School of business Management

School of Business ManagementShoolini University

ANALYZING BUSINESS MARKETS

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Business organizations do not only sell; they also buy vast quantities of raw materials, manufactured components, plant and equipment, supplies, and business services.

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Decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

ORGANIZATIONAL BUYING?

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The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others

Consumer behaviour is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants

BUSINESS MARKET VERSUS THE CONSUMER MARKET

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Fewer, larger buyersClose supplier-customer

relationshipProfessional purchasing. Several buying

influences.Multiple sales calls Geographically

concentrated buyers Direct purchasing. Derived Demand Inelastic demand.

CHARACTERISTICS OF BUSINESS BUYERS

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Straight RebuyModified RebuyNew Task

BUYING SITUATIONS

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systems contracting, where a single supplier provides the buyer with his or her entire requirement of MRO (maintenance, repair, operating) supplies. During the contract period, the supplier manages the customer's inventory.

SYSTEMS BUYING AND SELLING

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All members of the organization who play any of seven roles in the purchase decision process

Initiator

User

Influencer

Decider

Approver

Buyer

Gatekeeper (purchasing agents, receptionists, and telephone operators )

PARTICIPANTS IN THE BUSINESS BUYING PROCESS

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Price-oriented customers

(transactional selling). Price is

everything.

Solution-oriented customers

(consultative selling). They

want low prices but will respond to arguments about lower total cost or more dependable supply or service.

Gold-standard customers (quality

selling). They want the best

performance in terms of product

quality, assistance,

reliable delivery, and so on.

Strategic-value customers (enterprise

selling). They want a fairly

permanent sole-supplier

relationship with your company

TYPES OF BUSINESS CUSTOMERS

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Buying Orientation. The purchaser's focus is short term and tactical. Buyers are rewarded on their ability to obtain the lowest price from suppliers for the given level of quality and availability

Procurement Orientation. Here buyers simultaneously seek quality improvements and cost reductions. Buyers develop collaborative relationships with major suppliers and seek savings through better management of acquisition

Supply Chain Management Orientation. Here purchasing's role is further broadened to become a more strategic, value-adding operation. Purchasing executives at the firm work with marketing and other company executives to build a seamless supply chain management system from the purchase of raw materials to the on-time arrival of finished goods to the end users.

PURCHASING ORIENTATIONS

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Routine products. These products have low value and cost to the customer and involve little risk (e.g., office supplies).

Leverage products. These products have high value and cost to the customer but involve little risk of supply (e.g., engine pistons) because many companies make them.

Strategic products. These products have high value and cost to the customer and also involve high risk (e.g., mainframe computers).

Bottleneck products. These products have low value and cost to the customer but they involve some risk (e.g., spare parts).

TYPES OF PURCHASING PROCESSES

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MAJOR INFLUENCES ON BUSINESS BUYERS

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France: if you do not speak french, apologize for your lack of knowledge. The french are quite proud of their language and believe that everyone should feel privileged to speak it.

Germany: Germans are sticklers for titles. Try to introduce people using their full, correct title, no matter how long it is.

Japan: Most Japanese businesspeople know what will be discussed at a meeting, how everyone feels about it, and how it will affect their business before they even get there

Korea: Korean do not like foreigners to assume that their culture is the same as Japan

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RULES OF SOCIAL & BUSINESS ETIQUETTES THAT MARKETERS SHOULD UNDERSTAND

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THE PURCHASING/PROCUREMENT PROCESS

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Problem recognition

General needs description and product specification

Supplier search

Proposal solicitations

Supplier selection

Order routine specification

Performance review

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Shoolini University

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SCHOOL OF BUSINESS MANAGEMENT

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