4.2 Buyers and Buying Situations in a B2B Market
3 min read•june 24, 2024
B2B markets involve complex buying situations with various types of . , , and all make purchases to support their operations, each with unique needs and processes.
B2B buying situations range from new tasks to straight rebuys, with different levels of risk and decision-making involved. Multiple roles contribute to the purchasing process, including , , , , buyers, and .
Types of Buyers and Buying Situations in B2B Markets
Types of B2B buyers
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- Commercial enterprises purchase goods and services to support their business operations
- transform raw materials into finished products (General Motors, Boeing)
- provide intangible offerings to customers (banks, consulting firms)
- sell products directly to end consumers (Walmart, Target)
- distribute goods to other businesses for resale (Sysco, McKesson)
- Government agencies procure goods and services to carry out public functions at various levels
- Federal agencies operate at the national level (Department of Defense, NASA)
- State agencies serve the needs of individual states (California Department of Transportation)
- Local agencies focus on city or county-level requirements (New York City Department of Education)
- Institutions are organizations that serve specific societal needs
- Hospitals provide healthcare services to patients (Mayo Clinic, Johns Hopkins Hospital)
- Schools educate students at various levels (Harvard University, public school districts)
- Non-profit organizations pursue missions that benefit society (American Red Cross, Habitat for Humanity)
B2B buying situations
- involves a first-time purchase of a product or service
- Requires extensive problem-solving and information gathering to evaluate options
- Perceived risk is high due to lack of prior experience (selecting a new ERP system)
- occurs when a routine purchase requires minor modifications
- Involves moderate problem-solving and information gathering to assess changes
- Perceived risk is moderate as the buyer has some familiarity with the purchase (upgrading office computers)
- is a routine, recurring purchase with minimal changes
- Requires little problem-solving and information gathering as the need is well-defined
- Perceived risk is low due to the buyer's extensive experience with the purchase (restocking office supplies)
Roles in B2B purchasing
- Initiators identify a problem or need and request a product or service to address it
- May be end-users, managers, or other stakeholders (production manager requesting new equipment)
- Users are the individuals or groups who will actually use the purchased product or service
- Provide valuable feedback and input on requirements and specifications (factory workers using a new machine)
- Influencers provide information, advice, and recommendations to guide the purchasing decision
- Help define specifications, evaluate options, and assess potential suppliers (engineering department)
- Deciders have the authority to make the final decision and choose the supplier
- Consider input from other participants and align the decision with organizational goals (purchasing manager)
- Buyers are responsible for formally selecting suppliers and negotiating terms and conditions
- Work with deciders to execute the purchase and establish contractual agreements (procurement specialist)
- Gatekeepers control the flow of information and manage access to decision-makers
- May screen communications, filter information, and facilitate or hinder the purchasing process (executive assistant)
Organizational Buying Process
- The , consisting of various roles mentioned above, collaborates throughout the
- Steps in the process often include:
- Identifying needs and creating specifications
- Conducting to assess potential suppliers
- Issuing a to solicit detailed offers from vendors
- Negotiating terms and selecting a supplier
- is influenced by various factors, including company policies, budget constraints, and industry norms
- Effective ensures smooth coordination between buyers and suppliers throughout the purchasing process
Key Terms to Review (23)
B2B Buyers: B2B (Business-to-Business) buyers refer to individuals or organizations that purchase products or services for the purpose of their business operations, rather than for personal use. These buyers play a crucial role in the B2B market, making decisions that impact the success of both the buyer's organization and the selling organization.
Buyers: Buyers refer to the individuals or organizations that purchase goods or services for their own use or for resale. In the context of business-to-business (B2B) markets, buyers are the decision-makers within organizations who are responsible for procuring products or services to support their operations or meet their business needs.
Buying Center: The buying center refers to the group of individuals within an organization who are involved in the decision-making process for a business purchase. This group is responsible for identifying, evaluating, and selecting products or services that meet the organization's needs.
Commercial Enterprises: Commercial enterprises refer to businesses or organizations that engage in the production, distribution, or sale of goods and services with the primary goal of generating profit. These enterprises operate within a market economy, competing with other businesses to meet the demands of consumers or other commercial entities.
Deciders: Deciders are the individuals or groups within an organization who are responsible for making the final purchasing decisions in a B2B (business-to-business) market. They play a crucial role in the buying process by evaluating options, assessing needs, and determining the most suitable product or service to acquire.
Gatekeepers: Gatekeepers are individuals or groups within an organization who have the power to control or influence the flow of information, resources, or decision-making processes. They play a critical role in the context of B2B (Business-to-Business) markets, where they can significantly impact the buying decisions of their organizations.
Government Agencies: Government agencies are administrative units or departments within a government that are responsible for the oversight, regulation, and implementation of specific policies, programs, and services. These agencies play a crucial role in shaping the business landscape, particularly in the context of business-to-business (B2B) markets.
Influencers: Influencers are individuals or entities that have the ability to sway the opinions, behaviors, and decisions of others through their perceived expertise, authority, or social standing. They can significantly impact various aspects of the marketing environment, buyer behavior, and personal selling strategies.
Initiators: Initiators are the individuals or groups within an organization who recognize a need or problem and start the buying process for a product or service. They play a crucial role in identifying and defining the requirements that need to be addressed in a B2B market.
Institutions: Institutions are established organizations, structures, or systems that shape and influence the behavior of individuals and groups within a society. They provide the framework for social, economic, and political interactions, and play a crucial role in the functioning of a B2B market.
Manufacturers: Manufacturers are businesses that produce goods or products through the transformation of raw materials or components. They play a crucial role in the business-to-business (B2B) market by supplying products and services to other organizations, such as wholesalers, retailers, and other manufacturers.
Modified Rebuy: A modified rebuy is a type of buying situation in a B2B (business-to-business) market where the buyer is purchasing a product or service that they have previously bought, but with some modifications or changes to the original order. This type of situation occurs when the buyer needs to make adjustments to their previous purchase to better meet their current needs or requirements.
New Task Buying: New task buying refers to a type of buying situation in a B2B (business-to-business) market where the organization is purchasing a product or service for the first time. This type of buying situation involves a high degree of uncertainty and risk as the organization has no prior experience with the product or service.
Organizational Buying Behavior: Organizational buying behavior refers to the decision-making processes and behaviors exhibited by organizations when purchasing goods or services to support their operations. It encompasses the factors, influences, and dynamics that shape how businesses, government agencies, and other institutions make purchasing decisions.
Procurement Process: The procurement process refers to the series of steps an organization takes to acquire goods or services needed to support its operations. It involves identifying requirements, sourcing suppliers, negotiating contracts, and managing the delivery of purchased items.
Request for Proposal (RFP): A request for proposal (RFP) is a formal document used in the business-to-business (B2B) market to solicit bids or proposals from potential suppliers or vendors. It outlines the specific requirements, expectations, and evaluation criteria for a particular project or service, allowing businesses to compare and select the most suitable provider.
Retailers: Retailers are businesses that sell goods and services directly to consumers, serving as the final link in the distribution chain between manufacturers or wholesalers and the end-user. They play a crucial role in connecting products with the ultimate buyers and shaping the overall customer experience.
Service Businesses: Service businesses are organizations that provide intangible products or activities rather than physical goods. They focus on meeting the needs and demands of customers through the delivery of services, expertise, and experiences rather than the production and sale of tangible items.
Straight Rebuy: A straight rebuy is a type of purchasing decision in a business-to-business (B2B) market where the buyer repeatedly purchases the same product or service from the same supplier with minimal changes to the order. This type of buying situation is characterized by a routine, low-risk, and low-involvement decision-making process.
Supply Chain Management: Supply chain management is the coordination and management of the flow of goods, services, information, and finances across an entire supply chain, from the sourcing of raw materials to the delivery of products to the end consumer. It involves the planning, implementation, and control of all activities related to the movement and storage of goods, as well as the effective management of relationships with suppliers, intermediaries, and customers to maximize value and achieve a sustainable competitive advantage.
Users: Users are the individuals or organizations that interact with and utilize a product, service, or system. In the context of B2B (business-to-business) markets, users refer to the decision-makers, influencers, and end-users within a business who are involved in the purchasing process and the subsequent use of the acquired products or services.
Vendor Evaluation: Vendor evaluation is the process of assessing and selecting suppliers or vendors to provide goods and services for a business. It involves a systematic evaluation of potential vendors based on various criteria to ensure that the chosen vendor can meet the organization's needs and requirements effectively.
Wholesalers: Wholesalers are businesses that purchase goods in bulk from manufacturers or other suppliers and then resell those goods to retailers, industrial users, or other wholesalers. They serve as intermediaries in the distribution channel, bridging the gap between producers and end-consumers.