Unit 6 Business Buyer Behavior

8/13/2019 Unit 6 Business Buyer Behavior

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Unit 6: Business Buyer Behavior

Subject Code : MB0046

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Contents

Introduction

Difference between consumer and business buyer behavior

Buying situations in industrial marketing

Buying roles in industrial marketing

Factors that influence business buyers

Steps in business buying process

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Introduction The market where customer buys roducts but not !or

ersona" consumtion is known as business market#

The business market inc"udes or$ani%ationa" buyin$&institutiona" buyin$ and $o'ernment buyin$#

The number o! buyers in such markets is "ess but the

(uantity urchased is 'ery hi$h# Business buyers e)ist in industria" towns& techno"o$ica"

arks and industria" areas#

In business markets& the demand !or the roduct is deri'ed&i#e#& deends uon !ina" consumtion o! roduct andser'ice#

*or e)am"e& demand !or car en$ines deend on number o!customers who wi"" urchase the car#

I! the number o! eo"e who urchase the car decreases&the demand !or car en$ines a"so decreases#

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Learning Objectives

After studying this chapter you will be able to-1. Differentiate between consumer behavior and organization behavior.

2. Discuss the different types of buying situations involved in the

organizational buying

4. Understand the buying roles and their importance in industrial mareting.

!. Analyze the factors that influence the organizational buying process.

". #$amine the business buying process in the industrial mareting.

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Difference between consumer and business buyer behavior

Characteristics Consumer Market Business market

1. Demand Direct Derived2. o of customers %arge &ew!. Location Dispersed 'oncentrated.". ature of buy (ersonal (rofession#. o of buying ro$es &ew )any%. egotiations #asy 'omple$&. 'romotion Advertising (ersonal selling

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Buying Situations in The Industrial Marketing

There is a large difference between buying situations in industrialmarketing and consumer markets. In industrial marketing, there arethree different buying situations, namely,

1.ew task* +t is the stage where an organization is purchasinga ma,or product for the first time. A large number of people areinvolved in decision maing.

2.(traight re)buy * +t is the situation in which an organizationfollows routine steps of informing seller about their reuirements andsupply specifications. +t provides fle$ibility to both buyers and sellers.

!.Modified re)buy * +n this situation buyer wants either productmodification price modification terms modification or suppliers/modifications.

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Buying *o$es in the +ndustria$ Marketing

The number of people involved in decision making in industrialmarketing is more. Hence, many business organizationsconsist of a buying center or buying committee.

The characteristics of a buying center are:

Many individuals can perform a given role or one individual canperform many roles. The buying centre may include people from outside the

organization such as government officials, consultants, etc. Different members of the buying centre have different

views. Members of a buying centre have different personal

motivations, perceptions and preferences which depend onthe persons age, income, education, !ob position, attitude,culture, etc.

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The various buying roles in thebusiness buying process are:

1.Users. These are eo"e whoactua""y use the roduct#

2.Influencers. They are eo"ewho $i'e in!ormation to assess the

'endor and his roducts#3.Buyers. These are eo"e whourchase the roduct# They a"soe'a"uate the 'endor and se"ecthim#

4.Deciers. They are eo"ewho take !ina" decision onsu"iers#

!."ate#eepers. /e is a !i"terin$a$ent between the buyin$committee and se""ers#


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,actors that +nf$uence Business Buyers

1. $cono%ic evelop%ents: urchasin$ deendson the economy o! the country# I! the economy is$rowin$ we"" the consumtion a"so increasesaccordin$"y#

2. &upply conitions: aw materia"s re(uiredshou"d match with the demand o! the comany#Comany shou"d make chan$es in su"y whenthere is irre$u"ar or seasona" demand#

3. 'olitical an legal environ%ent: 3n unstab"e

o'ernment has unredictab"e o"icies# Chan$esin o'ernment o"icies ha'e an imact on thecomany#

4. (o%petitive environ%ent: In business buyin$&the number o! buyers are "ess# Techno"o$ica"

chan$es adoted by the cometitor shou"d becare!u""y obser'ed# 5


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#. Cu$ture and customs0 #very country has its own culture andcustoms and buying is affected by culture and customs.

%. Organi-ationa$ objectives0 (urchasing ob,ectives are influencedby organizational ob,ectives. &or e.g. if a company wants to reducethe overall cost by 2 then its purchasing ob,ectives taes this asa benchmar.

&. Organi-ationa$ o$icies and rocedures0 'ompanies/ policieslie centralization or decentralization of buying and selling willhave direct effect on company/s production.

/. Organi-ation structure and systems0 An organization is morefle$ible if the number of hierarchical levels is less.

0. +nterersona$ factors0 3usiness buying will have different resultson the basis of authority status empathy that customers andorganization have.

1. +ndividua$ factors0 &actors lie age education ,ob positionattitude etc. determine the buying behavior.

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&teps in Business Buying'rocess

rob"emeco$nition

eed7escrition

roductSeci!ication

Su"ierSearch

roosa"So"icitation

Su"ierSe"ection

8rderoutineSeci!icatio

n

er!ormance e'iew

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(tage 1 'rob$em *ecognition

(roblem can be identified from either internal stimuli or e$ternal stimuli.(tage 2 eed Descrition

After finalizing the problem companies will define need description. +t

includes

'haracteristics and uantity of the item needed.

&or comple$ products team assessment is reuired. he reuired items are assessed on the basis of reliability durability price etc.

(tage ! 'roduct (ecification

5rganizations develop detailed product specification with value analysis.

6alue analysis means analyzing the components and the production

process.

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(tage " (u$ier (earch

he buyer finds the most suitable suppliers. his can be doneby using trade directories doing computer search watch trade

advertisements and attend trade shows.

he supplier tries to get listed in ma,or business directories

and build a good reputation in the maret.

(tage # 'roosa$ (o$icitation

he buyer invites suppliers to submit proposals.

7ome suppliers may send only a catalog or a salesrepresentative.

he buyer may also invite suppliers to mae formal

presentations.

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(tage % (u$ier (e$ection

his stage is also nown as vendor selection.

At this stage companies prepare a list of suppliers and assignweightages to each supplier and evaluate each of them.

he common characteristics used to evaluate suppliers are

8uality

Delivery

'ommunication

'ompetitive prices

7ervice

echnical advice

(erformance history

9eputation

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(tage & Order routine secifications

At this stage the buyer negotiates the final order with the

selected supplier and lists the technical specifications theuantity needed the e$pected time of delivery return policies

warranties etc.

&or )95 :maintenance repair and operating items; buyers

are using blanet contracts :long term contract; rather thanperiodic purchase orders.

(tage / 'erformance *eview

At this stage the organization reviews the performance of thesuppliers.

hey decide whether to continue with the same supplier or

search for a new supplier.

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Buying "ri )oel

Buyin$ rid Mode" is de'e"oed to understand thebusiness buyin$ rocess in three business buyin$situations#Buying 'rocess *e+ Tas# )oifie

,e-buy&traightre-buy

1# rob"em reco$nition 9

2# enera" need descrition 9 9 sometimes

+# roduct seci!ication 9 9 9

4# Su"ier Search 9 9 sometimes

,# roosa" so"icitation 9 9 sometimes

6# Su"ier se"ection 9 9

-# 8rder routine seci!ication 9 9

# er!ormance re'iew 9 9 9

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Unit 6 Business Buyer Behavior

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