7

Analyzing
Business Markets

Marketing Management
What is Organizational Buying?
Organizational buying refers to the
decision-making process by which formal
organizations establish the need for
purchased products & services and
identify, evaluate, and choose among
alternative brands and suppliers.
-Frederick E. Webster Jr. and Yoram Wind
Business Mkt V/s Consumer Mkt
• Biz mkt consists of all organizations that
acquire goods and services used in the
production of other product or services that
are sold, rented, or supplied to others.
• 3 biggest Hurdle to B-to B Marketing:
– Building stronger interfaces between marketing and sales
– Building stronger innovation –marketing interfaces
– Extracting and leveraging more granular customer and market
knowledge.
 Characteristics of Business Markets
• Fewer, larger buyers- i.e. Tyre cos.
• Close supplier-customer relationships-Customization
• Multiple buying influences: Purchase dept./Technical Team / Senior Mgmt
• Multiple sales calls : Capital Goods
• Derived demand : Construction Industry Steel & Cement
• Inelastic demand : No Change with in Prices of goods
• Fluctuating demand : Acceleration Affect
• Geographically concentrated buyers
• Professional purchasing
• Direct purchasing
• Reciprocity
• Leasing
 Buying Situation

Straight
Straight rebuy
rebuy

Modified
Modified rebuy
rebuy

New
New task
task
 The Buying Center :
Decision making units of buying organization
Initiators
Initiators

Users
Users

Influencers
Influencers

Deciders
Deciders

Approvers
Approvers

Buyers
Buyers

Gatekeepers
Gatekeepers
 The Buying Center :
Decision making units of buying organization
 Initiators—Users or others in the organization who request that
something be purchased.
 Users—Those who will use the product or service. In many cases, the
users initiate the buying proposal and help define the product
requirements.
 Influencers— by helping define specifications and providing
information for evaluating alternatives. Technical people are particularly
important influencers.
 Deciders—People who decide on product requirements or on
suppliers.
 Approvers—People who authorize the proposed actions of deciders or
buyers.
 Buyers—People who have formal authority to select the supplier and
arrange the purchase terms. Buyers may help shape product
specifications, but they play their major role in selecting vendors and
negotiating. In more complex purchases, buyers might include high-level
managers.
 Gatekeepers—People who have the power to prevent sellers or
information from reaching members of the buying center. For example,
purchasing agents, receptionists, and telephone operators may prevent
 Targeting within the Business
Center
• Who are the major
decision participants?
• What decisions do they
influence, and how
deeply?
• What evaluation criteria
do they use?

Copyright © 2016 Pearson Education Ltd. 7-9

 Sales Strategies

Key Buying
Small Sellers Influencers

Multilevel
Large Sellers In-depth
Selling
 The Purchasing/
Procurement Process
• Business buyers seek the highest benefit
package (economic, technical, service, and
social) in relationship to a market offering’s
costs

Copyright © 2016 Pearson Education Ltd. 7-11

 Stages in the Buying Process: Buy
phases
1. Problem recognition : Internal V/s External
2. General need description: Features & Quantity is described | PVA
3. Product specification : Technical Specification are Set
4. Supplier search : Searching best vendor from trade directories / database
research / Qualifying supplier visited by Buyer’s agent
5. Proposal solicitation: Inviting Proposal / Formal presentation/
bids from the final list of qualified vendors
6. Supplier selection : Vendor analysis
7. Order-routine specification
8. Performance review
Table 7.3 Vendor Analysis
Table 7.2 Buygrid Framework
Handling Price-Oriented Customers

Limit
Limit quantity
quantity purchased
purchased

Allow
Allow no
no refunds
refunds

Make
Make no
no adjustments
adjustments

Provide
Provide no
no services
services
 Other Special Markets
• Reseller Markets
• Government Markets
• Institutional Markets