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

Chapter 7:
  

The Buying Behaviour
of Business and
Organizational
Customers

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Business vs. Consumer Buying
The following is a summary of the characteristics of business to
business markets when compared to consumer markets:
Characteristic
Sales volume
Purchase volume
Number of buyers
Size of individual buyers
Location of buyers
Buyer-seller relationship
Nature of channel
Nature of buying
Nature of buying influence
Type of negotiations
Use of reciprocity
Use of leasing
Primary promotional method

Business to Business

Market
Greater
Larger
Fewer
Larger
Geographically concentrated
Closer
More direct
More professional
Multiple
More complex
Yes
Greater
Personal selling

Consumer Market
Smaller
Smaller
Many
Smaller
Diffuse
More impersonal
More indirect
More personal
Single
Simpler
No
Smaller
Advertising

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

Exhibit 7­1

7­2

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Different Types of Customers
Manufacturers

Producers

Farms, mines, etc.
Financial Institutions
Other providers

All business and
organizational
customers

Intermediaries

Governments

Nonprofits
Exhibit 7­2
7­3

Wholesalers
Retailers
Federal
Provincial and Local
National
Local
For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Typical Components of Cost-in Use
ACQUISITION
COSTS

+

POSSESSION
COSTS

+

USAGE
COSTS

=

Price

Interest

Field defects

Paperwork

Storage

Training

Shopping time

Quality control

User labour

Expediting

Taxes & insurance

Product longevity

Mistakes in order

Shrinkage &
obsolescence

Replacement

Prepurchase
product

evaluation

General
internal
handling

Disposal

TOTAL
COST-IN-USE

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

Exhibit 7­3

7­4

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Buying Centres
Buyers

Users

Buying
Centre

Gatekeepers

7­5

Influencers

Deciders

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Overlapping Needs
Risk

Innovation

Job security

Survival

Comfort

Individual’s
Needs
Career advancement

Customer satisfaction

Overlap
in

Needs

Money-rewards
Other needs

7­6

Company’s
Needs
Growth
Profit

Other needs

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Organizational Buying Processes

Type of Process
Characteristics
New-Task
Buying

Modified
Rebuy

Straight
Rebuy

Time Required

Much

Medium

Little

Multiple Influences

Much

Some

Little

Review of Suppliers

Much

Some

None

Information Needed

Much

Some

Little

Exhibit 7­5
7­7

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Basic Methods in Organizational Buying
Inspection

Sampling

Basic
Methods
Description

Negotiated
Contracts
7­8

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Buyer-Seller Relationships
Information sharing
Linkages

Finance

R&D
Cooperation
Quality
Quality
R&D
Salesperson
Purchasing manager

Supplier

Relationship

Accounting

Marketing
Accounting
Production

Exhibit 7­7
7­9

Customer

Production
Engineering

Legal bonds

Adaptations
For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.


Types of Organizational Buyers
Manufacturers

Service Producers

Retailers &
Wholesalers

Governments

7­10

Focus:

Grouped by Industry
Focus:

Close to Customers
Focus:

Buying for Targets
Focus:

Bids & Regulations

For use with Shapiro, Wong, Perreault, and McCarthy texts.
Copyright © 2002 McGraw-Hill Ryerson Limited.