Download Chapter 7

Marketing
Chapter 7
Organizational
Buying Behavior
Gilbert A. Churchill, Jr.
J. Paul Peter
“A transaction in which a product is sold for any use
other than personal consumption”
Slide
7-1
Figure
7.1
A Comparison of Organizational
Buyers and Consumers
Characteristic
Organizational Buyers
Consumers
Number of buyers in
market
Few
Size of Purchases
Large
Decision Criteria
Primarily Rational
Rational and emotional
Location
Concentrated
Dispersed
Distribution
More Direct
More Indirect
Interdependence
between buyer and
seller
Strong
Weak
Number of people
involved in purchase
decisions
Many
Few
Many
Small
Source: Based in part on information in Philip R. Cateora, International Marketing, 9th ed. (Burr Ridge, Ill: Irwin, 1996) chapter 10.
Slide
7-2
Categories of Organizational Buyers
National & local
organizations
providing goods
& services to
people in their
care
Buy finished
goods & sell
them to other
businesses or
customers for a
profit
Purchase goods
Producers
Intermediaries
Government
Agencies
General Motors
Crown Books
Air Force
Harvard
University
Boeing
Campus Store
Park Service
St Mary’s
Hospital
Amazon.com
New York City
United Way
Buy goods &
services to
produce other
goods &
services
& services for
carrying out the
main functions
of the
government
Institution
Slide
7-3
Business Classification Systems
Standard
US Government
System
Industrial
Thomas
Classification
Register
Code
Private
System
Slide
7-4
Demand Principles
Derived Demand
Demand for organizational goods
that is dependent on the demand
for consumer goods.
Accelerated Principle
A small change in consumer
demand for a product can result
in a large change in the demand
for organizational goods and
services to produce the product.
Joint Demand
Demand for one organizational
good is dependent on the demand
for another organization good.
Slide
7-5
Figure
7.5
The Organizational Buying Process
Recognize a
Need or
Problem
Assign
Responsibility
for Making a
Purchase
Decision
Search for
Alternatives
Evaluate and
Select an
Alternative
Make a
Purchase
Evaluate
Performance
of Product and
Supplier
Slide
7-6
Types of Business Products
Major Equipment
(machinery, generators)
Accessory Equipment
(drills, fax machines)
Raw Materials
(lumber, wheat, vegetables
Component Parts
(tires spark plugs)
Major
Categories of
Business-toBusiness
Products
Processed Materials
(corn syrup, sheet metal)
Supplies
(pencils, paper towels)
Business Services
(janitorial & legal services)
Slide
7-7
Table
7.2
Types of Organizational Purchases
Low Involvement
Purchase
Type
Complexity
Time
Frame
Number of
Suppliers
Applications
Straight rebuy
Simple
Short
One
Frequently purchased
routine products, such
as printer cartridges
Modified buy
Moderate
Medium
Few
Routine purchase
that has changed in
some way, such as
air travel (new fares,
flights, destinations)
New task
purchase
Complex
Long
Many
Expensive, seldompurchased products,
such as new
production equipment
High Involvement
Slide
7-8
Vendor Analysis - Compare Suppliers
Example of Vendor Analysis in a Microcomputer Buying Situation
Rating scale
Attributes
Unacceptable
(0)
Poor
(1)
Fair
(2)
Good
(3)
X
Compatibility
Affordability
X
X
Reliability
Product line depth
Excellent
(4)
X
X
Service/support
X
Flexibility
Total score: 4 + 2 + 4 + 2 + 4 + 3 = 19
Average score: 19 ÷ 6 = 3.17
Slide
7-9
Table
7.3
Functional Areas and Their Key
Purchasing Concerns
Functional
Area
Design and
development
engineering
Production
Sales/Marketing
Key Concerns in Purchasing Decision Making
Name reputation of vendor; ability of vendors to meet
design specifications
Delivery and reliability of purchases
Impact of purchased items on marketability of the
company’s products
Maintenance
Compatibility with existing facilities, maintenance
service and installation arrangements
Finance/accounting
Effects of purchases on cash flow, financial statements
and existing budgets
Purchasing
Obtaining lowest possible price at acceptable quality
levels; maintaining good relations with vendors
Quality Control
Assurance that purchased items meet prescribed
specifications
Slide
7-10
Approaches to Organizational Buying
Office
Space
Inspection
Buying
Government
Contracts
Competitive
Bidding
Buyer
Contract
Buying
New
Building
Sampling
Buying
Fruits &
Vegetables
Description
Buying
Bolts
Slide
7-11
Ethical Issues
Source Loyalty
Ethics
Reciprocity
Slide
7-12
Figure
7.8
The Buying Center
Initiator
Identifies Need
Gatekeeper
Controls
Information
Flow
User
Uses Product
Influencer
Affects
Buying
Decision
Decider
Has Expertise or
Power to Make
or Approve
Selection
Buyer
Has
Responsibility to
Select Vendor
and Negotiate
Terms