© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ORGANIZATIONAL MARKETS AND BUYER BEHAVIOR

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Business marketing Organizational buyers THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Type and number of US organizational customers

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Industrial Markets  Industrial firms Industrial firms Reseller Market  Resellers Resellers Government Markets  Government Units Government Units Global Organizational Markets THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin North American Industry Classification SystemNorth American Industry Classification System MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND GOVERNMENT MARKETS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NAICS breakdown for information industries sector: NAICS code 51 (abbreviated)

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Demand Characteristics  Derived demand Derived demand Size of the Order or Purchase Number of Potential Buyers Organizational Buying Objectives CHARACTERISTICS OF ORGANIZATIONAL BUYING

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organizational Buying Criteria  ISO 9000 ISO 9000  Reverse marketing Reverse marketing CHARACTERISTICS OF ORGANIZATIONAL BUYING

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Buyer-Seller Relationships and Supply Partnerships  Reciprocity Reciprocity  Supply partnership Supply partnership CHARACTERISTICS OF ORGANIZATIONAL BUYING

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Buying Center: A Cross- Functional GroupBuying Center People in the Buying Center Roles in the Buying Center Buying Situations and the Buying Center  Buy classes Buy classes CHARACTERISTICS OF ORGANIZATIONAL BUYING

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How they buying situation affects buying center behavior

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Stages in the Organizational Buying Process  Organizational buying behavior Organizational buying behavior CHARTING THE ORGANZATIONAL BUYING PROCESS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Problem Recognition  Make-buy decision Make-buy decision Information Search  Value analysis Value analysis CHARTING THE ORGANZATIONAL BUYING PROCESS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Comparing the stages in consumer and organizational purchases

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Alternative Evaluation  Bidder’s list Bidder’s list Purchase Decision Postpurchase Behavior CHARTING THE ORGANZATIONAL BUYING PROCESS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Prominence of Online Buying in Organizational Markets E-Marketplaces: Virtual Organizational MarketsE-Marketplaces Online Auctions in Organizational Markets ONLINE BUYING IN ORGANIZATIONAL MARKETS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How buyer and seller participants and price behavior differ by type of online auction

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Online Auctions in Organizational Markets  Traditional auction Traditional auction  Reverse auction Reverse auction ONLINE BUYING IN ORGANIZATIONAL MARKETS

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Business marketing is the marketing of goods and services to commercial enterprises, governments, and other profit and not-for-profit organizations for use in the creations of goods and services that they then produce and market to other business consumers, as well as individuals and ultimate consumers. Business Marketing

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organizational buyers are those manufacturers, wholesalers and retailers, and government agencies that buy goods and services for their own use or for resale. Organizational Buyers

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Industrial firms reprocess a product or service they buy before selling it again to the next buyer. Industrial Firms

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Wholesalers and retailers who buy physical products and resell them again without an reprocessing are resellers. Resellers

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve. Government Units

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The North American Industry Classification System (NAICS) provides common industry definitions for Canada, Mexico, and the United States. North American Industry Classification Systems

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Derived demand means that the demand for industrial products and services is driven by, or derived from, demand for consumer products and services. Derived Demand

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organizational buying criteria are the objective attributes of the supplier’s products and services and the capabilities of the supplier itself. Organizational Buying Criteria

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ISO 9000 standards are standards for registration and certification of a manufacturer’s quality management and assurance system based on an on-site audit of practices and procedures. ISO 9000

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Reverse marketing involves the deliberate effort by organizational buyers to build relationships that shape suppliers’ products services, and capabilities to fit a buyer’s needs and those of its customers. Reverse Marketing

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Reciprocity is an industrial buying practice in which two organization agree to purchase each other’s products and services. Reciprocity

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost and/or increasing the value of products and services delivered to the ultimate consumer. Supply Partnership

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A buying center is made up of several people in an organization who participate in the buying process. Buying Center

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Buy classes are straight rebuy, modified rebuy, and new buy. Buy Classes

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organizational buying behavior is the decision- making process that organizations use to establish the need for products and services and identify, evaluate, and chose among alternative brands and suppliers. Organizational Buying Behavior

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A make-buy decision is an evaluation of whether components and assemblies will be purchased form outside suppliers or built by the company itself. Make-Buy Decision

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Value analysis is the systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs. Value Analysis

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A bidder’s list is a list of firms believed to be qualified to supply a given item. Bidder’s List

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin E-marketplaces are online trading communities that bring together buyer and seller organizations. E-Marketplaces

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin In a traditional auction a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other. Traditional Auction

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin In a reverse auction, a buyer communicates a need for a product of service and would-be suppliers are invited to bid in competition with each other. Reverse Auction