ING BUSINESS MARKETS
C H A P T E R
After reading this chapter, students should:
Know what is the business market, and how it differs from the consumer market
Know what buying situations do organizational buyers face
Know who participates in the business-to-business buying process
Know how business buyers make their decisions
Know how companies can build strong relationships with business customers
Know how institutional buyers and government agencies do their buying
Organizational buying is the decision-making process by which formal
organizations establish the need for purchased products and services, then
identify, evaluate, and choose among alternative brands and suppliers. The
business market consists of all the organizations that acquire goods and services
used in the production of other products or services that are sold, rented, or
supplied to others.
Compared to consumer markets, business markets generally have fewer and larger
buyers, a closer customer-supplier relationship, and more geographically
concentrated buyers. Demand in the business market is derived from demand in
the consumer market and fluctuates with the business cycle. Nonetheless, the total
demand for many business goods and services is quite price inelastic. Business
marketers need to be aware of the role of professional purchasers and their
influencers, the need for multiple sales calls, and the importance of direct
purchasing, reciprocity, and leasing.
The buying center is the decision-making unit of a buying organization. It consists
of initiators, users, influencers, deciders, approvers, buyers, and gatekeepers. To
influence these parties, marketers must be aware of environmental, organizational,
interpersonal, and individual factors.
The buying process consists of eight stages called buyphases: (1) problem
recognition, (2) general need description, (3) product specification, (4) supplier
search, (5) proposal solicitation, (6) supplier selection, (7) order-routine
specification, and (8) performance review.
Business marketers must form strong bonds and relationships with their customers
and provide them added value. Some customers, however, may prefer more of a
The institutional market consists of schools, hospitals, nursing homes, prisons,
and other institutions that provide goods and services to people in their care.
Buyers for governmental organizations tend to require a great deal of paperwork
from their vendors and to favor open bidding and domestic companies. Suppliers