analyzing business mkt & business buying behaviour_tue_05-oct-10

8/8/2019 Analyzing Business Mkt & Business Buying Behaviour_Tue_05-Oct-10

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Analyzing Business Markets &

Business Buying Behavior

Kalpesh Devariya (06)

Dinesh Govinda (07) Darshil Doshi (08)


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Contents

Organizational Buying

Characteristic of Business Markets

Buying Situations System Buying and Selling

Purchasing Orientation


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Organizational Buying

Business Organizations not only sells but also buy

vast quantities of components and services. And

such organization constitutes Business markets

Organizational Buying is the a decision making

process used by formal organizations for purchase.


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Characteristics of Business Markets

Fewer larger Buyers

Close supplier customer relationship

Professional purchasing

Several buying influences Multiple sales calls

Derived demand

Inelastic demand

Fluctuating demand

Geographically concentrated buyers

Direct buying


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Fewer larger Buyers


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Fewer larger Buyers

Business Marketer Normally deals with far

fewer and larger buyer.

E.g. : Tire manufacturing companies like

MRF and Appolo Tyres depands on the major

automobile manufacturing companies.


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Two way relation ship.

Business buyer will select supplier who also

buy from them.

E.g. : A paper manufacturer might buy from a

chemical company that buys its paper in bulk.


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Business goods are often brought from

trained seller.

Greater technical data is required about your

product..

Comparison with competitors products and

advantages over it.


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Several buying influences


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Involvement of more people in purchasing

decision.

Business marketer to send well trained sales

person to deal with well trained buyer.


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Sales cycle depends on type of good which

you are selling.

It may take years in case of capital

equipments and in big projects.


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Derived demand

Demand for business goods is ultimately derivedfrom the demand of consumer goods.


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Derived demand

Business marketer should keep focus on

ultimate customer.

E.g. : Boom in infrastructure industry will

increase demand of cement and steel.


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Inelastic demand

Total demand for many business goods is not

much affected by price change.

Because producers cannot make quick change

in production methods for a short run.

Example: G.M. will not buy more tires if price oftires goes down. G.M. will procure any sub

product as per their car demand in market.


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Fluctuating demand

% increase in consumer demand can lead tomuch larger% increase in demand for factoryexpansion.


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This concentration of producers helps to reduceselling costs.


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Different types of industries in India tend to

concentrated in specific region.

E.g. :

Hosiery industries are concentrated in

Coimbatore.

Large Number of software industries are

concentrated in Bangalore.


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Direct Buying

Business buyers prefer to buy directly formmanufacturers rather than throughintermediaries.


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Direct Buying

In case of expensive and technically complex

items are directly purchased from manufacturer.

E.g: Main frames or Air crafts etc.


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BuyingSituations

Buying Situations

Straight rebuy

Modified rebuy

New task

Routine reorders from

approved vendor list

Low involvement,

minimal timecommitment

Example: copier paper


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BuyingSituations

Buying Situations

Straight rebuy

Modified rebuy

New task

Specifications, prices,delivery terms or otheraspects requiremodification

Moderate level ofinvolvement and timecommitment

Example: desktopcomputers


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BuyingSituations

Buying Situations

Straight rebuy

Modified rebuy

New task

Purchasing a productor service for the firsttime

High level ofinvolvement and timecommitment; multipleinfluences

Example: selecting aweb site design firm orconsultant


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System buying & selling

Its a total solution to customer problem from one

seller.

Business marketers adopted system selling as

marketing tool.

System selling acts as key Industrial marketingstrategy in bidding to larger scale industrial

projects.


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Case Study

Indonesian govt. requested to bid to build a

cement factory near Jakarta.

A.U.S. Bidder: It has bid for

Choosing Site.

Designing factory

Hiring construction crews.

Assembling parts and equipments.


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A Japanese Firm bid for.

All things which was offered by a US firm. Hiring and train the workers to run factory.

Exploring the cement through its traders.

Using cement build new buildings, roads andoffices in Jakarta.


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Conclusion: Japanese firm won contract

though bidding high because It has not

thought only to build factory but as one of

contributing to Indonesia's economicdevelopment.

They took broadest view of the customersneed and that is true system selling.


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The BuyingCenter

Initiators: Those who make request for purchase.

Users: Those who will use the product.

Influencers: Influence buying decisions also helps in definingtechnical specification.

Deciders: Decide on product requirements or on suppliers.

Approvers:Authorize the proposed actions of deciders or buyers.

Buyers: Have authority to select supplier and arrange purchase

terms.

Gatekeepers: People who have power to prevent sellers orinformation from reaching members of the buying center.


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Business Marketers are concerned to

Who are the major decision participants ?

What decisions do they influence ?

What is their level of influence ?

What evaluation criteria they use ?


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Influences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Demand level

Economic outlook

Interest rates

Technological change

Politics/regulations

Competition

Concerns for socialresponsibility


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Objectives

Policies

Procedures Organizational

structures

Systems


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Interests

Authority

Status Empathy

Persuasiveness


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Age

Income

Education Job position

Personality

Risk attitudes

Culture


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PurchasingOrientations

Buying : Purchasers focus is short term. Here buyers are

rewarded on their ability to obtain lowest price from suppliers

for given quality and availability.

Procurement : Purchasers focus is long term. Here buyers

develop collaborative relation with supplier. Suppliers are

involved in material handling, Inventory levels and even in

product design.

Supplychain Mgmt : Purchasers role is further broaden and

become more strategic & value adding operations from raw

materials to end users.


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Type ofPurchasingProcess

Office supplies

Engine pistons

Mainframe

Computers

Spare parts


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Stages in Buying process


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Problem Recognition

Buying process begins when someone

recognize the problem and that can be met by

acquiring goods.

It can be triggered by Internal or external stimuli.


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Need Description & Product Specification


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Supplier Search


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Proposal Solicitation

Buyer invite qualified suppliers to submitproposals.

For complex or expensive items, buyer require adetailed written proposal form supplier.

Business marketers must be skilled in

researching, writing and presenting proposals.Which describes the value & benefits incustomer terms.


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Supplier Selection


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Order Routine Specification


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Performance Review


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Institutional & Government markets

In most countries, government organizations are the major buyers.

They typically requires suppliers to submit bids and normally award thecontract to lowest bidder.

They also make allowances to the suppliers for superior quality andOTD (On time Delivery).

Very common with these organizations :

Considerable paper work from suppliers.

Bureaucracy. Decision making delays.

Such customers are very wealthy and repeat business when satisfied.


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Thank You !

analyzing business mkt & business buying behaviour_tue_05-oct-10

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