Page 212 - Foundations of Marketing

Business Markets and Buying Behavior | Chapter 7 179

Characteristics of Transactions with
Business Customers

Transactions between businesses differ from consumer sales in several ways. Orders by busi-
ness customers tend to be much larger than individual consumer sales. Major government
contractor Booz Allen Hamilton frequently wins awards worth up to half a billion dollars to
supply medical and IT support assessments and services to various government agencies. 9
Suppliers of large, expensive, or complex goods often must sell products in large quantities to
make profits. Consequently, they may prefer not to sell to customers who place small orders.
Some business purchases involve expensive items, such as computer systems. Other prod-
ucts, such as raw materials and component items, are used continuously in production, and
their supply may need frequent replenishing. The contract regarding terms of sale of these
items is likely to be a long-term agreement.
Discussions and negotiations associated with business purchases can require consider-
able marketing time and selling effort. Purchasing decisions are often made by committee,
orders are frequently large and expensive, and products may be custom built. Several people
or departments in the purchasing organization are often involved. For example, one depart-
ment expresses a need for a product, a second department develops the specifications, a third
stipulates maximum expenditures, and a fourth places the order.
One practice unique to business markets is reciprocity , an arrangement in which two orga- reciprocity An arrangement
nizations agree to buy from one another. Reciprocal agreements that threaten competition are unique to business marketing in
illegal. The Federal Trade Commission and the Justice Department monitor and take actions which two organizations agree
to stop anticompetitive reciprocal practices, particularly among large firms. Nonetheless, to buy from each other
a certain amount of reciprocal activity occurs among small
businesses and, to a lesser extent, among larger companies.
Because reciprocity influences purchasing agents to deal only
with certain suppliers, it can lower morale among agents and
lead to less than optimal purchases.

Attributes of Business Customers

Business customers also differ from consumers in their purchas-
ing behavior because they are generally better informed about
the products they purchase. They typically demand detailed
information about a product’s functional features and techni-
cal specifications to ensure that it meets their needs. Personal
goals, however, may also influence business buying behavior.
Most purchasing agents seek the psychological satisfaction that
comes with organizational advancement and financial rewards.
Agents who consistently exhibit rational business buying behav-
ior are likely to attain these personal goals because they help
their firms achieve organizational objectives. Today, many sup-
pliers and their customers build and maintain mutually benefi-
cial relationships, sometimes called partnerships. Researchers
find that even in a partnership between a small vendor and a
large corporate buyer, a strong partnership can exist because
high levels of interpersonal trust leads to higher levels of com- Courtesy of Microsoft Corporation
mitment to the partnership on the part of both organizations. 10

Primary Concerns of Business
Customers Concerns of Business Customers
Microsoft Dynamics makes software tools for firms like Lotus,
When making purchasing decisions, business customers take into which produces automobiles and racecars. These products
account a variety of factors. Among their chief considerations increase companies’ ability to coordinate large teams and reduce
are price, product quality, service, and supplier relationships. errors in order to maintain a high level of quality.

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