Page 223 - Foundations of Marketing

190 Part 3 | Customer Behavior and E-Marketing

Chapter Review

1. Distinguish among the various types purchase, a new-task purchase is changed the second or third
of business markets. time it is ordered or requirements associated with a straight
rebuy purchase are modified.
Business (B2B) markets consist of individuals, organizations,
and groups that purchase a specific kind of product for resale, 3. Understand several attributes of demand for
direct use in producing other products, or use in day-to-day business products.
operations. Producer markets include those individuals and
Industrial demand differs from consumer demand along sev-
business organizations that purchase products for the purpose
eral dimensions. Industrial demand derives from demand for
of making a profit by using them to produce other products
consumer products. At the industry level, industrial demand
or as part of their operations. Intermediaries that buy finished
is inelastic. If an industrial item’s price changes, product
products and resell them to make a profit are classified as
demand will not change as much proportionally. Some indus-
reseller markets. Government markets consist of federal,
trial products are subject to joint demand, which occurs when
state, county, and local governments, which spend billions
two or more items are used in combination to make a product.
of dollars annually for goods and services to support inter-
Finally, because organizational demand derives from con-
nal operations and to provide citizens with needed services.
sumer demand, the demand for business products can fluctu-
Organizations with charitable, educational, community, or
ate significantly.
other nonprofit goals constitute institutional markets.
2. Identify the major characteristics of business 4. Understand the buying center and the stages of
customers and transactions. the business buying decision process and the
factors that affect this process.
Transactions that involve business customers differ from
consumer transactions in several ways. Business transac- Business (or organizational) buying behavior refers to the
tions tend to be larger and negotiations occur less frequently, purchase behavior of producers, resellers, government units,
though they are often lengthy. They may involve more than and institutions. Business purchase decisions are made
one person or department in the purchasing organization. through a buying center, the group of people involved in mak-
They may also involve reciprocity, an arrangement in which ing such purchase decisions. Users are those in the organiza-
two organizations agree to buy from each other. Business tion who actually use the product. Influencers help develop
customers are usually better informed than ultimate consum- specifications and evaluate alternative products for possible
ers and are more likely to seek information about a product’s use. Buyers select suppliers and negotiate purchase terms.
features and technical specifications. Deciders choose the products. Gatekeepers control the flow
Business customers are particularly concerned about of information to and among individuals occupying other
quality, service, price, and supplier relationships. Quality is roles in the buying center.
important because it directly affects the quality of products The stages of the business buying decision process are
the buyer’s firm produces. To achieve an exact level of qual- problem recognition, development of product specifications
ity, organizations often buy products on the basis of a set to solve problems, search for and evaluation of products
of expressed characteristics, called specifications. Because and suppliers, selection and ordering of the most appropri-
services have such a direct influence on a firm’s costs, sales, ate product, and evaluation of the product’s and supplier’s
and profits, factors such as market information, on-time performance.
delivery, and availability of parts are crucial to a business Four categories of factors influence business buying
buyer. Although business customers do not depend solely decisions: environmental, organizational, interpersonal, and
on price to decide which products to buy, price is of primary individual. Environmental factors include competitive forces,
concern because it directly influences a firm’s profitability. economic conditions, political forces, laws and regulations,
Business buyers use several purchasing methods, includ- technological changes, and sociocultural factors. Business
ing description, inspection, sampling, and negotiation. Most factors include the company’s objectives, purchasing poli-
organizational purchases are new-task, straight rebuy, or cies, and resources, as well as the size and composition of
modified rebuy. In a new-task purchase, an organization its buying center. Interpersonal factors are the relationships
makes an initial purchase of items to be used to perform new among people in the buying center. Individual factors are per-
jobs or solve new problems. A straight rebuy purchase occurs sonal characteristics of members of the buying center, such as
when a buyer purchases the same products routinely under age, education level, personality, and tenure and position in
approximately the same terms of sale. In a modified rebuy the organization.

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