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So, so far, we have been discussing about consumer markets.

What are the consumer markets look like.

So the psychological and behavioral processes which consumers maybe as

individuals or groups used to choose products, select different options,

search for alternative, use them, evaluate them, and so on.

And in order to satisfy certain needs and desires, right?

So, this is what the consumer markets usually look like.

Normally, in a consumer market there are many, many buyers.

Like you, like me.

There are many buyers.

Also there's relationships like we are not

really involved with the companies from whom we are purchasing the product.

So the relationships are not close enough.

And mainly consumer markets we see casual everyday purchasing.

That is not often that you see that Consumer Markets involve a lot of talks,

a lot of different influences and so on.

So this is other characteristics of Consumer Markets that the buying

influences the people who influence of purchase process are very few.

Maybe you talk to your family, maybe some of your friends, but not many people.

Finally, from the perspective of the marketers usually marketers do

not need to make so many calls, reach out to the consumers to sell their products.

And that's the reason why the demand for

consumer market products are usually elastic.

That is if there's a change in prices, there's a big reaction from

consumers who probably do not chose to buy it if the price really goes high.

This is a slightly bit different perspective

from what we see in the organizational markets, that is more in the B2B scenario.

In the B2B scenario the decision making process by which

the formal organizations work.

They first establish some need for the product or some services, and then

identify and evaluate different options, that is, the different suppliers or

brands, and finally, make their choices on which supplier to use for their products.

In this case, remember, there are a few large buyers.

It's not like a consumer market where there are many,

many buyers, here there are only a few large buyers.

So take for example Xerox.

They sell this for the copy machines but who are their buyers?

Most of the cases their buyers are organizations like an institute,

like a company, or maybe a photocopy shop.

So there are very few large buyers.

Because there are few large buyers the relationships are much closer that is

the seller can interact with the consumers and

try to sell their product and the purchase process is much more professional.

So, there is a formal bidding process and then based on the bidding

there's a pricing and then consumers try to purchase the product.

In this organizational markets, the buying influences are much more intensive.

Because when you as a company is trying to buy a product from other company

maybe the entire process is influenced by your

colleagues maybe different departments of your company and so on.

That's why the sellers try to reach out to these companies in

order to make sales calls and convince the company and

the different departments to buy their product.

As a result the demand in these organization markets is relatively

elastic, that is if there's a price change.

Maybe the demand doesn't change that much.

So, this is in a strict demand scenario.

Let's look at what are the different buying situations

in these organizational markets.

So if you are looking at these organizational markets,

the first buying situation is called straight rebuy.

In this case you, as a company, who is trying to buy a product from another

company, do not change the specification of the product significantly.

Maybe you change marginally, and pretty much go ahead with the earlier contracts.

The second sort of buying situation is a modified rebuy.

This is a situation where you change the characteristics of the product

significantly.

So let's say again you as a maybe a company trying to buy a photocopy

machine from Xerox.

You mention to them that you want certain additional features

from your photocopy machines.

You convey this message to Xerox.

They will try to come up different options which you can choose from.

And then you go ahead with the organizational purchase process.

So this is called modified rebuy.

The third situation of purchase is called new task.

This is a scenario where consumers, which is the business consumers, actually choose

from new vendors or new sellers go through a formal bidding process.

Specify certain characteristics of the products they need.

And the sellers come up with different options.

From these options, the purchaser chooses the best option,

both in terms of the features as well as the prices.

So this is called new task.

The final one is called system buying,

where a business-to-business consumer is trying to purchase

a whole lot of different products from a particular seller.

So this is what is called system buying.

Think about these four different purchase situations in our organizational

market and let's look at what we call a buygrid form framework.

What do we mean by a buygrid framework?

Let's look at this diagram.

So in this diagram, which is called the buygrid framework, we see different

options for the different stages in this organizational buying process.

So that different stages in the organizational buying process

include problem recognition which was there something

similar in the consumer market as well.

Then we go into general need description

which was also there in the consumer market but a slightly different one.

Then we have the product specification, supplier search, proposal solicitation.

And eventually you look at the supplier selection.

And the order-routine specification ending up with the performance review.

So these are the different stages of the organizational buying process.

Now, remember, in the different sort of buying situations we considered,

like, new task, or modified rebuy, or

even straight rebuy, there we didn't see those different stages, specifically.

But, what I am trying to convey here is, out of the different stages of

the organizational buying process, certain stages are important for new tasks.

Certain stages are not important for new tasks.

Or, maybe, certain stages are important for a modified rebuy and

straight rebuy and so on.

So, in the seven stages or eight stages we mentioned in the organization buying

process, pretty much all of them are very relevant in the new task scenario.

However, in the modified revise scenario,

some of the stages are optional as you can see in the graph.

However, in a straight rebuy scenario, where remember,

the organizational buyer is not changing the characteristics of the product, but

just simply reordering the product.

In this case, the only two stages in the organizational decision making process

which are relevant are essentially the product specification and

the performance review.

So what is important to remember here is in the organizational

purchase process there are different ways you can purchase a particular product,

when the different stages might not be relevant essentially,

which is a very big difference from the consumer markets,

where every consumer has to go to the different stages of the purchase process.

So this is what the basic difference between the consumer markets and

business markets are.

And in the next video we're going to start on the marketing research

which is important to understand these consumers at a much deeper level.

So, looking forward to see you guys again in the next video.

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Buying situation comparisons and buygrid framework.

Marketing Strategy Capstone Project

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