Chapter 6: business markets and business buyer behavior

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business buyer behavior
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the buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
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business buying process
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the decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands.
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derived demand
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business demand that ultimately comes from the demand for consumer goods
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supplier development
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systematic development of networks of supplier-partners to ensure and appropriate and dependable supply of products and materials for use in making products and materials for use in making products or reselling them.
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straight rebuy
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a business buying situation in which the buyer routinely reorders something without any modifications.
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modified rebuy
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a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.
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new task
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a business buying situation in which the buyer purchases a product or service for the first time.
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systems selling
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buying a packaged solution to a problem form a single seller, thus avoiding all the separate decisions involved in a complex buying situation.
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buying center
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all the individuals and units that play a role in the purchase decision-making process.
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users
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members of the buying organization who will actually use the purchased product or service.
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influencers
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people in an organizations buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives.
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buyers
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people in an organizations buying center who make an actual purchase.
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deciders
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people in an organization’s buying center who have formal or informal power to select or approve the final suppliers.
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gatekeepers
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people in an organization’s buying center who control the flow of information to others.
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problem recognition
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the first stage of the buying process in which the company recognized a problem or need that can be met by acquiring a good or service: internal: need for a product or production equipment. External: idea from trade show or advertising.
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general need description
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the stage in the process in which a buyer describes the general characteristics and quantity needed of an item.
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product specification
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stage in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
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Value analysis
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is an approach to cost reduction where components are studied to determine if they can be redesigned, standardized or made with less costly methods of production.
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supplier search
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stage where the buyer tries to find the best vendors.
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proposal solicitation
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the stage of the business buying process in which the buyer invites qualifies suppliers to submit proposals
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supplier selection
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the buyer reviews proposals and selects a supplier
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order-routine specification
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the stage in which the buyer writes the final order with the chosen suppliers: technical specifications, quantity needed, expected time of delivery, return policies, and warranties.
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performance review
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the stage in which the buyer assess the performance of the supplier and decides to continue, modify, or drop the arrangement.
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e-procurement
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purchasing through electronic connections between buyers and sellers.
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institutional market
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schools, hospitals, nursing homes, prisons, and other institutions that provide g & s to people in their care.
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government market
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government units: fed, state and local, that purchase or rent G &S for carrying out the main functions of the government.
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NAICS
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North American Industry Classification system. Replaced SIC in 1997, Reports number of firms, total dollar amount of sales, number of employees, growth amount rate for industries, broken down by geographic region.
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NAICS example
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major categories of business organizational markets
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producers of raw materials, manufacturers, service organizations: hospitals, universities, wholesalers and retailers, government agencies, non-profit orgs.
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business buyer markets
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complex buying decisions, more decision participants, more professional purchasing effort, more buyer and seller interaction.
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business buyer markets structure and demand
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fewer but larger buyers, derived demand, inelastic demand, fluctuating demand.
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Buying influence factors
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The environment: product, price, place promotion, economic, technological, political, cultural, competitive. Organization: organizational influences, interpersonal and individual influences. buyer response: product or service choice, order quantities, deliver terms and times, payment.
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E Procurement Advantages
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Access to new suppliers, lowers costs, speeds order processing and delivery, enhances information sharing, improves sales, facilitates service and support.

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