Business buyer strategy


The business buyer faces many decisions in making a purchase. The number of decisions depends on the buying situation, complexity of the problem being solved, newness of the buying requirement, number of people involved, and time required. Marketing wizards have distinguished three types of buying situations: the straight re-buy, modified re-buy and new task.

Straight Re-buy:

The purchasing department reorders on a routine basis (e.g. office supplies, bulk chemicals) and choose from suppliers on an “approved list.� The suppliers make an effort to maintain product and service quality and often propose automatic reordering systems to save time. Suppliers out of the “approved list� (Out-suppliers) attempt to offer something new or to exploit dissatisfaction with a current supplier. Out-suppliers try to get a small order and then enlarge their purchase share over a time period.

Modified Re-buy:

The buyer wants to modify product specifications, prices, delivery requirements, or other terms. The modified re-buy usually involves additional participants on both sides. The “approved suppliers� or In-suppliers become nervous and have to protect their account. The Out-suppliers see an opportunity to propose a better offer to gain some business.

New Task:

A purchaser buys a product or service for the first time (e.g. office building, new security system). The greater the cost of risk larger are the number of participants and the greater their information gathering and therefore the longer the time to take a decision.

The business buyer makes the fewest decisions in the straight re-buy situation and the most in the new-task situation. Over time, new-buy situations become straight re-buys and routine purchase behavior. New-task buying passes through several stages: awareness, interest, evaluation, trial, and adoption. The effectiveness of communication tools varies at each stage. Mass media are most important during the initial awareness stage; salespeople have their greatest impact at the interest (generating enquiry) stage; and technical sources are the most important during the evaluation stage.

In the new-task situation, the buyer has to determine product specifications, price limits, delivery terms and times, service terms, payment terms, order quantities, acceptable suppliers, and the selected supplier. Different participants influence each decision, and the order in which these decisions are made varies. This situation is the marketer’s greatest opportunity and challenge. Because of the complicated selling involved, many companies use a missionary sales force consisting of their most effective salespeople. The brand promise and the manufacturer’s brand name recognition will be important in establishing trust and the customer’s willingness to consider change. The marketer also tries to reach as many key participants as possible and provide helpful information and assistance.

A Case:

Orica Ltd formerly ICI Australia, competes in the cutthroat commercial explosives business. Its customers are quarries that use explosives to blast solid rock face into aggregate of a specified size. Orica is constantly trying to minimize the cost of explosives. As a supplier, Orica realized it could create significant value by improving the efficiency of the blast. To do this, it established over 20 parameters that influenced the success of the blast and began collecting data from customers on the input parameters as well as the outcomes of individual blasts. By collating the data, Orica engineers came to understand the conditions that produced different outcomes. It then could offer customers a contract for “broken rock� that would almost guarantee the desired outcome. The success of Orica’s approach of managing the entire blast for the quarry rather than simply selling explosives entrenched the company as the world’s leading supplier of commercial explosives.

Customers considering dropping six or seven figures on one transaction for big ticket goods and services and want all the information they can get. One way to entice new buyers is to create a customer reference program in which satisfied customers act in concert with the company’s sales and marketing department by agreeing to serve as references. Once a customer is acquired, in-suppliers are continually seeking ways to add value to their market offer to facilitate re-buys. Often they do this by giving customers customized information.