McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 5, YOU SHOULD BE ABLE TO:

Distinguish among industrial, reseller, and government organizational markets.

LO1

Describe the key characteristics of organizational buying that make it different from consumer buying.

LO2

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LO3

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 5, YOU SHOULD BE ABLE TO:

Explain how buying centers and buying situations influence organizational purchasing.

Recognize the importance and nature of online buying in organizational markets.

LO4

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BUYING PUBLICATION PAPER IS A SERIOUS MARKETING RESPONSIBILITY AT JCPENNEY

5-4

Business Marketing

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

LO1

Organizational Buyers

• Industrial Markets(Industrial Firms)

• Reseller Markets(Resellers)

• Government Markets(Government Units)

Retailers

Wholesalers

Mars Curiosity

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FIGURE 5-A Type and number of organization establishments in the U.S.: 2007

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MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND

GOVERNMENT MARKETS

LO1

North AmericanIndustry ClassificationSystem (NAICS)

North American Free Trade Agreement (NAFTA)

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FIGURE 5-1 NAICS breakdown for the information industries sector:NAICS code 51 (abbreviated)

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FIGURE 5-2 Key characteristics and dimensions of organizational buying behavior

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Derived Demand

Size of Order or Purchase

Number of Potential Buyers

CHARACTERISTICS OFORGANIZATIONAL BUYING

LO2

Organizational Buying Objectives

• Profits • Efficiency

• Women/MinoritySuppliers/Vendors

• Environment

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CHARACTERISTICS OFORGANIZATIONAL BUYING

LO2

Supplier Development

Organizational Buying Criteria

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MARKETING MATTERSHarley-Davidson’s Supplier Collaboration

Creates Customer Value…and a Great Ride

LO2

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FIGURE 5-3 Product and supplier selection criteria for buying machine vision equipment emphasize factors other than price

An optic component in a largermachine vision system for soft drink cans

Percentage of machine vision buyersciting individual selection criteria

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CHARACTERISTICS OFORGANIZATIONAL BUYING

LO2

Buyer-Seller Relationships and Supply Partnerships

• Reciprocity

• Supply Partnership

• Sustainable Procurement

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MAKING RESPONSIBLE DECISIONSSustainable Procurement for Sustainable Growth

LO2

Starbucks

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• Alternative Evaluation

CHARTING THEORGANIZATIONAL BUYING PROCESS

STAGES IN THE ORGANIZATIONAL BUYING PROCESS

LO3

Organizational Buying Behavior

• Purchase Decision

• Problem Recognition

• Information Search

• Postpurchase Behavior5-16

FIGURE 5-4 Comparing the stages in a consumer and organizational purchase decision process

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CHARACTERISTICS OFORGANIZATIONAL BUYING

THE BUYING CENTER

LO3

Buying Center

Buying Committee

People in the Buying Center

Roles in the Buying Center• Users

• Influencers

• Buyers

• Deciders

• Gatekeepers

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CHARACTERISTICS OFORGANIZATIONAL BUYING

THE BUYING CENTER

LO3

Buy Classes

• Straight Rebuy

• Modified Rebuy

• New Rebuy

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FIGURE 5-5 The buying situation affects buying center behavior in different ways

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Prominence of Online Buyingin Organizational Markets

ONLINE BUYING INORGANIZATIONAL MARKETS

LO4

E-marketplaces

Online Auctions in Organizational Markets

• Traditional Auction

• Reverse Auction

AgentricsVideo

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MARKETING MATTERSeBay Means Business for Entrepreneurs

LO4

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FIGURE 5-6 How buyer and seller participants and price behavior differ by type of online auction

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TREK: BUILDING BETTER BIKES THROUGH ORGANIZATIONAL BUYING

VIDEO CASE 5

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VIDEO CASE 5TREK

1. What is the role of the buying center at Trek? Who is likely to comprise the buying center in the decision to select a new supplier at Trek?

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VIDEO CASE 5TREK

2. What selection criteria does Trek utilize when it selects a new supplier or evaluates an existing supplier?

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VIDEO CASE 5TREK

3. How has Trek’s interest in the environmental impact of its business influenced its organizational buying process?

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VIDEO CASE 5TREK

4. Provide an example of each of the three buying situations—straight rebuy, modified rebuy, and new buy—at Trek.

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Business Marketing

Business marketing involves 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.

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Organizational Buyers

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

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North American Industry Classification System (NAICS)

The North American Industry Classification System (NAICS) provides common industry definitions for Canada, Mexico, and the United States, which makes it easier to measure economic activity in the three member countries of the North American Free Trade Agreement (NAFTA).

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Derived Demand

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

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Buying Center

A buying center consists of the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge importantto a purchase decision.

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Buy Classes

Buy classes consists of three types of organizational buying situations: straight rebuy, new buy, and modified rebuy.

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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.

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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. Also called B2B exchanges or e-hubs.

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Traditional Auction

A traditional auction, inan e-marketplace, is an online auction in which a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other.

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Reverse Auction

A reverse auction, in ane-marketplace, is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other.

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