Business Markets and Business Buyer Behaviour

1. Business Markets and Business Buyer Behaviour Chapter 8 PowerPoint slides Express version Instructor name Course name School name Date Principles of Marketing,Sixth Canadian Edition

2. After studying this chapter, you should be able to: Define the business market and explain how business markets differ from consumer markets Identify the major factors that influence business buyer behaviour List and define the major steps in the business buying-decision process Compare the institutional and government markets and explain how they make their buying decisions Learning Objectives Principles of Marketing,Sixth Canadian Edition

3. Market structure and demand Fewer but larger buyers Customers are more geographically concentrated Business demand is derived from consumer demand Inelastic demand that can fluctuate quickly Types of decisions and process More complex buying decisions More formalized process Buyers and sellers work closely and build relationships Characteristics of Business Markets • Business purchase decisions pose greater risk due to their size and more serious consequences of making a bad decision • Nature of the buying unit • Involve more buyers • More professional purchasing effort Table 8.1 Principles of Marketing,Sixth Canadian Edition

4. Straight rebuy: routine reorder with no modifications Modified rebuy: some modification to product specifications, prices, terms, or suppliers New task: first time purchase of a product or service Systems selling: buying a packaged solution to a problem Model of Business Buyer Behaviour Figure 8.1 Principles of Marketing,Sixth Canadian Edition

5. Buying centre:all those involved in business buying, may not be a formal unit Buying roles: Users Influencers Buyers Deciders Gatekeepers Participants in Business Buyer Behaviour • Salesperson’s challenge: • To understand who participates, • What role they play, and • How much influence they have in the decision Principles of Marketing,Sixth Canadian Edition

6. Influences on Business Buyer Behaviour Figure 8.2 Principles of Marketing,Sixth Canadian Edition

7. New task buying situations usually follow all eight steps Straight/modified rebuy situations may skip steps The Business Buying Process Figure 8.3 Principles of Marketing,Sixth Canadian Edition

8. Eprocurement growing rapidly: $272 billion in 2005, approximately 18% of all B2B transactions Reverse auctions: invite suppliers to bid for contracts Majority of purchases are for materials, repair, and operations (MRO) versus capital items Advantages: Lower transaction/order processing costs Less paperwork Lower prices Faster delivery Frees personnel to focus on more strategic issues Business Buying on the Internet • Disadvantages: • Transaction-oriented medium can erode buyer-seller relationships • Potential security problems Principles of Marketing,Sixth Canadian Edition

9. Institutional markets: Schools, hospitals, nursing homes, prisons Large demands, low budgets, captive patrons Focus on low prices that meet minimum standards Government markets: Federal, provincial, municipal Huge ongoing requirements Open bidding, low price that meet buying specifications wins Governments favour domestic suppliers, may use large projects for regional development purposes May require separate selling effort Institutional/Government Markets Principles of Marketing,Sixth Canadian Edition

10. The learning objectives for this chapter were: Define the business market and explain how business markets differ from consumer markets Identify the major factors that influence business buyer behaviour List and define the major steps in the business buying-decision process Compare the institutional and government markets and explain how they make their buying decisions In Conclusion… Principles of Marketing,Sixth Canadian Edition