1. Business Markets & Organizational Buying
Chapter 7
Business Markets & Organizational Buying

2. Objectives ID components of business markets
Learn steps of organizational buying decisions
Characterize basic organizational buying situations
Explore effect of Internet on B-to-B marketing
Understand importance of the buying center
Explore needs of organizational buyers, and strategies to meet those needs
Overview NAICS and its usefulness

3. Business-to-Business (B2B) Marketing
Any sale to an industrial user, wholesaler, retailer, or organization other than the ultimate consumer. . .
Key questions:
Who bought it?
Why did they buy it? 4

4. Characteristics of the Business Market
Few,
concentrated
customers
Expertise in
buying
Importance
of repeat
transactions
Derived
demand
Preference for
direct buying
Global
Competition 6

5. Buy Phase: Steps in Organizational Buying
Identification
of the need
Step 2:
Establish
Objectives
Step 3:
ID Suppliers/
Evaluate
Alternatives
Step 5:
Establish
Relationship
Step 4:
Selection of
Suppliers/
Negotiations 9

6. Three buying situations
Straight rebuy: Automatic and regular purchase of familiar products
Modified rebuy: Buyer is not completely satisfied with current suppliers and shops around
New task buying: Buyer seeks to fill a need never before addressed 11

7. The Internet Dramatically Changes Organizational Buying13

8. The Internet Dramatically Changes Organizational Buying
Information availability & dissemination
Customer customization
Customer service
Messaging
FAQ’s
Increase # of bidders
Decrease costs 14

9. The Buying Center Informal & dynamic Cross-departmental
Information center
Acquisition
Dissemination
Processing
BUYING CENTER
DATA
INFORMATION
BUYING
DECISION 16

10. Buying Center: Roles Roles of buying center individuals include….
Users
Gatekeepers
Influencers
Deciders
Buyers 17

11. Roles in Organizational Buying: Users
Employees and managers who will actually use the product

12. Roles in Organizational Buying: Buyers
Has the formal authority to purchase the product

13. Roles in Organizational Buying: Gatekeeper
Controls the flow of information related to the purchase

14. Roles in Organizational Buying: Decider
Makes the actual purchase decision

15. Roles in Organizational Buying: Influencer
Affects the purchase decision by supplying advice or information

16. Why Do Organizations Buy?
Product
Quality
Price
Related
Services
Delivery &
Inventory
Collab-
oration
Bottom
Line 18

17. Generalizations About Organizational Demand
DEMAND FOR AIRPLANES
Derived demand: Ore
DEMAND FOR SHEET METAL AND ALUMINUM
INCREASED INTERNATIONAL TRADE
DEMAND FOR BUSINESS FLYING
INCREASED MINING REQUIRED 21

18. Generalizations About Organizational Demand
Price inelasticity
Price/cost increases passed to customer
Component prices small % of total cost 22

19. Generalizations About Organizational Demand
Fluctuating demand
Linked to economy’s ups and downs
Larger inventories maintained
Product durability 23

20. North American Industry Classification System (NAICS)
Replaces SIC (Standard Industrial Classification system)
Incorporates technological changes
Creates relevant & current industrial databases 24

21. Review ID components of business markets
Learn steps of organizational buying decisions
Characterize basic organizational buying situations
Explore effect of Internet on B-to-B marketing
Understand importance of the buying center
Explore needs of organizational buyers, and strategies to meet those needs
Overview NAICS and its usefulness