CH.6 Business Markets and Business buyer behavior
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Created by:
DarinHarada on October 18, 2008
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Terms | Definitions |
|---|---|
 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 a profit. |
| Business buying process | The decision process by which business buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose among alternative suppliers and brands. |
| Derived demand | Business demand that ultimately comes from (derives from) the demand for consumer goods. |
| Business Markets | Contain fewer but larger buyers, the customers are more geographically concentrated , derived demand the ultimately derives from the demand for consumer goods, Demand is more inelastic-not affected as much in the short run price changes, and demand fluctuated more and more quickly. |
| Nature of the Buying Unit | Business purchases involve more buyers , and buying involves more professional purchasing effort. |
| Types of decisions and the Decision Process | Business buyers usually face more complex buying decisions. The process is more formalized, and buyers and sellers work closely together and build long term relationships. |
| Supplier development | systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others. |
| A model of business buyer behavior | The environment - marketing stimuli and other stimuli.-> The buying organization-The buying center, and the buying decision process.-> Buyer responses |
| The environment- Marketing stimuli | Product, Price, Place, Promotion. |
| The environment-Other stimuli | Economic, Technological, Political, Cultural, Competitive. |
| The buying organization is influenced by | by internal organizational, interpersonal, and individual factors as well as by external environmental factors. |
| Buyers Responses | Product or service choice, supplier choice, order quantities, delivery terms and times, service terms, and payments |
| Straight rebuy | a business buying situation in which the buyer routinely reorders something without and modifications |
| Modified rebuy | a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. |
| New task | a business buying situation in which the buyer purchases a product or service for the first time. |
| System Selling | buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation. a key business marketing strategy for winning and holding accounts. Two step process 1suppliers sells a group of interlocking products 2. supplier sells a system of production, inventory control, distribution, and other services to meet the buyer's need for a smooth running operation. |
| Buying center | all the individuals and units that play a role in the purchase decision-making process. Includes the actual users of the product or sercvice, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control the buying information. They are users, influencer's, buyers, decider's, gatekeepers |
| Users | are members of the organization who will use the product or service. In many cases, users initiate the buying proposal and help define product specifications. |
| Influencers | people in an or organizations buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives. |
| Buyers | the people in the organization's buying center who make an actual purchase. have formal authority to select the supplier and arrange terms of purchase. major role is in selecting vendors and negotiating. |
| Deciders | people in the organization's buying center who have formal or informal power to select or approve the final suppliers. buyers are often the deciders, or at least the approver. |
| Gatekeepers | people in the organization's buying center who control the flow of information to others. |
| Major influences on business buyer behavior | Environmental, Organizational, Interpersonal, Individual , buyers |
| Environmental Factors | factors in the current and expected economic environment , such as level of primary demand, the economic outlook, the cost of money. shortages in key materials. Technological change,political regulatory developments, competitive developments, and culture and customs. |
| Organizational Factors | each buying organization has its own objectives, policies, procedures, structure, and systems, and the business marketer must understand these factors well. |
| Interpersonal Factors | influences from authority, status, empathy and persuasiveness .Hard to assess such factors and are often very subtle. |
| Individual Factors | factors which are affected by personal characteristics such as age, income, education, professional identification, personality, and attitudes toward risk. |
| Problem recognition | the 1st stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or service. Can result from a internal or external stimuli. |
| General need description | the stage in the business buying process in which the company describes the general characteristics and quantity of a needed item. Standard items presents problems complex items need engineers, users, consultants to define the item |
| Product specification | the stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item. |
| Value analysis | an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made b y less costly methods of production. |
| Supplier search | the stage of the business buying process in which the buyer tries to find the best vendors. Turning to the internet to find suppliers. For marketers, the internet gives smaller suppliers many of the same advantages as larger competitors |
| Proposal solicitation | the stage of the business buying process in which the buyer invites qualified suppliers to submit proposals. Business marketers must be skilled in researching, writing, and presenting proposals in response to buyer proposal solicitations. They should inspire confidence and should make the company stand out to competitors. |
| Supplier selection | the stage of the business buying process in which the buyer reviews proposals and selects a supplier or suppliers. the buying center will draw up a list of desired supplier attributes and their relative importance. Most important quality of product or service, on-time delivery, ethical corporate behavior, honest communication, and competitive prices. other factors repair and servicing capabilities, technical aid and advice, geographic location, performance history, and reputation. prefer multiple sources of suppliers. |
| Order-routine specification | the stage of the business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies , and warranties. In case of maintenance or repair buyers use blanket contracts rather then periodic purchases instead. A blanket contract is a longterm relationship in which the supplier promises to re-supply as needed at the agreed prices for the set time. Many large buyers are practicing vendor-,amaged inventory, in which they turn over ordering and inventory responsibiilities to their suppliers. |
| Performance review | the stage of the business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement. |
| Stages of the business buying process | Problem recognition, General need description, Product specification, Supplier search, Proposal solicitation, Supplier selection, Order-routine specification, and Performance review. |
| E-Procurement | has grown rapidly and done in several ways; Set up their own company buying sites. Or the company can create extranet links with key suppliers. Gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. In turn for business marketers can connect and create customer relationships. Benefits it shaves transaction costs and results in more efficient purchasing for both buyers and suppliers and eliminates paper work. 2nd it reduces the time b/w order and delivery. 3rd Frees purchasing people to focus on more-strategic issues. Problems potential security disasters. |
| Institutional Market | Schools, hospitals, nursing homes, prisons, and other insitutions that provide goods and services to people in their care. Many institutuional markets are characterized by low budgets and captive patrons. |
| Government Market | Governmental units-ferderal state, and local-that purchase or rent goods and services for carrying out the main functions of government. To succeed in the government market, sellers must locate key decision makers, identify the factors that affect buyer behavior, and understand the buying decision process. The U.S. government is the world's largest buyer of products and services. |
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