4 Marketing Management SECTION 1 7th Edition Business, Government menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors C H A P T E R F O U R Marketing Management 7th Edition J. Paul Peter James H. Donnelly, Jr. 4 Business, Government and Institutional Buying McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

4 SECTION 1 Buyer Categories menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Buyer Categories PRODUCERS Businesses that buy goods and services in order to produce other goods and services INTERMEDIARIES Purchase products to resell at a profit 4

4 SECTION 1 Buyer Categories menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Buyer Categories GOVERNMENT AGENCIES 86,000 Government agencies spend trillions of dollars on machinery, equipment, facilities, supplies and services OTHER INSTITUTIONS 4 Such as hospitals, museums, universities, nursing homes, and churches

4 SECTION 1 Purchase Types New Task Purchase menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchase Types New Task Purchase > Most often used for big-ticket items, these purchases happen rarely and are heavily researched and formal Straight Rebuy > Routine reordering from a supplier used in the past Modified Rebuy > When some aspects of the buying process are unfamiliar 4

4 SECTION 1 Purchase Type Comparison New Task Purchase Complex Long menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchase Type Comparison TIME FRAME NO. OF SUPPLIERS COMPLEXITY New Task Purchase Complex Long Many Straight Rebuy Simple Short One 4 Modified Rebuy Moderate Medium Few FIGURE 4-2

4 SECTION 1 Purchasing Roles menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchasing Roles Initiators – Recognizing need starts process Users – People who use the product Influencers – People who affect the buying process 4

4 SECTION 1 Purchasing Roles menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchasing Roles Buyers – Those with formal authority and responsibility Deciders – Those with formal or informal power to select or approve suppliers Gatekeepers – Those who control information flow to the buying center 4

4 SECTION 1 Purchasing Policies menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchasing Policies Designed to ensure that the appropriate products and services are purchased efficiently and responsibility for purchasing is assigned appropriately Sole Sourcing – all of a particular product is purchased from a single supplier Direct buying – list of approved vendors for particular products Competitive bidding – for large, one-time purchases 4

4 SECTION 1 Behavioral Influences Personal Motivations menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Behavioral Influences Personal Motivations > Factors such as friendship, professional pride, fear and uncertainty, trust and personal ambition Role Perceptions > Their commitment lies in what they believe is their perceived or expected role 4

4 SECTION 1 Purchasing Agent Influences Design of the product menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Purchasing Agent Influences Design of the product Cost of the product Performance life Naming a specific supplier Assessing engineering support from the supplier Reduction of rejects 4

4 SECTION 1 Organizational Buying Process ORGANIZATIONAL NEED menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Organizational Buying Process ORGANIZATIONAL NEED VENDOR ANALYSIS PURCHASE ACTIVITIES 4 POSTPURCHASE EVALUATION

4 SECTION 1 Organizational Buying Process menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Organizational Buying Process ORGANIZATIONAL NEED Needs based on survivability and stated objectives of the organization VENDOR ANALYSIS 4 Search for, locate and evaluate potential providers of goods and services Rate them based on quality, on-time delivery, price, payment terms and use of technology

4 SECTION 1 Organizational Buying Process menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Organizational Buying Process PURCHASE ACTIVITIES Purchases can involve extensive negotiations on price, term of contract – increases with complex goods and services POSTPURCHASE EVALUATION 4 Does the purchase perform as expected? Will the supplier should be used again?

4 SECTION 1 Organizational Buying Distinctions menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Organizational Buying Distinctions How marketing to organizational buyers differs: More variation in buyer-seller relationships Shorter distribution channels Greater emphasis on personal selling Greater web integration Unique promotional strategies 4

4 SECTION 1 Understanding Buyers’ Code of Ethics menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Understanding Buyers’ Code of Ethics Avoid the intent or appearance of unethical activity. Demonstrate loyalty to employee by being lawful and using reason. Refrain from private or personal activity that could create conflicts of interest. Refrain from soliciting or accepting gifts, loans, or services from potential suppliers. 4

4 SECTION 1 Understanding Buyers’ Code of Ethics menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Understanding Buyers’ Code of Ethics 5. Handle confidential information with proper consideration. 6. Promote positive relationships with suppliers through impartiality. 7. Refrain from reciprocal agreements that restrain competition. 8. Know and obey both the letter and spirit of laws governing the purchasing function. 4

4 SECTION 1 Understanding Buyers’ Code of Ethics menu SECTION 1 Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors Understanding Buyers’ Code of Ethics 9. Encourage all segments of society to participate by supporting disadvantaged interests. 10. Discourage involvement in personal purchases that are not business related. 11. Enhance the stature of the purchasing profession by keeping up with current knowledge and standards. 12. Conduct international purchasing with regards to U.S. laws and ethical guidelines. 4

4 SECTION 1 The Authors menu J. Paul Peter, Ph.D. Chapter Four Buyer Categories Purchase Types Purchase Type Comparison Purchasing Roles Purchasing Policies Behavioral Influences Purchasing Agent Influences Organizational Buying Process Organizational Buying Distinctions Buyers’ Code of Ethics The Authors The Authors J. Paul Peter, Ph.D. University of Wisconsin – Madison 3Click image to go to author’s web site James H. Donnelly, Jr., Ph.D. University of Kentucky – Lexington 3Click image to go to author’s web site 4 Marketing Management 7th Edition – McGraw-Hill 3Click on the book to go to the book site PowerPoint design by Lance Fuhrer, MBA PowerPoint content by Larry Fuhrer, MBA, MBA Keller Graduate School of Management of DeVry University