Chapter 8: Business Market and Buying Behavior

Online marketplaces where buyers and sellers can exchange information, goods, services, ideas, and payments are best described as _______.

B2B e-commerce sites

Interpersonal Influences

the relationships between people in the business; trust and collaboration are important

Stages of the Business Buying Decision Process

1. recognize problem 2. develop product specifications to solve problem 3. search for and evaluate possible products and suppliers (vendor and value analysis) 4. select product and supplier and order product (multiple and sole souring) 5. evaluate product and supplier performance

Standard Industrial Classification (SIC)

U.S. government code used to classify a firm by its type of business operations (replaced)

Price

a business customer views price as the amount of investment necessary to obtain a certain level of return or savings

Vendor Analysis

a formal, systematic evaluation of current and potential vendors

Modified Rebuy

a new-task purchase that is changed on subsequent orders or when straight-rebuy requirements are modified

Product Quality

a product must meet specifications

Straight Rebuy

a routine purchase of same products under approximately the same terms

Reciprocity

an arrangement in which two organizations agree to buy from each other (reciprocal agreements that threaten competition are illegal, but a certain amount still occurs

Value Analysis

an evaluation of each component of a potential purchase

New Task Purchase

an item is purchased to be used to perform a new job or solve a new problem

Sole Sourcing

an organization's decision to use only one supplier

Multiple Sourcing

an organization's desire to use several suppliers

Derived Demand

demand for business products that is the result of demand for consumer products

Inelastic Demand

demand that is not significantly altered by a price increase or decrease

Demand for Business Products

derived demand, inelastic demand, joint demand

Commodities and raw materials are typically purchased using which method of business buying?

description

The purchase manager of a cake and pastries store wanted to purchase supplies of milk. He told the seller that he wanted cow's milk that contained at least 10% fat. Which of the following methods of business buying did the purchase manager use?

description

Methods of Business Buying

description, inspection, sampling, negotiation

Government Markets

federal, state, and local agencies that buy goods and services to support their internal operations and provide products to their constituencies, spend hundreds of billions annually on a wide range of goods and services, government contracts are awarded to a wide variety of large and small firms in many industries

Sampling

entails taking a specimen of the product and evaluating it for suitability before purchase

Influences of the Business Buying Decision Process

environmental, organization, interpersonal, and individual

Which of the following markets may have complex buying procedures due in part to their public accountability?

government market

Organizational Influences

include company's objectives, purchasing policies, resources, and size and composition of the buying center

Environmental Influences

include competitive and economic factors, political forces, legal and regulatory forces, technological changes and sociocultural issues

Producer Markets

individuals and business organizations that purchase products to make profits by using them to produce other products or using them in their operations

Business Markets

individuals, organizations, or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations (also called B2B)

A price increase or decrease does not significantly alter demand for a product with _______.

inelastic demand

Reseller Markets

intermediaries (wholesalers and retailers) who buy finished goods and resell them to final consumers for a profit

Factors Resellers Consider

level of demand, resale price, space required, suppliers' ability to provide adequate quantities when and where needed, and availability of technical assistance

ACME Corp. has ordered widgets from Wiley Widgets several times before, but now it would like Wiley Widgets to offer a lower per-unit price in exchange for a larger order. ACME is using which of the following types of business purchases?

modified rebuy purchase

Types of Business Purchases

new task purchase, straight rebuy, modified rebuy

Services

offered by suppliers directly and indirectly influence customers' costs, sales, and profits

Primary Concerns of Business Customers

price, product quality, service, supplier relationships

Dell obtains most of its computer parts and chips from other producers and assembles them together into a desktop or a laptop, which is then sold to consumers. It can be said that Dell is a part of a(n) ______ market

producer

Gorton's Seafood buys large amounts of fish to use in its frozen dinners and dinner components. Gorton's Seafood belongs in which of the following business markets?

producer market

Four Categories of Business Markets

producer markets, reseller markets, government markets, and institutional markets

In business markets, individuals or groups purchase products for one of three purposes. These purposes are

resale, direct use in producing other products, and use in general daily operations

Which of the following markets includes wholesalers or retailers?

reseller market

International Standard Industrial Classification (ISIC)

same as (SIC) but used mainly in Europe

The North American Industry Classification System (NAICS) is a(n) _______.

single industry classification system used by the United States, Canada, and Mexico to generate comparable statistics

Negotiation

some purchases are based on negotiated contracts wherein buyers describe what they need, and sellers submit bids

The group of people within an organization who make business buying decisions are best described as _______.

the buying center

Business (Organizational) Buying

the purchase behavior of producers, government units, institutions, and resellers

George, the purchase manager for a car manufacturing company, was asked to collect the specifications of a new engine part from the production manager and the vendor specifications from the other departments before placing an order with a supplier. He was also asked to create the procedures for future purchases of the particular engine part that would help in increasing the car's mileage. Which of the following types of business purchase is the company going to make?

new-task purchase

B2B e-commerce Sites

online marketplaces where business buyers and sellers from around the world can exchange information, goods, services, ideas, and payments

Which of the following is NOT one of the ways that business transactions differ from consumer transactions?

orders by businesses are frequently small and inexpensive

Institutional Markets

organizations with charitable, educational, community, or other non-business goals, members can include hospitals, charitable organizations and private colleges, marketers may use special techniques to target them

Many suppliers and their customers invest time and resources to build and maintain mutually beneficial relationships which are often called

partnerships

Individual Influences

personal characteristics (age, education level, personality and tenure and position) of participants in the buying center

The Buying Center

the group of people within the organization who make business purchase decisions (roles include initiator/user, influencers, buyers, deciders, and gatekeepers)

To estimate the purchase potential of business customers, a marketer must find a relationship between a variable available in industrial classification data, such as number of employees, and the size of _______.

potential customers' purchases

When a business buyer invites vendors to bid to supply a specified good or service in competition with each other, with the lowest bidder winning the right to sell to the buyer, this is best described as _______.

reverse auction

Online marketing efforts make the buying process far more efficient because it _______ and _______

saves time; reduces costs

Purchasing agents at ACME Corp. are looking in company files and trade directories, contacting suppliers for information, soliciting proposals from known vendors, and examining various online and print publications. They are in which of the following stages of the buying decision process?

searching for and evaluating potential products and suppliers

Characteristics of Transactions with Business Customers

transactions between businesses tend to be much larger than individual consumer sales, discussions and negotiations associated with business purchases can require considerable marketing time and selling effort, (reciprocity)

North American Industry Classification System (NAICS)

used by the U.S., Canada, and Mexico to help generate comparable statistics, useful for segmentation, most appropriate when used with other types of data, marketers must locate potential purchasers and estimate their purchase potential by finding a relationship between the potential purchases and a variable from the industrial classification data

Inspection

used with some products that have unique characteristics and vary in regard to condition

Examining quality, design, materials, and possibly item reduction or deletion to acquire the product in the most cost-effective way is best described as _______.

value analysis

Attributes of Business Customers

well-informed about products purchased, demand detailed info and technical specifications, help the firm achieve organizational objectives, engage in rational buying behavior, often form partnerships with suppliers

Description

when products are highly standardized, a buyer can order by describing quantity, grade, and other attributes

Joint Demand

when two or more items are used in combination to produce a product (demand for the product drives demand for both items)