Business Markets Overview
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Questions and Answers

What characterizes a straight rebuy in the business buying process?

  • A reordering of a product without any modifications (correct)
  • A purchase after extensive market research
  • A complete new purchase without prior experience
  • A reordering of a product with modifications

Which factor increases the complexity of a new task buying situation?

  • High associated costs or risks (correct)
  • Limited number of decision-makers
  • Standard pricing strategies
  • Low product specifications

Who are the influencers in the business buying process?

  • Users who will directly utilize the purchased product
  • Deciders who control approval of purchases
  • Individuals who provide expertise and evaluate purchase alternatives (correct)
  • Members of the buying department with formal authority

What role do gatekeepers play in the business buying process?

<p>They filter information and control access to decision-makers (D)</p> Signup and view all the answers

In many routine purchases, what is true about buyers and deciders?

<p>They often coincide and perform similar roles (A)</p> Signup and view all the answers

What distinguishes business markets from consumer markets primarily?

<p>The size and structure of the market (A)</p> Signup and view all the answers

What is a key factor in the nature of buying units in business purchases?

<p>More participants in the decision-making process (D)</p> Signup and view all the answers

Which of the following best describes derived demand in business markets?

<p>Demand stemming from the production of related goods (D)</p> Signup and view all the answers

What type of demand is characteristic of business markets, especially in the short term?

<p>Inelastic demand (B)</p> Signup and view all the answers

How does the demand structure differ between business and consumer markets?

<p>Business markets have more geographic concentration (B)</p> Signup and view all the answers

What implication does having fewer but larger buyers in business markets have on marketing strategies?

<p>Increased emphasis on personalized marketing (B)</p> Signup and view all the answers

What role does psychology play in business exchanges?

<p>It influences decision-making based on needs (B)</p> Signup and view all the answers

What is the typical purchasing behavior in business exchanges when prices change?

<p>Purchasing remains stable despite price changes (C)</p> Signup and view all the answers

What is the purpose of the buyer preparing a document in the general need description phase?

<p>To list characteristics and quantity of the needed item (D)</p> Signup and view all the answers

Which factor increases the effort put into supplier search?

<p>The complexity and cost of the item (A)</p> Signup and view all the answers

What criteria is NOT typically considered when ranking suppliers in the supplier selection phase?

<p>Color preferences of the buyer (A)</p> Signup and view all the answers

What document is prepared in the order-routine specification phase?

<p>A final order with specifications and quantities (A)</p> Signup and view all the answers

What does the performance review involve?

<p>Evaluating user satisfaction and usability of purchased items (C)</p> Signup and view all the answers

Which of the following is an example of an external stimulus for purchasing decisions?

<p>Taste-testing a new product at a fair (B)</p> Signup and view all the answers

What should be included in the proposal solicitation phase?

<p>Price lists and catalogues from potential suppliers (B)</p> Signup and view all the answers

Why is it important to check with the accountancy department when considering a new purchase?

<p>To confirm if the purchase is within the budget (B)</p> Signup and view all the answers

What characterizes decisions in a B2B buying process compared to B2C?

<p>B2B decisions often require more complex technical and economic considerations. (C)</p> Signup and view all the answers

Which of the following is NOT typically included in a purchase order (PO)?

<p>Supplier approval (D)</p> Signup and view all the answers

What is one major difference in the relationship between buyers and sellers in B2B vs. B2C?

<p>B2B relationships often require close collaboration to meet specific needs. (B)</p> Signup and view all the answers

What is the first step in the business buying process?

<p>Problem recognition (B)</p> Signup and view all the answers

Why is relationship marketing significant in the B2B context?

<p>It fosters long-term partnerships and collaboration. (A)</p> Signup and view all the answers

Which of the following accurately describes an aspect of the buying committee's role?

<p>The buying committee consists of both technical experts and top management. (B)</p> Signup and view all the answers

In the context of B2B buying, what is meant by 'order-routine specification'?

<p>Detailing the conditions under which an order is repetitively made. (B)</p> Signup and view all the answers

What is the primary factor that differentiates B2B buying behavior from regular consumer purchases?

<p>B2B involves purchasing for organizational use rather than individual consumption. (C)</p> Signup and view all the answers

Flashcards

What are Business Markets?

Business markets consist of organizations purchasing goods and services for production, resale, or renting, aiming to make a profit.

Similarities between Business and Consumer Markets

Both business and consumer markets involve individuals making purchasing decisions based on needs.

Economic Needs in Business Markets

Business markets mainly focused on economic needs, aiming to generate profit through value propositions.

Market Structure and Demand in Business Markets

Fewer but larger buyers exist in business markets compared to consumer markets, influencing relationship marketing strategies.

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Nature of Buying Unit in Business Markets

Business purchases often involve multiple decision-makers, making the procurement process more complex and requiring professional expertise.

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Derived Demand in Business Markets

Demand in business markets is derived from the demand for the final consumer product, making it indirect and influenced by consumer trends.

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Inelastic Demand in Business Markets

Demand in business markets is often less sensitive to price changes compared to consumer markets, making price fluctuations less impactful.

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Fluctuating Demand in Business Markets

Fluctuating demand in business markets is common, especially in industries with stock accumulation, leading to potential supply chain disruptions and volatility.

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Buying Committees

Groups of individuals within a company who hold the authority to make purchasing decisions.

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Complex Business Decisions

Decisions involving significant financial investments, complex technical aspects, and often requiring input from multiple individuals.

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Purchase Order (PO)

A formal document outlining a purchase request, containing details like quantity, price, payment terms, and delivery information.

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Business Buyer & Seller Dependence

The reliance of businesses on each other for success. In a B2B context, success often depends on developing strong, long-term relationships.

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Customization in Business

The practice of customizing products or services to meet the specific needs of a particular customer.

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Helping Customers Solve Needs

The process of helping customers solve their problems by providing appropriate products, services, and support.

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Relationship Marketing

The act of building strong relationships with customers through consistent communication and supportive actions, fostering loyalty and repeat business.

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Problem Recognition

The first stage in the business buying process where a need or problem is identified that can be addressed through purchasing.

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Internal Stimuli

Internal stimuli are triggers that arise from within an organization, such as the need for a new product launch or the introduction of new materials.

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External Stimuli

External stimuli are triggers that originate outside an organization, such as attending a trade show or discovering a new product during a fair.

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General Need Description

A general need description is a document that outlines the characteristics and quantity of the required item. It's the starting point of the buying process.

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Product Specifications

Product specifications involve defining the desired characteristics and requirements for a product, including performance features, quality standards, and compatibility.

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Supplier Search

Supplier search involves identifying potential vendors who can provide the required product or service. This can be done through past contacts, online research, or industry publications.

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Proposal Solicitation

Proposal solicitation is the process of inviting qualified suppliers to submit proposals, including price lists, catalogues, or detailed propositions.

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Supplier Selection

Supplier selection involves evaluating potential vendors based on various criteria, such as quality, reliability, ethical behavior, and pricing.

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Order-Routine Specification

Order-routine specification involves finalizing the purchase order, detailing the items, specifications, quantities, delivery time, and warranty information.

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Straight Rebuy

A buying situation where a customer reorders the same product or service without any changes. Think of it like ordering your usual coffee at your favorite cafe.

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Modified Rebuy

A buying situation where a customer wants to modify a previous order. They may want to change the product's specifications, price, or terms. Think of it as trying a new flavor at your favorite cafe.

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New Task Situation

A buying situation where a customer is purchasing a product or service for the first time. This usually requires more research and decision-making. Think of it like trying a new cafe for the first time.

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Users

The people in the organization who will actually use the product or service. They often start the buying process and help define what the company needs.

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Deciders

The people who have the power to say yes or no to a purchase. They often control the flow of information about the purchase.

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Study Notes

Business Markets

  • Business markets include organizations buying goods and services for use in production, or resale.
  • Business exchanges differ from consumer exchanges in terms of who buys and the purpose of the purchase.
  • Both business and consumer markets share similarities, such as psychological needs. However, differences exist in market structure and demand.

Similarities to Consumer Markets

  • Both involve people assuming buying roles.
  • Both involve needs.
  • Both involve psychology and need fulfillment

Differences from Consumer Markets

  • Market structure: Fewer, larger buyers in business markets. Individual consumers might purchase less.
  • Demand: Business demand is often derived, meaning demand for one product triggers demand for another (e.g., tires are demanded based on car sales). Business demand is often inelastic (short term) – price changes impact product demand less than consumer markets. Also, business demand is more fluctuating.
  • Buying unit: Business purchases often involve multiple people (buying committees) and more formalized procedures, compared to simpler individual consumer buying decisions.

Market Structure and Demand

  • Fewer, larger buyers: Business markets have fewer, but significantly larger, buyers compared to the multitude of individual consumers.
  • Geographic concentration: Businesses in certain industries cluster geographically in specific regions (e.g., luxury firms in Paris).
  • Derived demand: Business demand for products is dependent on the demand for related products.
  • Inelastic demand (short-term): Changes in prices of raw materials or components have less of an impact on the demand for finished goods in the short term.
  • Fluctuating demand: Demand for products are often irregular in fluctuating industries (which might be impacted by fluctuations in sales, or availability challenges).

Nature of Buying Unit

  • More decision participants: Business purchases usually involve more people in the decision-making process than individual consumer purchases.
  • More professional purchasing effort: Purchasing decisions in business involve more careful evaluation of available options.
  • More complex purchases: Complex purchasing decisions involve more participants leading to more complex purchase processes.

The Business Buying Process

  • The steps in a business buying process involve problem recognition, need description, product specifications, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review.
  • Suppliers are qualified, and selection is based on factors such as quality, service and price.

Types of Decisions and Specifications

  • Business decisions involve complex technical and economic factors, potentially including considerations about large sums of money.
  • Business purchases frequently include detailed product specifications and written purchase orders.

Participants in Business Buying Process

  • Various participants influence business buying decisions, including users, influencers, buyers, decisors and gatekeepers.

Influences on Business Buyers

  • Business buyers are influenced by environmental factors (economic, political), organizational factors (objectives, policies), interpersonal factors (authority, empathy), and individual factors (age, income and personality).

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Related Documents

UNIT 4 Strategic Marketing: Industrial Markets PDF

Description

Explore the intricacies of business markets, including the key differences and similarities with consumer markets. Understand how demand dynamics, market structure, and psychological factors influence purchasing decisions in these two market types.

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