The Organisation as Consumers Part 5 in Text book

Basic Framework Motivation Perception Search Evaluation Choice Learning

Characteristics of Business Markets Fewer but larger buyers Demand often derived from consumer demand - e.g. car industry buys steel because consumers buy cars Buying unit differs - more rational approach, more people involved Buying process usually more formalised

Marketing Mix - key differences Greater degree of negotiation Bid pricing may be involved Greater emphasis on personal selling Increasing use of e-commerce, extranets, Distributors and agents may be involved

Decision Making Unit (DMU) User -end user, may initiate request and help specify Influencer –technical personnel or specialists, help specify, provide information Buyer -formal authority holders, help specify, select vendors, negotiate Decider -final approver (often also buyer) Gatekeeper –control information flow to others, can prevent sales people gaining access

Types of Buying Decisions Straight Rebuy Modified Rebuy New Task

Straight re-buy - goods re-ordered without modification Modified re-buy - opportunity for competitors to enter discussions, essential service quality is good New buy - greater risk or cost, the fuller decision making unit involved

Steps in the Organisational Buying Decision Process Problem Recognition Information Search Alternate evaluation Purchase Decision Product Usage Ongoing Evaluation

Problem Recognition New Task? SR MR Remember a problem is not necessarily bad…

Information Search More Structured than consumer but still uses similar sources… Trade / Industry sources – directories, Magazines, exhibitions……. Supplier salesmen

Alternative Evaluation Specification Brief = exact requirements Tender Process

No one got fired for buying an IBM (computer) Purchase Decision Supplier Credentials Quality Systems Reputation Terms and Conditions Quality / Reliability / Support No one got fired for buying an IBM (computer)

Product Usage On going performance Actual Product Delivery Contractual obligations met…

Factors influencing industrial buying behaviour ENVIRONMENTAL Levels of demand Economic prospects Interest rates The pace of technological change Political and legal structures Competitive structures

Factors influencing industrial buying behaviour ORGANISATIONAL Objectives Policies Structures Systems & degree of centralisation Processes and procedures Managerial attitudes to risk Financial resource Previous experiences

Factors influencing industrial buying behaviour BUYING CENTRE Roles in DMU Group processes Interpersonal interactions

Factors influencing industrial buying behaviour INDIVIDUAL Personal objectives Job position Attitude to risk Previous experiences Technical knowledge Motivation

Firmographics A way of profiling like consumer analysis – segmentation SIZE, ACTIVITIES, OBJECTIVES, OWNERSHIP, SEVEN S’s

Organisational segmentation Macro-segmentation ! size of organisation ! location ! industry sector ! end use Micro-segmentation ! DMU structure ! decision process ! buy class ! type of purchasing organisation ! innovation level ! purchasing strategy

Organisational Culture Mckinsey 7 S’s From yesterday….

The 7S Framework Staff Strategy Systems Structure   Strategy Systems Structure Superordinate Goals / Shared Values Style Skills    

Strategy is the key What is a strategy? Strategy is a coherent set of actions aimed at gaining a sustainable advantage over the competition.. Integrated plan for development of marketing orientation SYSTEMS/STRUCTURE Formalised definitions of markets and mission -SHARED VISION/STYLE Detailed specification of marketing objectives Commitment to implementation SKILLS/STAFFING

Shared values The ideas of what is right and desirable - the mores of the organisation / individuals Typified by catch phrases / sound bites “We will become a fully customer driven organisation Customers come first Marketing expenditures are an investment Service is paramount” ??

Style The way that management behaves... Top management support - visible commitment to customer related activities Open communications between all functional groups and marketing staff Recognition/reward of customer /market oriented behaviour

Structure Clearly defined responsibilities and reporting lines Key accounts - recognising important customers Decentralised marketing staff to provide close and fast support to customers Staff rotation of non-marketing staff through customer contact positions

Systems Procedures and processes Information - flow Customer intelligence Competitor intelligence Marketing planning and control systems Providing information to customer facing staff Process easy for both customers and staff.

Skills/Staffing People in the organisational rather than personal context Recruitment of people with requisite skills / ability to acquire Provision of adequate number of customer service staff Marketing training -programmes and market Analytical skills in segmentation

China Southern Buying new aircraft. What is the buying decision process?

HAUT New IT System What would be important in the buying decision?

Mars Confectionery New packaging for new product? What would be important in the buying decision

Zara New supplier for garments What would be important in the selection process?

Appointment of a new Advertising Agency. Decision Importance Needs of the firm..

Basic Framework Motivation Perception Search Evaluation Choice Learning