Consumer Versus Business Buyers
8.2 Explain the difference between consumer and business buyers
Consumer buyer behavior refers to the buying behavior of individuals and households who buy goods and services for personal consumption. Each year, consumers purchase many trillions of dollars’ worth of goods and services. Business buyer behavior refers to the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.7 In many business-buying situations, several people work together to reach a decision. The buying center is a cross-functional team of decision makers who often represent several departments. Each team member is likely to have some expertise needed in a particular purchase decision. Salespeople must continually identify which individuals within a firm will be members of the buying center team.8
It is not uncommon for salespeople to sell products and services to both consumer and business buyers. A well-established interior decorating firm will likely work with homeowners as well as commercial clients who own hotels, restaurants, or art galleries. A salesperson employed by an automobile dealership will often sell to corporate customers who maintain a fleet of cars or trucks as well as consumers who buy vehicles for personal use.
There are some similarities between consumer markets and business markets. Both involve people who assume the role of buyer and make purchase decisions to satisfy needs. These two markets differ, however, in some important areas. Figure 8.2 provides a brief review of some of these differences. A business purchase is likely to involve more decision participants and these participants may be well trained. Most purchasing agents spend time learning how to buy better.9
Types of Business Buying Situations
There are three major types of business-to-business buying situations. The amount of time and effort organizational buyers spend on a purchase usually depends on the complexity of the product and how often the decision must be made.10 At one extreme is the straight rebuy, which is a fairly routine decision. At the other extreme is the new-task buy, which may require extensive research. In the middle is the modified rebuy, which will require some research.11
New-Task Buy
A first-time purchase of a product or service is a new-task buy. Depending on the cost and complexity of this purchase, the buying decision may require several weeks of information gathering and the involvement of numerous decision participants. In some cases, a buying committee is formed to consider the new product’s quality, price, and service provided by suppliers. Salespeople who are involved in new-task buying situations must rely heavily on consultative selling skills.
Straight Rebuy
A straight rebuy is a routine purchase of items needed by a business-to-business customer. Let’s assume you have decided to open a new restaurant and need a steady supply of high-quality cooking oil. After talking to several restaurant suppliers and testing several oils, you select one that meets your needs. Your goal now is to simplify the buying process with the use of a straight rebuy plan. As long as the supplier meets your criteria for price, quality, service, and delivery, future purchases will be very routine. Organizations often use the straight rebuy approach for such items as cleaning supplies, copy paper, and cartridges for computer printers. Salespeople must constantly monitor every straight rebuy situation to be sure the customer is completely satisfied. A competing supplier will be quick to exploit any sign of dissatisfaction by the customer.
Modified Rebuy
The tide of change is a powerful force in the world of business. From time to time, your customers may wish to modify product specifications, change delivery schedules, or renegotiate prices. Several years ago, American automobile manufacturers, faced with greater competitive pressures from China, Korea, Japan, Germany, and other nations, turned to their suppliers and demanded price reductions. Suppliers were required to become involved in a modified rebuy situation or risk loss of the account. A modified rebuy often requires the involvement of several participants.
Well-trained professional salespeople work hard to provide outstanding service after the sale and anticipate changes in customer needs. Some salespeople regularly ask their customers what they value most about the existing buying situation and how improvements can be made in this area.
Building Strategic Alliances
In Chapter 2, we described strategic alliances as the highest form of partnering. Alliances are often formed by companies that have similar business interests and believe the partnership will help them gain a mutual competitive advantage. Large companies often form several alliances. Some strategic alliances take the form of systems selling. Systems selling appeals to buyers who prefer to purchase a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation.12
Several years ago, Kinko’s reinvented itself as a document solutions provider for business firms of all sizes. Full-service Kinko’s stores began offering the buyer networks of computers equipped with popular software, ultrafast color printers, high-speed Internet connections and, of course, a variety of document preparation services. After Kinko’s was purchased by FedEx, a network of 1,200 digitally connected FedEx Kinko’s locations began offering a wider selection of customized, needs-based document solutions. One large financial institution consolidated the services of 13 vendors by forming an alliance with FedEx Kinko’s.13 Systems selling efforts at FedEx Kinko’s have become an important strategy for winning and holding accounts.