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Business versus Consumer Markets

1

Characteristic 

Demand 

Volume

# of Customers

LocationDistribution

Nature of Buy 

Buy Influence

NegotiationsReciprocity 

Leasing

Promotion

Business Market 

Organizational

Larger

Fewer

ConcentratedMore Direct

More Professional

Multiple

More ComplexYes

Greater

Personal Selling

Consumer Market 

Individual

Smaller

Many

DispersedMore Indirect

More Personal

Single

SimplerNo

Lesser

Advertising

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Consumer vs.

organizationalbuyer

Behavior

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Dimensions of Marketing toBusiness Customers

Attributes of Business Customers◦ Better informed about products purchased

◦ Demand more detailed product information◦ Personal goals (in support of organizationalgoals) may influence buying behavior

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Organizational Buying Situations

New-task purchase – first-timepurchase of complex and expensive

product or service Modified rebuy – requires modification

to existing purchase decision and may

open the door for new suppliers Straight rebuy – reorder item purchased

many times in the past

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Business (Organizational) Buying DecisionProcess and Factors That May Influence It

FIGURE 10.1

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Dimensions of Marketingto Business Customers

Primary Concerns of BusinessCustomers◦ Price of goods affecting ability to compete◦ Return on investment in product◦ Price of product compared to the

benefits it provides◦ Quality of the product in meeting

specifications

◦ Quality of services offered bysuppliers in support of theirproducts

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Buying Process Participants

Initiators – perceive problems/opportunitiesrequiring new product or service

Users –use or work with product or service Influencers –provide information for evaluating

products or suppliers

Gatekeepers – control flow of information

Buyers – contact selling organization and place order

Deciders – final authority to purchase

Controllers – determine budget

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Dimensions of Marketing toBusiness Customers (cont’d) 

Methods of Business Buying◦ Description

Products standardized by certain characteristics

◦ Inspection Products with particular characteristics

◦ Sampling Product is homogenous and a single specimen can be

evaluated as representative of the entire product◦ Negotiation

Sellers are asked to bid on specified productcharacteristics and purchasers negotiate withsuccessful bidders

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Dimensions of Marketing toBusiness Customers (cont’d) 

Demand for Business Products◦ Derived demand

Demand for industrial products that stems fromdemand for consumer products

◦ Inelastic demand Demand that is not significantly altered by a price

increase or decrease

◦ Joint demand

Demand involving the use of two or more items incombination to produce a product

◦ Fluctuating demand Demand that varies directly as consumer demand

varies

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Derived Demand means the demand is derived (or caused by,

or linked to) demand for a consumer item- demand for lithium is ―derived‖ from thedemand for lithium batteries, which is in turn

 ―derived‖ from the demand for cell phones 

- demand for wood pulp is derived from thedemand for paper, which is derived from theincrease in people printing on paper

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Joint Demand means the demand is related to the demand

for other industrial thingseg. The demand for printer cartridges islinked to the demand for printer paper

for services, the demand for Netscape 4.05 -is linked to the demand for an ISP account

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Business Buying Decisions

Business (Organizational) Buying Behavior◦ The purchase behavior of producers, government

units, institutions, and resellers

Buying Center◦ The people within an organization who make

business purchase decisions Users—actually use the products

Influencers—help develop the specifications and evaluatealternative products

Buyers—select suppliers and negotiate terms of purchase

Deciders—actually choose the products

Gatekeepers—control the flow of information to others inthe buying center

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The Buying Process: Key Terms

Value Analysis◦ An evaluation of each component of a potentialpurchase.

Vendor Analysis◦ A formal systematic evaluation of current andpotential vendors

Multiple Sourcing

◦ An organization’s decision to use severalsuppliers Sole Sourcing

◦ An organization’s decision to use only onesource

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Business (Organizational) Buying DecisionProcess and Factors That May Influence It

FIGURE 10.1