© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-2 ORGANIZA- TIONAL MARKETS AND BUYER BEHAVIOR C HAPTER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Distinguish among industrial, reseller, and government organizational markets. 2.Describe the key characteristics of organizational buying that make it different from consumer buying.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-4 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 3.Explain how buying centers and buying situations influence organizational purchasing. 4.Recognize the importance and nature of online buying in industrial, reseller, and government markets.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS Slide 6-6 Business Marketing Organizational Buyers Industrial Markets (Industrial Firms)Industrial Markets (Industrial Firms) Reseller Markets (Resellers)Reseller Markets (Resellers) Government Markets (Government Units)Government Markets (Government Units) Global Organizational Markets

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-7 FIGURE 6-1 FIGURE 6-1 Type and number of organizational customers in the U.S.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-13 Demand Characteristics  Derived Demand Derived Demand Size of the Order or Purchase Number of Potential Buyers Organizational Buying Objectives

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-14 FIGURE 6-3 FIGURE 6-3 Key characteristics of organizational buying behavior

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-16 Organizational Buying Criteria  ISO 9000 ISO 9000  Reverse Marketing Reverse Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-17 FIGURE 6-A FIGURE 6-A Key organizational buying criteria

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-19 Buyer-Seller Relationships and Supply Partnerships  Reciprocity Reciprocity  Supply Partnership Supply Partnership

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-21 The Buying Center: A Cross-Functional Group  Buying Center Buying Center  Buying Committee  People in the Buying Center

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-22 The Buying Center: A Cross-Functional Group  Roles in the Buying Center Users Influencers Buyers Deciders Gatekeepers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-23 Buying Center Who is in the buying center and what roles do they play?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-24 FIGURE 6-B FIGURE 6-B Five roles in the buying center

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARACTERISTICS OF ORGANIZATIONAL BUYING Slide 6-25 The Buying Center: A Cross-Functional Group  Buying Situations (Buy Classes) and the Buying Center Buying Situations (Buy Classes) and the Buying Center Straight Rebuy Modified Rebuy New Buy

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-26 FIGURE 6-4 FIGURE 6-4 How the buying situation affects buying center behavior

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARTING THE ORGANIZATIONAL BUYING PROCESS Slide 6-29 Organizational Buying Behavior Stages in the Organizational Buying Process

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-30 FIGURE 6-5 FIGURE 6-5 Comparing the stages in consumer and organizational purchases

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARTING THE ORGANIZATIONAL BUYING PROCESS Slide 6-31  Information Search Buying a Machine Vision System Value Analysis Value Analysis  Alternative Evaluation Bidder’s List Bidder’s List  Problem Recognition Make-Buy Decision Make-Buy Decision

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CHARTING THE ORGANIZATIONAL BUYING PROCESS Slide 6-32  Purchase Decision  Postpurchase Behavior Buying a Machine Vision System

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ONLINE BUYING IN ORGANIZATIONAL MARKETS Slide 6-36 Prominence of Online Buying in Organizational Markets E-marketplaces: Virtual Organizational MarketsE-marketplaces: Virtual Organizational Markets

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-37 WEB LINK eBay Means Business Too

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ONLINE BUYING IN ORGANIZATIONAL MARKETS Slide 6-38 Online Auctions in Organizational Markets  Traditional Auction Traditional Auction  Reverse Auction Reverse Auction

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-39 FIGURE 6-6 FIGURE 6-6 How buyer and seller participants and price behavior differ by type of online auction

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-57 Business Marketing Business marketing is 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.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-58 Organizational Buyers Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-59 Industrial Firms Industrial firms are organizational buyers that in some way reprocesses a product or service they buy before selling it again to the next buyer.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-60 Resellers Resellers are wholesalers and retailers that buy physical products and resell them again without any processing.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-61 Government Units Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-62 North American Industry Classification System (NAICS) The NAICS provides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of the North American Free Trade Agreement (NAFTA).

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-63 Derived Demand Derived demand means the demand for industrial products and services is driven by, or derived from, demand for consumer products and services.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-64 Organizational Buying Criteria Organizational buying criteria are the objective attributes of the supplier’s products and services and the capabilities of the supplier itself.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-65 ISO 9000 ISO 9000 consists of standards for registration and certification of a manufacturer’s quality management and assurance system based on an on-site audit of practices and procedures developed by the International Standards Organization (ISO).

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-66 Reverse Marketing 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.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-67 Reciprocity Reciprocity is an industrial buying practice in which two organizations agree to purchase each other’s products and services.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-68 Supply Partnership A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-69 Buying Center A buying center is the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-70 Buy Classes Buy classes consist of three types of buying situations: straight rebuy; modified rebuy; and new buy.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-71 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.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-72 Make-Buy Decision A make-buy decision is an evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-73 Value Analysis Value analysis is a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-74 Bidder’s List A bidder’s list is a list of firms believed to be qualified to supply a given item.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-75 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. E-Marketplaces

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-76 A traditional auction 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. Traditional Auction

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 6-77 A reverse auction 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. Reverse Auction