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Management and Organizational Studies
Management and Organizational Studies 2320A/B
Chris Torrence

CHAPTER 7 BUSINESS MARKETS AND BUSINESS BUYER BEHAVIOR Business buyer behavior: The buying behavior of the organizations that buy goods and services for use in the production of other products and services or to resell or rent to others at a profit. Characteristics of business markets Market structure demand: Far fewer but far larger buyers than consumer marketers. Derived demand: Business demand that ultimately comes from the demand for consumer good. Nature of the buying unit: Compared to consumer purchases, B2B involves more decision participants and a more professional purchasing effort. Types of decisions and the decision process: More complex buying decisions than consumer buyers. Buyer and seller are more dependent on each other. Supplier development: Systematic development of networks of supplier-partners to ensure an appropriate and dependable supple of products and materials for use in making products or reselling them to others. Business buyer behavior Major types of buying situations: 1. Straight rebuy: A business buying situation in which the buyer routinely reorders something without any modifications. 2. Modified rebuy: A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. 3. New task: A business buying situation in which the buyer purchases a product or service for the first time. Systems selling (solutions selling): Buying a packaged solution to a problem from a single seller, thus avoiding separate decisions involved in a complex buying situation. Buying centre: All the individuals and units that play a role in the purchase decision-making process. Includes Users Influencers 1 Buyers Deciders Gatekeepers Major influences on business buyers: Environmental factors Organizational factors Interpersonal factors Individual factors The buying process: 1. Problem recognition 2. General need description 3. Product specification 4. Supplier search 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review Eprocurement: Purchasing through electronic connections between buyers and sellers, usually online. Institutional and government markets Institutional market: Schools, CHAPTER 9 PRODUCTS SERVICES AND BRANDS: BUILDING CUSTOMER VALUE Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Service: Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. 2 Consumer products Consumer products: A product bought by final consumers for personal consumption. Four types: 1. Convenience products: Product that customers usually buy frequently, immediately, and with a minimum of comparison and buying effort. Ex: Candy, magazines. 2. Shopping products: Product that customer, in the process of selection and purchase, usually compares on such bases as suitability, quality, price and style. Ex: hotel. 3. Specialty products: Product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Ex: car brands. 4. Unsought products: Consumer products that the consumer either does not know about or knows about but does not normally think of buying. Ex: life insurance. Business products Business product: A product bought by individuals and organizations for further processing or for use in conducting a business. Three types: 1. Materials and parts (ex: livestock) 2. Capital items (ex: buildings) 3. Supplies and services (ex: operating supplies) Social marketing: The use of commercial marketing concepts and tools in programs designed to influence individuals behavior to improve their well-being and that of society. Product and service decisions 3 Three levels: individual, product line, and product mix. Individual decisions Product quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Brand: A name, term, sign, symbol, design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. Packaging: The activities of designing and producing the container or wrapper for a product. Product line decisions Product line: A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. Product mix decisions Product mix (product portfolio): The set of all product lines and items that a particular seller offers for sale. Width = # of product lines Length = total # of products in lines Depth = # of versions of each product in a line Consistency = how closely related lines are in end use Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing. Brand positioning brand name selection brand sponsorship brand development A manufacturer has four sponsorship options: 1. National/manufacturers brand 2. Private/store/distributor brand 3. Licensed brand 4. Co-brand Store brand: Brand created and owned by a reseller of a product or service. 4
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