.
• More decisions are made in new task situation by the
purchaser than straight rebuy situation. The purchaser
make decisions about price limits, suppliers, product
specifications, order quantities, payment terms,
delivery times and service terms in the new task
situations.

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