Objective 4

I Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions.

Business buyer behavior

The buying behavior of the organizations that buy goods and services for use in the production of other products and sen/ices or to resell or rent them 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 and brands.

Like GE, in one way or another, most large companies sell to other organizations. Companies such as DuPont, Airbus, IBM, and countless other firms sell most of their products to other businesses. Even large consumer-products companies, which make products used by final consumers, must first sell their products to other businesses. For example, Unilever makes many familiar consumer brands—food brands such as Knorr, Country Crock, and Lipton; beauty products such as Pond's, Radiant, and Dove; and detergents such as Surf and Sunlight. But to sell these products to consumers, Unilever must first sell them to its wholesaler and retailer customers, who in turn serve the consumer market.

Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. It also includes the behavior of retailing and wholesaling firms that acquire goods to resell or rent them to others at a profit. In the business buying process, business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands. Business-to-business (B-to-B) marketers must do their best to understand business markets and business buyer behavior. Then, like businesses that sell to final buyers, they must build profitable relationships with business customers by creating superior customer value.

Author I Business markets operate Comment | "behind-the-scenes" to most consumers. Most of the things you buy Involve many sets of business purchases before you ever see them.

Business Markets <PP 192-196)

The business market is huge. In fact, business markets involve far more dollars and items than do consumer markets. For example, think about the large number of business transactions involved in the production and sale of a single set of Michelin tires. Various suppliers sell Michelin the rubber, steel, equipment, and other goods that it needs to produce tires. Michelin then sells the finished tires to retailers, who in turn sell them to consumers. Thus, many sets of business purchases were made for only one set of consumer purchases. In addition, Michelin sells tires as original equipment to manufacturers who install them on new vehicles, and as replacement tires to companies that maintain their own fleets of company cars, trucks, buses, or other vehicles.

In some ways, business markets are similar to consumer markets. Both involve people who assume buying roles and make purchase decisions to satisfy needs. However,

Chapter 6 | Business Markets and Business Buyer Behavior 193 Characteristics of Business Markets

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.

Business purchases involve more buyers.

Business buying involves a more professional purchasing effort.

Types of Decisions and the Decision Process

Business buyers usually face more complex buying decisions. ^he business buying process is more formalized.

¡n business buying, buyers and sellers work more closely together and build close long-term relationships.

business markets differ in many ways from consumer markets. The main differences, shown in • Table 6.1, are in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

Derived demand

Business demand that ultimately comes ^-om (derives from) the demand for consumer goods.

Market Structure and Demand

(intel)

Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

Get My Free Ebook


Responses

  • Bellisima
    How the market structure and demand of the business markets for michelin tyres?
    8 years ago

Post a comment