business market and its buyer.

1. Business Markets and BusinessBusiness Markets and Business
Buyer BehaviorBuyer Behavior

2. Content
• Business Buyer Behavior
• Business market
• business market vs. consumer market
• Model of Business buyers behavior
• Business buying situations
• Participates and influencer in the business-to-business buying
process
• Business buying process

3. 7 - 3
• Sells jets exclusively
for corporate use
• 300 – 500 customers
worldwide
• Rational, objective,
and human factors
influence business
buyer’s decisions
• Multiple people are
involved in the decision
• Buying influences
include the CEO, pilot,
board members, even
spouses
• Company has been
highly successful
GulfstreamAerospaceGulfstreamAerospace
Case Study

4. 6- 4
Business Buyer Behavior
The buying behavior of 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 to Business (B-to-B) marketers
must understand the business markets &
business buyer behavior.

5. Business Markets
• Business marketing also referred to as “Industrial marketing”
or “B2B marketing” or “Organizational marketing”.
• Business marketing is the marketing of products & services
to business organizations.
• Business organizations include:
Manufacturing companies
Govt. undertakings
Private sector organizations
Educational institutions
Hospitals
Distributors / Dealers
Business organizations buy products
& services to satisfy many objectives
like production of other goods &
services, making profits, reducing
costs, & so on.
Consumer marketing is the marketing
of products & services to individuals,
families, & households. The
consumers buy products & services
for their own consumption.

6. Business vs. Consumer market

7. B2B Marketing vs. Consumer Marketing

8. CISCO Targets Businesses
Copyright © 2009 Pearson Education,
Inc. Publishing as Prentice Hall
7-8

9. 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.

10. 6- 10
Model of Business Buyer
Behavior
 The model suggests four aspects about business buyer
behavior
a. Buying situations
b. Participants in the buying process
c. Major influences on business buyers
d. The buying process

11. a. Major Types of Buying Situations:-
The buyer routinely reorders
something without any
modifications.
Straight Re-buy
Modified Re-buy
New Task
The buyer wants to modify
product specifications,
prices, terms, or suppliers.
The buyer purchases a
product or service for the
first time.

12. Characteristics of the
Three Types of Buying Decisions:-
Newness of Problem or NeedNewness of Problem or Need
Information RequirementsInformation Requirements
Information SearchInformation Search
Consideration of New AlternativesConsideration of New Alternatives
Multiple Buying InfluenceMultiple Buying Influence
Financial RisksFinancial Risks
StraightStraight
RebuyRebuy
LowLow
MinimalMinimal
MinimalMinimal
NoneNone
Very SmallVery Small
LowLow
Routine
response
ModifiedModified
RebuyRebuy
MediumMedium
ModerateModerate
LimitedLimited
LimitedLimited
ModerateModerate
ModerateModerate
Limited
prob.
solving
NewNew
TaskTask
HighHigh
MaximumMaximum
ExtensiveExtensive
ExtensiveExtensive
LargeLarge
HighHigh
Extended
prob
solving

13. Systems Buying and Selling
Turnkey solution
desired;
bids solicited
Prime
contractors
Second-tier
contractors
System
subcomponents
assembled
Buying a packaged solution to a problem from a single seller,
thus avoiding all the separate decisions involved in a complex
buying situation.

14. SYSTEMS BUYING AND SELLING
System selling is a key
industrial marketing strategy
in bidding to build large-
scale industrial projects,
such as:
dams, steel factories,
irrigation systems, sanitation
system, pipelines utilities,
and even new towns.
Example:
Ford has transformed itself
from being mainly a car
manufacturer to being
mainly a car assembler.
Many business buyers prefer to buy a
total solution to a problem from one
seller. Called systems buying, this
practice originated with government
purchases of major weapons and
communications systems.
•The government would solicit bids
from prime contractors, who assembled
the package or system.
•The contractor who was awarded the
contract would be responsible for
bidding out and assembling the systems
subcomponents from second-tier
contractors.
The prime contractor would thus
provide a turnkey solution, so-called
because the buyer simply had to turn
one key to get the job done.

15. 7 - 15
b. Participants in theb. Participants in the
Business Buying ProcessBusiness Buying Process
Business Buyer Behavior
• Users
• Buyers
• Influencers
• Deciders
• GatekeepersGatekeepers

16. b. Participants in the Buying Decisionb. Participants in the Buying Decision
ProcessProcess
Buying Center: All the individuals & units that participate inBuying Center: All the individuals & units that participate in
the business buying-decision process.the business buying-decision process.
UsersUsers are members who will actually use the purchased products orare members who will actually use the purchased products or
service. They initiate buying proposal & help define productservice. They initiate buying proposal & help define product
specification.(specification.(office staff)
InfluencersInfluencers often help define product specification & provideoften help define product specification & provide
information for evaluation. (information for evaluation. (engineers, researchers, product
managers)
BuyersBuyers select supplier, arrange terms & make actual purchase. Such asselect supplier, arrange terms & make actual purchase. Such as
high level officers.(high level officers.( purchasing agent)
DecidersDeciders have formal or informal power to select the final suppliers. Inhave formal or informal power to select the final suppliers. In
routine buying buyers are deciders. (CEO)routine buying buyers are deciders. (CEO)
GatekeepersGatekeepers control the flow of information to others. Such ascontrol the flow of information to others. Such as
purchasing agentspurchasing agents. (. (administrative assistant)
6- 16

17. 6- 17
c. Major Influences on
Business Buyer Behavior

18. Aramark Successfully Services Institutional and
Government Markets

19. 6- 19
d. Stages of the
Business Buying Process

21. 7 - 21
– E-procurement is growing rapidly.
– Reverse auctions account for much of the
online purchasing activity.
– E-procurement offers many benefits:
• Access to new suppliers
• Lower purchasing costs
• Quicker order processing and delivery
Business Buying on the Internet

22. 7 - 22
• Institutional Markets
– Consist of churches, schools, prisons,
hospitals, nursing homes and other
institutions that provide goods and services
to people in their care.
– Often characterized by low budgets and
captive patrons.
– Marketers may develop separate divisions
and marketing mixes to service institutional
markets.
Institutional and Government
Markets

23. 7 - 23
• Government Markets
– Governmental units – federal, state, and local
– that purchase or rent goods and services
for carrying out the main functions of
government.
– Government buyers often favor:
• Depressed business firms and areas
• Small businesses
• Minority-owned businesses
• Firms which practice non-discriminatory
practices
Institutional and Government
Markets

24. 7 - 24
• Government Markets
– Most firms that sell to government buyers are
not marketing oriented.
– Some companies have separate government
marketing departments.
– Much of government buying has migrated
online.
Institutional and Government
Markets

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

26. What we learnt
• Define Business Buyer Behavior
• What is Business market
• What is the business market, and how does it differ from the
consumer market?
• What buying situations do organizational buyers face?
• What is system selling?
• Who participates in the business-to-business buying process?
• 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?