Mos 2030- Marketing- Chapter 7

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Western University
Management and Organizational Studies
Management and Organizational Studies 2320A/B
Angela White

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 and services or to resell or rent to others at a profit. 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. (Business-to-Business (B2B) Marketers) 1) Business Markets - Involve far more dollars and items than do consumer markets. Characteristics of business markets Market Structure and Demand - Business markets contain fewer but larger buyers - Business buyer demand is derived from the final consumer o Marketing efforts often directed towards final consumer - Demand in many business markets is more inelastic (not affected by short run price changes) - Demand Fluctuates more and more quickly. o Small percentage increase in consumer (10%) can cause huge rise in business demand (200%) Nature of the Buying Unit - Business purchases involve more buyers - Business buying involves a more professional purchasing effort o Committees made up of experts used in decisions. Types of Decisions and the decision process - Business buyers usually face more complex buying decisions o More money, complex technical and economical & social interactions - Buying Process is more formalized - Buyers and sellers work more closely together and build close, long-term relationships. o Supplier Development: Systematic development of networks of suppliers- partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others. 2) Business Buyer Behavior (Copy Model) p.219 Major Types of Buying Situations Straight Rebuy: A business buying situation in which the buyer routinely reorders something without modifications. - In suppliers: Try to maintain service and quality making process easier and more efficient - Out suppliers: Find new ways to add value or exploit dissatisfaction to gain consideration Modified Rebuy: A business situation in which the buyer wants to modify product specifications, prices, terms or suppliers (Involves more participants) - In suppliers: Put their best foot forward to protect and account - Out suppliers: Use opportunity to make a better offer and gain business New Task: A business buying situation in which the buyer purchases a product or service for the first time. - The buyer makes the fewest decisions in a straight rebuy and the most in a new task decision. - Sales often go to the company providing the most complete system o 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 decision. Participants in a Business buying Process Buying Centre: All the individuals and units that play a key role in the purchase decision- making process. The decision-making unit of an organization. - Users: Members of the organization who will actually use the purchased product or service - Influencers: People in an organization who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives. - Buyers: People in the organization’s buying centre who make an actual purchase - Deciders: People in the organizations buying centre who have the formal power to select or appro
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