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© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-1
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-2
ORGANIZA-TIONAL
MARKETS AND BUYER
BEHAVIOR
CHAPTER
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-3
AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:
1. Distinguish among industrial, reseller, and government organizational markets.
2. Describe the key characteristics of organizational buying that make it different from consumer buying.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-4
AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:
3. Explain how buying centers and buying situations influence organizational purchasing.
4. Recognize the importance and nature of online buying in industrial, reseller, and government markets.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS
Slide 6-6
• Business Marketing
• Organizational Buyers
• Industrial Markets (Industrial Firms)
• Reseller Markets (Resellers)
• Government Markets (Government Units)
• Global Organizational Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-7
FIGURE 6-1FIGURE 6-1 Type and number of organizational customers in the U.S.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-13
• Demand Characteristics
Derived Demand
• Size of the Order or Purchase
• Number of Potential Buyers
• Organizational Buying Objectives
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-14
FIGURE 6-3FIGURE 6-3 Key characteristics of organizational buying behavior
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-16
• Organizational Buying Criteria
ISO 9000
Reverse Marketing
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-17
FIGURE 6-AFIGURE 6-A Key organizational buying criteria
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-19
• Buyer-Seller Relationships andSupply Partnerships
Reciprocity
Supply Partnership
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-21
• The Buying Center: A Cross-Functional Group
Buying Center
Buying Committee
People in the Buying Center
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-22
• The Buying Center: A Cross-Functional Group
Roles in the Buying Center
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-23
Buying CenterWho is in the buying center and
what roles do they play?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-24
FIGURE 6-B FIGURE 6-B Five roles in the buying center
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-25
• The Buying Center: A Cross-Functional Group
Buying Situations (Buy Classes) and the Buying Center
• Straight Rebuy
• Modified Rebuy
• New Buy
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-26
FIGURE 6-4FIGURE 6-4 How the buying situation affects buying center behavior
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARTING THE ORGANIZATIONAL BUYING PROCESS
Slide 6-29
• Organizational Buying Behavior
• Stages in the Organizational Buying Process
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-30
FIGURE 6-5FIGURE 6-5 Comparing the stages in consumer and organizational purchases
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARTING THE ORGANIZATIONAL BUYING PROCESS
Slide 6-31
Information Search
• Buying a Machine Vision System
• Value Analysis
Alternative Evaluation
• Bidder’s List
Problem Recognition
• Make-Buy Decision
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARTING THE ORGANIZATIONAL BUYING PROCESS
Slide 6-32
Purchase Decision
Postpurchase Behavior
• Buying a Machine Vision System
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
ONLINE BUYING IN ORGANIZATIONAL MARKETS
Slide 6-36
• Prominence of Online Buying in Organizational Markets
• E-marketplaces: Virtual Organizational Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-37
WEB LINK
eBay Means Business Too
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
ONLINE BUYING IN ORGANIZATIONAL MARKETS
Slide 6-38
• Online Auctions in Organizational Markets
Traditional Auction
Reverse Auction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-39
FIGURE 6-6FIGURE 6-6 How buyer and seller participants and price behavior differ by type of online auction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-57
Business Marketing
Business marketing is the marketingof goods and services to companies, governments, or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others.
Business marketing is the marketingof goods and services to companies, governments, or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-58
Organizational Buyers
Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-59
Industrial Firms
Industrial firms are organizational buyers that in some way reprocesses a product or service they buy before selling it again to the next buyer.
Industrial firms are organizational buyers that in some way reprocesses a product or service they buy before selling it again to the next buyer.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-60
Resellers
Resellers are wholesalers and retailers that buy physical products and resell them again without any processing.
Resellers are wholesalers and retailers that buy physical products and resell them again without any processing.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-61
Government Units
Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.
Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-62
North American Industry Classification System (NAICS)
The NAICS provides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of the North American Free Trade Agreement (NAFTA).
The NAICS provides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of the North American Free Trade Agreement (NAFTA).
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-63
Derived Demand
Derived demand means the demandfor industrial products and services is driven by, or derived from, demand for consumer products and services.
Derived demand means the demandfor industrial products and services is driven by, or derived from, demand for consumer products and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-64
Organizational Buying Criteria
Organizational buying criteria arethe objective attributes of the supplier’s products and services and the capabilities of the supplier itself.
Organizational buying criteria arethe objective attributes of the supplier’s products and services and the capabilities of the supplier itself.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-65
ISO 9000
ISO 9000 consists of standards for registration and certification of a manufacturer’s quality managementand assurance system based on anon-site audit of practices and procedures developed by the International Standards Organization (ISO).
ISO 9000 consists of standards for registration and certification of a manufacturer’s quality managementand assurance system based on anon-site audit of practices and procedures developed by the International Standards Organization (ISO).
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-66
Reverse Marketing
Reverse marketing involves the deliberate effort by organizational buyers to build relationships that shape suppliers’ products, services, and capabilities to fit a buyer’s needs and those of its customers.
Reverse marketing involves the deliberate effort by organizational buyers to build relationships that shape suppliers’ products, services, and capabilities to fit a buyer’s needs and those of its customers.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-67
Reciprocity
Reciprocity is an industrial buying practice in which two organizationsagree to purchase each other’s products and services.
Reciprocity is an industrial buying practice in which two organizationsagree to purchase each other’s products and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-68
Supply Partnership
A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer.
A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-69
Buying Center
A buying center is the group of peoplein an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.
A buying center is the group of peoplein an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-70
Buy Classes
Buy classes consist of three typesof buying situations: straight rebuy; modified rebuy; and new buy.
Buy classes consist of three typesof buying situations: straight rebuy; modified rebuy; and new buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-71
Organizational Buying Behavior
Organizational buying behavior isthe decision-making process that organizations use to establish the needfor products and services and identify, evaluate, and choose among alternative brands and suppliers.
Organizational buying behavior isthe decision-making process that organizations use to establish the needfor products and services and identify, evaluate, and choose among alternative brands and suppliers.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-72
Make-Buy Decision
A make-buy decision is an evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself.
A make-buy decision is an evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-73
Value Analysis
Value analysis is a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs.
Value analysis is a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-74
Bidder’s List
A bidder’s list is a list of firms believed to be qualified to supply a given item.A bidder’s list is a list of firms believed to be qualified to supply a given item.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-75
E-marketplaces are online trading communities that bring together buyers and supplier organizations to make possible the real time exchange of information, money, products, and services.
E-marketplaces are online trading communities that bring together buyers and supplier organizations to make possible the real time exchange of information, money, products, and services.
E-Marketplaces
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-76
A traditional auction is an online auction in which a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other.
A traditional auction is an online auction in which a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other.
Traditional Auction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-77
A reverse auction is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other.
A reverse auction is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other.
Reverse Auction
