1. Chapter 7 Business Markets & Organizational Buying

2. Objectives bID components of business markets bLearn steps of organizational buying decisions bCharacterize basic organizational buying situations bExplore effect of Internet on B-to-B marketing bUnderstand importance of the buying center bExplore needs of organizational buyers, and strategies to meet those needs bDescribe nature of organizational demand bOverview NAICS and its usefulness

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

4. Characteristics of the Business Market Relatively few customers Relatively GeographicalConcentrationGeographicalConcentration Prefer to buy direct from manufacturer Prefer to buy direct from manufacturer Expertise in buying buying Importance of repeat transactionsImportance transactions GlobalCompetition

5. Buy Phase: Steps in Organizational Buying Step 1: Identification of the need Step 2: EstablishObjectives Step 3: ID Suppliers/ EvaluateAlternatives Step 4: Selection of Suppliers/Negotiations Step 5: EstablishRelationship

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

7. The Internet Dramatically Changes Organizational Buying

8. bInformation availability & dissemination bCustomer customization bCustomer service bMessaging bFAQ’s bIncrease # of bidders bDecrease costs

9. BUYING CENTER The Buying Center bInformal & dynamic bCross-departmental bInformation center bAcquisition bDissemination bProcessing DATAINFORMATION BUYING DECISION

10. Buying Center: Roles bRoles of buying center individuals include…. bUsers bGatekeepers bInfluencers bDeciders bBuyers

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? ProductQuality RelatedServices Price Delivery & Inventory BottomLine Collab-oration

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

18. Generalizations About Organizational Demand bPrice inelasticity bPrice/cost increases passed to customer bComponent prices small % of total cost

19. Generalizations About Organizational Demand bFluctuating demand bLinked to economy’s ups and downs bLarger inventories maintained bProduct durability

20. North American Industry Classification System (NAICS) bReplaces SIC (Standard Industrial Classification system) bIncorporates technological changes bCreates relevant & current industrial databases

21. Review bID components of business markets bLearn steps of organizational buying decisions bCharacterize basic organizational buying situations bExplore effect of Internet on B-to-B marketing bUnderstand importance of the buying center bExplore needs of organizational buyers, and strategies to meet those needs bDescribe nature of organizational demand bOverview NAICS and its usefulness