Chapter 7

Analyzing Business
Markets and Buyer
Behavior
PowerPoint by Karen E. James
Louisiana State University - Shreveport

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 7
 Objectives

 Understand the nature of the business

market and how it differs from the
consumer market.
 Learn how institutions and government
agencies buy.
 Identify the different buying situations
faced by organizational buyers.
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 7
 Objectives

 Identify the participants in the

business buying process and the
various influences impacting
business buying decisions.
 Understand how business buyers
make their decisions.

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 7
 Organizational Buying

 Organizational buying is:

“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.”

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 7
 Organizational Buying

 Compared to Consumer Markets,

Business Markets have . . .
– Fewer buyers
– Larger buyers
– Geographically concentrated buyers
– Close relationships with their
supplier-customers
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 7
 Organizational Buying

Other Business Market Characteristics

 Fluctuating  Multiple buying
demand influences
 Derived demand  Multiple sales calls
 Inelastic demand  Direct purchasing
 Professional  Reciprocity
purchasing  Leasing
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 7
 Organizational Buying

 The Business Market Includes For-Profit

Companies and Two Specialized Groups:
– The institutional market
 Schools, hospitals, prisons, etc. with captive
audiences
 Cost and quality standards drive purchases

– The government market

 Bidding process awards contracts

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 7
 Organizational Buying

Buying Situations  Routine reorders

from approved
vendor list
 Straight rebuy
 Low involvement,
 Modified rebuy minimal time
commitment
 New task
 Example: copier
paper

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 7
 Organizational Buying

Buying Situations  Specifications,

prices, delivery
terms or other
 Straight rebuy aspects require
modification
 Modified rebuy  Moderate level of
involvement and
 New task time commitment
 Example: desktop
computers
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 7
 Organizational Buying

Buying Situations  Purchasing a

product or service
for the first time
 Straight rebuy  High level of
involvement and
 Modified rebuy time commitment;
multiple influences
 New task
 Example: selecting a
web site design firm
or consultant
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 7
 Organizational Buying

 Systems Buying
– A single provider provides the total
package for the buyer’s needs
– May involve turnkey solutions
 Systems Selling
– Manufacturers sell entire systems
– Supplier provides all MRO items
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 7
Participants in Business Buying

Buying center members fill one or more

roles in the purchase decision process:
 Initiators  Deciders
 Users  Approvers
 Influencers  Buyers
Gatekeepers
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 7
Influences on Business Buyers
 Demand level
Major Influences  Economic outlook
 Interest rates
 Environmental  Technological change
 Organizational  Politics/regulations
 Competition
 Interpersonal
 Concerns for social
 Individual responsibility

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 7
Influences on Business Buyers

Major Influences  Objectives

 Policies
 Environmental
 Procedures
 Organizational
 Organizational
 Interpersonal structures
 Individual  Systems

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 7
Influences on Business Buyers

Major Influences  Interests

 Authority
 Environmental
 Status
 Organizational
 Empathy
 Interpersonal
 Persuasiveness
 Individual

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 7
Influences on Business Buyers

Major Influences  Age

 Income
 Environmental  Education
 Organizational  Job position

 Interpersonal  Personality
 Risk attitudes
 Individual
 Culture
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 7
Purchasing/Procurement Process

Eight Buyphases of Industrial Buying

 Problem  Proposal
recognition solicitation
 General need  Supplier selection
description  Order-routine
 Product specification
specification  Performance
 Supplier search review

©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 7