MGT301

Principles of Marketing
Lecture-16
Business Markets and Buying Behavior
 What is a Business Market?

The Business Market - all the organizations that buy goods and services
to use in the production of other products and services that are sold,
rented, or supplied to others.
Characteristics of Business Markets
 Market Structure and Demand
 Fewer, larger buyers
 Geographically concentrated
 Demand derived from consumers
 Inelastic demand
 Fluctuating demand
 Nature of the Buying Unit

 More buyers
 More professional purchasing effort
 Types of Decisions & the
Decision Process

 More complex decisions

 Process is more formalized
 Buyer and seller are more dependent on each other
 Build close long-term relationships with customers
 Business Buyer Behavior

The buying behavior of the organizations that buy goods and services for
use in the production of other products and services or for the purpose
of reselling or renting them to others at profit.
Model of Business Buyer Behavior
 Marketing
Marketing and
and
Product Other
Other Stimuli
Stimuli Economic
Price Technological
Place Political
Promotion Cultural

The
TheBuying
BuyingOrganization
Organization
Organizational Interpersonal
The Buying Center
Influences and Individual
Buying Decision
Process
Influences

Product or Service Delivery Terms

Choice Buyer’s
Buyer’s Response
Response and Times
Supplier Choice Service Terms
Order Quantities Payment
Business Buying Situations
New
New Task
Task Buying
Buying
Involved Decision Making

Modified
Modified Rebuy
Rebuy

Straight
Straight Rebuy
Rebuy
 Participants in the Business Buying
Process: The Buying Center

Gatekeepers Users

Buying
Buying
Deciders Center
Center Influencers

Buyers
Initiator
Initiator Influence
Influence
rr

User
User Buying
Buying Decider
Decider
Center
Center

Gate-
Gate-
keeper Buyer
Buyer
keeper
 Major Influences on
Business Buying
Environmental
Organizational
•Level of
demand Interpersonal
•Economic •Objectives Individual
outlook •Interests •Age
•Policies
•Interest rate •Authority •Income Business
•Procedures •Education Buyer
•Rate of techno- •Status •Job position
logical change •Organizational •Personality
•Political and structures •Empathy •Risk attitudes
regulatory •Culture
developments •Systems •Persuasive-
ness
•Competitive
developments
•Social responsi-
bility concerns
Stages in the Business
Buying Process
Problem
Problem Recognition
Recognition
General
General Need
Need Description
Description

Product
Product Specification
Specification

Supplier
Supplier Search
Search
Proposal
Proposal Solicitation
Solicitation
Supplier
Supplier Selection
Selection
Order
Order Routine
Routine Specification
Specification

Performance
Performance Review
Review
Key Organizational Buying Criteria
 Quality Delivery
Price Specifications Schedules

Past
Technical Organizational
Performance
Capability Buying Criteria

Warranty/ Production
Claim Policies Facilities/Capacity
 Institutional Markets

Schools, hospitals, nursing homes, prisons and other institutions

that provide goods and services to people in their care.
 Government Markets

Governmental units-federal and provencial-that purchase or rent goods

and services for carrying out the main functions of government.
 Difference between Business Marketing
and
Consumer Market

 Fewer buyers, concentrated, competitive

 Driven by derived demand
 More inelastic
 More professional, complex
 Direct purchase from producer
 Long-term relationship
 More leasing
 More departments are involved
 Users, influencers, buyers, deciders, gatekeeper