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Understanding the stages of business buying is important to a marketing firm if it is to market its product properly.
Describe the different stages within the business buying decision process
The stages of business buying includes recognizing the problem, developing product specs to solve the problem, searching for possible products, selecting a supplier and ordering the product, and finally evaluating the product and supplier performance.
Buying B2B products is risky. Usually, the investment sums are high and purchasing the wrong product or service, the wrong quantity, the wrong quality or agreeing to unfavourable payment terms may put an entire business at risk.
Making a riskier investment can yield to high returns. However, there is also a greater chance that they could lose their investment as well. This can be seen in this diagram. Those involved in the decision buying process need to weigh the risks against the expected returns.
In order to entice and persuade a consumer to buy a product, marketers try to determine the behavioral process of how a given product is purchased. Understanding the nature of customers' buying behavior is important to a marketing firm if it is to market its product properly.
The main difference between B2B and B2C is who the buyer of a product or service is. The purchasing process is different in both cases and the following is a list of the stages involved in B2B buying:
Step 1: Recognize the Problem
Machine malfunction, firm introduces or modifies a product, etc.
Step 2: Develop product specifications to solve the problem
Buying center participants assess problem and need to determine what is necessary to resolve/satisfy it
Step 3: Search for and evaluate possible products and suppliers
look in company files and trade directories, contact suppliers for information, solicit proposals from known vendors, examine websites, catalogs, and trade publications
conduct a valueanalysis - an evaluation of each component of a potential purchase; examine quality, design, materials, item reduction/deletion to save costs, etc.
conduct vendor analysis - a formal and systematic evaluation of current and potential vendors; focuses on price, quality, delivery service, availability and overall reliability
Step 4: Select product and supplier and order product
This step uses the results from Step 3
An organization can decide to use several suppliers, called multiple sourcing. Multiple sourcing reduces the possibility of a shortage by strike or bankruptcy.
An organization can decide to use one supplier, called sole sourcing. This is often discouraged unless only one supplier exists for the product; however it is fairly common because of the improved communication and stability between buyer and supplier.
Step 5: Evaluate Product and supplier performance
Compare products with specs
Results become feedback for other stages in future business purchasing decisions
Understanding the stages of business buying and the nature of customers' buying behavior is important to a marketing firm if it is to market its product properly. In order to entice and persuade a consumer to buy a product, marketers try to determine the behavioral process of how a given product is purchased.
Buying one can of soft drink involves little money, and thus little risk. If the decision for a particular brand of soft drink was not right, there are minimal implications. The worst that could happen is that the consumer does not like the taste and discards the drink immediately. Buying B2B products is much riskier. Usually, the investment sums are much higher. Purchasing the wrong product or service, the wrong quantity, the wrong quality or agreeing to unfavourable payment terms may put an entire business at risk. Additionally, the purchasing office / manager may have to justify a purchasing decision. If the decision proves to be harmful to the organization, disciplinary measures may be taken or the person may even face termination of employment.
Risk and Return
Less risky investments yield less returns. The riskier the investment, the higher the yield.
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step 5: evaluating product and supplier performance., step 4: selecting products and suppliers and ordering products., step 1: recognizing the problem., and step 2: developing product specifications to solve the problem.
In the stage when proposals are evaluated., In the stage when an order routine is established., In the stage when a need is recognized., In the stage when a post-purchase evaluation is conducted., and In the stage when there is a search for potential suppliers.