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Understanding Organizational Buying Behavior for Effective Marketing

Explore organizational buying behavior in business markets versus consumer markets, major influences on buyers, buying situations, participants in the buying process, and the purchasing/procurement process. Learn about the benefits and pitfalls of single-source solutions and systems buying arrangements, along with examples of major influences on industrial buying behavior. Discover how environmental, organizational, and interpersonal factors impact purchasing decisions.

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Understanding Organizational Buying Behavior for Effective Marketing

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  1. Chapter 8Analyzing Business Markets and Business Buying Behaviorby PowerPoint by Milton M. Pressley University of New Orleans

  2. Kotler on Marketing Many businesses are wisely turning their suppliers and distributors into valued partners.

  3. Chapter Objectives • In this chapter, we focus on six questions: • What is the business market, and how does it differ from the consumer market? • What buying situations do organizational buyers face? • Who participates in the business buying process? • What are the major influences on organizational buyers? • How do business buyers make their decisions? • How do institutions and government agencies do their buying?

  4. What is Organizational Buying? • Organizational buying • The business market versus the consumer market • Business market • Fewer buyers • Larger buyers • Close supplier-customer relationship • Geographically concentrated buyers

  5. What is Organizational Buying? • Derived demand • Inelastic demand • Fluctuating demand • Professional purchasing

  6. Blue Shield of California’s mylifepath

  7. What is Organizational Buying? • Several buying influences • Multiple sales calls • Directed purchasing • Reciprocity • Leasing

  8. Discussion Question If you were tasked with marketing a product or service to an organization, would you attempt to initially contact the purchasing department, or potential users of your company’s offerings? Why? Would the product youwere selling make a difference? Why?

  9. What is Organizational Buying? • Buying Situations • Straight rebuy • Modified rebuy • New Task • Systems Buying and Selling • Systems buying • Turnkey solution • Systems selling

  10. Discussion Question What are some of the benefits to an organization that can be derived from a single source solution, or a systems buying arrangement with a prime contractor? What are some of the potential pitfalls? What can the company do to protect itself from these hazards?

  11. Participants in the Business Buying Process • The Buying Center • Initiators • Users • Influencers • Deciders • Approvers • Buyers • Gatekeepers • Key buying influencers • Multilevel in-depth selling

  12. Figure 8-1: Major Influences on Industrial Buying Behavior

  13. Major Influences on Buying Decisions • Environmental Factors • Organizational Factors • Purchasing-Department Upgrading • Cross-Functional Roles • Centralized Purchasing • Decentralized Purchasing of Small-Ticket Items • Internet Purchasing

  14. The e-hub Plastics.com home page offers buyers and sellers of plastics a marketplace plus news and information

  15. Covisint’s Web site offers both services and information

  16. Major Influences on Buying Decisions • Other Organizational Factors • Long-Term Contracts • Vendor-managed inventory • Continuous replenishment programs • Purchasing-Performance Evaluation and Buyers’ Professional Development • Improved Supply Chain Management • Lean Production • Just-in-time

  17. Major Influences on Buying Decisions • Interpersonal and Individual Factors • Cultural Factors • France • Germany • Japan • Korea • Latin America

  18. The Purchasing/ Procurement Process • Incentive to purchase • Three Company Purchasing Orientations • Buying Orientation • Commoditization • Multisourcing • Procurement Orientation • Materials requirement planning (MRP) • Supply Chain Management Orientation

  19. The Purchasing/ Procurement Process • Types of Purchasing Processes • Routine products • Leverage products • Strategic products • Bottleneck products

  20. The Purchasing/ Procurement Process • Stages in the Buying Process • Problem Recognition • General Need Description and Product Specification • Product value analysis • Supplier Search • Vertical hubs • Functional hubs • Direct external links to major suppliers • Buying alliances • Company buying sites • Request for proposals (RFPs)

  21. Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations (Buyclasses)

  22. The Purchasing/ Procurement Process • General Need Description and Product Specification • Product value analysis • Supplier Search • Vertical hubs • Functional hubs • Direct extranet links to major suppliers • Buying alliances • Company buying sites • Request for proposals (RFPs)

  23. The Purchasing/ Procurement Process • Proposal Solicitation • Supplier Selection

  24. Table 8-2: An Example of Vendor Analysis

  25. The Purchasing/ Procurement Process • Customer value assessment • Routine-order products • Procedural-problem products • Political-problem products • Order-Routine Specification • Blanket contract • Stockless purchase plans • Performance Review • Buyflow map

  26. Figure 8-2: Major Influences on Industrial Buying Behavior

  27. Institutional and Government Markets • Institutional market

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