31380131 Business Buying Behaviour

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen WebbSlides prepared by Sarah Fletcher and Morena Dobrowolski

4ORGANISATIONAL BUYING BEHAVIOUR


4-2

Organisational buying behaviour

At the end of this session, you should understand:• The nature and types of business markets• The influences on business market buying behaviour and

demand• The business buying decision process• The types of business buying decisions (straight rebuy,

modified rebuy, new task buying)• The influence of the buying centre on purchase decision

making• The application of relationship marketing in business markets• The role of the Internet in business-to-business (B2B)

marketing


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What is organisational (business to business) buying?

• Business markets use the products or services they buy to produce or trade their own products or services

• Consumer markets make purchases for personal consumption

• Three main differences exist between consumer and business decision making

– Nature of demand– Composition of the business market– Motives of the buyers in each market


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The business decision-making process


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The scope of the business market

• Agriculture• Mining• Construction• Manufacturing• Transport• Wholesale and retail trade• Finance, insurance, real estate• Government• Non-profit organisations


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Marketing to B2B

• Innovative B2B promotions can gain attention

– Bankwest targets business with pizza delivery

• Successful marketing to the agriculture sector

– Product focus combats lower price

See EXHIBIT 4.2 Optus targets businesses, page 97.

PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.


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The nature of business markets• Organisational buyers have different needs and buying

patterns across different buying situations– e.g. medical purchase of simple box of rubber gloves vs complex purchase of

an X-ray machine

• Vary primarily from consumers through type of customer, reason for buying or product usage

– See Exhibit 4.2 previous slide

• B2B– Purchase inputs to make other goods and services

e.g. sugar and flavouring as inputs for Coca-Cola

– Resell purchases to other business users or consumers e.g. Woolworths

– Use purchases to conduct business e.g. stationery, legal services, marketing services


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Organisational buyers and consumers


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Purchase decision making in business markets

• Buying is often a group process

• Buying is less frequent and in large quantities

• Negotiation period is often prolonged

• Customer service is frequently a main requirement

• Consistency of quality and supply are important


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Types of buying situations

• New task rebuy– A similar purchase decision has never been made

• A modified rebuy– A similar purchase decision has been made before

but this time modifications to the purchase are needed or a new supplier is to be chosen

• A straight rebuy– A routine purchase that has been made many times

before


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Business market demand

• Consumer demand is influenced by marketing environment factors, such as

– Interest rate, social trends, marketing communications

• Demand for business goods incorporates four main considerations

– Demand is derived from the underlying consumer demand for its goods and services

– Demand is relatively inelastic to changes in price– Demand can fluctuate widely– Business market buyers are well informed


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Buying motives

• Assumptions exist that B2B buying motives are rational, methodical and objective

• However, personal factors also play a part: relationships, self advancement

• Primary motivators include– Cost and profit-related benefits– Ongoing promotional support– Ability to generate store traffic– Improvements in productivity


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Organisational buying criteria and motives


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Multiple buying influences

• Buying centre– A group of individuals involved in the purchase decision making

• Users– The people who actually use the product e.g. safety goggles

• Influencers– Have a direct or indirect influence on the purchase decision due

to some technical knowledge, financial power or other factor• Deciders

– Make the actual buying decision: purchasing officer, management, product/service user

• Gatekeepers– Control the flow of information

• Buyers– Select the suppliers and negotiate the terms of agreement


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Relationship marketing in business markets

• Relationship marketing– All marketing activities directed toward establishing,

developing and maintaining successful exchanges with customers

• Create a ‘value proposition’– Strategies should include use of specific competencies

to create better value for customers

• Customer relationship management (CRM)– Maximising customer retention rates and share of

individual customer’s business– Past behaviour is important in CRM


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Factors influencing growth of relationship marketing

• 1970s increased global competition, forcing adoption of defensive strategies

• 1980s and 1990s growth in services marketing based on direct relationships, leading to a professional focus in this area

• Adoption of the ‘value chain’ approach by Japanese businesses

– A link of value-creating activities producing maximum efficiency across all areas

• The future for relationship marketing – Increased use of the Internet– Increasing costs servicing unprofitable customers, leading

to a focus on better servicing other customers


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Trends in organisational buying


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Measuring CRM programs

• Key measurement programs for a customer satisfaction system in the B2B market


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‘Autocratic management versus the buying group’

• Case study: – Autocratic management versus the buying group

• Read the above case study and discuss the associated questions

31380131 Business Buying Behaviour

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