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Business markets consist of individuals or groups that purchase a specific kind of product for resale,
direct use in producing other products, or use in general daily operations. There are producer, reseller,
government, and institutional markets.
Producer markets
include those individuals and business
organizations purchasing products for the purpose of making a profit by using them to produce other
products or by using them in their operations.
Reseller markets
are intermediaries who buy finished
products and resell them to make a profit.
Government markets
are federal, state, county, and local
governments that buy goods and services to support their internal operations and provide products to
their constituencies.
Institutional markets are organizations with charitable, educational, community,
or other nonbusiness goals.
Business transactions differ from consumer transactions in several ways. Business transactions tend to
be larger, and frequently involve more than one person or department in the purchase. They may also
, an arrangement in which two organizations agree to buy from each other. Business
customers are usually better informed than ultimate consumers and are more likely to seek information
about a product's features and technical specifications.
When purchasing products, business customers are particularly concerned about quality, service, and
price. To achieve an exact level of quality, businesses often buy products on the basis of a set of
expressed characteristics, called specifications. Because services have such a direct influence on a firm's
costs, sales, and profits, such matters as market information, on-time delivery, and availability of parts
are crucial to a business buyer. Although business customers do not depend solely on price to decide
which products to buy, price is of prime concern because it directly influences profitability.
Business buyers use several purchasing methods, including description, inspection, sampling, and
negotiation. Most business purchases are either
new-task purchases
(an initial purchase of an item to b
used to perform a new job or solve a new problem),
straight rebuy purchases
(a routine purchase of
the same products), or
modified rebuy purchases
(a new-task purchase that is changed on subsequent
orders or when the requirements of a straight rebuy purchase are modified).
Unlike consumer demand, the demand for industrial products can be characterized as derived, inelastic,
or sometimes joint demand.
Derived demand
is demand for industrial products that stems from demand
for consumer products.
Inelastic demand
is demand that is not significantly altered by a price increase
or decrease.
Joint demand
involves the use of two or more items in combination to produce a product.
Because business demand derives from consumer demand, the demand for business products can
fluctuate widely.

Business buying behavior
refers to the purchase behavior of producers, government units, institutions,
and resellers. Business purchase decisions are generally made through a
buying center
, which includes
users, influencers, buyers, deciders, and gatekeepers who make purchase decisions.
The stages of the business buying decision process are problem recognition, development of product
specifications, search for and evaluation of products and suppliers, selection and ordering of the most
appropriate product, and evaluation of the product's and supplier's performance. During the search for
and evaluation of possible products, some businesses engage in
value analysis
, an evaluation of each
component of a potential purchase, and/or
vendor analysis
, a formal, systematic evaluation of current
and potential vendors. Results of deliberations and assessments in the third stage are used in selection
and ordering of the product. In some cases the buyer uses
multiple sourcing
(the decision to use several
suppliers), and in others the buyer uses
sole sourcing
(the decision to use only one supplier).
Four categories of factors influence business buying decisions: environmental, organizational,

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interpersonal, and individual.
Business marketers have available to them a considerable amount of information about customers.
Much of this information is based on an industrial classification system. A marketer can obtain the name
and location of potential customers by using government and commercial data sources. Marketers then
must estimate potential purchases by finding a relationship between a potential customer's purchases
and a variable available in industrial classification data.

Characteristics of international business markets:
Marketing structure and demand

contain fewer but larger buyers
close supplier-customer relationship
more geographically concentrated
buyer demand is mostly derived from final consumer demand
more inelastic to price in short term
demand fluctuates more & more quickly
professional purchasing

Nature of buying unit

involves more buyers / influencers
involves a more professional purchasing effort

Types of decision & decision process

more complex buying decisions
buying process is more formalized
buyers & sellers work more closely & build long-run relationships

Other characteristics

buyers often buy directly from producers, rather than through retailers & wholesalers
buyers often practice reciprocity, buying from suppliers who also buy from them
buyers often lease equipment rather than buying it out right

Participants in international buying process:

• Initiators / Users
– who use the product - often initiate buying & define specs.
• Influencers
– often help define specs., & info. for evaluation of the products
• Deciders / Approvers
– who approve the final supplier/product
• Buyers
– the persons who makes actual purchase
• Gatekeepers
– who control flow of info. out of the organization

Major influences on international business buyers:

Environmental factors

level of primary demand
economic outlook
cost of money
supply conditions
rate of technological change
political & regulatory developments
competitive developments
Organizational factors

organizational structure

authority, status, empathy, persuasiveness

age, education, job position, risk attitude

Importance of international business marketing tools:

Telemarketing & direct mail 34%
Merchandise incentives 14%
Exhibits 13%
Travel & entertainment 11%
Advertising 10%
other incentives (travel, sweep stakes) 5%
Public relations 4%
Research 4%
Others 5%

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