Transcript Business Markets and Business Buyer Behaviour

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Business Markets and
Business Buyer Behaviour
•Chapter 8
•PowerPoint slides
•Express version
•Instructor name
•Course name
•School name
•Date
Principles of Marketing, Sixth Canadian Edition
Learning Objectives
8.2
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• After studying this chapter, you should be able to:
– Define the business market and explain how business markets
differ from consumer markets
– Identify the major factors that influence business buyer
behaviour
– List and define the major steps in the
business buying-decision process
– Compare the institutional and
government markets and explain
how they make their buying
decisions
Principles of Marketing, Sixth Canadian Edition
Characteristics of Business Markets
8.3
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• Business purchase decisions pose greater risk due to their size and
more serious consequences of making a bad decision
Market structure and demand
–
–
–
–
Fewer but larger buyers
Customers are more geographically concentrated
Business demand is derived from consumer demand
Inelastic demand that can fluctuate quickly
Nature of the buying unit
– Involve more buyers
– More professional
purchasing effort
Types of decisions and process
– More complex buying decisions
– More formalized process
– Buyers and sellers work closely
and build relationships
Table 8.1
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Model of Business Buyer Behaviour
8.4
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• Straight rebuy: routine reorder with no modifications
• Modified rebuy: some modification to product specifications,
prices, terms, or suppliers
• New task: first time purchase of a product or service
• Systems selling: buying a packaged solution to a problem
Figure 8.1
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Participants in Business Buyer Behaviour
8.5
• Buying centre: all those involved in business buying, may not be a
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formal unit
• Buying roles:
–
–
–
–
–
Users
Influencers
Buyers
Deciders
Gatekeepers
Salesperson’s challenge:
– To understand who
participates,
– What role they play,
and
– How much influence
they have in the
decision
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Influences on Business Buyer Behaviour
8.6
Figure 8.2
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8.7
The Business Buying Process
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• New task buying situations usually follow all eight steps
• Straight/modified rebuy situations may skip steps
Figure 8.3
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Business Buying on the Internet
8.8
• Eprocurement growing rapidly: $272 billion in 2005, approximately
18% of all B2B transactions
• Reverse auctions: invite suppliers to bid for contracts
• Majority of purchases are for materials, repair, and operations (MRO)
versus capital items
• Advantages:
• Disadvantages:
– Lower transaction/order
processing costs
– Less paperwork
– Lower prices
– Faster delivery
– Frees personnel to focus
on more strategic issues
– Transaction-oriented
medium can erode buyerseller relationships
– Potential security problems
Principles of Marketing, Sixth Canadian Edition
Institutional/Government Markets
8.9
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• Institutional markets:
– Schools, hospitals, nursing homes, prisons
– Large demands, low budgets, captive patrons
– Focus on low prices that meet minimum standards
• Government markets:
– Federal, provincial, municipal
– Huge ongoing requirements
– Open bidding, low price that meet
buying specifications wins
– Governments favour domestic
suppliers, may use large projects for
regional development purposes
– May require separate selling effort
Principles of Marketing, Sixth Canadian Edition
In Conclusion…
8.10
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• The learning objectives for this chapter were:
– Define the business market and explain how business markets
differ from consumer markets
– Identify the major factors that influence business buyer
behaviour
– List and define the major steps in the
business buying-decision process
– Compare the institutional and
government markets and explain
how they make their buying
decisions
Principles of Marketing, Sixth Canadian Edition