1. Buying Behavior and the Buying Process  What are the different types of customers?  How do organizations make purchase decisions?  Which factors do organizations consider when evaluating products and services?  Who is involved in the buying decision?  What should salespeople do in the different types of buying situations?  Which changes are occurring in organizational buying, and how will these changes affect salespeople? Some questions answered in this chapter are: 4-1 CHAPTER 4 McGraw-Hill/Irwin

2. Types of Customers Producers –Products included in manufacturing –Services to support the manufacturing operation OEM purchasers –Goods to use in making their products End users –Goods and services to support their own production and operations 4-2 McGraw-Hill/Irwin Capital equipment items are major purchases such as mainframe computers and machine tools. Maintenance, repair, and operating (MRO) supplies include paper towels and replacement parts for machinery.

3. Types of Customers (continued) Resellers –Finished products or services with the intention to resell them. 4-3 McGraw-Hill/Irwin Profit margin is how much a reseller makes on each sale. Turnover is how quickly an item sells, and how much effort it takes to sell.

4. Government agencies –Goods and services valued at more than $1 trillion annually Institutions –Different needs and buying processes Consumers –Products and services for use by themselves or by their families 4-4 Types of Customers (continued) McGraw-Hill/Irwin

5. Organizational Buying and Selling Complexity of the organizational buying process –Purchasing agents –Evaluations and negotiations –Complexity is increasing Derived versus direct demand –Customer’s customers 4-5 McGraw-Hill/Irwin

6. 4-6 Steps in the Buying Process McGraw-Hill/Irwin Step 9 Payment

7. Steps in the buying process Choices to attend a university related to the 8 steps in the organizational buying process Creeping commitment –Narrowing range of alternatives –Critical that salespeople be involved in the initial steps 4-7 How do Organizations Make Buying Decisions? McGraw-Hill/Irwin

8. New tasks –A customer purchases a product or service for the first time Straight rebuys –A customer buys the same product from the original source Modified rebuys –The customer has purchased the product in the past but is looking for new information 4-8 Types of Organizational Buying Decisions McGraw-Hill/Irwin

9. Who Makes the Buying Decision? UsersGatekeepers InitiatorsDeciders Influencers 4-9 McGraw-Hill/Irwin

10. 4-10 Factors Influencing Organizational Buying Decisions McGraw-Hill/Irwin

11. Economic criteria –Life-cycle costing (total cost of ownership) Quality criteria –What are organizational buyers looking for? Service criteria –Value analysis 4-11 Organizational Needs and Criteria McGraw-Hill/Irwin

12. 4-12 Life Cycle Costing McGraw-Hill/Irwin

13. Types of needs –Financial security –Self-esteem –Recognition Risk reduction –Collect additional information –Develop supplier loyalty –Spread the risk 4-13 Individual Needs of Buying Center Members McGraw-Hill/Irwin

14. Supply chain management –Logistics –Managing inventory while controlling costs –Just-in-time inventory control system –Material requirements planning –Automatic replenishment –Electronic data interchange 4-14 Professional Purchasing’s Growing Importance McGraw-Hill/Irwin

15. Professional Purchasing’s Growing Importance (continued) Supplier relationship management –Identify the annual spend –Summarize the benefits and needs satisfied by a supplier 4-15 McGraw-Hill/Irwin

16. The Internet and business-to- business selling –Extranets –Reverse auctions 4-16 Professional Purchasing’s Growing Importance (continued) McGraw-Hill/Irwin

17. Selling to organizations differs from selling to consumers because organizations are more concentrated, demand is derived, and the buying process is more complex. The organizational buying process consists of eight steps. The length of the buying process and the role of various participants depend on the customer’s past experiences. The people involved in the buying process are referred to as the buying center. Organizations are facing an increasingly dynamic and competitive environment. The Internet is playing a much more important role in business-to-business transactions. 4-17 Summary McGraw-Hill/Irwin

18. Based on the idea that people view a product as a collection of characteristics or attributes. Buyers evaluate a product by considering how each characteristic satisfies the firm’s needs and perhaps their individual needs. Performance evaluation of characteristics Importance weights 4-18 Appendix: Multiattribute Model of Product Evaluation and Choice McGraw-Hill/Irwin

19. 4-19 Information about Laptop Computers McGraw-Hill/Irwin

20. 4-20 Performance Evaluation of Laptop Computers McGraw-Hill/Irwin

21. Overall evaluation Value offered Supplier selection Implications for salespeople 4-21 Appendix: Multiattribute Model of Product Evaluation and Choice (continued) McGraw-Hill/Irwin

22. 4-22 Information Used to Perform and Overall Evaluation McGraw-Hill/Irwin

23. 4-23 Value Offered by Each Brand McGraw-Hill/Irwin

24. Increase the performance rating for your product. Decrease the performance rating for a competitive product. Increase or decrease an importance weight. Add a new dimension. Decrease the price of your product. 4-24 Approaches for Changing Perceived Value McGraw-Hill/Irwin