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Questions and Answers
Which of the four business markets consists of individuals, organizations, or groups that purchase a specific kind of product for one of three purposes? (Select all that apply)
Which of the four business markets consists of individuals, organizations, or groups that purchase a specific kind of product for one of three purposes? (Select all that apply)
Which type of business market includes companies buying raw materials, semi-finished, and finished goods to produce other products?
Which type of business market includes companies buying raw materials, semi-finished, and finished goods to produce other products?
Which market type involves intermediaries such as wholesalers and retailers who buy finished goods and resell them for a profit?
Which market type involves intermediaries such as wholesalers and retailers who buy finished goods and resell them for a profit?
Which type of market consists of organizations with charitable, educational, community, or other non-business goals?
Which type of market consists of organizations with charitable, educational, community, or other non-business goals?
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Which of the following is the most important concern for customers in the business market? (Select all that apply)
Which of the following is the most important concern for customers in the business market? (Select all that apply)
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Which of the following scenarios describes a 'new-task purchase' in business buying?
Which of the following scenarios describes a 'new-task purchase' in business buying?
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Which of the following scenarios describes a 'straight rebuy purchase' in a business setting?
Which of the following scenarios describes a 'straight rebuy purchase' in a business setting?
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Which of the following scenarios best describes a 'modified rebuy purchase'?
Which of the following scenarios best describes a 'modified rebuy purchase'?
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Which of the following describes a 'derived demand' situation?
Which of the following describes a 'derived demand' situation?
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Which of the following is a true statement about 'inelastic demand'?
Which of the following is a true statement about 'inelastic demand'?
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Which of the following situations exemplifies 'joint demand'?
Which of the following situations exemplifies 'joint demand'?
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Which of the following is NOT a typical role in a 'buying center'?
Which of the following is NOT a typical role in a 'buying center'?
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Which of the following situations best reflects the work of an 'influencer' in the buying center?
Which of the following situations best reflects the work of an 'influencer' in the buying center?
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Which of the following describes the role of a 'gatekeeper' in a buying center?
Which of the following describes the role of a 'gatekeeper' in a buying center?
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Which of the following situations would NOT be considered an 'environmental influence' on business buying decisions?
Which of the following situations would NOT be considered an 'environmental influence' on business buying decisions?
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Which of the following is NOT considered an 'organizational influence' on business buying decisions?
Which of the following is NOT considered an 'organizational influence' on business buying decisions?
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Which of the following best reflects the impact of 'interpersonal influences' on business buying decisions?
Which of the following best reflects the impact of 'interpersonal influences' on business buying decisions?
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Which of the following scenarios best represents an 'individual influence' on a business buying decision?
Which of the following scenarios best represents an 'individual influence' on a business buying decision?
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Which of the following is the most current standard industrial classification system used in North America?
Which of the following is the most current standard industrial classification system used in North America?
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Study Notes
2016 Marketing Chapter 8: Business Markets and Buying Behavior
- Learning Objectives:
- Distinguish among the four types of business markets
- Identify the major characteristics of business customers and transactions
- Identify the attributes of demand for business products
- Describe the buying center, stages of the business buying decision process, and the factors that affect this process
- Describe industrial classification systems
Business Markets
- Business (B2B) markets consist of individuals, organizations, or groups that purchase specific products for one of three purposes:
- Resale
- Direct use in producing other products
- Government or Institutional Use
Product Markets
- Producer Markets: Individuals and business organizations that buy products to make profits by using them to produce other products or using them in their operations. They include buyers of raw materials, semi-finished and finished items. These markets encompass a wide range of industries.
- Reseller Markets: Intermediaries like wholesalers and retailers buy finished goods to resell for profit. Considerations for resellers include: level of demand, resale price, space required (sales per square foot), supplier's ability to provide adequate quantities and ease of placing orders.
- Government Markets: Federal, state, county, and local governments purchase goods and services to support their operations and provide products to their constituents. Government spending accounts for approximately 39% of the U.S. GDP. Although government markets have demanding requirements, they can be lucrative.
- Institutional Markets: Organizations with charitable, educational, community, or other non-business goals. These organizations have distinct goals, and fewer resources than other organizations.
Table 8.1: Number of Establishments in Industry Groups
- Provides statistics on the number of establishments in various industry groups in the US. (Specific numerical figures listed in the table)
Reseller markets
- Include intermediaries (like wholesalers, retailers) who purchase finished products to resell them for a profit.
- Factors resellers consider include: level of demand, resale price, sales per square foot, supplier's abilities, and order placement ease.
Learning Objective 8-1
- Four main types of business market:
- Producer, reseller, government and institutions
Learning Objective 8-2
- Business orders tend to be larger than consumer sales.
- Purchases often involve teams (committees).
- Negotiations and discussions can take considerable time and selling effort.
- Reciprocity is an agreement where two organizations agree to buy from one another
Learning Objective 8-2: Business Customer Attributes
- Business customers are better informed.
- They demand more detailed product information.
- Purchasing agents' goals may include advancement or financial awards.
- Mutual relationships/partnerships between some suppliers and business customers are common.
Learning Objective 8-2: Business Customer Concerns
- Customers are concerned about price (influencing operating costs, selling prices, profit margins).
- Customers want quality products that meet standards.
- Customers want good service, including market info, inventory maintenance, on-time delivery, and repair services.
- Supplier relationships are important.
Learning Objective 8-2: Business Buying Methods
- Description: used for standardized products like agricultural products.
- Inspection: when checking products with unique characteristics such as buildings or vehicles
- Sampling: Used for homogenous products (products that are the same).
- Negotiation: frequently used in business purchases.
Learning Objective 8-2: Types of Business Purchases
- New-task purchase: first-time item purchase in a new job or situation.
- Straight rebuy purchase: routine purchase of the same products with the same terms.
- Modified rebuy purchase: when purchase terms are changed.
Learning Objective 8-2: Discussion Point- Government Buyers
- Apple products are valued for quality.
- Different business purchasing situations exist in government procurement scenarios.
- Government buyers must consider sustainability issues or other product considerations
Learning Objective 8-3: Demand for Business Products
- Demand for business products (industrial demand) is related to consumer demand.
- Derived demand is when demand for business products comes from consumer demand.
- Inelastic demand is when price changes don't affect industrial demand significantly.
- Joint demand is when two or more items are used together to make a product.
- Discussion Point- Type of Demand
- Categorize different scenarios.
Learning Objective 8-4: Business Buying Decisions
- Organizational buying behavior refers to the purchasing behavior of producers, government units, institutions and resellers.
- Some purchasing factors are the same as consumer markets.
- The buying center is a group within an organization that makes purchase decisions.
Learning Objective 8-4: The Buying Center
- Users: members who initiate the purchase, use, and evaluate the product.
- Influencers: technical personnel who develop specifications and evaluate alternative products.
- Buyers: select suppliers and negotiate terms.
- Deciders: make the final purchase decision.
- Gatekeepers: control the flow of information to and among other buying center members.
Learning Objective 8-4: Discussion Point - The Buying Center
- Business scenarios that showcase how to identify different roles within the buying center (buyer, influencer, decider).
Learning Objective 8-4: Stages of the Business Buying Decision Process
- Recognize a problem or need
- Determine product specifications
- Search for potential products and suppliers
- Evaluate potential products and suppliers
- Select the product and supplier
- Evaluate the purchase decision.
Learning Objective 8-4: Stage 1: Problem Recognition
- Individuals recognize a problem or need exists.
- This can include buying center members (like users, influencers, or buyers).
- External sources like salespeople or advertisements can also highlight problems or needs.
Learning Objective 8-4: Stage 1: Problem Recognition (continued)
- Problems or needs arise under various circumstances.
- Malfunctioning machines, product modifications, and new product introductions are a few examples.
Learning Objective 8-4: Stages of the Business Buying Decision Process (continued)-
- Stage 2: Specifications
- Stage 3: Potential Products
- Value Analysis: evaluation of each component of the potential purchase.
- Examines quality, design, materials, etc.
- Vendor Analysis: systematic evaluation of current and potential vendors.
- Examines price, product quality, delivery service, product availability, and reliability.
- Stage 4: Selection
- Multiple Sourcing: when the buyer selects and uses several suppliers.
- Sole Sourcing: when only one supplier is selected.
- Stage 4: Selection - Details Finalized
- Contracts and Arrangements
- Delivery Details
- Technical assistance.
- Stage 5: Evaluation
- Comparing product performance with specifications.
- Adjusting specifications if the product or sales representative isn't ideal
- Evaluating supplier performance.
Learning Objective 8-4: Influences on Buying Decisions
-
Environmental Influences: -Competitive factors, economic factors -Political forces, legal and regulatory forces -Technological changes, socio-cultural issues
-
Organizational Influences: -Company objectives, purchasing policies -Resources, size and composition of the buying center
-
Interpersonal Influences -Trust, clear communication -Relationships amongst buying group members.
-
Individual Influences -Age, Education level -Personality, Position
Learning Objective 8-5: Industrial Classification Systems
- Businesses are grouped using industry classification systems.
- The Standard Industrial Classification (SIC) and the International Standard Industrial Classification (ISIC) are examples
- The North American Industry Classification System (NAICS) system.
Learning Objective 8-5: Industrial Classification System Uses
- Segmentation
- Matching purchase data to industry classification variables.
- Identify potential buyers, estimate purchase potential.
- Problems with data include industry classification differences, double counting and time delays in production.
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