PoM 6th ed. chapter 06

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 6.1

it’s good and good for you

Chapter 6Business markets and

business buyer behaviour


Slide 6.2

Business markets and business buying behaviour

• Business markets• Business buyer behaviour• The business buying process• E-procurement: buying on the Internet• Institutional and government markets

Topic outline


Slide 6.3

Business buyer behaviour refers to the buying behaviour of organisations that buy goods and services for use in the production of other products and services that are sold, rented or supplied to others.

Business buying process is the decision process by which business buyers determine which products and services their organisations need to purchase and then find, evaluate and choose among alternative suppliers and brands.

Business markets


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Business markets (Continued)Market structure and demand

Fewer and larger buyers

Derived demand

• Inelastic demand• Fluctuating demand

Buyer and seller dependency


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Business markets (Continued)

• More complex• More decision participants• More professional purchasing effort

Decision process


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Business markets (Continued)

Supplier developmentSystematic development of networks of

supplier–partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell.

Decision process


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Business buyer behaviourThe model of business buyer behaviour

Figure 6.2 Major influences on business buyer behaviour


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Business buyer behaviour (Continued)

Straight rebuy is a routine purchase decision such as reorder without any modification.

Modified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms or suppliers.

New task is a purchase decision that requires thorough research such as a new product.

Major types of buying situations


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Systems selling involves the purchase of a packaged solution from a single seller.

Major types of buying situations


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Buying center is all of the individuals and units that participate in the business decision-making process.– Users– Influencers– Buyers– Deciders– Gatekeepers

Participants in the business buying process


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• Buying center provides a major challenge.

• Who participates in the process?– Their relative authority– What evaluation criteria each participant

uses– Informal participants.



Slide 6.12


Users are those that will use the product or service.Influencers help define specifications and provide

information for evaluating alternatives.Buyers have formal authority to select the supplier and

arrange terms of purchase.Deciders have formal or informal power to select or

approve the final suppliers.Gatekeepers control the flow of information to others.



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Major influences on business buyers

Economic Factors

Price

Service

Personal Factors

Emotion


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Major influences on business buyers Environmental factors

Demand for product

Economic outlook

Cost of money

Supply of Materials Technology Culture

Politics Competition


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Objectives

Policies

Procedures

Structure

Systems

Major influences on business buyers Organisational factors


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Motives Perceptions Preferences

Age Income Education

Attitude toward risk

Major influences on business buyersIndividual factors


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The buying process


Figure 6.3 Stages of the business buying process


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Problem recognition occurs when someone in the company recognises a problem or need.

• Internal stimuli– Need for new product or production

equipment.• External stimuli

– Idea from a trade show or advertising.

The buying process


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General need description describes the general characteristics and quantity of a needed item.

Product specification describes the best technical product characteristics for a needed item.

Value analysis is an approach to cost reduction where components are studied to determine if they can be redesigned, standardised or made with less costly methods of production.

The buying process


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Supplier search is the stage of the business buying process in which the buyer tries to find the best vendors.

Proposal solicitation is the stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.

The buying process


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Supplier selection is the process when the buyer reviews proposals and selects a supplier or suppliers.

Order-routine specifications sees the buyer write the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.

The buying process


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Performance review involves the buyer assessing the performance of the supplier and deciding to continue, modify or drop the arrangement.

The buying process


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• Online purchasing• Company-buying sites• Extranets

E-procurement


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• Advantages– Access to new suppliers– Lowers costs– Speeds order processing and delivery– Shares information– Sales– Service and support

• Disadvantages– Can erode relationships as buyers search for new

suppliers– Security

E-procurement


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Institutional and government markets

Institutional markets consist of schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care.

• Characteristics– Low budgets– ‘Captive’ audience


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Institutional and government markets (Continued)

Government markets tend to favour domestic suppliers and require suppliers to submit bids and normally award to the lowest bidder.

• Affected by environmental factors• Non-economic factors considered

– Minority suppliers– Depressed suppliers– Small businesses.

PoM 6th ed. chapter 06

Education

Transcript of PoM 6th ed. chapter 06