Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

7. Business and
   Organizational Customers
   and Their Buying Behavior

Text © The McGraw−Hill

Companies, 2002

Business and Organizational Customers and Their Buying Behavior 193

In business-to-business markets,

the Internet has prompted

explosive growth in e-commerce

and new central market “portals”

that bring buyers and sellers

together more quickly and at

lower cost.

What buying procedure

becomes routine

iscritical

Buyer-Seller Relationships in Business Markets

Once a buying firm gets beyond the early stages of a new-task buying decision,

it needs to make important decisions about how it is going to deal with one or more

suppliers to meet its needs. At one extreme, a buyer might want to rely on com-

petition among all available vendors to get the best price on each and every order

it places. At the other extreme, it might just routinely buy from one vendor with

whom it already has a good relationship. In practice, there are many important and

common variations between these extremes. To better understand the variations—

and why firms rely on different approaches in different situations—let’s take a closer

look at the benefits and limitations of different types of buyer–seller relationships.

That will also help you to see why new e-commerce developments in business

markets have become so important.

There are often significant benefits of a close working relationship between a

supplier and a customer firm. And such relationships are becoming common. Many

firms are reducing the number of suppliers with whom they work—expecting more

in return from the suppliers that remain. The best relationships involve real part-

nerships where there’s mutual trust and a long-term outlook.

Closely tied firms can often share tasks at lower total cost than would be possi-

ble working at arm’s length. Costs are sometimes reduced simply by reducing

uncertainty and risk. A supplier is often able to reduce its selling price if a customer

commits to larger orders or orders over a longer period of time. A large sales vol-

ume may produce economies of scale and reduce selling costs. The customer benefits

from lower cost and also is assured a dependable source of supply.

A firm that works closely with a supplier can resolve joint problems. For exam-

ple, it may cost both the supplier and the customer more to resolve the problems

of a defective product after it is delivered than it would have cost to prevent

the problem. But without the customer’s help it may be impossible for the

supplier to identify a solution to the problem. As the head of purchasing at

Motorola puts it, “Every time we make an error it takes people at both ends to

correct it.”

Close relationships

may produce mutual

benefits