Transcript Chapter 5 - Austin Community College

C H A P T E R
5
Business-tobusiness
Markets and
Buying
Behavior
McGraw-Hill/Irwin
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After studying this chapter, you should be able to:
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Define the nature of business-to-business buying behavior
and markets.
Explain the differences between business-to-business
buying and consumer purchase behavior.
Recognize the different types of buying decisions.
Define the different stages of the business buying process.
Describe the buying center concept and the determinants
of influence within the buying center.
Understand the nature of government, reseller, and other
institutional markets.
Bearden Marketing 5th Ed
5-2
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Office Depot
Companies like Office Depot spend enormous amounts
on products and services for business operations, and
then market products and services to other consumer
or business buyers. These firms are making many
changes to improve purchasing performance.
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Business-to-Business Buying
Business-to-business (B2B) buying behavior
refers to decision making and other activities of
organizations as buyers.
Suppliers
Elements
of B2B
Sources
Vendors
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5-4
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Business Categories
Business
Firms
Government
Markets
Reseller
Markets
Institutional
Markets
Bearden Marketing 5th Ed
Manufacturers of tangible goods and firms
that provide services such as health care,
entertainment, and transportation
Federal, state, and local
Wholesalers and retailers
Hospitals (profit and nonprofit), educational
and religious institutions, and trade
associations.
5-5
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Supply Chain Management
Supply Chain
Management
The integration of business processes
from end user through original suppliers
that provides products, services, and
information that add value for customers.
Supply
Management
The identification, acquisition, access,
positioning, and management of
resources the organization needs or
potentially needs in the attainment of its
strategic objectives.
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Characteristics of B2B Buying
Consumers buy for their own use and for
household consumption.
Business buyers purchase for
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further production
for use in their firm’s operations
for resale to other customers.
Derived demand is demand for business-tobusiness products that is often dependent on
demand in consumer markets.
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Industry Classification System
Exhibit 5-2
The federal
government has
developed a
numerical scheme
called the North
American
Industry
Classification
System (NAICS)
for categorizing
businesses.
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5-8
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The Importance of B2B Buying
Business-to-business markets and purchasing
behavior are important for two basic reasons:
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The size of business markets offers many opportunities
for astute marketers.
Many firms are trying to increase profits by improving
purchasing practices.
Bearden Marketing 5th Ed
5-9
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Trends in B2B Buying
Selected purchasing trends 1998–2008
1. Electronic commerce
7. Global supplier development
2. Strategic cost management
8. Third-party purchasing
3. Strategic sourcing
9. Competitive bidding
4. Supply chain partner
selection and contribution
10. Strategic supplier alliances
5. Relationship management
11. Win–win negotiation strategy
6. Performance measurement
12. Complexity management
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5-10
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Trends in B2B Buying
Outsourcing
Productivity
Improvement
Corporate
Downsizing
Reducing
Cycle time
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Use of Technology
Buyers are increasingly employing technology to
improve the productivity of purchasing operations.
Electronic marketplace exchanges or B2B
exchanges were heralded as the next
revolutionary development in organizational
buying.
Private exchanges, those that link invitation-only
buyers and sellers, are now showing more
promise than most of the open-access
exchanges.
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Electronic Commerce
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A Relationship Perspective
Exhibit 5-6
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Trends in B2B Buying
Customer Value Considerations
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Continually increasing quality
Lowering costs
Environmental Impact
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Purchasers should identify activities, products, and
services that have an environmental impact.
This includes recycling programs, emissions to air,
discharges to water, use of raw materials, and storage
and movement of hazardous materials and the impact of
both on land and communities.
Purchasers can work with suppliers to reduce excessive
packaging, conserve natural resources, and minimize the
dangers of products and processes that may harm the
environment.
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Types of Buying Decisions
The classes of buying decisions are distinguished
according to the newness of the purchase decision, the
information required, and the need to consider
alternatives in the purchase, such as different suppliers.
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The Buying Process
Recognize
problem or
opportunity
Determine
desired product
characteristics
and quantity
Describe
desired product
specifications
Make
purchases
and evaluate
performance
Evaluate and
select
suppliers
Locate and
qualify
suppliers
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Bearden Marketing 5th Ed
The Buying Center
Buying
Center
Includes more than the purchasing
department or the purchasing function;
it is made up of people throughout the
organization at all levels.
Gatekeepers
Those who control the flow of
information and communication among
the buying center participants.
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Government Markets
In the United States, the government market
includes federal, state, and local government
organizations that purchase goods and services
for use in many activities.
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Total expenditures in the trillions of dollars, the
government market is the largest in the world
The United States federal government is the largest
customer in this market.
The Department of Defense is the federal government’s
biggest spender, trailed by the Department of Health and
Human Services in expenditures.
Bearden Marketing 5th Ed
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Reseller Markets
The reseller market is
made up of firms that
purchase goods and in turn
sell them to others at a gain.
This market includes
wholesalers and retailers,
totaling approximately 3.5
million companies with more
than 20 million employees.
Bearden Marketing 5th Ed
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Other Institutional Markets
Nonprofit organizations must also purchase
goods and services to support their activities,
includes:
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educational institutions
public and private hospitals
religious and charitable organizations
trade associations
Bearden Marketing 5th Ed
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Ethical Issues
Reciprocity occurs when firm A purchases
from supplier B, who in turn buys A’s own
products and services.
The important values of fairness, honesty, and
trust should influence all negotiations between
business purchasers and their suppliers.
For firms pursuing global markets, the possibility
of encountering ethical dilemmas is multiplied
many times.
Bearden Marketing 5th Ed
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Summary
After studying this chapter, you should be able to:






Define the nature of business-to-business buying behavior
and markets.
Explain the differences between business-to-business
buying and consumer purchase behavior.
Recognize the different types of buying decisions.
Define the different stages of the business buying process.
Describe the buying center concept and the determinants of
influence within the buying center.
Understand the nature of government, reseller, and other
institutional markets.
Bearden Marketing 5th Ed
5-23
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.