Business Standard,

Mumbai,
1 9 August 2019, P.11
 Lecture 5
Analyzing
Business Markets
Learning Outcomes
1. Understand organizational buying and buying situations
business buyers face.
2. Analyze how business buyers do make their decisions
and develop effective marketing programs.
3. Evaluate how companies can build strong loyalty
relationships with business customers.
4. Analyze how institutional buyers and government
agencies do their buying.
What is Organizational Buying?
• Business market
– Consists of all the organizations that acquire goods
and services used in the production of other
products or services that are sold, rented, or
supplied to others
Business markets
• Fewer, larger buyers • Multiple sales calls
• Close supplier–customer • Derived demand
relationships • Inelastic demand
• Professional purchasing • Fluctuating demand
• Multiple buying • Geographically
influences concentrated buyers
• Direct purchasing
Buying situations

Straight Rebuy

Modified Rebuy

New Task
Business Standard, Mumbai,
19 August 2019, P.11
The buying center

 Initiators
 Users
 Influencers
 Deciders
 Approvers
 Buyers
 Gatekeepers
Targeting within the Business Center

• Who are the major

decision participants?
• What decisions do they
influence, and how
deeply?
• What evaluation criteria
do they use?
The Purchasing/Procurement Process

• Business buyers seek the highest benefit

package (economic, technical, service, and
social) in relationship to a market offering’s
costs
Business Standard, Mumbai, page 3, 25 August 2019
Stages in the Buying Process
1. Problem recognition
– Someone in the company recognizes a problem or
need that can be met by acquiring a good or
service

2.General need description and product

specification
– Next, the buyer determines the needed item’s
general characteristics, required quantity, and
technical specifications
3. Supplier search

Vertical
Catalog sites
markets

Buying “Pure Play”

alliances auction

Private Spot & barter

exchanges markets
E-procurement
• Vertical hubs
• Functional hubs
• Direct extranet links
to major suppliers
• Buying alliances
• Company buying
sites
Stages in the Buying Process
• Proposal solicitation
– The buyer next invites qualified suppliers to
submit written proposals

• Supplier selection
– Before selecting a supplier, the buying center will
specify and rank desired supplier attributes
A supplier-evaluation model
Supplier selection
• Overcoming price
pressures
– Solution selling
– Risk and gain sharing
• Number of suppliers
 Stages in the Buying Process
• Order-routine specification
– After selecting suppliers, the buyer negotiates
the final order, listing the technical
specifications, the quantity needed, the
expected time of delivery, return policies,
warranties, etc.
• Performance review
– The buyer periodically reviews the
performance of the chosen supplier(s)
 Developing Effective b2b Marketing
Programs
• Communication and
branding activities
• Systems buying and
selling
– Total problem solution
from one seller
(turnkey solution)
• Role of services
Buyer–supplier relationships

• Basic buying and • Customer supply

selling • Cooperative systems
• Bare bones • Collaborative
• Contractual • Mutually adaptive
transaction • Customer is king
Managing b2b Customer Relationships

• Risks and Opportunism in Business

Relationships
Institutional and Government Markets
• Institutional market
– Schools, hospitals, nursing homes, prisons, etc. that
must provide goods and services to people in their
care
• Government organizations
– Are a major buyer of goods and services in most
countries
MCQs
1. ________ refers to the decision-making process by
which formal organizations establish the need for
purchased products and services and identify, evaluate,
and choose among alternative brands and suppliers.
A) Marketing channels
B) Organizational buying
C) Corporate retailing
D) Brand auditing

B) 24
2.Sometimes a rise of only 10 percent in consumer
demand can cause as much as a 200 percent rise in
business demand for products for the next period. This
is an example of ________.
A) inelastic demand
B) direct purchasing
C) fluctuating demand
D) derived demand

C) 25
3. Shoe manufacturers are not going to buy much more
leather if the price of leather falls, nor will they buy
much less leather if the price rises, unless they can find
satisfactory substitutes. This is an example of
________.
A) inelastic demand
B) direct purchasing
C) the acceleration effect
D) a modified rebuy

A) 26
4. Pittsburgh-based Consol Energy's coal business largely
depends on orders from utilities and steel companies
which, in turn, depend on broader economic demand
from consumers for electricity and steel-based products
like automobiles and appliances because of ________.
A) fluctuating demand
B) derived demand
C) professional purchasing
D) multiple buying influences

B) 27
5. Which of the following is a challenge in which business
marketers differ from consumer marketers?
A) understanding deep customer needs in new ways
B) identifying new opportunities for organic business growth
C) geographically concentrated buyers
D) calculating better marketing performance and accountability
metrics

C) 28