Exam 2 - Chapter 8 Flashcards
Business Markets
individuals, organizations or groups that purchase a specific kind of product for one of three purposes: resale, direct use in production, use in general daily operations
3 Reasons a Business Buys a Product
resale
direct use in production
use in general daily operations
Types of Business Markets
producer
reseller
Government (UWSP)
Institutional (church/private college)
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
ex: buying an industrial freezer for a grocery store
Reseller Markets
intermediaries such as wholesalers and retailers, who buy finished goods and resell them for a profit
ex: Walmart
Factors for Reseller Consideration
a. level of demand
b. resale price
c. space required
d. supplier’s ability to provide, adequate quantities when and where needed, ease of placing orders
e. ease of placing orders
Planogra
system for planning store/shelf layout to maximize sales/linear foot
Wholesaler
an intermediary entity that buys in bulk and sells to reseller rather than to consumers
Government Markets
federal, state, county, and local governments that buy goods and services to support their internal operations and provide products to their constituencies; very formal bidding process
ex: Oshkosh Corp.
Institutional Market
organizations with charitable, educational, community, or other non-business goals
ex: private schools/churches
Transaction Characteristics between Businesses
large business orders, issue = costs, purchases made by committees, considerable marketing time and selling effort required for negotiations
Reciprocity
an arrangement unique to business markets in which two organizations agree to buy from each other
Business Customer Attributes
business customers vs. consumers: better informed, demand more detailed product info, goals of purchasing agent may include advancement of financial awards, build and maintain mutually beneficial relationships or partnerships (purchases based on evidence and facts)
Primary Concerns of Business Customers
price
SUPPLIER RELATIONSHIPS
product quality
service
Primary Concerns of Business Customers
Price
influences operating costs, which in turn affect selling price, profit margin and the ability to compete-total value often a consideration
Primary Concerns of Business Customers
Product Quality
most firms have standards or specifications they must meet and not exceed
Primary Concerns of Business Customers
Service
typically business customers desire market info, inventory maintenance, on-time delivery, and repair services
Primary Concerns of Business Customers
Supplier Relationships
with a strong relationship buyers can reduce their search efforts and their price uncertainty
Description
used when products are standardized
ex: 1000 bottles of 16 oz tide
Inspection
used when products have uniques characteristics
ex: buildings/vehicles
Sampling
used for homogeneous products when examining the entire lot is not feasible
ex: ordering grain/coffee beans
Negotiation
used commonly for custom/onetime projects
ex: buildings/capital equipment
New Task Purchase
initial purchase of an item for use in performing a new job or solving a new problem
Straight Rebuy Purchase
routine purchases of the same products under approx. the same terms of sale “reordering”
Modified Rebuy Purchase
when new-task purchases are changed on repeat orders or straight rebuy purchases are modified
Derived Demand
demand for business products derives from demand for consumer products
ex: steel for a plant that produces cars
Inelastic Demand
price increases and decreases will not significantly alter industrial demand; demand for entire industry; product has very few substitutes
ex: insulin
Joint Demand
occurs when two or more items have interdependent demand; demand for one goes up demand for the other goes up
ex: complimentary goods such as tires and cares
Fluctuating Demand
derived from consumer demand rising and falling
Business Organizational Buying Behavior
the purchase behavior of producers, government units, institutions, and resellers
Buying Center
the people within an organization who make business purchase decisions
Users
members who frequently initiate the purchase, use the product, and evaluate the product
ex: store managers
Influencers
technical personel who develop the specifications and evaluate alternative products
ex: engineers
Buyers
people who select suppliers and negotiate terms
Deciders
people who actually choose the products
ex: CEOs/committees
Buying Decision Process
recognize problem, develop product specifications to solve problem, search for and evaluate possible products and suppliers, select product and supplier and order product, evaluate product and supplier performance
6 Environmental Influences
a. competitive and
b. economic factors
c. political forces
d. legal/regulatory forces
e. technological changes
f. socio-cultural forces
4 Organizational Influences
a. objectives
b. purchasing policies
c. resources
d. buying center structures
Interpersonal Influences
cooperation
conflict
power relationships
TRUST is crucial
Individual Influences
personal characteristics that affect buying behavior
ex: age, personality, education, tenure, position in the organization, etc.
North American Industry Classification System
an industry classification system that generates comparable statistics among the US, Canada, and Mexico
