Lecture Notes: Business Buyer Behavior

Introduction

• Presenter: Amreem Bashir Harris
• Topic: Business buyer behavior, Chapter 6
• Previous Topic: Consumer markets and buyer behavior (Chapter 5)

Overview of IBM

• IBM: Known as Big Blue in business markets
• Transformation: From a hardware/software company to a total solutions provider
• Campaign Example: Cognitive Business (Out Think)
• Sales Example: Vivek Gupta's $600 million contract with Vodafone

Topics Covered

1. Difference between business market and consumer market
2. Factors influencing business buyer behavior
3. Steps in business buying decision process
4. The impact of IT and social media on B2B marketing

Differences Between Business and Consumer Markets

1. Customer Base: Fewer but larger customers in business markets
   • Example: Goodyear Tires
2. Derived Demand: Demand based on consumer products
   • Example: Corning’s Gorilla Glass in tech products
3. Buying Unit: More decision participants and professional purchasing effort
4. Decision Making: More complex, larger sums, technical specs, and formal approvals
   • Buyer and seller dependency

Model of Business Buying Behavior

• Stimuli: Marketing (product, price, place, promotion) + Macro/Micro environmental factors
• *Buying Activity Includes:
  • Buying Center
  • Buying Decision Process
• Influences: Organizational, interpersonal, individual factors***

Types of Buying Situations

1. Straight Rebuy: Routine purchases, low involvement
2. Modified Rebuy: Modified specs, prices, terms; supplier changes possible
3. New Task: High involvement, complex, new suppliers/products required
   • Example: Hiring new digital agency
4. System Selling: Total solutions from a single seller
   • Example: IBM’s approach

Participants in the Business Buying Process

• *Buying Center Roles:
  1. User/Initiator: Uses the product, identifies needs
  2. Influencer: Defines specs, evaluates alternatives
  3. Buyer: Selects suppliers, arranges terms
  4. Decider: Approves final suppliers
  5. Gatekeeper: Controls information flow***

Major Influences on Business Buyers

1. Environmental: Economy, technology, politics, competition, culture/customs
2. Organizational: Objectives, strategies, structures, systems
3. Interpersonal: Expertise, work relationships, authority
4. Individual: Personal motivations, perceptions, preferences

Steps in the Buying Decision Process

1. Problem Recognition: Internal/external stimuli; example - machine breakdown or ad
2. General Need Description: Describes characteristics, quantity
   • May involve collaboration with engineers, users, consultants
3. Supplier Search: Online search, trade directories, recommendations
4. Proposal Solicitation: Suppliers submit proposals
5. Supplier Selection: Based on quality, communication, behavior, prices
6. Order Routine Specification: Final order details, vendor-managed inventory
7. Performance Review: Assess supplier performance, make changes if necessary

Digital and Social Media Marketing

• E-Procurement: Rapid growth, online supply chains
  • Example: Staples B2B e-procurement division
• Social Media: Explosive growth in B2B marketing
  • Example: Maersk Line on LinkedIn

Conclusion

• End of Chapter 6: Business markets and buyer behavior
• Q&A: Open for comments and questions