1. Dr. Close

2. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Organizational Buyer Categories  Producers – Businesses that buy goods and services in order to produce other goods and services  Intermediaries – Purchase products to resell at a profit  Government agencies – 86,000 government agencies spend trillions of dollars on machinery, equipment, facilities, supplies and services  Other institutions – Such as hospitals, museums, universities, nursing homes, and churches

3. Dell Commercial

4. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Organizational Buying Process A Model of the Organizational Buying Process

5. Buying Center  Roles – auto parts  Users: work with product, often generate specs (line workers)  Influencers: can modify outcome; dev. Specs, evaluate alternatives (engineers)  Buyers: complete transaction, negotiate (purchasing manager)  Deciders: select or approve (upper/middle management; may be same as buyer)  Gatekeepers: control info. Within buying center (secretary)

6. Buying Situations (1)  Buying process: 3 types (goes with individual as well) 1.Straight rebuy  Small, recurring items like office supplies  Little buyer’s time, little info needed  Reminder ads, automate process  Purchasing manager and no one else  Common with just in time inventory

7. Buying Situations (2) 2.Modified rebuy (contract with cell phone ends) Some review due to some unfamiliarity Dissatisfy: look for opportunity Comparison ads: show your product strengths Your client: protect, attention to changing needs 3.New task buying (plant overseas) Unique situation Extensive search Lots of information, effort, and time Develop product and vendor specs Many influences

8. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Purchase-Type Influences Differences in Types of Organizational Purchases Differences in Types of Organizational Purchases

9. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Key Differences in Marketing to Organizational Buyers

10. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Structural Influences – Purchasing Roles  Structural influences – Design of organizational environment and how it affects the purchasing process  Initiators  Users  Influencers  Buyers  Deciders  Gatekeepers

11. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Organization-Specific Factors  Orientation – Dominant function in an organization controlling purchasing decisions  Size of organization – Larger organizations tend to have higher degree of joint decision; smaller organizations tend to use autonomous decision making  Degree of centralization – This influences whether decisions are made individually or jointly with others

12. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Purchasing Policies and Procedures  Sole sourcing – All of a particular type of product is purchased from a single supplier  Direct buying – List of approved vendors for particular products  Competitive bidding – For large, one-time purchases

13. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Behavioral Influences  Personal motivations – Factors such as friendship, professional pride, fear and uncertainty/risk, trust and personal ambition  Role perceptions – Organizational buyers’ commitment depends on what they believe is  Expected of their role  The ‘maturity’ of the role type  Extent of management commitment to role type

14. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Behavioral Influences  Organizations can be divided into three groups based on commitment  Innovative  Adaptive  Lethargic

15. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Purchasing Agent Influences  One study involving purchasing agents revealed that there a greater degree of responsibility and control over decisions involving  Design of the product  Cost of the product  Determination of performance life  Naming a specific supplier  Assessing engineering support from the supplier  Reduction of rejects

16. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Stages in Organizational Buying Process  Organizational Need  Needs based on survivability and stated objectives of the organization  Vendor Analysis  Search for, locate and evaluate potential providers of goods and services  Rate them based on quality, on-time delivery, price, payment terms, and use of technology  Helps in developing a list of approved vendors, comparing competing vendors, and comparing vendor performance both before and after purchase

17. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Stages in Organizational Buying Process

18. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Stages in Organizational Buying Process  Purchase Activities  Purchases can involve extensive negotiations on price, term of contract – increases with complex goods and services  Postpurchase Evaluation  Does the purchase perform as expected?  Should the supplier be used again?  Must be remembered that different functional areas have different evaluation criteria

19. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Stages in Organizational Buying Process Functional Areas and Their Key Concerns in Organizational Buying

20. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Code of Ethics for Organizational Buyers