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Assessing Buyer Needs Chapter 3

A business market is one “composed of firms, institutions and governments who acquire goods and services to use as inputs into their own manufacturing processes, for use in their day-to-day operations, or for resale to their own customers. (Ingram, 2013)” The main distinction between business and consumer markets is that businesses are not usually the end-users of the good or service. The product the business purchases may be for use in their own business objectives aimed at consumers.

Business markets have a concentrated demand which allows for large purchases from a small number of buyers. Sales may have to navigate their way through a small number of the same purchasers and make comparative bids to get contracts. Sales may have to have detailed information about competitors and how the sale product is more beneficial than the competition.

Derived demand buyers mimic the needs of the consumer market in terms of demand. If a demand in the consumer market rises or falls, the related manufacturer will have a demand that reflects the change. Sales will have to become a source of intuitive information that predicts the fluctuations in the consumer market. This will add value to the buyers they service.

Purchasing professionals will have a more in-depth knowledge about their buying criteria and capabilities. For this market, “salespeople must possess increased levels of knowledge and expertise to provide customers with a richer assortment of application, performance and technical data (Ingram, 2013).” Of these types of business buyers, the purchasing professional might be the most challenging because they will encompass aspects of the first two categories. The buyer may be one of few purchasers of the product and may be experiencing the acceleration principle where demand increases or decreases due to consumer demand. In addition, this buyer will be more knowledgeable about all aspects related to the purchase decision, and therefore harder to convince about a new product or service.

The business buying decision is an eight phase process that starts with the recognition of a need. A need arises when a needs gap is perceived in the distance between the desired state and the actual state. The need may then spark an interest in seeking out information to lessen the needs gap. Next the buyer determines a set of characteristics that will have to be addressed to map out the specifications of the problem. These criteria will be used to analyze which solutions will be appropriate. The buyers will then search for sources that can provide the solution to the problem. The buyer will then solicit and evaluate proposals from prospective suppliers. The buyer will then begin negotiations with suppliers to finalize terms of the purchase. Once a buyer has been chosen, terms of ordering must be finalized. This will include shipping details such as quantities, locations for distribution etc. The last phase is the feedback and evaluation of performance. Communication is key in this phase to ensure customer satisfaction and loyalty.

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The most challenging phase for sales may be the negotiation of terms to finalize a deal. Even after the prospective companies are chosen, terms of the final deal may include extending credit, handling large orders and the distribution details of the purchase. These details may cause major conflict and will affect profit as well as future interactions with the customer.

Reference:

Ingram, LaForge, Avila, Schwepker, Williams, SELL, 3rd ed., South-Western, Cengage Learning, 2013