Transcript Chapter 7: Business and Organizational Customers and

Chapter 7:
Business and
Organizational
Customers and
Their Buying Behavior
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Different Types of Customers
Manufacturers
Producers
Farms, mines, etc.
Financial Institutions
Other providers
Middlemen
All business and
organizational
customers
Governments
Nonprofits
Exhibit 7-1
7-3
Wholesalers
Retailers
Federal
State and Local
National
Local
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Issues in Organizational Buying
1. Must satisfy direct purchasers AND their
customers
2. Major focus on economic factors
3. Concentration of economic power.
4. Large buyers have buying specialists
5. Often have multiple buyers or influencers
 Users, Influencers, Buyers, Deciders,

& Gatekeepers
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Buying Center
Business purchases often involve multiple
influence
"Buying center"—all people who participate
in or influence a particular purchase
Buying center varies from purchase to
purchase
Does not appear on the "organizational
chart"
Structure may be formal or informal
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Issues in Organizational Buying
6. Organizational Buyers are more rational,
but personal factors can still be critical
7. Long-term buying agreements are more
common
8. Far more negotiation, especially for
larger purchases
9. Much more information sharing
10. Reciprocity
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Three Kinds of Organizational Buying Processes
 New-task buying
 An organization has a new need and the
consumer wants a great deal of information
 Modified rebuy
 the in-between process where some review of
the buying situation is done—though not as
much as in new-task buying
 Straight rebuy
 a routine repurchase that may have been made
many times before
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Organizational Buying Processes
Type of Process
Characteristics
New-Task
Buying
Modified
Rebuy
Straight
Rebuy
Time Required
Much
Medium
Little
Multiple Influences
Much
Some
Little
Review of Suppliers
Much
Some
None
Information Needed
Much
Some
Little
Exhibit 7-4
7-6
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Major Sources of Information Used
by Organizational Buyers
Personal Sources
Marketing Sources
Nonmarketing Sources
Salespeople
Others from supplier
firms
Trade shows
Buying center members
Outside business
associates
Consultants and outside
experts
Advertising in trade
publications
Sales literature
Impersonal Sources
Sales catalogs
Web page
Rating services
Trade associations
Product directories
Internet news pointcasts
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Basic Methods in Organizational Buying
Inspection
Sampling
Basic
Methods
Description
Negotiated
Contracts
7-7
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Definitions (not in book)
Inspection Buying – looking at every item
before buying
Sample Buying – looking only at part of a
potential purchase
Description Buying – buying from a written
or verbal description of the product
Competitive Bids – terms of sale offered by
suppliers in response to the buyers purchase
specifications
Negotiated Contract Buying – book pg 191
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Business Internet Purchases
Higher Percentage of Total Purchases
 More limited Buyer / Seller Pool
 Greater Dollar Volume
Possible to Buy or Get Bids Quickly
Often Done on Closed Sites Requiring
Permission to Participate
Closed Sites Often Used for Current
Customers
Very Common For Standardized Purchases
and Totally Unique Purchases (used)
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Buyer-Seller Relationships
 1] Building relationships and limiting the number
of suppliers you work with
 2] cooperation
 3] share information
 4] operational linkages
 5] contracts
 6] relationship specific adaptions
 7] risk of powerful customers
 8] buyers may still use multiple sources to cut
their risk.
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Resellers Buying Criteria
Will The Product Sell?
At What Price (Profit Margin) Can it Be
Sold For?
How Many Can Be Sold?
How Fast Will They Sell?
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Government Market
 Government units
 Federal government
 State governments
 Local governments
 Foreign countries
 Bid buying and negotiated contracts
 Sources of information
 Commerce Business Daily
 A variety of Internet web-sites
 Small Business Administration
 Government purchasing departments
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill