Chapter 6
BUSINESS MARKETS AND
BUSINESS BUYER BEHAVIOR
MARKETING STARTER: CHAPTER 6
IBM: The World’s Most Valuable Business-to-Business Brand
Synopsis
IBM’s “Big Blue” nickname used to be on the lips of any computer buyer, from laptops and desktop machines to
mainframes. By the early 1990s, the company’s sales had plateaued, which caused the firm to investigate what was
changing. Because the name is so familiar, many people don’t realize that most of IBM’s revenues come from
business customers, not individual consumers. Its business is much more than selling personal computers. IBM’s
core business is “delivering insights and solutions to customers’ data and information technology problems.” IBM is
now the most valuable B-to-B brand in the world, valued at $94 billion, about 50 percent more than the number two
brand, GE. IBM grew by partnering with its business customers, striving to understand their unique needs, and
providing superior value. Business customer buying decisions are made within the framework of a strategic,
problem-solving partnership.
Discussion Objective
The IBM story is perfect for highlighting the unique characteristics of business markets and the differences between
consumer buying behavior and business buying behavior. It also demonstrates that marketing to business customers
requires a deep understanding of customer needs and customer-driven marketing strategies that create superior
customer value. To succeed in its business-to-business markets, IBM must build day in, day out, year in, and year
out customer partnerships based on superior products, close collaboration, and trust.
Starting the Discussion
Set up the discussion by visiting the IBM website at http://www.ibm.com. Students will see that even on the front
page, IBM touts that it loves developing customized and unique solutions. To explore what IBM offers to business
customers, scroll to the Products tab along the top. Then try the Services tab, and after that the Industry tab. In each
case, note the number of different offerings that IBM has for customers. Look for information on each that
underscores the basic promise that IBM must deliver each day: to create partnerships with business customers to
help them solve their problems and develop solutions.
With students, discuss the similarities and differences between selling to final consumers and selling to business
customers. Students should understand that working in business markets is much more complex, and that closing a
single sale may take years of advance work. Use the questions below to guide the discussion on IBM’s efforts to
build relationships with B-to-B customers to handle their technology and service needs and the impact on customer
relationships.
Discussion Questions
1. What are IBM’s business customers looking for when committing to work with IBM? But more than just a
superior product, they want a trusted partner that delivers on its promises. Business customers must be able
to rely on IBM as a strategic partner they can count on to help the company solve its problems and
sometimes win new customers of its own. As this case demonstrates, IBM providing solutions can mean it
even gets into business with customers in a huge variety of industries, from healthcare to education to
mining.
2. How does IBM’s marketing and sales to business customers differ from working with its individual
consumers? Selling and marketing in either sector requires a deep understanding of customer needs and
customer-driven marketing strategies that create superior customer value. However, in business markets,
rather than selling to large numbers of small buyers, IBM sells to a relatively few very large buyers. Losing
a single sale to a large business customer can mean the loss of hundreds of millions of dollars in revenues.
Performing poorly as a partner in creating solutions and developing systems can also cost the customer
hundreds of millions of dollars in revenue. Also, with IBM’s business customers, buying decisions are
much more complex. IBM is not the only company in the business of providing systems solutions services
to business customers. Selling a contract to take over operations of another company’s backend operations,
from customer service to finance, for example, involves a tortuously long buying process, dozens or even
hundreds of decision makers, and layer upon layer of subtle and not-so-subtle buying influences. To
succeed in these business-to-business markets, IBM must do more than just provide hardware and software
for its customers. It must work closely and deeply with its business customers to become a strategic,
problem-solving partner.
2. How does the IBM story relate to the major concepts of Chapter 6 on business buyer behavior? The IBM
story shows the complexities of business-to-business transactions and relationships relative to final
consumer buying. It provides an excellent vehicle for exploring the nature of business markets, types of
buying situations, buying participants and influences on business buyers, and the business buying process.
CHAPTER OVERVIEW
Use Power Point Slide 6-1 Here
This chapter examines business customers—those that buy goods and services for use in
producing their own products and services or for resale to others. As with firms selling to final
buyers, firms marketing to business customers must build profitable relationships with business
customers by creating superior customer value.
CHAPTER OBJECTIVES
Use Power Point Slide 6-2 here
1. Define the business market and explain how business markets differ from consumer
markets.
2. Identify the major factors that influence business buyer behavior.
3. List and define the steps in the business buying decision process.
4. Discuss how new information technologies and online, mobile, and social media have
changed business-to-business marketing.
5. Compare the institutional and government markets and explain how institutional and
government buyers make their buying decisions.
CHAPTER OUTLINE
p. 188
INTRODUCTION
Considering our familiarity with IBM’s consumer products,
it is somewhat surprising that most of IBM’s business is for
the business customers who work with IBM to develop
systems solutions to data and information technology
problems.
Most of IBM’s business comes from commercial and
industrial customers across a wide range of industries. IBM
provides services including data analytics, cloud computing,
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Photo: IBM
cybersecurity, social networking, and mobile technology
solutions.
In its business markets, rather than selling to large numbers
of small buyers, IBM sells to a relatively few very large
buyers. Buying decisions are much more complex.
People throughout the entire IBM organization know that
success in business-to-business markets involves more than
just developing and selling superior products and
technologies.
Business customer buying decisions are made within the
framework of strategic, problem-solving partnerships.
Opening Vignette Questions
1. Discuss several ways in which marketing to
business customers is different from marketing to
final consumers.
2. As a sales representative for IBM, how would
you describe the advantages of working with your
company to a potential customer?
3. As the president of Zappos.com, which
considerations would be most important to you in
selecting a data and information technology
vendor? Explain.
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PPT 6-3
Business buyer behavior refers to the buying behavior of
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. It also includes the behavior of
retailing and wholesaling firms that acquire goods for the
purpose of reselling or renting them to others at a profit.
In the business buying process, business buyers determine
which products and services their organizations need to
purchase, and then find, evaluate, and choose among
alternative suppliers and brands.
Business-to-business (B-to-B) marketers must do their best to
understand business markets and business buyer behavior.
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Key Terms:
Business buyer
behavior, Business
buying process
Assignments, Resources
Use Discussion Question 6-1 here
Use Think-Pair-Share 1 here
PPT 6-4
p. 188
Define the business market and explain how business
markets differ from consumer markets.
Business Markets
Learning Objective
1
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PPT 6-5
p. 189
PPT 6-6
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The business market is huge. In fact, business markets
involve far more dollars and items than do consumer
markets.
The main differences between consumer and business
markets are in market structure and demand, the nature of
the buying unit, and the types of decisions and the decision
process involved.
Market Structure and Demand
The business marketer normally deals with far fewer but far
larger buyers than the consumer marketer does.
Even in large business markets, a few buyers often account
for most of the purchasing.
Business demand is derived demand. It ultimately derives
from the demand for consumer goods. B-to-B marketers
sometimes promote their products directly to final consumers
to increase business demand.
Many business markets have inelastic demand; that is, total
demand for many business products is not affected much by
price changes, especially in the short run.
Business markets have more fluctuating demand. The
demand for many business goods and services tends to
change more—and more quickly—than the demand for
consumer goods and services does.
Nature of the Buying Unit
Compared with consumer purchases, a business purchase
usually involves more decision participants and a more
professional purchasing effort.
Often, business buying is done by trained purchasing agents
who spend their working lives learning how to buy better.
The more complex the purchase, the more likely that
multiple people will participate in the decision-making
process.
Types of Decisions and the Decision Process
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Key Term: Derived
demand
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Ad: Gorilla Glass
PPT 6-7
Business buyers usually face more complex buying decisions
than do consumer buyers. Purchases often involve large
sums of money, complex technical and economic
considerations, and interactions among many people at many
levels of the buyer’s organization.
The business buying process also tends to be longer and
more formalized than the consumer buying process.
In the business buying process, buyer and seller are often
much more dependent on each other.
Many customer companies are now practicing supplier
development, systematically developing networks of
supplier-partners to ensure an appropriate and dependable
supply of products and materials that they will use in making
their own products or reselling to others.
Review Learning Objective 1: Define the business market
and explain how business markets differ from consumer
markets.
p. 166
Photo: Cargill
p. 166
Key Term: Supplier
development
Assignments, Resources
Use Critical Thinking Exercise 6-6 here
Use Video Case here
Use Think-Pair-Share 2 here
Use Outside Example 1 and 2 here
Troubleshooting Tip
The first major learning barrier in this chapter is that
most students lack experience with the business
market and its buying processes. To promote student
understanding, carefully explain the business market
(see Key Terms) and how it differs from the
consumer market. The text provides ample material
with which to accomplish this objective.
PPT 6-8
p. 190
PPT 6-9
Identify the major factors that influence business buyer
behavior.
Business Buyer Behavior
At the most basic level, marketers want to know how
business buyers will respond to various marketing stimuli.
Within the organization, buying activity consists of two
major parts: the buying center and the buying decision
process.
Learning Objective
2
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Figure 6.1: A Model
of Business Buyer
Behavior
PPT 6-10
PPT 6-11
Major Types of Buying Situations
There are three major types of buying situations.
In a straight rebuy, the buyer reorders something without
any modifications. It is usually handled on a routine basis by
the purchasing department.
In a modified rebuy, the buyer wants to modify the product
specifications, prices, terms, or suppliers. The modified
rebuy usually involves more decision participants than does
the straight rebuy.
A company buying a product or service for the first time
faces a new task situation. In such cases, the greater the cost
or risk, the larger the number of decision participants, and
the greater their efforts to collect information will be.
Many business buyers prefer to buy a complete solution to a
problem from a single seller. Instead of buying and putting
all the components together, the buyer may ask sellers to
supply the components and assemble the package or system.
Thus, systems selling is often a key business marketing
strategy for winning and holding accounts.
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Key Terms: Straight
rebuy, Modified
rebuy, New task,
Systems selling
(Solutions selling)
p. 191
Photo: Six Flags
Assignments, Resources
Use Discussion Question 6-2 here
Use Critical Thinking Exercise 6-8 here