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MGMA01H3 (184)
Chapter 7

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Management (MGM)
Tarun Dewan

Business Buyer behavior: buying behavior of the organizations that buy goods for use in the production of other good or to resell or to rent to others at a profit Business buying process: decision process by which business buyers determine which products their organizations need to purchase, and find, evaluate and choose among alternatives Differences between business markets and consumer markets / characteristics of business markets: 1) Market structure and demand Business marketer normally deals with fewer but larger buyers Business demand is derived demand – ultimately derives from the demand for consumer goods Inelastic demand – total demand is not affected by price changes, especially in the short run Fluctuating demand – demand for goods changes more and more quickly 2) Nature of the buying unit Involves more decision participants and more professional purchasing effort. Business buying is done by trained purchasing agents 3) Types of decision and decision process Business decisions are more complex as it involves large sums of money and interactions among many people at many levels. Therefore, decision making takes longer Buying process is more formal: need for detailed product specification and formal approval Buyer and seller are more dependent on each other and they build close, long term relationships. Companies are practicing supplier development (systematic development of networks of suppliers-partners to ensure a safe supply of products/materials for use in making products or reselling The buying activity consists of two parts: the buying center (all the people involved in making the decision) and the buying decision process Factors that influence business buyer behavior What buying decisions do businesses make? Straight rebuy: buyer reorders something without any modifications. It is handled on a routine basis. ‘IN’ suppliers try to maintain product and service q
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