Chapter 5

Business Markets and

Business Buyer
Behavior
Why Bother?
◼ A business market comprises all the
organizations that buy goods and services
for use in the production of other products
and services that are sold, rented, or
supplied to others.
◼ The business market is huge, growing
globally and involves many dollars and
goods.
 Case Study
UPS

Customer Needs Services

◼ Consumers need fast, ◼ 360,000 people and 88,000

friendly, low-cost package vehicles offer ground, air,
delivery freight worldwide
◼ Business needs are more ◼ Helps customer navigate the
complex complexities of international
 Shipping part of complex
shipping
logistics process ◼ Offers a wide range of
including purchasing, financial services
inventory, order status, ◼ Provides consulting services
invoices, payments, to improve logistics
returns operations
These UPS ads target businesses as
a supply chain solution
Definition
◼ Business Buyer Behavior:
 The buying behavior 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.
Characteristics of Business Markets
Business Markets
Characteristics ◼ Compared to
consumer markets:
 Business markets
◼ Marketing Structure and ◼ have fewer but larger
customers
Demand  Business customers
◼ Nature of the ◼ are more geographically
concentrated
Buying Unit
 Demand is different
◼ Types of Decisions and ◼ Demand is derived
the Decision Process ◼ Demand is price inelastic
◼ Demand fluctuates more
 Characteristics of Business
Markets
Contain fewer, but
Marketing Structure larger buyers
and Demand Customers are more
geographically concentrated
Buyer demand is derived from
final consumer demand
Demand is often more
inelastic
Demand often fluctuates
more, and more quickly
Business Markets
Characteristics
◼ Compared to consumer
purchases:
◼ Marketing Structure and
 Involve more buyers in
Demand
the decision process
◼ Nature of the
 More professional
Buying Unit
purchasing effort
◼ Types of Decisions and
the Decision Process
Characteristics of Business
Markets

Nature of the Buying Unit

Business
buying
involves a
more Business
professional buying
purchasing involves
effort more buyers
(participants)
Business Markets
Characteristics ◼ Compared to consumer
purchases
More complex buying
◼ Marketing Structure and
decisions
Demand
The buying process is
◼ Nature of the
more formalized
Buying Unit
Buyers and sellers work
◼ Types of Decisions and
the Decision Process more closely together and
build long-term
relationships
 Characteristics of Business
Markets
Types of Decisions
Business and the Decision
buyers Process
usually face Business
more buying In business
complex process is buying,
buying more buyers and
decisions. formalized. sellers work
more closely
together.
Model of Business Buyer Behavior
Buyer Responses
The Environment The Buying
Organization
Product or
Marketing
service choice
Stimuli: The buying
•Product center
•Price Supplier Choice
•Place
•Promotion
Buying decision Order Quantities
process
Other Stimuli: Delivery terms
•Economic (Interpersonal and and times
•Technological individual influences)
•Political Service terms
•Cultural (Organizational
•Competitive Influences) Payment
 Business Buyer Behavior
◼ Major Types of Buying Situations
Involved Decision Making

◼ Straight rebuy
 Reordering without modification
◼ Modified rebuy
 Requires modification to prior purchase
◼ New task
 First-time purchase
Major Types of Buying
Situations

New Task Buying

Involved Decision

Modified Rebuy
Making

Straight Rebuy
 T23

Stages of the Buying Process

Stages of the buying process Buying Situations

New Modified Straight
Task Rebuy Rebuy
Problem recognition Yes Maybe No
General need description Yes Maybe No
Product specification Yes Yes Yes
Supplier search Yes Maybe No
Proposal solicitation Yes Maybe No
Supplier selection Yes Maybe No
Order routing specification Yes Maybe No
Performance review Yes Yes Yes
Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying
and Creative Marketing (Boston: Allyn & Bacon, 1967), p.14.
Business-to-Business Company
DuPont Chemicals
◼ Established in 1802 with gunpowder as its first
product
◼ In 1910 moved away from explosives with the first
non-leather 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
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
Business Buyer Behavior
◼ 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.
 Customization ????
Business Buyer Behavior
◼ Buying Center
 The decision-making unit of a buying
organization
 Includes all individuals and units that
participate in decision making
Participants in the Business Buying
Process

Users

Initiators Influencers

Gatekeepers

Buyers Deciders

Approvers
Discussion Question
What are the
advantages and
disadvantages of
buying from
single suppliers
versus multiple
suppliers?
Major Influences on Business
Buyers
Major Influences on Business
Buyers

Key Factors
◼ Economic trends
Environmental ◼ Supply conditions
◼ Technological,
Organizational
political and
Interpersonal competitive changes
Individual ◼ Culture and customs
Major Influences on Business
Buyers

Key Factors
◼ Objectives
Environmental ◼ Policies
◼ Procedures
Organizational
◼ Organizational
Interpersonal structure
Individual ◼ Systems
Major Influences on Business
Buyers

Key Factors
◼ Influence of
Environmental members in the
buying center
Organizational
 Authority
Interpersonal  Status
Individual  Empathy
 Persuasiveness
Major Influences on Business
Buyers

Key Factors ◼ Personal

characteristics of
Environmental members in the buying
center
Organizational
 Age and income
Interpersonal  Education
Individual  Job position
 Personality
 Risk attitudes
 Buying styles
Stages in the Business Buying
Process
 Business Buying on the Internet
◼ E-procurement is growing rapidly
◼ Business buyers may purchase
electronically by:
 Electronic data interchange links (EDI)
 The Internet
◼ 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
Benefits and Problems Created
by Buying on the Internet
◼ Benefits: ◼ Problems:
 Shave transaction costs  Cut purchasing jobs
 Reduce time between  Erode supplier-buyer
order and delivery loyalty
 Create more efficient  Create potential
purchasing systems security disasters
 Forge more intimate
relationships
 Level the playing field
Institutional and Government
Markets
Institutional Markets

Low Budgets Captive Patrons

Government Markets

Red Tape is Noneconomic

Public Review
Common Criteria
Negotiated Some Buying
Contracts Online