LN 05 BUSINESS BUYER BEHAVIOUR

LN 05 BUSINESS BUYER BEHAVIOUR

This chapter examines business customers—those that buy goods and services for use in producing their own products and services or for resale to others. As with firms selling to final buyers, firms marketing to business customers must build profitable relationships with business customers by creating superior customer value.

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 for the purpose of reselling or renting 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.


Business Markets: The business market is huge. In fact, business markets involve far more dollars and items than do consumer markets. The main differences between consumer and business markets are in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

Market Structure and Demand: The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. Even in large business markets, a few buyers often account for most of the purchasing.

Business demand is derived demand. It ultimately derives from the demand for consumer goods. B-to-B marketers sometimes promote their products directly to final consumers to increase business demand. Many business markets have inelastic demand; that is, total demand for many business products is not affected much by price changes, especially in the short run. Business markets have more fluctuating demand. The demand for many business goods and services tends to change more—and more quickly—than the demand for consumer goods and services does.

Nature of the Buying Unit: Compared with consumer purchases, a business purchase usually involves more decision participants and a more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend their working lives learning how to buy better. The more complex the purchase, the more likely that several people will participate in the decision-making process.

Types of Decisions and the Decision Process
Business buyers usually face more complex buying decisions than do consumer buyers. Purchases often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer’s organization. The business buying process also tends to be longer and more formalized than the consumer buying process. In the business buying process, buyer and seller are often much more dependent on each other.

Many customer companies are now practicing supplier develop¬ment, systematically developing networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or reselling to others.

At the most basic level, marketers want to know how business buyers will respond to various marketing stimuli. Within the organization, buying activity consists of two major parts: the buying center and the buying decision process.