Unlike the ultimate consumer, the industrial buyer is motivated by budgetary consideration, such
as profit goals, expense quotas and cost-benefit considerations as quality, service and price in
choosing a supplier. These are explained briefly below.
Quality – the customer needs the product that has specific features he considers important
indicators of quality. The customers would also like to have suppliers who can guarantee
suppliers of consistent quality. The supplier should be able to meet specific quality
standards specified by the buyer.
Service – organizations need services such as technical, replacement parts, delivery,
information and sales in addition to products and materials. Such services are very
important to the consumer organization and manufacturers need to be able to avail them
with a high degree of certainty. Timing of the availability is also very important as
unreliable timing or a delay in availability is bad for the consumer. The supplier should
therefore provide services whose features include adequate stocks in warehouse located
at places convenient to the user, prompt handling and delivery of all orders, reliable
delivery information processing, and willingness to go out of the way in giving services.
Price – proposed buyers often look beyond the quoted price, and consider other issues
like the cost of processing the material, amount of scrap resulting from the use of the
Savings – the industrial consumers may realize some saving as a result of buying the
product. The buyer would be interested in those materials that are economical to process
and thus lead to a realization of some savings.
Assurance of supply – the buyer needs supply that is not interrupted as this may result in
shortages or even shut down of the production unit.
Buyer temperaments – a purchasing officer being a human being, will be interested in his
own status, prestige, ambitions and personal feelings, as well as the welfare of the firm
for which he works. His motives in buying would therefore include presenting his status,
desire to be promoted and maintain personal feelings with his peers at work. All that will
affect the buying decision, although economic considerations seem to outweigh these
Purchasing for public institutions – this is influenced by legal constraints which can
affect the buying decision. They are required to adhere to very strict government
procured procedures which sometimes interferes with rational buying behaviors.
THE BUSINESS MARKET VERSUS THE CONSUMER MARKET
The business market consists of all businesses that acquire goods and services used in the
production of other products or services that are sold, rented or supplied to others (Kotler and
Armstrong, 2006). The industries that make up the business market are agriculture, forestry,
fisheries, manufacturing, construction, communication, public utilities, banking, finance,
insurance, distribution and services. The consumer market on the other hand, consists of
individuals and households that buy goods and services for personal consumption (Kotler and
Characteristics of business buying behavior
1. Demand characteristics
Consumer demand for products and services is affected by price, availability and personal tastes
and discretionary income. By comparison, business or business demand is derived. Derived
demand means that the demand for business products and services is driven by or derived from
demand for consumer goods and services. For example, the demand for pan paper pulp and
paper products is based o consumer demand for newspapers, student demand for exercise books
and consumer demand for packaged products.
2. Number of potential buyers
Firms selling consumer products or services often try to reach thousands or millions of
individuals or households. For example, your local supermarket or bank probably serves
thousands of people. In contrast, Boeing sells to only a few airlines which may be less than 100
throughout the world. In a year, it may sell only a few jets.
3. Buying objectives
Businesses buy products and services for one main reason – to help them achieve their
objectives. For business firms, the buying objective is usually to increase profits by reducing
costs or increasing revenues. For non-profits and government agencies, the objective is usually
to meet the needs of the groups they serve.
4. Buying criteria
In making a purchase, the buying organization must weigh key buying criteria that apply to
potential suppliers and what it wants to sell. Organization buying criteria are the objective
attributes of the suppliers products and services and the capabilities of the supplier itself. The six
most commonly used business buying criteria are:
(ii) Ability to meet the quality specifications required for the item
(iii) Ability to meet required delivery schedules
(iv) Technical capability of warranties and claim policies in the event of poor
(v) Performance on previous contracts and
(vi) Product facilities and capacity
5. Size of the order or purchase
The size of the purchase involved in business buying is typically much larger than in consumer
buying. The value of a single purchase made by an organization often runs into thousands or
millions of shillings.
With so much money at stake, most businesses place constraints on their purchasing managers
(buyers) in the form of purchasing policies or procedures.
6. Buyer – seller relationship
There is a close relationship between sellers and customers in the business to business market
because of the smaller customer base, greater volume, cost of the average sale and the
importance and power of the larger customers of a supplier. Sales are typically made by those
suppliers who closely cooperate with the buyer on technical specifications and delivery
requirements (Bingham and Raffield, 1990).
7. Professional buying
Business buyers normally take a more formal approach to buying than do final consumers. A
sales person selling clothes in a clothing outlet generally deals with one customer at a time.
However, a sales person selling computers to an organization has to give demonstrations to the
purchasing manager, office manager and secretaries. Business –to-business buyers are
professional buyers; selling to them requires professional sales people (ibid).
8. Multiple buying influences
More people typically influence business buying decisions than consumer buying decisions. A
buying committee composed of technical experts and senior management are common in the
purchase of major goods. Therefore, marketers must employ well-trained sales representatives.
They also use sales teams to deal with highly skilled buyers (ibid).
9. Complex negotiations
Other than the few consumer goods such as automobiles and real estate in which negotiations
commonly take place, considerable buyer-seller negotiations occur in the purchase and sale of
more expensive business products. Areas of negotiations include product specification, delivery
dates, payment terms and price.
Business buyers often choose suppliers who also purchase from them. For instance, a paper
manufacturer may buy chemicals for its production process from a chemical company that buys a
large amount of its paper. Reciprocity is deemed illegal if one of the parties uses coercive
pressure that results in reduction competition (ibid).
Many business –to-business buyers lease their equipment rather than buy it. For instance, Kenya
Airways leases aircraft from Boeing. Computers, packaging equipment, heavy construction
equipment, machine tools and vehicles serve as examples of this phenomenon. This way, the
lessee (buying organization) conserves capital, acquires the sellers latest product and receives
better servicing while the lessor (selling organization) often receives a larger net income and has
the opportunity to sell to those customers who cannot afford to purchase the equipment outright
12. Business buyers are more rational
Like people, business buyers are affected by emotional factors such as like or dislike of a
salesperson, the colour of office equipment etc. Nevertheless, it is probably true that overall
business buying is more rational.
In business buying, decisions are made on economic criteria.
13. Business buying may be to specific requirements
It is not uncommon in business marketing for buyers to determine product specifications and for
sellers to tailor their product offerings to meet them. This is feasible because of the potentially
large revenue of such products e.g railway engines.
14. Business selling/buying may be more risky
Business markets are sometimes characterized by a contract being agreed before the product is
made. Further, the product itself may be highly technical and at the seller may be faced with
unforeseen problems once the work has started (ibid)
15. Business buying is more complex
Many business purchases, notably those which involve large sums of money and which are new
to the company involve many people at different levels of the organization. The managing
director, product engineers, product managers, purchasing managers and operatives may
influence the decision on which expensive machine to purchase (ibid).
16. The buying centre
For routine purchases with a low shillings value, a single buyer or purchasing officer often
makes the purchase decision alone. However several people in the organization participate in the