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CH 7.docx

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University of Toronto Scarborough
Management (MGM)
Tarun Dewan

CH 7: Business Markets and Business Buyer Behaviour  Business Buyer Behaviour- the buying behaviour 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. o Retailing and wholesaling  Business Buying Process- the decision process by which business buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose among alternative suppliers and brands.  Differences between business markets and consumer markets o Market Structure and Demand  Business markets contain fewer but larger buyers  Business buyer demand is derived from final consumer demand  Demand in many business markets is more inelastic- not affected as much in the short run by price changes  Demand in business markets fluctuates more, and more quickly o Nature of Buying Unit  Business purchases involve more buyers  Business buying involves a more professional purchasing effort o Types of Decisions and the Decision Process  Business buyers usually face more complex buying decisions  The business buying process is more formalized  In business buying, buyers and sellers work more closely together and build close, long-term relationship.  Derived Demand- business demand that ultimately comes from (derives from) the demand for consumer goods.  Supplier Development- Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.  3 types of buying situations: o Straight rebuy- a business situation in which the buyer routinely reorders something without any modifications o Modified rebuy- a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.  More decision participants o New Task- A business buying situation in which the buyer purchases a product or service for the first time.  Greater the cost or risk, the larger the number of decision participants and the greater their efforts to collect information  Systems Selling (solutions selling)- Buying a packaged solution to a problem from a single seller, thus avoiding all the 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. o Users- members of the buying organization who will actually use the purchased product or service. o Influencers- People in an organization’s buying centre who affects the buying decision’ they often help define specifications and also provide information for evaluating alternatives. I.e. technical personnel o Buyers- People in the organization’s buying centre who make an actual purchase. o Deciders- People in the organization’s buying centre who have formal or informal power to select or approve the final suppliers o Gatekeepers- People in the organization’s buying centre that control the flow of information to others.  Major Influences on Business Buyers economic factors and personal factors.  Business Buying Process: o Problem Recognition- the first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.  Internal
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