ORGANIZA-TIONAL MARKETS AND BUYER BEHAVIOR

1. CHAPTER ORGANIZA-TIONAL MARKETS AND BUYER BEHAVIOR

2. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Distinguish among industrial, reseller, and government organizational markets. • Describe the key characteristics of organizational buying that make it different from consumer buying.

3. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Explain how buying centers and buying situations influence organizational purchasing. • Recognize the importance and nature of online buying in industrial, reseller, and government organizational markets.

4. BUYING PAPER IS A STRATEGIC BUSINESS DECISION AT JCPENNEY

5. THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS • Business Marketing • Organizational Buyers • Industrial Markets (Industrial Firms) • Reseller Markets (Resellers) • Government Markets (Government Units)

6. FIGURE 6-1Type and number of organizational customers in the U.S.

7. MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND GOVERNMENT MARKETS • North American Industry ClassificationSystem (NAICS)

8. FIGURE 6-2NAICS breakdown for information industries sector:NAICS code 51 (abbreviated)

9. Concept Check 1. What are the three main types of organizational buyers? A: industrial firms; resellers; government units

10. Concept Check 2. What is the North American Industry Classification System (NAICS)? A: The NAICSprovides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of NAFTA.

11. CHARACTERISTICS OF ORGANIZATIONAL BUYING • Demand Characteristics • Derived Demand • Size of the Order or Purchase • Number of Potential Buyers • Organizational Buying Objectives • Organizational Buying Criteria • Reverse Marketing

12. FIGURE 6-3Key characteristics of organizational buying behavior

13. FIGURE 6-AKey organizational buying criteria

14. CHARACTERISTICS OF ORGANIZATIONAL BUYING • Buyer-Seller Relationships andSupply Partnerships • Reciprocity • Supply Partnership

15. THE ORGANIZATIONAL BUYING PROCESS AND THE BUYING CENTER • Organizational Buying Behavior • Stages in the Organizational Buying Process • The Buying Center: A Cross-Functional Group • Buying Center • Buying Committee • People in the Buying Center

16. FIGURE 6-4Comparing the stages in consumer and organizational purchases

17. THE ORGANIZATIONAL BUYING PROCESS AND THE BUYING CENTER • The Buying Center: A Cross-Functional Group • Roles in the Buying Center • Users • Deciders • Influencers • Gatekeepers • Buyers

18. Buying Center Who is in the buying center andwhat roles do they play?

19. THE ORGANIZATIONAL BUYING PROCESS AND THE BUYING CENTER • The Buying Center: A Cross-Functional Group • Buying Situations (Buy Classes) and the Buying Center • Straight Rebuy • Modified Rebuy • New Buy

20. FIGURE 6-5How the buying situation affects buying center behavior

21. Concept Check 1. What one department is almost always represented by a personin the buying center? A: purchasing department

22. Concept Check 2. What are the three types of buying situations or buy classes? A: straight rebuy; modified rebuy;new buy

23. ONLINE BUYING IN ORGANIZATIONAL MARKETS • Prominence of Online Buying in Organizational Markets • E-marketplaces: Virtual Organizational Markets • Trading Communities • Private Exchanges

24. ONLINE BUYING IN ORGANIZATIONAL MARKETS • Online Auctions in Organizational Markets • Traditional Auction • Reverse Auction

25. FIGURE 6-6How buyer and seller participants and price behavior differ by type of online auction

26. Concept Check 1. What are e-marketplaces? A: E-marketplaces are online trading communities that bring together buyers and supplier organizations.

27. Concept Check 2. In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices? A: traditional auction; reverse auction

28. NAVIGATING THE NAICS GOING ONLINE

29. Going Online • 1.What is the three-digit industry subsector code for food manufacturing?

30. Going Online • 2.What is the six-digit U.S. code for dog and cat food manufacturing?

31. Going Online • 3.How many establishments and what is the value of shipments sold by the U.S. dog and cat food manufacturing industry based on the latest government statistics?

32. LANDS’ END:WHERE BUYERS RULE VIDEO CASE 6

33. VIDEO CASE 6Lands’ End

34. VIDEO CASE 6Lands’ End • 1.Who is likely to make up the buying center in the decision to select a new supplier for Lands’ End? Which of the buying center members are likely to play the roles of users, influencers, buyers, deciders, and gatekeepers?

35. VIDEO CASE 6Lands’ End • 2.Which stages of the organizational buying decision process does Lands’ End follow when it selects a new supplier? What selection criteria does the company utilize in the process?

36. VIDEO CASE 6Lands’ End • 3.Describe purchases Lands’ End buyers typically face in each of the three buying situations: straight rebuy, modified rebuy, and new buy.

37. HOW ORGANIZATIONSCAN IMPROVE THEIR PURCHASING SUPPLEMENTALLECTURE NOTE 6-1

38. BUYING CENTER ROLE-PLAY IN-CLASS ACTIVITY 6-1

39. Sprint FonPromotions Brochure

40. Sprint Prepaid Business Card

41. Sprint Prepaid Phone Card

42. Business Marketing Business marketing is the marketing of 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.

43. Organizational Buyers Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.

44. 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).

45. Derived Demand Derived demand means the demand for industrial products and services is driven by, or derived from, demand for consumer products and services.

46. 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.

47. Organizational Buying Behavior Organizational buying behavior is the decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers.

48. Buying Center A buying center is the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.

49. Buy Classes Buy classes consist of three types of buying situations: straight rebuy; modified rebuy; and new buy.

50. E-Marketplaces 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.