Transcript here - Pearson Canada

Chapter 7
Business Markets
and Business
Buyer Behaviour
Copyright © 2008 Pearson Education Canada
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Case Study
UPS
Customer Needs
Services
• Consumers need fast,
friendly, low-cost package
delivery
• Business needs are more
complex
– Shipping part of
complex logistics
process including
purchasing, inventory,
order status, invoices,
payments, returns
Copyright © 2008 Pearson Education Canada
• Employs 407,200 people,
88,000 vehicles, and 600
aircraft worldwide
• Helps customer navigate the
complexities of international
shipping
• Offers a wide range of
financial services
• Provides consulting services to
improve logistics operations
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Definition
• Business Buyer behaviour:
– The buying behaviour of organizations that
buy goods and services for use in the
production of other products and services that
are sold, rented, or supplied to others.
– Also included are retailing and wholesaling
firms that acquire goods for the purpose of
reselling or renting them or others at a profit.
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Principles of Marketing, Seventh Canadian Edition
Characteristics of Business Markets
• Marketing Structure and
Demand
• Nature of the
Buying Unit
• Types of Decisions and the
Decision Process
• Business markets
– have fewer but larger
customers
• Business customers
– are more geographically
concentrated
• Demand is different
– Demand is derived
– Demand is price inelastic
that can fluctuate quickly
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Principles of Marketing, Seventh Canadian Edition
Characteristics of Business Markets
• Marketing Structure
and Demand
• Nature of the
Buying Unit
• Types of Decisions and
the Decision Process
Copyright © 2008 Pearson Education Canada
• Business purchases
involve more buyers
in the decision
process
• Business buying
involves more
professional
purchasing effort
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Principles of Marketing, Seventh Canadian Edition
Characteristics of Business Markets
• Marketing Structure
and Demand
• Nature of the
Buying Unit
• Types of Decisions and
the Decision Process
Copyright © 2008 Pearson Education Canada
• Compared to
consumer purchases
– More complex buying
decisions
– The buying process is
more formalized
– Buyers and sellers
work more closely
together and build
long-term
relationships
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Principles of Marketing, Seventh Canadian Edition
Business Buyer Behaviour
• Major Types of Buying Situations
– Straight rebuy
• Reordering without modification
– Modified rebuy
• Requires modification to prior purchase
– New task
• First-time purchase
– Systems Selling
• Buying a packaged solution to a problem from a single seller.
• Often a key marketing strategy for businesses seeking to win
and hold accounts.
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Business-to-Business Company
DuPont Chemicals
• Established in 1802 with gunpowder as its first product
• In 1910 moved away from explosives with the first nonleather material, which was snatched up for upholstery
and automobile parts
• Today, the firm delivers science-based solutions that
make real differences in people's lives around the world
in areas such as food and nutrition, health care, apparel,
safety and security, construction, electronics and
transportation
• Revenue of $27 billion
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Business-to-Business Company
DuPont Chemicals
• Examples of B2B markets and products:
– Heath Care - Medical fabrics to provide comfort and safety to
surgeons
– Automobile – airbag fibers and engineering plastics for safety
– Dental – filaments for toothbrushes
– Glass – technology to reduce glare and noise, save energy,
protect against breakage
– Footware – flexibility for rubber, strength of plastic
– Farming – pesticides
– Guitar manufacturers – DuPont product give the look of vintage
lacquer
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Principles of Marketing, Seventh Canadian Edition
Participants in the Business
Buying Process
• Buying Center
– The decision-making unit of a buying
organization
– Includes all individuals and units that
participate in decision making
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
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Principles of Marketing, Seventh Canadian Edition
Discussion Question
Buyer Behaviour
• You have just been reassigned
from Coca-Cola’s consumer
division to its Institutional
Division. Your first
assignment is to convince your
former college to switch from
Pepsi to Coca-Cola in their
dining halls. Consider the
following…
• How will demand differ from
the consumer market?
• How does the buying process
differ? Describe the members
of they buying center.
• Is this a new task, modified
rebuy or straight rebuy?
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying-decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
7-14
Principles of Marketing, Seventh Canadian Edition
Major Influences on
Business Buyers
•
•
•
•
Environmental
Organizational
Interpersonal
Individual
Copyright © 2008 Pearson Education Canada
• Economic trends
• Shortages of raw
materials, rising costs,
and political
developments
• Technological
changes
• Actions of
competitors
• Culture and customs
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Principles of Marketing, Seventh Canadian Edition
Major Influences on
Business Buyers
•
•
•
•
Environmental
Organizational
Interpersonal
Individual
Copyright © 2008 Pearson Education Canada
•
•
•
•
Objectives
Policies
Procedures
Organizational
structure
• Systems
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Principles of Marketing, Seventh Canadian Edition
Major Influences on
Business Buyers
•
•
•
•
Environmental
Organizational
Interpersonal
Individual
Copyright © 2008 Pearson Education Canada
• Influence of members
in the buying center
–
–
–
–
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Authority
Status
Empathy
Persuasiveness
Principles of Marketing, Seventh Canadian Edition
Major Influences on
Business Buyers
•
•
•
•
Environmental
Organizational
Interpersonal
Individual
Copyright © 2008 Pearson Education Canada
• Personal
characteristics of
members in the
buying center
–
–
–
–
–
–
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Age and income
Education
Job position
Personality
Risk attitudes
Buying styles
Principles of Marketing, Seventh Canadian Edition
Discussion Question
Business Buyer Behaviour
• Your job selling Coca-Cola to
your old college has proven
more difficult than you
imagined. There seem to be
many influences on your
buyer’s behaviour that you did
not expect.
– What environmental factor
might exist?
– Organizational factors?
– Interpersonal factors?
– Individual factors?
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Stages in the Business
Buying Process
• Problem recognition can result from internal or external
stimuli
• General need description: describing the general
characteristics and quantity of a needed item or service
– Part of the more formalized process of business buying; may
need technical expertise to write this
– This stage can be influenced by salespeople promoting the
unique aspects of their products; helping to write the
specification
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Principles of Marketing, Seventh Canadian Edition
Stages in the Business
Buying Process
• Product specification: deciding on and
specifying the best technical product
characteristics for a needed item
– The responsibility is on suppliers to meet the
specifications demanded and provide the best value
– Value analysis is an approach to cost reduction in
which components are studied for redesign,
standardization, or less costly methods of production
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Principles of Marketing, Seventh Canadian Edition
Stages in the Business
Buying Process
• Supplier search: the buyer searches for the best vendors
for the product or services needed
– Sources: existing suppliers, contacts from new suppliers,
supplier directories, or through Internet buying sites
– Trend towards supplier development
• Proposal solicitation: inviting qualified suppliers to
submit proposals for the products specified; also known
as RFQ, RFP, or tender documents
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Principles of Marketing, Seventh Canadian Edition
Stages in the Business
Buying Process
• Supplier selection: reviewing the proposals submitted
and choosing the supplier which best meets the
specifications asked for
– Political considerations may enter into this process, such as
reciprocal buying agreements, local purchasing requirements, or
past history
– Factors other than price may be given consideration: availability,
servicing capabilities, installation, training, location, or
reputation
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Stages in the Business
Buying Process
• Order-routine specification: writing the final order for
the goods to be purchased; can be a very specific, written
document (purchase order or contract) to ensure
accountability
– Blanket contracts can be used for future repeat purchasing
• Performance review: postpurchase rating of the supplier
to decide if satisfactory value has been received and if
the relationship should be continued
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Principles of Marketing, Seventh Canadian Edition
Business Buying
on the Internet
• E-procurement is growing rapidly.
• Online auctions and online trading
exchanges (e-marketplaces) 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
Copyright © 2008 Pearson Education Canada
7-26
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
7-27
Principles of Marketing, Seventh Canadian Edition
Institutional and
Government Markets
• 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.
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Principles of Marketing, Seventh Canadian Edition
Institutional and
Government Markets
• Government Markets
– The Government of Canada buys $14 billion in goods
and services from thousands of suppliers
– Public Works and Government Services Canada is the
government’s largest purchasing organization
averaging 60,000 contracts annually.
– Require suppliers to submit bids and often give job to
lowest bidder
– Favor domestic suppliers
– Much “red tape” can exist
Copyright © 2008 Pearson Education Canada
7-29
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the business market and how it
differs from consumer markets
2. Identify the major factors that influence
business buyer behaviour
3. List and define the steps in the business
buying decision process
4. Compare the institutional and
government markets and explain how
they make their buying decisions
Copyright © 2008 Pearson Education Canada
7-30
Principles of Marketing, Seventh Canadian Edition