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2.4 Analyzing Buying Behaviour on the B2B Market in:

Svend Hollensen, Marc Oliver Opresnik

Marketing, page 93 - 96

A Relationship Perspective

1. Edition 2010, ISBN print: 978-3-8006-3722-5, ISBN online: 978-3-8006-4870-2, https://doi.org/10.15358/9783800648702_93

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2.4 Analyzing Buying Behaviour on the B2B Market 79 Technical criteria• are related to the performance of the product or service, and include reliability, durability, taste, and convenience. Economic criteria • concern the cost aspects of purchase and include value for money, price, and residual values. Social criteria • refer to the impact that the purchase makes on the customer’s perceived relationship with other people, and the influence of social norms on the person. Personal criteria • concern how the product or service relates to the individual psychologically and includes self-image and risk reduction. 2.4 Analyzing Buying Behaviour on the B2B Market The business buying process can be described as the decision process by which business buyers determine which products and services their organisations need to purchase, and then find, evaluate, and choose among alternative suppliers and products (Kotler and Armstrong, 2009). Consumer behaviour relates to the buying behaviour of individuals (or families) for products for their own use. Organisations buy to enable them to provide goods and services to the final consumer. Organisational buying behaviour has many similarities to consumer behaviour. Both include the behaviour of human beings, whether individually or in groups. Organisational buyers do not necessarily act in a more rational way than individual consumers’. Organisational buyers are affected by environmental and individual factors, as outlined in the previous section. A difference in organisational buying is that many products are more complex and require specialist knowledge. As many products are changed according to the specifications of the buyer there is more communication and negotiation between buyer and sellers. Often, organisational purchases, especially those that entail large amounts of investment and that are new to the company, involve many people at different levels. The sales task will be to influence as many of these stakeholders as possible and may involve multilevel selling by means of a sales team, rather than an individual salesperson (Corey, 1991). Although organisational buyers are affected by personal factors as well, organisational buying decisions are often made on economic and technical criteria. This is because organisational buyers have to justify their considerations and decisions to other stakeholders of their organisation (Jobber and Lancaster, 2009). After-sales service is also very important in organisational buying and suppliers are often evaluated quite rigorously after purchase. In general, organisational markets have fewer, larger buyers who are geographically concentrated. Another aspect of organisational buying is the nature of derived demand. That is, demand for organisational goods is derived from consumer markets. If demand for the end product consumer good falls then this has an effect along the production line to all the inputs. So, in organisational marketing the end consumers should not be ignored and trends should be continuously monitored (Hollensen, 2006). One of the main differences from consumer buying is that organisational buying usually involves group decision making (known as the ‘decision-making unit’ (DMU) or sometimes referred to as the buying centre). In such a group individuals may have dif- Kapitel_2.indd 79 03.08.2010 12:46:35 Uhr 2. Situational Analysis in the Marketing Planning Process80 ferent tales in the purchase process. These can be categorized as follows (Anderson and Narus, 2004): Initiators• : those who begin the purchase process Influencers/evaluators• : people who influence the buying decision. They often help define specifications and provide information for evaluating options. Technical personnel are especially important as influencers. Gatekeepers• : group members who regulate the flow of information. Frequently, the purchasing agent views the gate keeping role as a Source of his or her power. A secretary may also act as a gatekeeper by determining which vendors get an appointment with a buyer. Decider• : the person who has the formal or informal power to choose or approve the selection of the supplier or brand. In complex situations, it is often difficult to determine who makes the final decision. Purchaser• : the person who actually negotiates the purchase. It could be anyone from the president of the company to the purchasing agent, depending on the importance of the decision. Users• : members of the organisation who will actually use the product. Users often initiate the buying process and help define product specifications. The buying centre is not a fixed and formally identified unit within the organisation. It is a set of roles assumed by different people for different purchases. Within this framework one person may play all the above roles in the purchase decision or each role may be represented by a number of personnel. The salesperson trying to sell to an organisation should be aware of the roles people assume in the buying centre. The buying centre concept presents a marketing challenge as the marketing manager must learn who participates in the decision, each participant’s influence, and what evaluation criteria each decision participants uses. Organisational buying decisions can be categorized into buy classes as to how complex they are, similar to the low-high involvement decision making in consumer markets. There are three major types of buying situations (Robinson et al., 1967): 1. Straight re-buys : In this situation, the buyer reorders something without any modifications. This is usually handled on a routine basis by the purchasing department. If the supplier is an ‘in supplier’ – that is, they are on the company’s preferred list of suppliers – then they have to perform in a way that ensures they do not get taken off the list. If they are ‘out suppliers’ they have to try to get on to the list of preferred suppliers. 2. Modified re-buy : This situation requires some additional information or evaluation of suppliers. Usually, the buyer wants to modify product specifications, prices or terms of delivery. 3. New task : A new task or new buy situation is the most complex purchasing decision, when the company has not bought this product before. Search and evaluation procedures are widespread. This situation is the marketers greatest opportunity and challenge. The marketing manager not only tries to reach as many key buying influences as possible but also provides help and information. As with consumers business buyers are subject to many influences when they make their buying decisions. The major influences on business buying behaviour can be characterized as follows (Webster and Wind, 1972): Kapitel_2.indd 80 03.08.2010 12:46:35 Uhr 2.4 Analyzing Buying Behaviour on the B2B Market 81 Environmental factors• : Business buyers are influenced to a great extent by factors in the current and expected economic environment, such as the level of primary demand, the economic outlook, and the cost of capital. As economic uncertainty rises, business buyers cut back on new investments and attempt to reduce their inventories. Organisational factors• : Each buying organisation has its own objectives, policies, procedures and structures, and the business marketer has to understand these factors as well. Interpersonal factors• : As the buying centre includes many participants which influence each other, interpersonal factors like status and persuasiveness are also of key importance in the buying process. However, it is quite difficult to assess such interpersonal factors and group dynamics. Interpersonal factors are often very subtle so whenever possible business marketers must try to understand these factors and compile strategies that take them into account. Personal factors• : Each participant in the business buying process brings in personal motives, perceptions, and preferences. These individual factors are affected by personal characteristics such as age, education, professional identification, and attitude toward risk. In addition, buyers have different buying styles as some may be technical types who compile in-depth analyses of competitive proposals and other buyers may be more intuitive negotiators. Although the exact nature of the organisational buying process will depend on the specific situation, the business buying process consists of the following eight stages. Buyers who face a new-task buying situation usually go through all stages of the buying process whereas buyers making modified or straight re-buys may skip some of the stages (Robinson et al., 1967): Problem recognition• : The buying process starts when someone in the company recognizes a problem or need that can be met by acquiring a specific product or service. Problem recognition can result from internal or external stimuli. Internally, a machine may need new parts as it is broken down. Externally, the buyer may get some new ideas at a trade show or see an advertisement. General need description• : After having recognized a need, the buyer prepares a general need description that describes the characteristics and quantity of the required product or service. Product specification• : Within this stage of the business buying process the buying company decides on and specifies the best technical product characteristics for a needed item. Supplier search• : The buyer now conducts a supplier search to find the best vendors. The buyer can compile a list of qualified suppliers by reviewing trade directories, doing an online-search, or contacting other companies for recommendations. Proposal solicitation• : In this stage the buyer invites qualified suppliers to submit proposals. Supplier selection• : The members of the buying centre now review and select a supplier. During the supplier selection stage, the buying centre will often draw up a list of the desired supplier attributes and their importance. Factors include repair and servicing capabilities, geographic location, performance history, and reputation. Kapitel_2.indd 81 03.08.2010 12:46:35 Uhr 2. Situational Analysis in the Marketing Planning Process82 2.5 Comparing B2B and B2C Markets Areas of difference between the business and consumer markets can be summarized as follows (see Table 2.2). The Internet is playing an increasing role in both B-t-B and B-t-C markets. Web sites enable organisations to promote brand values, reduce printing costs, attract and qualify prospects and leads, and foster customer loyalty. Sites can also expand the customer database, provide customer service, and showcase and sell products. Online purchasing, often called e-procurement, is growing rapidly. E-procurement gives buyers access to new suppliers, lower purchasing costs, and hastens order processing and delivery. In turn, business marketers can connect with customers online to share marketing information, sell products and services, provide customer support, and maintain customer relationships (Kotler and Armstrong, 2009). 2.6 SWOT Analysis Successful SWOT analysis is basically a process of finding the optimum fit between the firm’s controllable strengths and weaknesses and uncontrollable opportunities and threats of the firm’s environment in which it operates; and not just today’s environment, but also that of the predictable future. This explains why charting a SWOT profile (strengths, weaknesses, opportunities and threats) is by one of the most popular marketing planning tools. It provides a means by which all the key internal (company- B-t-B market B-t-C market Market structure Geographically concentrated• Relatively few buyers • Oligopolistic competition • Geographically dispersed • mass markets (often millions) Pure competition • Size of purchase Often extremely large • Usually small • Buyer behaviour Functional involvement • Rational/task motives prevail • Stable relationships • Professionalism, expertise • Family involvement• Social/emotional motives • prevail Less buyer-seller loyalty• Less trained, often inexperi-• enced Buying influences Committees, technical • experts, and management are all involved in decision • making (buying centre) The individual, household • members, or friends and relatives Decision-making Distinct, observable stages• Often group decisions • Vague, mental stages• Usually individual decisions • Supplier relationship Long-term contracts and • supplier involvement Many single purchases • Table 2.2: Comparing B2B and B2C markets Kapitel_2.indd 82 03.08.2010 12:46:36 Uhr

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Zusammenfassung

Marketing – A Relationship Perspective

Moderne Grundlange zum Marketing

Das Lehrbuch behandelt eines der wichtigsten und aktuellsten Themenfelder des modernen Marketings. Der Ansatz verbindet dabei den klassischen Ansatz der strategischen Marketingplanung und seiner Instrumente mit dem neuen Ansatz des Relationship Marketing. Der ganzheitliche Ansatz des Buches umfasst dabei die aktuellen Marketing-Grundlagen, Praxisbeispiele sowie anwendungsorientierte Fallstudien und eignet sich somit ideal sowohl für Manager und Entscheidungsträger im Marketing-Bereich, Studenten in Bachelor- und Materstudiengängen sowie Dozenten und Trainer.