DETAILS IN KOTLER Chapter Name Analyzing the Business Markets

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.

Factors -Business Mkts v/s Consumer Mkts

1. Fewer, larger buyers : A few large buyers do most of purchasing. 2. Professional purchasing : Most of the organizations have extensive purchase policies eg requests for quotation, proposals, purchase contracts etc. 3. Several Buying Influences : More people typically influence business buying decisions. eg technical experts & senior management. 4. Multiple sales call : It takes multiple sales calls to win a business order.

Factors affecting Business Markets Buying

5. Derived demand : Demand for business goods is dependent on consumer goods demand. 6. Geographically concentrated buyers : Normally business market customers are concentrated in few selected areas. 7. Inelastic demand in short run: In the short run, demand for most business goods and services does not change with price. 8. Close supplier-customer relationship: Because of smaller customer base and the importance of each business account maintaining relations is imp.

REASON 3

Major Types of Buying Situations

Straight re-buy Reordering without modification. Modified re-buy Requires modification to prior purchase.
New task First-time purchase

The Purchase/Procurement Process

Stages of the Business Buying Process

1) Problem Recognition : Can be triggered by internal or external stimuli, eg

New product development decision. Machine break down. Purchased material unsatisfactory. Purchase manager senses opportunity to obtain lower prices or better quality.

2) General Need Description : eg

Price, Reqd. quantity and general characteristics.

Stages of the Business Buying Process

3) Product Specification : eg Technical details like

Dimensions of the product. Minimum features/performance expected. Input-Output (Single phase/ Three phase).

4) Supplier Search :

Buyer tries to identify most appropriate suppliers through trade directories, trade shows, advertisements & contacts with other companies.

Stages of the Business Buying Process

5) Proposal Solicitation :

The buyer invites detailed written proposals from each qualified supplier.

6) Supplier Selection : Will depend on following

Price. Supplier reputation Supplier product reliability. Supplier flexibility.

Stages of the Business Buying Process

7) Order-Routine Specification :

The buyer negotiates the final order. Expected time of delivery. Return policies. Warranties and so on..

8) Performance Review : Buyer periodically does this for chosen suppliers

Buyer may contact end user for evaluation. Buyer may evaluate supplier internally.

Performance review leads to continue, modify or end supplier relationship.