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Chapter 7Chapter 7
Business Markets & Business Markets & Organizational BuyingOrganizational Buying
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ObjectivesObjectives
ID components of business marketsLearn steps of organizational buying
decisionsCharacterize basic organizational buying
situationsExplore effect of Internet on B-to-B marketingUnderstand importance of the buying centerExplore needs of organizational buyers, and
strategies to meet those needsDescribe nature of organizational demandOverview NAICS and its usefulness
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Key questions:
•Who bought it?
•Why did they buy it?
Key questions:
•Who bought it?
•Why did they buy it?
Business-to-Business Business-to-Business MarketingMarketing
Any sale to an industrial user, wholesaler, retailer, or organization other than the ultimate consumer. . .
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Characteristics of the Characteristics of the Business MarketBusiness Market
RelativelyRelativelyfew customersfew customersRelativelyRelativelyfew customersfew customers
GeographicalGeographicalConcentrationConcentrationGeographicalGeographicalConcentrationConcentration
Prefer to buyPrefer to buydirect fromdirect frommanufacturermanufacturer
Prefer to buyPrefer to buydirect fromdirect frommanufacturermanufacturer
Expertise inExpertise inbuyingbuyingExpertise inExpertise inbuyingbuying
ImportanceImportanceof repeat of repeat transactionstransactions
ImportanceImportanceof repeat of repeat transactionstransactions
GlobalGlobalCompetitionCompetition
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Buy Phase: Steps in Buy Phase: Steps in Organizational BuyingOrganizational Buying
Step 1:Step 1:IdentificationIdentificationof the needof the need
Step 2:Step 2:EstablishEstablishObjectivesObjectives
Step 3:Step 3:ID Suppliers/ID Suppliers/Evaluate Evaluate AlternativesAlternatives
Step 4:Step 4:Selection ofSelection ofSuppliers/Suppliers/NegotiationsNegotiations
Step 5:Step 5:Establish Establish RelationshipRelationship
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Three buying situationsThree buying situations
Straight rebuy: Automatic and regular purchase of familiar productsModified rebuy: Buyer is not completely satisfied with current suppliers and shops aroundNew task buying: Buyer seeks to fill a need never before addressed
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The Internet Dramatically The Internet Dramatically Changes Organizational Changes Organizational
BuyingBuying
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The Internet Dramatically The Internet Dramatically Changes Organizational Changes Organizational
BuyingBuying
Information availability & dissemination
Customer customization
Customer serviceMessagingFAQ’s
Increase # of biddersDecrease costs
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BUYING CENTER
The Buying CenterThe Buying Center
Informal & dynamic
Cross-departmental
Information centerAcquisitionDisseminationProcessing
DATA INFORMATION
BUYING
DECISION
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Buying Center: RolesBuying Center: Roles
Roles of buying center individuals include….UsersGatekeepersInfluencersDecidersBuyers
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Roles in Organizational Roles in Organizational Buying: UsersBuying: Users
Roles in Organizational Roles in Organizational Buying: UsersBuying: Users
Employees and managers who will actually use the product
Employees and managers who will actually use the product
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Roles in Organizational Roles in Organizational Buying: BuyersBuying: Buyers
Roles in Organizational Roles in Organizational Buying: BuyersBuying: Buyers
Has the formal authority to purchase the product
Has the formal authority to purchase the product
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Roles in Organizational Roles in Organizational Buying: GatekeeperBuying: Gatekeeper
Roles in Organizational Roles in Organizational Buying: GatekeeperBuying: Gatekeeper
Controls the flow of information related to the purchase
Controls the flow of information related to the purchase
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Roles in Organizational Roles in Organizational Buying: DeciderBuying: Decider
Roles in Organizational Roles in Organizational Buying: DeciderBuying: Decider
Makes the actual purchase decision
Makes the actual purchase decision
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Roles in Organizational Roles in Organizational Buying: InfluencerBuying: Influencer
Roles in Organizational Roles in Organizational Buying: InfluencerBuying: Influencer
Affects the purchase decision by supplying advice or information
Affects the purchase decision by supplying advice or information
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Why Do Organizations Why Do Organizations Buy?Buy?
ProductProductQualityQuality
RelatedRelatedServicesServices
PricePrice
Delivery &Delivery &InventoryInventory
BottomBottomLineLine
Collab-Collab-orationoration
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Generalizations About Generalizations About Organizational DemandOrganizational Demand
INCREASED INTERNATIONAL
TRADE
DEMAND FOR BUSINESS
FLYING
DEMAND FOR AIRPLANES
DEMAND FOR SHEET METAL AND ALUMINUM
INCREASED MINING
REQUIRED
Derived demand: Ore
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Generalizations About Generalizations About Organizational DemandOrganizational Demand
Price inelasticityPrice/cost increases
passed to customerComponent prices small
% of total cost
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Generalizations About Generalizations About Organizational DemandOrganizational Demand
Fluctuating demandLinked to
economy’s ups and downs
Larger inventories maintained
Product durability
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North American Industry North American Industry Classification System Classification System
(NAICS)(NAICS)
Replaces SIC (Standard Industrial Classification system)
Incorporates technological changesCreates relevant & current industrial
databases
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ReviewReview
ID components of business marketsLearn steps of organizational buying
decisionsCharacterize basic organizational buying
situationsExplore effect of Internet on B-to-B marketingUnderstand importance of the buying centerExplore needs of organizational buyers, and
strategies to meet those needsDescribe nature of organizational demandOverview NAICS and its usefulness