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Questions and Answers
What is described as a routine purchase decision without modifications?
What is described as a routine purchase decision without modifications?
Which of the following best describes the role of influencers in the business buying process?
Which of the following best describes the role of influencers in the business buying process?
What term describes when a company develops networks of supplier-partners for dependability?
What term describes when a company develops networks of supplier-partners for dependability?
Which of the following statements about derived demand is correct?
Which of the following statements about derived demand is correct?
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In the business buying process, who formally selects the supplier?
In the business buying process, who formally selects the supplier?
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Which buying situation involves a decision requiring in-depth research for a new product?
Which buying situation involves a decision requiring in-depth research for a new product?
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What characterizes business markets in terms of buyer structure?
What characterizes business markets in terms of buyer structure?
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Which participant in the buying center is responsible for controlling information flow?
Which participant in the buying center is responsible for controlling information flow?
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What is a key characteristic of the business buying process compared to consumer buying behavior?
What is a key characteristic of the business buying process compared to consumer buying behavior?
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Which of the following best describes the buying situation referred to as modified rebuy?
Which of the following best describes the buying situation referred to as modified rebuy?
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In the context of business buying, who holds formal authority to select the supplier?
In the context of business buying, who holds formal authority to select the supplier?
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What does the term 'derived demand' refer to in business markets?
What does the term 'derived demand' refer to in business markets?
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Which participant in the business buying process is responsible for defining specifications?
Which participant in the business buying process is responsible for defining specifications?
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What is a primary purpose of supplier development in business buying?
What is a primary purpose of supplier development in business buying?
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How does demand in business markets typically manifest, compared to consumer markets?
How does demand in business markets typically manifest, compared to consumer markets?
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What role do gatekeepers play in the business buying process?
What role do gatekeepers play in the business buying process?
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Study Notes
Business Markets
- Business buyers are organizations that purchase goods and services to use in the production of other products and services.
- Business buying behavior refers to the buying decisions made by these organizations.
- Derived demand describes how the demand for business products is based on the demand for final consumer products.
- Inelastic demand means that the demand for business products is less sensitive to price changes.
- Supplier development is the process of building relationships with suppliers to ensure a dependable supply of products and materials.
Business Buying Process
- Business buying processes are often more complex than consumer buying processes.
- Business buying decisions involve more decision-makers and require a more professional approach.
- Buyers and sellers are often more dependent on each other in business purchasing situations.
Business Buying Situations
- Straight rebuy is a routine purchasing decision involving reordering existing products without changes.
- Modified rebuy involves some research, as the buyer may want to change product specifications, price, terms, or suppliers.
- New task purchases require extensive research as the buyer will be purchasing a new product.
- Systems selling involves purchasing a complete solution (a package of multiple products or services) from a single seller.
Business Buying Center
- The buying center encompasses all the individuals and units that participate in the business buying decision-making process.
- Users are the ones who will utilize the purchased product or service.
- Influencers help define product specifications and offer information for evaluating possible options.
- Buyers hold the authority to select suppliers and negotiate purchase terms.
- Deciders have the power to approve the final suppliers.
- Gatekeepers manage the flow of information within the buying process.
Business Markets
- Business buyer behavior encompasses the buying practices of organizations that procure goods and services for use in producing other products or services.
- These products and services are subsequently sold, rented, or supplied to others.
- The business buying process involves identifying the required products and services, and then finding, evaluating, and selecting among alternative brands.
Business Market Structure and Demand
- Characterized by fewer, larger buyers compared to consumer markets.
- Demand is derived, meaning it stems from the demand for consumer goods and services.
- Demand tends to be inelastic, implying that price changes have a minimal impact on demand.
The Business Market Decision Process
- Typically more complex, involving greater involvement of decision-makers than consumer buying.
- This process requires more professional purchase effort, and exhibits a higher degree of dependency between buyer and seller.
Supplier Development
- Refers to the systematic development of networks of supplier partners to ensure reliable and appropriate supply of products and materials.
- These products and materials are used in the manufacturing of company's own goods, or reselling to others.
Business Buyer Behavior Model
- A model helps understand the factors influencing business buyer behavior.
Major Buying Situations
- Straight Rebuy: Routine purchases that involve reordering without any modifications or changes.
- Modified Rebuy: Purchase decisions requiring some research, where buyers seek to modify product specifications, pricing, terms, or suppliers.
- New Task: Purchases requiring thorough research, typically for completely new products.
- Systems Selling: Acquisition of a packaged solution from a single seller.
Participants in the Business Buying Process
- The buying center comprises all individuals and units participating in the business decision-making process.
- Users: Those who will directly use the product or service.
- Influencers: Contribute to defining specifications and provide information for assessing alternatives.
- Buyers: Possess the formal authority to select suppliers and negotiate purchase terms.
- Deciders: Hold formal or informal power to make the final supplier selections and approvals.
- Gatekeepers: Control the flow of information.
The Buying Process
- The process involves a series of steps:
- Problem Recognition: Identifying a need or opportunity.
- General Need Description: Defining the general characteristics of the required product.
- Product Specification: Developing detailed specifications for the product.
- Supplier Search: Identifying potential suppliers.
- Proposal Solicitation: Obtaining proposals from potential suppliers.
- Supplier Selection: Choosing a supplier based on evaluation criteria.
- Order Routine Specification: Finalizing the order details.
- Performance Review: Evaluating supplier performance and considering future purchases.
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Description
This quiz explores the fundamentals of business markets, focusing on business buyers, buying behavior, and the complexities of the business buying process. It covers concepts like derived demand, inelastic demand, and supplier development, essential for understanding organizational purchasing decisions.
