For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 7: Business and Organizational Customers and Their Buying Behavior

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 7-3 Different Types of Customers Exhibit 7-1 All business and organizational customers Producers Middlemen Governments Nonprofits Manufacturers Farms, mines, etc. Financial Institutions Other providers National Local Federal State and Local Wholesalers Retailers

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Issues in Organizational Buying 1. Must satisfy direct purchasers AND their customers 2. Major focus on economic factors 3. Concentration of economic power. 4. Large buyers have buying specialists 5. Often have multiple buyers or influencers Users, Influencers, Buyers, Deciders, & Gatekeepers

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Buying Center Business purchases often involve multiple influence "Buying center"—all people who participate in or influence a particular purchase Buying center varies from purchase to purchase Does not appear on the "organizational chart" Structure may be formal or informal

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Issues in Organizational Buying 6. Organizational Buyers are more rational, but personal factors can still be critical 7. Long-term buying agreements are more common 8. Far more negotiation, especially for larger purchases 9. Much more information sharing 10. Reciprocity

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Three Kinds of Organizational Buying Processes New-task buying An organization has a new need and the consumer wants a great deal of information Modified rebuy the in-between process where some review of the buying situation is done—though not as much as in new-task buying Straight rebuy a routine repurchase that may have been made many times before

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill LittleSomeMuch NoneSomeMuch LittleSomeMuch LittleMediumMuch Information Needed Review of Suppliers Multiple Influences Time Required Characteristics New-Task Buying Modified Rebuy Straight Rebuy Type of Process 7-6 Exhibit 7-4 Organizational Buying Processes

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Major Sources of Information Used by Organizational Buyers

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Basic Methods Inspection Description Negotiated Contracts Sampling 7-7 Basic Methods in Organizational Buying

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Definitions (not in book) Inspection Buying – looking at every item before buying Sample Buying – looking only at part of a potential purchase Description Buying – buying from a written or verbal description of the product Competitive Bids – terms of sale offered by suppliers in response to the buyers purchase specifications Negotiated Contract Buying – book pg 191

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Business Internet Purchases Higher Percentage of Total Purchases More limited Buyer / Seller Pool Greater Dollar Volume Possible to Buy or Get Bids Quickly Often Done on Closed Sites Requiring Permission to Participate Closed Sites Often Used for Current Customers Very Common For Standardized Purchases and Totally Unique Purchases (used)

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Buyer-Seller Relationships 1] Building relationships and limiting the number of suppliers you work with 2] cooperation 3] share information 4] operational linkages 5] contracts 6] relationship specific adaptions 7] risk of powerful customers 8] buyers may still use multiple sources to cut their risk.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Resellers Buying Criteria Will The Product Sell? At What Price (Profit Margin) Can it Be Sold For? How Many Can Be Sold? How Fast Will They Sell?

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Government Market Government units Federal government State governments Local governments Foreign countries Bid buying and negotiated contracts Sources of information Commerce Business Daily A variety of Internet web-sites Small Business Administration Government purchasing departments