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What is the difference between Business buying and Consumer buying (individual Buying)?

There are intrinsic differences between Business buyers i.e. business-to-business (B2B) and Individual or final consumers i.e. business-to-consumer marketing (B2C). The differences are a result of the complex and interdependent relationships between buyers and sellers relative to their roles in the supply chain.

Business buying
Business buying is buying products and services by an organisation for end use purpose. Business buying behaviour refers to the actions of employees of an organisation to buy products and services for the organisation which includes the decision making process of selection of suppliers and bearing post purchase consequences.

In this market business buyers buy products on large scale either for production of another product or for their own use. They buy products and add value to the same for selling to Consumers. For example, raw material (crude oil, steel, etc.), final products for company use (generators, printing machines, etc.), office stationary, etc. Due to companies operating on large scale in global markets, they also utilise services of banks for life insurance of its employees, security services, legal services, etc. from other organisations which provide such offerings.

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What should be the strategy for B2B marketing?

Business buyers tend to buy all the products and services from one seller or few sellers. This benefits the organisation in many ways.

For Example,
1. It helps in cost reduction,
2. No over storage needed for emergencies,
3. Long term relationship brings effectiveness,
4. Less price fluctuation as contract signed over long period.

The decision making differs from organisation to organisation. Depending on the size of the organisation, the decisions can be made by different people. Decisions can be related toProduct characteristics, price negotiation, selecting a supplier, contract/ paperwork.For a small firm which has limited resources and small production unit, a single person like a Senior Production Manager can take all the decisions with the help from its staff.
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What is Business market and Business buyer behaviour?

Organisation not only are sellers but also buyers. The Business Markets includes organisations that buy products on large scale either for production of another product or for their own use. They buy products and add value to the same for selling to Consumers.

These organisations are end users, and buy products and services for their operations. For example, a candy bar producer needs to buy materials to produce and package the candy bar. It needs to buy milk, sugar, preservatives, paper for packaging etc. from suppliers to produce the candy bar.

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Explain Business/ Industrial Buying situations.

There are three major types of buying situations depending on the purchase and its information. (Industrial Buying and Creative Marketing; Boston: Allyn& Bacon, 1967; Ch 2)

(1) New task – The purchase is done for the first time with no purchasing experience, and extensive search is done to evaluate options. The greater the cost or risk involved, more the expertise of decision making participants is needed. For example, an organisation buying raw materials to manufacture laptops for the first time.

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Who does the buying in Industrial market, and what are the types of decisions made?

For smooth functioning of the organisations operations, as part of “Strategic Marketing Planning”, responsibilities have to be clearly assigned to departments and managers. Purchasing agents or managers from the purchasing department are mostly involved in straight rebuy or modified rebuy situations. The main responsibilities include-

• Choosing a supplier
• Data collection on goods to be procured (quality, characteristics, expiry, etc.)
• Negotiating price
• Signing of contract

In case of a New Task situation, the decision is mostly taken by experts from different departments- finance, production, marketing, etc. To accelerate the buying process and overcome hurdles of taking approvals in the hierarchy, some organisations have upgraded the position of the manager in purchasing department to the level of Vice President.

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What are the factors that affect Business Buying?

Like consumer buying, Business buying is also affected by many factors. We need to understand all these factors to understand how these factors force an organisation to adopt different strategies in different markets. There are external as well as internal factors that affect the organisational buying like government policies, industrial changes, organisational values, learning of the decision makers, experience, etc. Business Marketers need to understand these factors to design effective marketing strategies.

factors for effective marketing strategies

(1) Environmental Factors – The organisation is greatly influenced by its environment such as Government regulations, Location, industrial development or changes, technological changes, Cultural factrors. Buying centre of the organisation has to adjust to these changes and carefully take decision on purchase of products. Companies sign long term contracts with suppliers to ensue constant supply of materials for production. This also avoids price fluctuations. Various Government policies and regulations also affect business buying. A curb on certain materials by the government forces an organisation to make changes to the product requirements.

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Explain in detail the Industrial / Business Buying Process

There are common steps involved in Business buying though each organisation has its own way of making decision for buying products. The process may also differ for all the three buying situations – New Task, Modified Rebuy and Straight Rebuy. Below are the common steps involved in Business buying process-

Business Buying Process

(1) Need/ Problem recognition – in business buying the need or problem arises for a product needed for operation of the business. Business buyers buy products either to take advantage of new opportunities in the market or to find a solution for any issues related to operations.

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