1. C HAPTER F OUR Organizational Buyer Behavior

2. THE RATIONALITY OF BUSINESS MARKET BUYING Business purchasing is more rational than consumer purchasing Decisions are made for the good of the organization (what will most benefit the company?) And Decisions are made for the good of individual (what will lead to personal success – promotion) (what will prevent personal loss – firing) Although, business market purchasing is still done by people who have their own individual motivations. These are not always rational. Examples? Chapter 4 - Organizational Buyer Behavior

3. WHAT MAKES ORGANIZATIONAL BUYERS BUY? (T HEORIES OF B UYER M OTIVATION ) Reward-measurement theory Motivations: Intrinsic rewards (satisfaction), Extrinsic rewards (salary, promotion) Benefits are the dominant element Behavior choice theory Motivations: Let’s complete the process correctly (not let’s buy the right product) Self orientation vs. Company orientation Situation and process are the dominant elements Role theory The situational role determines peoples’ actions The way we behave depends on who we are with and their expectations Norms or expectations dominate Chapter 4 - Organizational Buyer Behavior

4. MARKETING TO THE BUYER THEORIES Reward-measurement theory What are the desired features and their importance? What benefits (intrinsic and extrinsic) can we provide regarding the important features Behavior choice theory Discuss how your product will improve their specific work situation (self orientation) and improve the organization (company orientation) Role theory Often conducted in buying centers, so you have to communicate different things to different individuals depending on their job roles Chapter 4 - Organizational Buyer Behavior

5. BUYING CENTER ROLES Job Description Secretary Vice president Office manager Secretary & office manager Office manager Vice president of operations Buying Center Role Initiator-reports that fax keeps breaking down Controller-sets budget for purchase of new fax Gatekeeper-gathers review from vendors. Influencers-view demonstrations narrow choices Recommender-recommends a particular product to decision maker Decision Maker – Selects fax to purchase Chapter 4 - Organizational Buyer Behavior

6. BUYING CENTERS STRUCTURES Not all buying centers look alike!!! TIME DIMENSIONS HIGHLY FRAGMENTED: Many participants for a short time NOT FRAGMENTED: Same people stay for the entire process VERTICAL DIMENSIONS How many layers of management are involved HORIZONTAL DIMENSIONS How many departments are involved FORMALIZATION DIMENSION Tasks and roles are guided and enforced by written procedures and policies Chapter 4 - Organizational Buyer Behavior

7. RECOGNIZING THE BUYER’S RISK Buying centers often occur when the risks are high (important decision – high costs) Financial Risk Potential for lost revenue with bad product choice Performance Risk Product doesn’t perform as intended Social Risk The purchase will not meet approval of a reference group (co- workers, boss, buying center members) Chapter 4 - Organizational Buyer Behavior

8. REDUCING RISK More information from more sources Sellers use promotional tools – Salespeople, trade shows, telemarketing, e-mail, advertising, sales literature, websites, direct mail, trade publications Using loyalty — build trust Integrity, honesty, and reliability Spread the risk More decision makers More suppliers (don’t put all of your eggs in 1 basket) Chapter 4 - Organizational Buyer Behavior

9. BUYING DETERMINANTS THEORY Individual factors Experience, Education, Age Organizational factors Culture and policies Market factors Competition Environmental factors Regulations and technology Chapter 4 - Organizational Buyer Behavior