[Applause] my name is amreem bashir harris and today we are going to discuss business buyer behavior in the last class if you remember we studied chapter number five on consumer markets and consumer buyer behavior today we are going to discuss chapter number 6 on business markets and business buyer behavior let's first look at the example of ibm who has not heard of ibm computers it's a household name in computers and other hardware and software however its biggest sales and revenues come from business markets where it is known as the big blue ibm is more than 100 years old company and its success can be attributed to a number of factors first and foremost it has transformed and evolved itself as a total solutions provider and not just as a computer hardware and software company look at this image of ibm's b2b marketing this campaign is called cognitive business out think that positions the company as working closely with business customers to help them thrive in the new cognitive era this picture is of vivek gupta ibm's all-star salesman he became very famous for landing a 600 million dollar contract with vodafone one of the biggest telecommunication giants in india however to get the contract he conducted research for nearly four years in such a way that you knew everything about vodafone he made sure he understood the pain points and challenges faced by vodafone he was so involved in getting the contract that people thought he was part of the vodafone team and not part of ibm ibm india now gives a total solution to vodafone from customer services to financial solutions this shows the importance of understanding b2b marketing this is the list of topics we are going to discuss in this chapter number six number one the difference between business market and consumer market number two the factors that influence business buyer behavior number three the steps in business buying decision process and number four how information technology and online mobile and social media have changed b2b marketing most large companies as you know sell to large organizations such as ibm boeing dupont caterpillar all these big companies sell most of their products to other businesses even large consumer good companies like unilevers png colgate palmolive nepal chan all these companies must first sell to retailers and wholesalers who in turn serve the consumer market therefore business buyer behavior refers to the buying behavior of organizations that buy goods and services for use in the production of products and services it also involves the behavior of retailing and wholesaling firms that acquire goods to resell or rent out so behind every consumer good market there is a business market business markets are huge one classic example of b2b marketing is the automobile sector when you buy a car from one company like toyota you are purchasing parts actually from dozens or even hundreds of companies around the world b2b sales are a vital part of every industry's supply chain let's look an example of tata nano the world's cheapest car that was launched by tata nano in india in 2008 and was sold for one lakh rupees and gated to the masses in order to create however the world's cheapest car it had to collaborate with the number of suppliers all over the world such as bosch which was a german company caparo was a european company and denso which was a japanese company delphi which was a usa-based company so first let's discuss the differences between a business market and a consumer market the first biggest difference between a business market and a consumer market is that business marketer normally deals with fewer but larger customers if you take an example of goodyear tires here when goodyear tire sells replacement tyre to its final consumers its potential customers go into millions of people however in business markets its dependent on getting orders from only a few large automakers another important difference is the concept of derived demand in business markets the demand is ultimately derived from the demand of consumer goods let's take an example here if you can see this image let's take an example of corning's gorilla glass this glass is used in a lot of products like smartphones and laptops of apple dell microsoft sony and other big companies so if the final consumer demands more of these brands then the demand for gorilla glass would definitely increase as shown in this ad sometimes such firms also reach the final consumers in order to benefit themselves and also to benefit their partner brands another key difference is the nature of the buying unit in a business purchase there are more decision participants and more professional purchasing effort business buying is often done by trained purchasing agents another difference between business market and consumer market is the type of decisions and the decision making process business decisions are mostly more complex involving large sums of money more technical and economic considerations and multiple interactions amongst people also business buying decisions take more longer and are more formalized as business purchases usually called for detailed product specifications and formal approval the buyer and seller in a business market are often more dependent on each other in the buying situation now let's look at the model of business buying behavior in this model marketing stimuli such as four piece product price place and promotion and other stimuli such as micro and macro environmental factors affect the buying organization and produce certain buyer responses although this model looks quite similar to consumer buying model it is very different to design good marketing strategies marketer must understand what happens within the organization to turn stimuli into responses if you look at this model you will see that the buying activity consists of two major parts the buying center and the buying decision process the buying center is composed of all the people involved in the decision process another important thing that you can see in this model is that there are a lot of organizational interpersonal and individual influences on the buying decision process so the questions that arise here are number one what type of buying situations are there number two who are the participants actually in the buying decision process and number three what are the major influences on business buyers let's first understand different types of buying situations in a business market the most common situation is called the straight rebuy in a straight rebuy situation the buyer reorders in a routine manner from approved vendor list it involves it's not very complex it is low involvement and in this what happens is that the in suppliers try to keep the customers engaged and happy whereas the out suppliers try to exploit in case there is a dissatisfaction so they can jump in another buying type of situation is called the modified rebuy in this particular situation the buyer wants to modify product specification prices terms and conditions and sometimes they might want to change the supplier as well in this case the in-supplier feels a lot of pressure obviously and the out supplier sees it as an opportunity for example when we are upgrading our office software then in that case you might want to modify the terms you might want to modify the specifications you might want to actually get a new supplier as well the most high involvement and complex buying situation is the new task for example you want to hire a new digital agency for your marketing needs in your organization or you want to launch a new product and you want new new material from new suppliers so in this particular case the situation is called the new task nowadays companies are looking at system selling the concept of system selling from a single seller that gives them a total solutions as we have already discussed in the previous example of ibm now who are the participants in the business buying process the decision making unit of a buying organization is called its buying center the buying center includes all members of the organizations that might play some role in the purchase decision so in this particular scenario five rules have been identified the first role is the role of a user who can also be an initiator the member of the organization who is going to actually use the product sometimes they identify the need as well for example in a biscuit factory who is going to actually work on the ovens that are fitted over there the next role is role of the influencer the influencer affects the buying decision they often help define specification and provide information for evaluating alternatives sometimes technical personnel in a company work as influencers another important role that has been identified is the role of a buyer who is the actual purchaser buyers have formal authority to select the supplier and arrange terms and condition their major role is selecting vendors and negotiating another role is the role of a decider deciders have formal or informal power to select or approve the final suppliers sometimes they are at the top of the organization at the top roles in the top money management positions another interesting role is the role of a gatekeeper another interesting role is the role of a gatekeeper controls the flow of information in an organization sometimes your personal assistant can also be the gatekeeper the classic example of a gatekeeper is that of a compounder in a doctor's clinic who it is it is up to him who who he lets the doctor meet so if a salesperson of a pharmaceutical company comes the compounder of the clinic can work as a gatekeeper one thing we need to understand here is that the buying center is not a fixed or formally identified unit it is a set of roles that is assumed by different people for different purchases now what are the major influences on business buyers many factors affect the business buyer sometimes we think that low price is one of the key factors that influence business buyers it may be true but personal factors also play a very important role in influencing the business buyers emotions can also play a very important role here as you can see in this ad usg corporation is a leading manufacturer of gypsum wall board and other building material for the construction and remodeling industries its target customers are contractors architects and builders usg not only attracts them through functional benefits but also through emotional appeal as can can be seen in this ad i really love this ad if you can see the ad so now let's discuss the major influences on business buyers as you can see in this diagram factors such as environmental organizational interpersonal and individual factors can affect a buying decision environmental factors such as the economy the ups and downs in the economy the economics and stability definitely affects buying purchase decision in any organization then the supplier if the bargaining power of the supplier is more or is it less are there multiple suppliers or do the suppliers have monopoly then the changing technology definitely is going to affect then politics regulations like custom duties and all those things will definitely affect the buying decisions competition is a very important micro environmental factor which affects any organization another very interesting point here is the custom sorry the culture and customs of any country especially in the international markets so if you are going to work with chinese buyers then you definitely need to know the culture and customs of china the next factor is the organizational factor organization factor involves the objective strategy structure system procedures the business marketer needs to understand all of this with respect to one particular organization every organization has their own visions missions organizational structure so we need to understand how to go about it one interesting question that the marketer needs to know here is how many people are going to be involved in the buying decision and who are they so this is a very important factor here another important factor here is the interpersonal factors the buying center usually includes many participants who influence one another based on their expertise based on the dynamics of work relationships based on the authority they have so there are a lot of interpersonal factors involved which marketer needs to understand the last but not the least factor is the individual factor each participant in the buying unit brings in personal factors personal motivations perceptions and preferences so we need to understand these are those factors of the individual which we also studied in the consumer market okay how they bring those personal factors and affect the organization that they are working in now we will discuss the stages in the buying decision process there are eight stages in the buying decision process and they are dependent on the type of buying situation so in the case of straight rebuy or modified rebuy the marketeer might [Music] you know the buyer might skip some of these stages in contrast in a new task situation mostly you go through all the stages of buying first step is the problem recognition it can result definitely for internal or external stimuli maybe a machine broke down that's an internal stimuli and in some case you visit a trade show a website receive a call from a salesperson or see an ad as you can see in this ad of accenture digital they try to attract business buyers through this advertisement the next step in a buying decision process is the general need description the buyer prepares a general need description that describes the characteristics and quantity of the needed item for standard items this process presents few problems but for complex items they might need to work together with engineers users consultants and all those people so they might work in the form of a team the next step is the supplier search nowadays to find the best vendors you can go online as you can see in this image you can go online and you can try to or you can look at the trade directories you can do uh phoning other companies for recommendations in order to find different suppliers after you have selected a list of suppliers you will ask the suppliers to make a list of proposal to prepare a suitable proposal some suppliers will refer the buyer to their website or promotional materials or sometimes send a salesperson also one should remember that these proposals should be marketing documents now this is very important it should be a marketing document not just a technical document then the firm the buyer selects the supplier based on its attributes and their relative importance such attributes includes product and service quality honest communication ethical corporate behavior and on-time delivery etc and comparative prices obviously the next step is the order routine specification which includes the final order with the chosen supplier or suppliers and list items such as technical specifications etc many large companies now practice vendor managed inventory in pakistan also there is vendor managed inventory in which they turn over ordering inventory responsibilities to the suppliers so in some companies here also we have vendor managed inventory in which the vendor is responsible for managing the inventory of the organization especially in case of supermarkets this is also done the performance review lastly the buyer reviews supplier performance the buyer may contact users and ask them to rate their satisfaction this performance review is important because it may lead the buyer to continue to modify the arrangement or in some cases drop the supplier arrangement as well now let's understand the changing scenario in the digital landscape nowadays because of digital and social media marketing many things are changing one thing which i've managed i've actually discussed previously as well was the online supply chain online purchasing often known as e-procurement has grown rapidly over the last few years so here is an example of staples staples b2b e-procurement division serves the office supplies and service needs of businesses which has 10 employees or even up to more than thousand employees which are listed on the fortune 1000 b2b marketing and social media marketing is not just growing rapidly it is exploding digital and social media marketing have rapidly become the new space for engaging business customers many books have been written especially on b2b digital marketing to use web to its full potential let's take an example here of mers client you must have learned of must line in our ports nearport grant also we see a lot of container with the name musk on them it is the world's leading container shipping and transport company serving customers through 374 offices in 160 countries despite that it engages its customers through social media now you can see if you go on your linkedin profiles you'll see a lot of b2b business happening through linkedin they're trying to keep a network through the linkedin in banks also if you can see they are customer relationship managers who actually deal directly with corporate customers all right so with this we come to an end of this chapter chapter number six business markets and business buyer behavior hope you understood the dynamics and importance of b2b marketing if you have any issues and you don't understand anything please feel free to comment and i will get back to you on that thank you