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Business Market - a system
composed of firms and business
Business Markets organizations that purchase
semi-processed goods and raw
materials either for their
operations or for reselling.
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The purchase decision of a
company is often entrusted to a
Decision-making in business group of employees or to
markets involve large groups of members of the management.
people since purchases tend to They evaluate the products and
be expensive or large in quantity. the suppliers to ensure that the
goods and materials are of the
highest quality.
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The demand in business markets
Characteristics – the demand for products in
of the business market is referred
Business Markets to as derived demand based
on the needs of the consumers.
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The complexity of buying –
The increased demand of business purchases often involve
consumers, therefore, results in a lot of money because company
an increased demand for raw either makes repeat purchases
materials and equipment or a product, or it buys a
which are necessary to produce product which will be used for a
the products. long time such as heavy
equipment and machinery.
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The involvement of professional
The complexity of buying – purchasing agents – companies
Purchase Decisions include and firms rely on the expertise of
careful attention to every detail professional purchasing
of transaction and business agents who have skills in dealing
transactions are formalized by with suppliers and are
contracts. professionally trained to make
purchasing decisions.
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Business Buying Decision Process 1. RECOGNITION OF A NEED
RECOGNIZING A NEED Businessidentify a need
DETERMINING PRODUCT
which will be addressed when
SPECIFICATIONS
they purchase certain goods
LISTING POSSIBLE SUPPLIERS
or raw materials.
SELECTION OF SUPPLIERS
PERIODIC REVIEW
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2. DETERMINING PRODUCT
3. LISTING POSSIBLE SUPPLIERS
SPECIFICATIONS
Product Specifications – refer Once product specifications are
to the function, features and laid out, business markets are
requirements related to the now ready to look for possible
product or service to be suppliers of raw materials, goods
created or improved. and equipment that the business
markets can use in making their
products.
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3. LISTING POSSIBLE SUPPLIERS
4. SELECTION OF SUPPLIERS
(cont…)
Extensivelist of suppliers From the supplier list, the
who can comply with the business then selects the
product specifications at an one which offer the product
affordable price. This task is that complies to its
performed by purchasing specifications at a reasonable
agent. price.
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4. SELECTION OF SUPPLIERS
5. PERIODIC REVIEW
(cont…)
The purchase is then made, The quality of the raw
and the selected supplier material or equipment bought
becomes the company’s will be evaluated regularly
official source of goods, by the personnel who use
equipment or raw materials the purchased product.
needed in its operations.
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A buying situation involves
Types of Business Buying the nature and frequency of a
Situation purchase.
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2. Modified rebuy, the company
or firm has encountered
1. Straight rebuy, the company or
problems in the supplier’s raw
firm is satisfied with the raw
material or equipment then
materials or equipment from the
makes changes in its
supplier and makes rebuys on a
specifications which may include
regular basis.
pricing of the product, terms of
payment or delivery schedule.
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3. New Buy – refers to a new
purchase made by the firm or
company from a different
4. Deciders – people in the
supplier. The firm often performs
business organization who have
extensive research to choose
the authority to make or
the best supplier, on the other
approve of decisions.
hand, the supplier is expected to
improve its products to entice
new customer.
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PARTICIPANTS IN THE BUSINESS
5. Gatekeepers – control the BUYING PROCESS
flow of information from the
business markets to the
suppliers. The information may
encourage or discourage the
members of the business
markets to further engage in the
buying process.
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1. Users – directly utilize products
and services from suppliers.
- They are the group of people 2. Influencers – help in further
who primarily determine what defining the specifications and
products need to be purchased by features needed for a product or
the company or firm. service.
- Users sometimes identify
product specifications.
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3. Buyers – are usually the
professional purchasing The users, influencers, buyers,
agents of the firms who and deciders may all act as
negotiate with the suppliers as gatekeepers.
part of the buying process.
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