Marketing Management

2 March 2011

Business Markets and Business Buyer Behaviour

Business Markets and Business Buyer Behaviour

• Business Buyer Behaviour: the buying behaviour of organisations which purchase goods and service for use in the production of other products and services or to resell them or rent them out to others

• Business Buying Process: the decision buying process taken by business buyers in selecting the products and services which their organisations need. This also involves finding, evaluating, and choosing amongst alternative suppliers and brands

• Business markets operate behind the scenes from the eyes of consumers

Business Markets

• Business markets are far bigger and involve far more money than consumer markets

• Plenty of business markets collectively form one consumer market

• Both business and consumer markets involve people and the satisfaction of needs, wants and demands

• Major differences between consumer and business markets– Market structure and demand– Nature of Buying unit– Types of decisions and the decision process

Market Structure and Demand

• Business markets contain fewer but larger buyers

• Business buyer demand is derived from final consumer demand

• Demand in business markets are inelastic – less price sensitive in the short run

• Demand in business markets fluctuates more, and more quickly

Nature of Buying Unit

• Business purchases involve more buyers• More professional purchasing efforts• Business to business markets now involve better

trained and higher level supply chain managers• Buying committees with senior management is

also a growing phenomena • Companies now need better trained marketers

and sales staff to better deal with trained supply chain managers

Types of Decisions and Decision Process

• Business Buyers face more complex buying decisions

• Business buying process is far more formalised

• Buyers and sellers work more closely together and are more dependent on each other compared to consumer markets

• Buyers and sellers build close long-term relationships in business markets

Business Buyer Behaviour

Major Types of Buying Situations

Major Types of Buying Situations

• New Task – a business buying situation in which the buyer purchases a product or a service for the very first time

• Modified Rebuy – a business buying process where the buyer wants to modify product specifications, prices, terms or suppliers

• Straight Rebuy – a business buying situation where the buyer routinely reorders the same products without altering the orders

• Businesses prefer to purchase a complete solution to a problem from a single seller – a complete system to meet customer needs

Participants in the Buying Process

• The decision making unit of a buying organisation is called the buying centre

• Buying centre consists of all units that play a role in the purchase decision-making process

• Users: people who use products and services with an organisation

• Influencers: the people within the organisation’s buying centre who affect the buying decision

• Buyers: people in the buying centre who make the purchase• Deciders: people in the buying centre who have power to

select and approve the final suppliers• Gatekeepers: people in the buying centre who control the flow

of information to others

Influences on Business Buyers

• Business Buyers respond to both economic and personal factors

• Environmental Factors – economic, supply, technological, political and regulatory, competitive, culture and customs

• Organisational Factors – objectives, policies, procedures, organisational structure, systems

• Interpersonal Factors – authority, status, empathy, persuasiveness

• Individual Factors – Age, Income, Education, Position, Personality, Risk attitude

Influences on Business Buyers

Business Buying Process

See you next time.

Cheers Guys!