Chapter 3b: Organizational Buying

Important Takeaways from Mediquip Case

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Types of Organizational Buyers

1. Industrial Market 2. Reseller Market 3. Government Market

Buying Center Member Roles

1. Users 2. Influencers 3. Buyers 4. Deciders 5. Gatekeepers

Role #2: Influencer

Affect the buying decision, usually by helping define the specifications for what is bought. E.g. A person who compares the CT Scanner to competitors.

Role #1: Users

Are the people in the organization who actually use the product or service. E.g. Radiologist for a CT Scanner.

Structure for Organizational Buying

Businesses purchasing products rather than an individual. Are manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that buy products and services for their own use or for resale.

Organization #1: Industrial Market

Businesses, modified re-sellers. These industrial firms in some way reprocess a product or service they buy before selling it again to the next buyer.

Key Characteristics of Organizational Buying Behavior

Demand is derived from consumption, only buy the product because they NEED it. Organizational Buying Criterion (Mediquip): >> Price >> Revenue Buying Center (Mediquip): >> Roles: User of product, decision maker, gatekeeper, influencer >> Situations: Objectives, relative power position.

Organization #3: Government Markets

Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.

Consumer vs Organizational: Differences

Organizational decision processes are more likely to be explicit and rational. Organizational decisions are most likely made in a group setting. >> Communication to each member of the group is KEY. >> Have to appeal to certain criterion which is dependent on the person you are dealing with. Organizational decisions usual take a longer. Consumers are typically more irrational.

Role #3: Buyers

Person who has formal authority and responsibility to select the supplier and negotiate the terms of the contract.

Organization #2: Resellers Market

Re-sellers, NO CHANGES MADE. Wholesalers and retailers that buy physical products and resell them again without any reprocessing are resellers.

Consumer vs Organizational: Similarities

The goals are the same, it is just a different type of consumer. Both want to be satisfied with the product they are investing time and money into. Satisfaction of customer needs drives market success.

Types of Buying Situations

The number of people in the buying center largely depends on the specific buying situation.

Role #5: Gatekeeper

This person controls the flow of information in the buying center. Keep salespeople or information from reaching people performing the other four roles. E.g. Secretary in Medquip Case

Role #4: Decider

This person has the formal or informal power to select or approve the supplier that receives the contract. Usually the buyer or purchasing manager.