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Friday, May 21, 2010

MM - The Industrial Buying Behavior

Industrial buying is the decision-making process by which formal organizations establish the need for purchasing products and services and identify, evaluate, and choose among alternative brands and suppliers. 


Characteristics of Industrial Market
a. Professional purchasing: professional buyers with education and experience who know their tasks and responsibilities  
b. Inelastic, fluctuating demand: due to the derived demand, price-elasticity in industrial markets is frequently lower than in consumer markets
c. Geographical concentration: many industrial markets are geographical concentrated
d. Large order quantities and large amounts of money involved
e. Limited number of customers: industrial suppliers often supply only a few companies compared to companies that deliver directly to consumers.


Major Types of Buying Situations

a. Straight re-buy : A business buying situation in which the buyer routinely reorders something without any modifications.
b. Modified re-buy : A business buying situation in which the buyer wants to modify product specifications, prices, terms, or supplier.
c. New task : A business buying situation in which the buyer purchases a product or services for the first time.
d. System buying : Buying a packaged solution to a problem from a single sellers or distributors.
e. Systems Selling : Selling all the raw materials required by an organization.


Participants in Business Buying Process
a. Users: people who will work with the product
b. Influencer: people who are able to affect the outcome of the purchasing process by means of solicited or unsolicited advice
c. Buyers: people who will negotiate with the suppliers about terms and conditions and who place the order d. Decision makers: people who actually determine the selection of the supplier
e. Gatekeepers: people who control the flow of information

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