Written Report

ANALYZING BUSINESS MARKETS AND

BUSINESS BUYING BEHAVIOR

Reporters:
John Carlo Adora
Katrina Jane Bernante
Reshell Pepito
Melanie Macasa
Jaypee Oca
ORGANIZATIONAL BUYING
is the decision-making process by which formal organizations establish the need for purchased products and
services and identify, evaluate, and choose among alternative brands and suppliers."
Ex. It is like identifying the problem and making a solution or alternative to solve the problem. (Large grocery
chains buys to manufacturer and sell to the final consumer.

Business Market versus the Consumer Market

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, on supplied to others.
Ex. Relationship between seller and consumer

*Fever buyers.
The business marketer normally deals with far fewer buyers than the consumer marketer does.
Ex. Milktea shops (decrease of customers)

*Larger buyers
Many business markets are characterized by a high buyer-concentration.
Ex. "Less but Better" (aircraft, defense weapon)

*Close supplier-customer relationship

Because of the smaller customer base and the importance and power of the larger customers, we observe
close relationships between customers and suppliers in business markets.
Ex. Suki

*Geographically concentrated buyers

Most agricultural output comes from relatively few states. This geographical concentration of producers helps
to reduce selling costs.
Ex. Reduce selling cost

*Derived demand
The demand for business goods is ultimately derived from the demand for consumer goods.
Ex. Demand ang motor so repair shops
*Inelastic demand.
The total demand for many business goods and services is inelastic that is, not much affected by price changes.
Ex. Gas, Yosi

*Fluctuating demand
The demand for business goods and services tends to be more volatile than the demand for consumer goods
and services.
Ex. Increase of tax sa yosi at alak

*Professional purchasing
Business goods are purchased by trained purchasing agents who must follow the organization's purchasing
policies, constraints, and requirements.
Ex. They are not Average buyers

*Several buying influences

More people typically influence business buying decisions than consumer buying decisions.
Ex. Sales lady, sales talk

*Direct purchasing
Business buyers often buy directly from manufacturers.
Ex. Average buyers

*Reciprocity
Business buyers often select suppliers who also buy from them.
Ex. Barter system

*Leasing
Many industrial buyers lease their equipment instead of buying it.
Ex. Computer shops

BUYING SITUATION
*Straight rebuy
The straight rebuy is a buying situation in which the purchasing department reorders on a routine basis
Ex. Routine, repurchase

*Modified rebuy
The modified rebuy is a situation in which the buyer wants to modify
product specifications, prices, delivery requirements, or other terms.
Ex. Try some new

*New task
The new mash is a buying situation in which a purchaser buys a produce
service for the first time.
Ex. New to the product

System Buying and Selling

Many business buyers prefer to buy a total solution to their problem from one seller.

Participants in the business buying process

 Initiators
 Users
 Influencer
 Deciders
 Approvers
 Buyers
 Gatekeepers

Organizational Factors

1. Purchasing department-upgrading

Purchasing department is a low position in an organization, yet they manage almost half of company's
cost.

2. Centralized purchasing

Multidivisional companies often use different divisions because of different needs, but recently they
started to recentralized some of the purchasing.

3. Decentralized purchasing of small ticket items

Some companies also decentralized purchasing operations by empowering employees to purchase small
ticket items.
 4. Longterm contracts

Increasing and initiating long term contracts with reliable suppliers.

5. Purchasing-performance evaluation and buyer's professional development

Most companies have incentive reward systems to reward purchasing managers for good buying
performance, on the same manner the sales personnel receives bonuses for good selling performance.

Individual Factors

Each participant in the buying process has personal motivation, perception and references. This are influenced
by the participant age income education, job position, personalities, and attitudes to work risk and culture.
Rules of Social and business etiquette that marketers should understand when doing business in other
countries.

France: Dress conservatively except in the south where more casual clothes are worn.

Germany: Be specifically punctual. Italy: Business people tend to be style conscious. Make appointment in
advance.

United Kingdom: Toast are often given at formal dinners.

Saudi Arabia: Although men will kiss each other in greetings they will never kiss a women in public

Japan: Don’t imitate Japanese bowing customs unless you understand them thoroughly.

LEAN PRODUCTION CHANGES THE FACE OF BUSINESS BUYING

Many manufacturer today are moving toward a whole new way of manufacturing called lean production.
Enables a company to produce a greater variety of high quality products at lower cost in less time using lens
labour.

Major elements of lean production that components are now adopting include:

1. JIT/ JUST IN TIME a production method that brings together all materials and parts needed at each stage of
production at the precise moment that they are required. JIT means that materials arrive at the moment
customer factory exactly when needed.

2. Strict Quality Control Maximum cost savings from JIT and JIT II are archived if the buyer receives perfect
goods from the supplier.

3. Frequent and Reliable Frequently the only way to avoid inventory build-up. The supplier must develop
reliable transportation arrangement.

4. Closer Location Supplier should locate close to their important customer because closeness means more
reliable delivery supplier must make large commitments to major customers.

5. telecommunication: new communication technologies permit suppliers to establish computerized

purchasing system with their customer
6. Stable production schedules: Customer provides their production schedule to the supplier so that the
delivery is made on the days the materials are required.

7. Single sourcing and Cartly Supplier Involvement: JIT and JIT II imply that the buying and selling organization
work closely together to reduce cost.

THE PURCHASING/ PROCUREMENT PROCESS

Business buyers do not buy goods and services for personal consumption. They buy goods and services
to make money or to reduce operating coat or to satisfy a social or legal obligation. To buy the needed goods,
business buyers move through a purchasing/ procurement process.

PROBLEM RECOGNITION.

The buying process begins when someone in the company recognizes a problem or need that can be met by
acquiring a good or a services. Can occur as a result of internal or external stimuli internally. * The company
decides to develop a new product and needs new equipment and materials to produce this product. * A
machine break down and require replacement or new parts * Purchased materials turn out to be
unsatisfactory and the conpany searches for another supplier * A purchasing manager senses an oppurtunity
to obtain lower prices or better quality.

GENERAL NEED DESCRIPTION

Once a need is organized, the buyer proceeds to determine the needed items general characteristics and
quantity needed.

PRODUCT SPECIFICATION

The buying organization must develop the items technical specifications. Often the company will assign a
product value analysis.

SUPPLIER SEARCH

Once the product has been specified the buyer tries to identify the most appropriate suppliers.

PROPOSAL SOLICITAION

The buyer will now invite qualified suppliers and submit proposals.

SUPPLIER SELECTION

Before selecting a supplier, the buying center will specify desired suppliers attributes and indicate their
relative importance.
The Value of Added Value

This is the way that suppliers used to rely on winning and dining their customers. It’s all about how many
lunches and dinners and ball games you take them too. Meaning they don’t think about how much it cost and
how many are products that are going to be produce. But somehow this winning and dining is no longer
enough. They have come up to the idea of reducing the cost while providing value added service for their
customers.

Buying Selection Process

This is where buying centers decide how many suppliers to use, because before many companies are
preferred to have many suppliers to ensure adequate supplies and to obtain price concession.

There are 3 kinds of Supplier

Prime Supplier

They are the main suppliers chosen to by the business to provide the products for the company. It is
contractual.

Secondary Supplier

They are the one who is trying to expand their share and waiting for the prime supplier to end its
contracts, and by that they are given the opportunity to renew contracts as prime supplier.

Out Suppliers

They are the one who is trying to get their on the floor, or they are seeking opportunities by lowering their
price and of course to be chosen as prime suppliers.

Order Routine Specification

After the suppliers have been chosen, buyers negotiates the final order, which included all listing all the
technical specification, the quantity needed, expected time of delivery, return policies and warranties.

Blanket Contract

This is a contract showing long term relationship between the supplier that promises to provide or supply
the buyer as needed at agreed upon price and time of delivery.

Performance Review

This is where the transaction is already done, this is the time when the buyer take the lead to review
supplier’s performance.
 This is how buyers evaluate their suppliers.

-Contact end users.

-Using weighted score method

-Aggregate-

This is where the suppliers being evaluated and review everything for the affirmation of continuity of the
contract.