Marketing Management

ANALYZING BUSINESS MARKETS

Business organizations do not only sell, each buys vast quantities of raw materials, manufactured components, plant and equipment, suppliers, and business services. Much of basic marketing also applies to business marketers.

What Is Organizational Buying?

Webster and Wind define organizational buying as the 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.

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.

More dollars and items are involved in sales to business buyers than to consumers.

Business markets have several characteristics that contrast sharply with those of consumer markets:

a. Fewer, larger buyers.

b. Close supplier-customer relationship.

c. Professional purchasing.

d. Several buying influences.

e. Multiple sales call.

f. Derived demand.

g. Inelastic demand.

h. Fluctuation demand.

i. Geographically concentrated buyers.

j. Direct purchasing.

Buying Situations

The business buyer faces many decisions in making a purchase. The number of decisions depends on the buying situation: complexity of the problem being solved, newness of the buying requirement, and number of people involved, and time required. There are three types of buying situations:

i) The straight rebuy

ii) Modified rebuy

iii) New task.

Straight rebuy is when the purchasing department reorders on a routine basis and chooses from suppliers on an “approved lists.”

Modified rebuy is when the buyer wants to modify product specifications, prices, delivery requirements, or other items.

New task is when the purchaser buys a product or service for the first time.

The business buyer makes the fewest decisions...