Phillip Kevin Lane

Kotler • Keller
Marketing Management • 14e
Analyzing Business
Markets
Discussion Questions
1. What is the business market, and how does it differ
from the consumer market?
2. What buying situations do organizational buyers face?
3. Who participates in the B2B buying process?
4. How do business buyers make their decisions?
5. How can companies build strong relationships with
business customers?
6. How do institutional buyers and government agencies
do their buying?
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 Organizational Buying
The decision-making process by which
formal organizations establish the need
for purchased products and services and
identify, evaluate, and choose among
alternative brands and suppliers.

-- F. Webster Jr and Y. Wind

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 Business Markets
Transportation &
Distribution

Agriculture Construction

Forestry
Manufacturing

Communications
Banking & Finance
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Business Markets
Similarities to the Consumer Market
• Understanding deep customer needs
• Identify areas for growth
• Improving value management techniques
• Calculating better marketing metrics
• Competing and growing in global markets
• Countering product commoditization
• Gain support for the marketing concept
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 Business Markets
Differences to the Consumer Market Geographically
Concentrated

Fewer, Larger
Buyers

Professional
Buyers

Multiple Personal
Sales Calls Relationships
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 Business Markets
Differences to the Consumer Market

Derived Demand

Inelastic Demand

Demand
• Derived
• Inelastic
• Fluctuating
Fluctuating Demand
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Buying Situation

Three types of purchasing situations:

• Straight rebuy
New task situation
• Modified rebuy ▪ Completely new product from unknown suppliers
▪ High uncertainty regarding outcome
• New task ▪ (e.g. acquisition of capital goods)

Modified Rebuy
▪ New product from known supplier
▪ Existing product, new supplier
▪ Moderate uncertainty regarding outcome

Straight rebuy
▪ Known product from known supplier
▪ Low uncertainty regarding outcome
▪ (e.g. consumable items like MRO)

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Examples of purchasing situations

1 Straight rebuy Modified rebuy New task

Routine task New task

Low risk High risk

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Business Buying Participants

Initiator/ Influencer Decider

Users

Gatekeeper Approver
Buyers
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The Buying Center

• Initiators • Approvers
• Users • Buyers
• Influencers • Gatekeepers
• Deciders

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Buying center
• A major task for marketers is to identify who are the members of the buying center
and what purchasing-related roles these people perform. Since the buying center
is ‘informal,’ this can be an onerous task. Moreover, one person can perform
several critical roles. Similarly, several people may perform the same role in the
buying center. Marketing managers must be able to identify the key players in the
buying center. These are the people that need to be targeted with important
marketing communications and visited by sales personnel.

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Buying center
• Roles in the Buying Center
• Users : - Users are those people in the firm who actually use the product, such as
personnel on the production line or in the shipping department. Users can be
particularly important sources of information on specifications, alternative
products and brands, and how the product can best be used. Users are often
responsible for initiating a purchase decision because they have ‘discovered a
better way of doing things.
• Initiators : -Initiators are individuals that make specific purchase requests.
Initiators often consist of users as noted above, but can be virtually anyone in the
firm who is in a position to ‘recognize the need exists.’

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Buying center

• Influencers : - Influencers typically are those individuals who are knowledgeable of

the product type. These people can assist in setting specifications and defining
other criteria that must be considered during the purchase process. Influencers
generally consist of supervisory personnel, research and design specialists, and
engineering staff. But, they can also include personnel from finance who control
budgets, or others who, because of their positions or political clout in the firm,
have an important ‘say so’ about the purchase.

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Buying center

• Gatekeepers : -Gatekeepers are those personnel who control the flow of

information to other members of the buying center and between the firm and its
vendors. Gatekeepers usually consist of secretaries, clerks, and purchasing agents.
Identifying the gatekeepers in the buying center is important to ensure that proper
marketing communications exist with important players in the buying organization.

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Buying center

• Deciders : - Deciders are the people who make the actual decision on
which products to buy and which vendors will supply the products.
Purchasing agents generally are authorized to make decisions for less
expensive, commonly purchased products (i.e. straight rebuys). More
complex, risking decisions typically are reserved for higher level managers.

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Buying center

• Buyers : Buyers are those persons who do most of the interacting with
vendors. They arrange many of the specific details of the purchase after
the decision is made. Buyers may negotiate the specific terms of the
contract, process much of the paper work, monitor progress on delivery,
and engage in any expediting that may be required. Usually, someone
from the purchasing department performs this function, but buyers may
be upper-level managers for more complex, risky purchase decisions.

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Buying center influences

• It usually includes several participants with

differing interest, authority, status and
persuasiveness ..(expressiveness)
• For ex- engineering personnel may want to
maximize the performance of the product ,
production personnel may want ease of use
and reliability of supply, financial personnel
may focus on economics of the purchase so
on..
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Buying center targeting :Of
Concern to Business Marketers
• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?

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Buying Center Influences

Participants differ by:

• Interest
• Authority
• Status
• Persuasiveness
• Decision criteria

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Targeting Firms and Buying Centers

Who to target?
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Purchasing/Procurement Process

Diverse supplier base

Benefits vs. Costs

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Stages in the Buying Process

Problem
Description and
Recognition
Characteristics Supplier
Search

Proposal
Solicitations

Performance Order Supplier

Review Specification Selection

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Stages in the Buying Process

Problem
Recognition Internal stimuli
• New product being developed
• Broken machine
• Low stock level

External stimuli
• Trade show visit
• Advertisement

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 Stages in the Buying Process

Description and Technical specifications

Characteristics
• Reliability
• Durability
• Price

Product value analysis

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 Stages in the Buying Process

Supplier
Search

Trade directories
Trade advertisements
Trade shows

E-Procurement Lead generation

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 Stages in the Buying Process

Proposal
Solicitations

Formal presentation

Written
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Stages in the Buying Process

Supplier
Selection

Supplier-evaluation model
Number of suppliers

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 Stages in the Buying Process

Order
Specification Stockless
purchase
plan
Technical specifications
Quantity
Delivery time
Return policy
Warranties
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 Stages in the Buying Process

Performance
Review

End user evaluations

9
Weighted-score
method
7 4
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 Buygrid Framework
Table 7.1
Buyclasses
Modified Straight
New Task
Rebuy Rebuy
1. Problem Recognition Yes Maybe No
2. General need description Yes Maybe No
3. Product specification Yes Yes Yes
Buyphases

4. Supplier search Yes Maybe No

5. Proposal solicitation Yes Maybe No
6. Supplier Selection Yes Maybe No
7. Order-routine specification Yes Maybe No
8. Performance review Yes Yes Yes

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Managing B2B Relationships

Online social media

One-to-one Marketing
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 Managing B2B Relationships
Vertical Coordination

Relationship Factors
Availability of alternatives
Importance of supply
Complexity of supply
Supply market dynamism

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 Buyer-Seller Relationship Categories
Cooperative systems

Collaborative

Customer is king

Contractual transaction Mutually adaptive

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Institutional and Governments Markets
Prisons

Government
agencies

Schools

Hospitals
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