Marketing Chapter 5: Organizational Buying Behavior

Characteristics of organizational buying

-few customers, purchase orders are large -multiple parties participate in purchase decisions

5 roles in the buying center

1. user 2. influencer- help define specifications 3. buyer 4. deciders- select the supplier that receives the contract 5. gatekeepers-control flow of into in buying center

buy classes

3 types of organizational buying situations

3. Alternative Evaluation

Assessing value. -Meet with vendors -Assess facilities, capacity, quality

Organizational buyers

Buy goods and services for their own use or for retail ex. manufacturers, wholesalers, retailers, and government agencies

4. Purchase decision

Buying value -use key buying criteria to evaluate -negotiate contract, award

5. Postpurchase behavior

Consuming/using value -Evaluate: using formal vendor rating system

Buying Center

Group of people who participate in the buying process to a purchase decision. Cross functional, depends on item being bought.

1. Problem Recognition

Perceiving a need. -Identify an opportunity -"Make-buy" decision

2. Information Search

Seeking value -designers draft specifications -purchasing identifies potential vendors

supplier partnerships

buyer and supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering cost or increasing value

Modified rebuy

change product specifications, price, delivery schedule

Derived demand

demand for industrial products and services is driven by demand for consumer products and services

Industrial markets

firms that in some way reprocess a product they buy before selling it again to the next buyer

New rebuy

first time purchase of product greater potential risks greater risk largest buying center

Business marketing

marketing products to firms, governments, or non profit organizations

Organizational buying criteria

objective attributes of the suppliers products and services and the capabilities of the supplier itself

Reverse marketing

organizational buyers shape suppliers' products, services, and capabilities to meet needs

supplier development

organizational buyers transforming buying criteria into specific requirements communicated to prospective buyers

Common key criteria

price, reliability delivery time, ability to meet schedules ability to meet quality specifications technical capabilities technical assistance post-sale service production facilities and capacity

organizational buying behavior

process by which organizations determine the need for products and then choose among alternative suppliers

North American Industry Classification System (NAICS)

provides common industry definitions for Canada, Mexico, and the US

Straight rebuy

reorder existing product or service from list of vendors. Routine, low involvement ex. office suppliers

Reseller

wholesalers and retailers that buy physical products and resell them again without any reprocessing