MARKETING MANAGEMENT

13th edition

7
Analyzing
Business Markets

Business Buyer Behavior

Participants in the Business Buying Process

The Buying center is all of the individuals

and units that participate in the business
buying decision-making process such as:

Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers

 Initiators

Users

 Influencers

Deciders

 Approvers

Buyers

 Gatekeepers

Types of Business Customers

Price-oriented Customer: Price is everything

for them. They always wait and look for the

lowest possible price.

- It is also called Transactional selling (single

dealings) like purchasing any product from
auction, exhibitions and trade fairs etc.
Solution-oriented Customers: They want

low price but will respond to arguments about

more dependable supply or service.

- It is also called Consultative selling like buyer

for computer and technology related products.

Types of Business Customers

Gold-standard Customers: They want the

best performance in terms of product quality,

assistance, delivery reliability and so on.
- It is also called Quality selling like selling to
Brand Cars, Brand Watches manufacturers.

Strategic-value Customers: They want a

fairly permanent and sole-supplier relationship

with their supplier companies.
- It is also called Enterprise selling like
strategic partnership between customer and
supplier; Partnership between AIUB and OTOBI.

Types of Product in Business

Purchasing Processes
Routine products: These products have low

value and cost to the customer and involve little risk

of supply. So Business customers will seek the
lowest price and emphasize routine ordering.
Suppliers will offer to standardize products.

Example: Office Supplies Paper, File Folders, Clips.

Leverage products : These products have

high value and cost to the customer but involve

little risk of supply because many companies make
them. The supplier knows that the customer will
compare market offerings and costs with other
sellers.

Example: Tier for car, Computer accessories, building

materials and office furniture.

Types of Product in Business

Purchasing Processes
Strategic products: These products have high

value and the cost to the customer also involve high

risk of supply. The customer will want a well known
and trusted supplier and be willing to pay more than
the average price. The supplier should seek strategic
alliances.
Example: Complex Computer software and Security
Systems, Special technical support for operation etc.

Bottleneck products: These products have low

value and cost to the customer but they involve some

risk of supply. The customer will want a supplier who
can give guarantee a stable supply of reliable
products.
Example: Spare parts for Automobile and Electronic
product producers.

Stages in the Business Buying

Decision Process
Problem
Recognitio
n

General
Need
Description

Product
Specificatio
n
Supplier
Search

Proposal
Solicitation
Performanc
e Review

Order
Routine
Specificatio
n

Supplier
Selection

Stages in the Business Buying

Decision Process
Problem recognition occurs when someone
in the company recognizes a problem or
need for a business product or services.
Internal sources:

Need for new product or production equipment

from the internal operations of the organization.

External sources:

Idea from some external activities like

trade show, advertising campaign or
competitors activities.

Stages in the Business Buying

Decision Process
General need description describes the

characteristics and quantity of the needed

item.
- For standard items the process is simple, but for
complex items, the buyer will work with
others engineers, users to define
characteristics like utility, reliability, durability
or price.

Product specification describes all the

technical criteria and details of the product.

The company can assign a product-value
analysis team to the project to determine the
cost and the standard of that product.

Stages in the Business Buying

Decision Process
Supplier search involves searching for the most

appropriate suppliers through trade directories, contacts

with other companies, trade advertisements and trade
shows. Company may collect information about the
multiple suppliers.

Proposal solicitation is the process of requesting

proposals from qualified suppliers. After evaluating the

proposals, finally the buyer will invite a few suppliers to
make formal presentation or discussion.

Supplier selection is the process when the buying

center creates a list of desired supplier attributes and

negotiates with preferred suppliers for favorable terms
and conditions.

Stages in the Business Buying

Decision Process

Order-routine specifications After selecting

supplier(s), buyer place the final order to the supplier

by listing all the technical specifications, quantity
needed, the expected time of delivery, return
policies, warranties, payment mode and so on.

Performance review involves a evaluation of

suppliers performance to the purchase terms.

- This is the most important stage for future sales

development and relationship. Because performance
review may lead the buyer
to continue, modify or end a supplier
relationship.

END of CHAPTER - 7