1. THE MAKE, BUY, OR LEASE DECISION
• Firms acquiring needed products can get them in one of three ways:
• Make the good or provide the service in-house.
• Purchase it from another organization.
• Lease it from another organization.
• Producing the item may be cheapest route, but most firms cannot make all of the products they need.
• Many companies purchase many of the goods they need.
• Companies can spread out costs through leasing.

2. THE RISE OF OFFSHORING AND OUTSOURCING
• Offshoring Movement of high-wage jobs from one country to lower-cost overseas locations.
• Example: China makes two-thirds of the world’s copiers, microwaves, DVD players, and shoes, and virtually all of the world’s toys.
• Allows firms to concentrate their resources on their core business and access specialized talent or expertise.
• Nearshoring Moving jobs to vendors in countries close to the business’s home country.
• U.S. firms often nearshore in Canada or Mexico.
• Outshoring Using outside vendors to provide goods and services formerly produced in-house.
• Commonly outshore for three reasons: cost reduction, quality and speed of software maintenance and development, and greater value.

3. PROBLEMS WITH OFFSHORING AND OUTSOURCING
• Many companies discover their cost savings are less than expected.
• Can raise security concerns over proprietary technology or customer data.
• Can reduce flexibility to respond quickly to marketplace.
• Can create conflicts with unions, even leading to shutdowns and strikes.
• Can negatively affect employee morale and loyalty.

4. THE BUSINESS BUYING PROCESS
• More complex than the consumer decision process.
• Takes place within formal organization’s budget, cost, and profit considerations.
INFLUENCES ON PURCHASE DECISIONS
Environmental Factors
• Economic, political, regulatory, competitive, and technological considerations influence business buying decisions.
• Example: Law freezing cable rates or introduction of new product by a competitor will affect demand.
• Natural disasters, such as Hurricane Katrina.
• Example: Rising fuel prices prompted Viking Energy Management to lock in fuel prices.

5. Organizational Factors
• Successful marketers understand their customers’ organizational structures, policies, and purchasing systems.
• Some firms have centralized procurement, others delegate it throughout the units.
• Many companies use multiple sourcing to avoid depending too heavily on a sole supplier.
Interpersonal Influences
• Many different people influence B2B buying decisions, sometimes as individuals and sometimes as part of a committee.
• Marketers must know who the influencers are and understand their priorities.
• Sales personnel must be flexible and have a good technical understanding of their products.

6. The Role of the Professional Buyer
• Many organizations rely on professionals, often called merchandisers, who implement systematic buying procedures.
• Firms usually buy expense items with little delay but carefully consider capital purchases.
• May rely on systems integration, centralization of the procurement function.
• Corporate buyers often use the Internet to identify sources of supplies.

7. MODEL OF THE ORGANIZATIONAL BUYING PROCESS

8. Stage 1: Anticipate a Problem/Need/Opportunity and a General Solution
• Example: Need to provide employees with a good cup of coffee to enhance productivity.
Stage 2: Determine the Characteristics and Quantity of a Needed Good or Service
• Example: Offering a coffee system that brews one cup of coffee at a time according to each employee’s preference.
Stage 3: Describe Characteristics and the Quantity of a Needed Good or Service
• Example: Firms need a simple system for brewing a good cup of coffee; quantity requirements are easily correlated to the number of coffee drinkers.

9. Stage 4: Search for and Qualify Potential Sources
• Choice of supplier may be fairly straightforward or very complex.
Stage 5: Acquire and Analyze Proposals
• May involve competitive bidding, especially if the buyer is the government or a public agency.
Stage 6: Evaluate Proposals and Select Suppliers
• Buyers choose proposal best suited to their needs.
• Final choice may involve trade-offs between feature such as price, reliability, quality, and order accuracy.

10. Stage 7: Select an Order Routine
• Buyer and vendor work out best way to process future purchases.
Stage 8: Obtain Feedback and Evaluate Performance
• Buyers measure vendors’ performance.
• Larger firms are more likely to use formal evaluation procedures.
• Some firms rely on outside organizations to gather quality feedback and summarize results.
• Example: J. D. Power and Associates

11. CLASSIFYING BUSINESS BUYING SITUATIONS
• Business buying behavior involves degree of effort involved in the decision and the levels within the organization in which these decisions are made.
Straight Rebuying
• A recurring purchase decision in which a customer reorders a product that has satisfied needs in the past.
• Purchaser see little reason to assess competing options.
• Marketers who maintain good relationships with customers can go a long way toward ensuring straight rebuys.
• High-quality products.
• Superior service.
• Prompt delivery.

12. Modified Rebuying New-Task Buying
• Purchaser willing to reevaluate available options.
• May occur if supplier has let a rebuy circumstance deteriorate because of poor service or delivery performance.
New-Task Buying
• First-time or unique purchase situations that require considerable effort by the decision makers.
• Most complex category of business buying.
• Often requires purchaser to consider alternative offerings and vendors.

13. Reciprocity ANALYSIS TOOLS
• Practice of buying from suppliers that are also customers.
• In U.S., Department of Justice and the Federal Trade Commission view reciprocity as an attempt to reduce competition.
ANALYSIS TOOLS
• Value analysis—examines each component of a purchase in an attempt to either delete the item or replace it with a more cost-effective substitute.
• Vendor analysis—an ongoing evaluation of a supplier’s performance in categories such as price, EDI capability, back orders, delivery times, liability insurance, and attention to special requests.

14. THE BUYING CENTER CONCEPT
• Buying center Participants in an organizational buying action.
BUYING CENTER ROLES

15. INTERNATIONAL BUYING CENTERS
• Marketers may have difficulty identifying members of foreign buying centers.
• Foreign buying centers often include more participants than those in U.S.
• Marketers who can quickly identify decision makers have an advantage over competition.
TEAM SELLING
• Combining several sales associates or other staff to help the lead account representative reach all those who influence the purchase decision.
• May include members of the seller firm’s own supply network in the sales situation.
• Example: Reseller of specialized computer applications whose clients require access to training.

16. DEVELOPING EFFECTIVE BUSINESS-TO- BUSINESS MARKETING STRATEGIES
• Marketer must develop strategy based on particular organization’s buying behavior and on the buying situation.
CHALLENGES OF GOVERNMENT MARKETS
• Government agencies make up the largest customer group in the U.S.
• More than 85,000 government units buy products.
• Purchases typically involve dozens of interested parties.
• Influenced by social goals, such as minority subcontracting programs.
• Can have either fixed-price contracts or cost-reimbursement contracts.

17. Government Purchasing Procedures
• Many purchases go through Government Services Agency, a central management agency.
• By law, most federal government purchases must go through a complex bidding process governed by the Federal Acquisition Regulation.
• Recent reforms have sped purchasing and increased flexibility.
• State and local governments follow procedures similar to federal government.
Online with the Federal Government
• Government buyers often rely on electronic commerce.
• GSA Advantage allows government buyers to make purchases online at preferred government prices.
• Many government units lag behind the private sector in electronic procurement procedures.

18. CHALLENGES OF INSTITUTIONAL MARKETS
• Institutional buyers include schools, hospitals, libraries, foundations, and others.
• Have widely diverse buying practices among, and even within, institutions.
• Multiple buying influences can affect buying decisions, such as conflicts between professional staff and purchasing departments.
CHALLENGES OF INTERNATIONAL MARKETS
• Marketers must consider buyers’ attitudes and cultural patterns.
• Local industries, economic conditions, geographic characteristics, and legal restrictions must also be considered.
• Remanufacturing, or restoring worn-out products to like-new condition, can be an important strategy in places that cannot afford new products.
• Foreign governments are also an important market.