Analyzing
Business Markets
Prepared By,
Mr. Nishant Agrawal

Chapter Questions
• What is the business market, and how
does it differ from the consumer
market?
• What buying situations do
organizational buyers face?
• Who participates in the business-to-
business buying process?

Chapter Questions
• How do business buyers make their
decisions?
• How can companies build strong
relationships with business customers?
• How do institutional buyers and
government agencies do their buying?

What is Organizational Buying?
Organizational buying refers to the decision-making
process by which formal organizations establish the
need for purchased products and services, and
identify, evaluate, and choose among alternative
brands and suppliers.

Top Business Marketing Challenges
• Expand understanding of customer needs
• Compete globally as China and India reshape markets
• Master analytical tools and improve quantitative skills
• Innovation as an engine of growth
• Create new organizational models and linkages

Characteristics of Business Markets
• Fewer, larger
buyers
• Close supplier-
customer
relationships
• Professional
purchasing
• Many buying
influences
• Multiple sales calls
• Derived demand
• Inelastic demand
(not affected by
price change)
• Fluctuating demand
• Geographically
concentrated buyers
• Direct purchasing

Buying Situation
• Straight rebuy
• Purchasing department reorder supplies such as office supplies and
bulk order.
• Goal is to get small order and then enlarge their purchase share over
time
• Modified rebuy
• The buyer in modified rebuy want to change product specification ,
prices, delivery requirement.
• New task
• A new task purchaser buy a product for first time. New task buying is
marketer’s greatest opportunity and challenge.

Participants in Business Buying Process
The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers (Ex.
Purchasing agent ,
receptionists, telephone
operators)
The buying center include all members of organization who play any of the
Following 7 roles in purchasing decision process

Stages in the Buying Process: Buyphases
Buygrid framework
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation / Tender
• Supplier selection
• Order-routine specification

Supplier Search
Forms of Electronic Marketplaces
• Catalog sites
• Vertical markets / specialized website
• Pure play auction sites
• Spot / exchange markets
• Private exchanges
• Barter markets : trade a goods
• Buying alliances (Ex. Flipkart + SBI)

Methods of e-Procurement
• Websites organized using vertical hubs
• Websites organized using functional
hubs
• Direct extranet links to major suppliers
• Buying alliances
• Company buying sites

Supplier Selection
Handling Price-Oriented Customers
Some companies handle price oriented buyers by setting a lower
price but establishing restrictive condition:
• Limit quantity purchased
• Allow no refunds
• Make no adjustments
• Provide no services

Methods for Researching
Customer Value
• Internal engineering
assessment
• Field value-in-use
assessment
• Focus-group value
assessment
• Direct survey
questions
• Conjoint analysis
• Benchmarks
• Compositional
approach
• Importance ratings

Order Routine Specification
• After selecting suppliers buyer negotiate final order, listing
technical specification , quantity needed, expected time of
delivery , return policy etc.
• Stockless purchase plans
• Buyer’s computer automatically sends an order to seller when stock is
needed.
• Vendor-managed inventory
•

Establishing Corporate Trust
and Credibility
• Expertise
• Trustworthiness
• Likability

Trust Dimensions
• Transparent
• Product/Service
Quality
• Incentive
• Partnering
• Cooperating design
• Product comparison
• Supply chain
• Pervasive advocacy
/ support

Factors Affecting
Buyer-Supplier Relationships
• Availability of alternatives
• Importance of supply
• Complexity of supply
• Supply market dynamism

Managing B to B Customer relationship
Categories of Buyer-Seller Relationships
• Basic buying and
selling
• Bare bones
• Contractual
transaction
• Customer supply
• Cooperative
systems
• Collaborative
• Mutually adaptive
• Customer is king

What is Opportunism?
•Opportunism is some form of cheating or
undersupply relative to an implicit or explicit contract.
•When buyers cannot easily monitor supplier
performance , supplier might cheat and not deliver
expected value.

Thank You