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MARKETING
Real People, Real Choices
CHAPTER 6
Business-to-Business Markets:
How & Why
Organizations Buy
Chapter Objectives
• Describe the general characteristics of
business-to-business markets
• Explain the unique characteristics of
business demand
• Describe how business or
organizational markets are classified
• Explain the business buying situation
and describe business buyers
6-2
Chapter Objectives
• Explain the roles in the business buying
center
• Understand the stages in the business
buying decision process
• Understand the growing role of B2B ecommerce
6-3
Business-to-Business Marketing
• Marketing of goods & services that
businesses & organizations buy for
purposes other than personal
consumption
– Manufacturers
– Wholesalers
– Retailers
– Government agencies
– Hospitals
6-4
Business Markets
• Generally, the same principles hold for
business & consumer customers
• There are characteristics that make B2B
buying more complex
– Multiple Buyers
– Number of customers
– Size of purchases
– Geographic concentration
6-5
B2B Demand Characteristics
• Derived Demand
• Inelastic Demand
• Fluctuating Demand
• Joint Demand
6-6
Derived Demand
• A business’ demand for goods &
services comes from consumer demand
– Can be direct or indirect
– For example, demand for education
impacts demand for forestry products
6-7
Inelastic Demand
• Inelastic demand means that business
customers buy the same quantity
whether the price goes up or down
• Example: A BMW Z4 Roadster 3.0i has
a list price starting at just over $55,000.
If the price of tires, batteries, or stereos
goes up or down, BMW still must buy
enough to meet consumer demand for
the Z4
6-8
Fluctuating Demand
• Small changes in consumer demand
can create large increases or decreases
in business demand
• Acceleration principles (multiplier effect)
means that changes in consumer
behavior have a ripple effect through
several related businesses
6-9
Joint Demand
• Joint demand occurs when two or more
goods are necessary to create a
product
• Companies try to avoid dependence on
specific suppliers by dealing with
multiple suppliers whenever possible
6-10
B2B Classifications
• Producers
– purchase products to produce others
• Resellers
– purchase finished goods for resale
• Governments
– competitive bids/proposals
• Not-for-profit organizations
6-11
The Nature of Business Buying
• The Buying Situation
• The Professional Buyer
• The Buying Center
6-12
The Buying Situation
• A buy class framework identifies the
degree of effort required of the firm’s
personnel to collect information & make
a purchase decision
• Straight rebuy
• Modified rebuy
• New task buying
6-13
The Professional Buyer
• Titles: purchasing agents, procurement
officers, director of materials management
• Focus on economic factors beyond the initial
price of a product, including transportation &
delivery charges, accessory products or
supplies, maintenance, disposal costs, etc.
• Large firms practice centralized purchasing one department does all buying
6-14
The Buying Center
• Group of people in the organization who
participate in the decision-making
process
• May include production workers,
supervisors, engineers, secretaries,
shipping clerks, & financial officers
6-15
Roles in the Buying Center
• Initiator begins the buying process
• User needs the product
• Gatekeeper controls the flow of
information to other members
• Influencer dispenses advice/expertise
• Decider makes the final decision
• Buyer executes the purchase
6-16
Considerations in Supplier Selection
• On-time deliveries
– JIT delivery
• Single sourcing vs. multiple sourcing
– Number of suppliers for a product
• Outsourcing
• Reverse marketing
– Buyer searches for suppliers who will
produce according to specifications
6-17
Electronic B2B Commerce
• Internet exchanges between two or
more businesses or organizations
• Allows marketers to link directly to
suppliers, factories, distributors, and
their customers
– Walmart: Electronic Data Interchange
• Reduces time necessary to order and
deliver goods, track sales, and get
feedback
6-18