Business Markets and Business Buyer Behavior

The business buyer behavior refers to the buying behavior of 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.

This includes retailers and wholesalers.

Business Markets

The business market is huge. In the United States alone, it consists of organizations that buy trillions of dollars worth of goods each year. For each consumer purchase (buying a car) many business purchases preceded that event.

Business markets also have their own characteristics. In some ways, they are similar to consumer markets, but in other ways they are very different. The main differences include:

1).

Market Structure and Demand Contain far fewer, but larger buyers, Customers are more geographically concentrated, Business demand is derived from final consumer demand.

Nature of the Buying Unit Business purchases involve more buyers. Business buying involves a more professional purchasing effort.

2). Nature of the buying unit.

a). Business purchases involve more decision participants.

b). Business buying involves a more professional purchasing effort.

3). Types of decisions and the decision process.

a). Business buyers face more complex buying decisions.

b). The process is more formalized.

c). In business buying, buyers and sellers work more closely together and work to build close, long-term relationships. They are more dependent on each other.

Business Buyer Behavior

At the most basic level, marketers want to know how business buyers will respond to various marketing stimuli.

As in the consumer buying model, marketing and other stimuli affect the buying organization and produce certain buyer responses.

Marketing stimuli centers around the four Ps—product, price, place, and promotion.

Other stimuli include major forces in the environment, economy, technology, politics, culture, and competition.

These stimuli enter the organization and are turned into buyer responses: product or service choices; supplier choice; order quantities; and delivery, service, and payment terms. In order to design a sound marketing program for this market, the marketer must understand how the stimuli are converted into responses.

In the organization, buying activity consists of two major parts: thebuying center (made up of people involved in the buying decision) and the buying decision process.

The model that describes the buying center and the buying decision process shows that influences come from internal organizational, interpersonal, and individual factors, as well as external environmental forces.

The model shown suggests that there are four major questions about business buyer behavior. They are:

Major Types of Buying Situations (What buying decisions do business buyers make?) There are three major types of buying situations:

1). The straight rebuy situation is a fairly routine decision. A buyer routinely reorders something without any modifications in this situation.

2). The modified rebuy is a situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.

3). The new task is an industrial buying situation in which the buyer purchases a product or service for the first time.

Many business buyers prefer to buy a packaged solution to a problem from a single seller. This is called systems selling. The sale often goes to the firm that provides the most complete system meeting the customer’s needs.

Participants in the Business Buying Process (Who participates in the buying process?)

The decision-making unit of a buying organization is called its buying center (all those individuals and groups who participate in the business buying decision process). These parties share some common goals and risks arising from the decisions.

The buying center is not a fixed and formally identified unit within the buying organization. It is a set of buying roles assumed by different people for different purchases. The size and make up of the buying center will vary for different products and for different buying situations.

The major challenge of the buying center concept for the marketer is to find out:

1). Who is part of the decision? 2). What decisions they influence?

3). Their relative degree of influence? 4). What evaluation criteria each decision participant uses?

Major Influences on Business Buyers (What are the major influences on buyers?)

Of the many factors that can affect business buying behavior, economic and personal factors have been found to be the most important.

Influences (factors) can be grouped as:

1). Environmental. These factors include such things as shortages of raw materials (specifically) or technology, political, competitive, culture, and customs (generally).

2). Organizational. Every buying organization has its own set of objectives, policies, procedures, structure, and systems.

3). Interpersonal factors. The industrial marketer must try to understand the interpersonal factors and group dynamics as they affect the buying process. Knowing your customer well is a beginning. These factors are often very subtle and require research.

4). Personal factors. These are affected by age, income, education, professional identification, personality, and attitudes toward risk. The different styles of buyers must be taken into account.

The Business Buying Process (How do business buyers make their buying decisions?)

There are eight stages in the business buying process. Buyers who face a new task buying situation usually go through all the stages. Buyers making a modified or straight rebuy will skip some of the stages. The stages are:

1). The buying process begins with problem recognition. In this stage, the company recognizes a problem or need that can be met by acquiring a good or service.

2). The next stage in the buying process is general need description. In this stage, the company describes the general characteristics and quantity of a needed item.

3). Product specification is the third stage. Here, the buying organization decides on and specifies the best technical product characteristics for a needed item.

a). A value analysis engineering team often will develop the item’s specifications.

b). Value analysis is an approach to cost reduction in which components are carefully studied to determine if they can be redesigned, standardized, or made by cheaper methods of production.

4). In the next stage, a supplier search is conducted, where the buyer tries to find the best vendors.

a). Sources of information include trade directories, computer search, or asking other companies for recommendations.

b). The buyer compiles a small list of qualified suppliers.

5). In the fifth stage, there is a proposal solicitation. Here, the buyer invites qualified suppliers to submit proposals.

6). It is then necessary to have a supplier selection process in which the buyer reviews proposals and selects a supplier or suppliers. Factors that influence this process are:

a). Quality products and services. b). On-time delivery. c). Ethical corporate behavior. d). Honest communications. e). Competitive prices.

f). Repair and servicing capabilities. g). Technical aid and advice. h). Geographic location. i). Performance history. j). Reputation.

7). The seventh stage is order routine specification. This is the stage in which the buyer writes the final order with the chosen supplier(s), lists the technical specifications, quantity needed, expected time of delivery, return policies, warranties, and so on.

a). A blanket contract creates a long-term relationship in which the supplier promises to re-supply the buyer as needed at agreed prices for a set time period.

b). Blanket contracting leads to more single source buying and more items from that source.

8). The final stage is performance review. In this final stage, the buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop them. The seller’s job is to monitor the same factors that the buyer is using so it can make sure that it is giving the expected satisfaction to the buyer.

Each organization buys in its own way and each buying situation has its own requirements.

Business Buying on the Internet

During the past few years, advances in information technology have changed the face of the business-to-business marketing process.

1). e-Procurement is now common.

2). New connections with buyers are being formed with two-way flow of information.

3). Most purchases steer toward MRO materials (maintenance, repair, and operations).

4). Some firms such as GE buy all of their general operating and industrial supplies online.

5). Many benefits have accrued:

a). It shaves transaction costs and results in more efficient purchasing for both buyers and suppliers.

b). Time is reduced between order and delivery.

6). Problems are also present. A few of these are:

a). Purchasing jobs have been cut.

b). Order processing jobs have been cut.

c). Customer relationships can be eroded.

d). Security can be a problem.

Дата добавления: 2015-10-30