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Business Market & Buying Behaviour

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Business Market & Buying Behaviour

  1. 1. Copyright© 2008. IAME – Anand Choudhary
  2. 2. <ul><li>It’s a decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. </li></ul>Copyright© 2008. IAME – Anand Choudhary
  3. 3. <ul><li>Fewer, larger buyers: The business marketer deals with fewer ,but larger buyers than the consumer marketer does. </li></ul><ul><li>Close supplier-customer relationships : Because of small customer base and power of large customers there is frequent customization of their offerings. </li></ul><ul><li>Professional purchasing : Goods are normally purchased by trained purchasing agents who must understand constraints and requirements </li></ul>Copyright© 2008. IAME – Anand Choudhary
  4. 4. Copyright© 2008. IAME – Anand Choudhary Several buying influences : More people typically influence business buying decisions. Multiple sales calls : Involvement of more players leads to multiple sales calls to win most business orders. Derived demand : The demand for business goods is derived from the demand of consumer goods.For this reason the business marketer must closely monitor the buying patterns. Inelastic demand : the demand is not much affected by price changes in many business goods and services. Fluctuating demand : the demand of business goods tends to be more volatile when compared to consumer goods.
  5. 5. Copyright© 2008. IAME – Anand Choudhary Geographically concentrated buyers : The geographic concentration of products helps to reduce selling costs.Business marketers also should monitor regional shifts of certain industries. Direct purchasing : Business buyers often buy directly from manufacturers rather than through intermediaries.Especially that are technically complex or expensive(such as mainframes or aircraft)
  6. 6. <ul><li>Straight re-buy </li></ul><ul><li>Modified re-buy </li></ul><ul><li>New task </li></ul>Copyright© 2008. IAME – Anand Choudhary
  7. 7. <ul><li>Many business buyers prefer to buy a total solution to a problem from one seller called Systems Buying . </li></ul>Copyright© 2008. IAME – Anand Choudhary
  8. 8. <ul><li>Initiators </li></ul><ul><li>Users </li></ul><ul><li>Influencers </li></ul><ul><li>Deciders </li></ul><ul><li>Approvers </li></ul><ul><li>Buyers </li></ul><ul><li>Gatekeepers </li></ul>Copyright© 2008. IAME – Anand Choudhary
  9. 9. <ul><li>Price-oriented customers ( transactional selling ) </li></ul><ul><li>Solution-oriented customers ( consultative selling ) </li></ul><ul><li>Gold-standard customers ( quality selling ) </li></ul><ul><li>Strategic-value customers ( enterprise selling ) </li></ul>Copyright© 2008. IAME – Anand Choudhary
  10. 10. <ul><li>Routine products ( e.g., office supplies ) </li></ul><ul><li>Leverage products ( e.g., engine piston ) </li></ul><ul><li>Strategic products ( e.g., mainframe computers ) </li></ul><ul><li>Bottleneck products ( e.g., spare parts ) </li></ul>Copyright© 2008. IAME – Anand Choudhary
  11. 11. <ul><li>Problem recognition </li></ul><ul><li>General need description </li></ul><ul><li>Product specification </li></ul><ul><li>Supplier search </li></ul><ul><li>Proposal solicitation </li></ul><ul><li>Supplier selection </li></ul><ul><li>Order-routine specification </li></ul><ul><li>Performance review </li></ul>Copyright© 2008. IAME – Anand Choudhary
  12. 12. <ul><li>Recognize a problem or need. </li></ul><ul><li>Recognition by: </li></ul><ul><ul><li>Internal stimuli </li></ul></ul><ul><ul><li>External stimuli </li></ul></ul>Copyright© 2008. IAME – Anand Choudhary
  13. 13. <ul><li>Identify needed item’s general characteristics and required quantity. </li></ul><ul><li>General characteristics: reliability, durability, or price. </li></ul>Copyright© 2008. IAME – Anand Choudhary
  14. 14. <ul><li>Create product technical specification. </li></ul><ul><li>Product Value Analysis (PVA). </li></ul>Copyright© 2008. IAME – Anand Choudhary
  15. 15. <ul><li>Identify appropriate suppliers through: </li></ul><ul><ul><li>Trade directories </li></ul></ul><ul><ul><li>Contact with other companies </li></ul></ul><ul><ul><li>Trade advertisements </li></ul></ul><ul><ul><li>Trade shows </li></ul></ul><ul><ul><li>Put products, prices, and other information on Internet. </li></ul></ul>Copyright© 2008. IAME – Anand Choudhary
  16. 16. <ul><li>Buyer invite qualified suppliers to submit proposals. </li></ul><ul><li>Formal presentation from a few suppliers. </li></ul>Copyright© 2008. IAME – Anand Choudhary
  17. 17. <ul><li>Buying center specifies desired supplier attributes and indicate their relative importance. </li></ul>Copyright© 2008. IAME – Anand Choudhary Attributes Rating Scale Importance Weights Poor (1) Fair (2) Good (3) Excellent (4) Price .30 X Supplier reputation .20 X Product reliability .30 X Service reliability .10 X Supplier flexibility .10 x Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
  18. 18. <ul><li>Negotiation for: </li></ul><ul><ul><li>Final order </li></ul></ul><ul><ul><li>Listing </li></ul></ul><ul><ul><li>Technical specifications </li></ul></ul><ul><ul><li>Quality needed </li></ul></ul><ul><ul><li>Expected time of delivery </li></ul></ul><ul><ul><li>Return policies </li></ul></ul><ul><ul><li>warranties </li></ul></ul><ul><li>“ OTIFNE” term summarizes three desirable outcomes of a B-to-B transaction. </li></ul><ul><ul><li>OT – deliver on time ( 80 %) </li></ul></ul><ul><ul><li>IF – in full ( 90 %) </li></ul></ul><ul><ul><li>NE – no error ( 70 %) </li></ul></ul><ul><ul><li>Overall performance: 80% x 90% x 70% = only 50%! </li></ul></ul>Copyright© 2008. IAME – Anand Choudhary
  19. 19. <ul><li>Three methods: </li></ul><ul><li>Buyer may contact end users and ask for their evaluation. </li></ul><ul><li>Buyer may rate supplier on several criteria using weighted score method. </li></ul><ul><li>Buyer might aggregate cost of poor performance to come up with adjusted costs of purchase. </li></ul>Copyright© 2008. IAME – Anand Choudhary