Lecture Basic Marketing: A global managerial approach - Chapter 7: The buying behaviour of business and organizational customers

When you finish chapter 7, you should: Know who the business and organizational customers are, see why multiple influence is common in business and organizational purchase decisions and understand how it affects the practice of marketing, understand the problem-solving behaviour of organizational buyers, know the basic methods used in organizational buying,...

The Buying Behaviour

of Business and

Organizational

Customers

The following is a summary of the characteristics of business to

business markets when compared to consumer markets:

Sales volume Greater Smaller

Purchase volume Larger Smaller

Number of buyers Fewer Many

Size of individual buyers Larger Smaller

Location of buyers Geographically concentrated Diffuse

Buyer-seller relationship Closer More impersonal

Nature of channel More direct More indirect

Nature of buying More professional More personal

Nature of buying influence Multiple Single

Type of negotiations More complex Simpler

Use of reciprocity Yes No

Use of leasing Greater Smaller

Primary promotional method Personal selling Advertising

Source: Bingham, F.G., Jr., and Raffield, B.T., Business to Business Marketing Management, Irwin, 1990.

Characteristic Business to Business Market Consumer Market

Business vs Consumer Buying

Different Types of Customers

All business and

organizational

customers

Producers

Intermediaries

Governments

Nonprofits

Manufacturers Farms, mines, etc.

Financial Institutions Other providers

National Local

Federal Provincial and Local

Wholesalers Retailers

TOTAL COST-IN-USE

Price

Paperwork

Shopping time

Expediting

Mistakes in order

Prepurchase

product

evaluation

Field defects Training User labour Product longevity Replacement Disposal

Interest Storage Quality control Taxes & insurance

Shrinkage &

obsolescence

General internal handling

ACQUISITION

COSTS

POSSESSION COSTS

USAGE COSTS

SOURCE: Cespedes, Frank V., Concurrent Marketing, Harvard School of Business Press, 1995

Typical Components of Cost-in Use

Buying Centres

Buying

Users

Buyers

Survival Customer satisfaction

Growth Profit Other needs

Company’s Needs

Overlap

in Needs

Individual’s

Needs

Risk Job security

Comfort

Career advancement

Money-rewards

Other needs

Overlapping Needs

Little Some

Much

None

Some

Much

Little Some

Much

Little

Medium Much

Information Needed

Review of Suppliers

Multiple Influences

Time Required

Characteristics

New-Task

Type of Process

Organizational Buying Processes

Basic Methods

Inspection

Description

Negotiated Contracts Sampling Basic Methods in Organizational Buying

Information sharing

Linkages Cooperation

Legal bonds

Relationship

Salesperson Quality

R&D

Accounting

Marketing Production

Purchasing manager

Quality

Finance

R&D

Production

Accounting

Engineering

Buyer-Seller Relationships

Types of Organizational Buyers

Manufacturers

Service Producers

Retailers &

Wholesalers

Governments

Grouped by Industry

Close to Customers

Buying for Targets

Bids & Regulations

Focus:

Focus:

Focus:

Focus: