2.3 Dynamic Single Assignment
2.3.4 Selection Statements
(i) there are relatively few alternatives for a business buyer to consider.
(i ) the responsibility of a buyer in an organization is ordinarily limited to a few products;
and
(i i) for most consumer purchase, an error is only a minor inconvenience. However, in business buying the cost of a mistake may be thousands naira or even the decision
maker's job!
3.4.1.2 REGIONAL CONCENTRATION OF BUSINESS USERS
There
is substantial regional concentration in many major industries and among businessusers as a whole.
3.4.13 VERTICAL AND HORIZONTAL BUSINESS MARKETS For effective marketing planning, a company should know whether the market for its products is vertical or horizontal. If a firm‘s product is usable by virtually al
firms in only one or two industries, it has a vertical business market. On the
other hand, if it is usable by many industries, then it is said to have a broad orhorizontal business market.
A company's marketing programme ordinarily is influenced by whether its markets are vertical or horizontal. In a vertical market, a product can be
tailor-made to meet the specific needs of one industry. However, the industry must buy enough to support this specialization. In addition, advertising andpersonal sel ing can be directed more effectively in vertical markets. In a
horizontal market, a product is developed as an al purpose item, to reach a larger market. However because of the large potential market, the products arelikely to move competition.
3.4.2 BUYING POWER OF BUSINESS USERS
Another determinant of business market demand is the purchasing power of
business customers. This can be measured either by the expenditures of business users or by their sales volume. However, such information is not always available or is very difficult to estimate. In such cases purchasing
power is estimated indirectly, using an activity indicator of buying power—that
is, some market factor related to sales and expenditures. For example, acompany marketing agricultural products or equipment can estimate the buying power of its farm market by studying such indicators as cash farm income, acreage planted, or crop yields. A chemical producer that sel s to a fertilizer
manufacture might study the same indices, because the demand for chemicals in this case derives from the demand for fertilizer.
3.4.3 BUSINESS BUYING BEHAVIOR
Business buying behavior is initiated when an aroused need ( a motive) is
recognized. This leads to goal —oriented activity designed to satisfy the need, marketers must try to determine what motivates the buyer, and then understand
the buying process and buying pat erns of business organizations in their
markets. Purchasing has become an important part of overal strategy for atleast three reasons
(i)Companies are making less and buying more. For many year General Motors has owned the plants that made many of the part for its cars. But in 1992 it announced the
closing of seven plants that were no longer competitive. As a result, General Motors wilbecome much more reliant on independent part suppliers.
(i )Finns are under intense quality and time pressures. To reduce costs and improve
efficiency, firms no longer buy and hold inventories of parts and supplies. Instead, they demand that raw materials and components that meet specifications be delivered just in time to go into the production process.
(i i)To get what they need, firms are concentrating their purchase with fewer suppliers and
developing long term "partnering" relationships. This level of involvement extends beyond a purchase to include such things as working together to develop new products and providing financial support?
3.4.4 BUYING MOTIVES OF BUSINESS USERS
One view of buying motives is that business purchases are methodical and structured.
Business buying motives, for the most part, are presumed to be practical and unemotional. Business buyers are assumed to be motivated to achieve the optimal combination of price, quality and service in the products they buy. An alternative view is that business buyers are human, and their business decisions are certainly
influenced by their attitudes, perceptions, and values.
The truth actual y is somewhere in between. Business buyers have two goals-to further their company's position (in profits, in acceptance by society) and to protect or
improve their position in their firms (self-interest). For example, the firm's highest priority may be to save money, and the buyer knows that he wil be rewarded for
negotiating a low price.
3.4.4.1 TYPES OF BUYING SITUATIONS
The buying situation in business organizations vary widely in their complexity, number of people involved, and time required. Researchers in organizational buying behavior have
identified three classes of business buying situations. The three buying classes are new
—task buying, straight re-buy, and modified re-buy.
i.
ii.
New —task buying. This is the most difficult and complex buying situation
because it is a first-time purchase of a major product. Typical y more people are involved in new-task buying than in the other two situations because the risk isgreat. Information needs are high and the evaluation of alternatives is difficult
because the decision makers have little experience with the product. A hospital'sfirst — time purchase of laser surgical equipment or a company robots for factory (or buying the factory itself) are new — task buying conditions.
Straight rebuy. This is a routine, low —involvement purchase with
minimal information needs and no great consideration of alternative. The
buyer extensive experience with the sel er has been satisfactory, so
there is no incentive to search. An example is the repeat purchase of steering wheels by Freightliner, a truck manufacturer.i i. Modified re -buy. This buying situation is somewhere between the
other two in items of time and people involved. Information needed, and