1. Dr. Dawne Martin Business Marketing September 22, 2011

2. Learning Objectives  Exam 1 – Thursday, September 28  To apply theories of organizational buying behavior to buying situations to determine marketing strategy  To investigate the impact of the buying center roles on sales and marketing strategy.  Chapter 5  Anderson and Narus, “Customer Value Propositions in Business”, HBS, March 2006  Part II of Project – Monday, October 3

3. Reward-Measurement Theory Paul Anderson & Terry M. Chambers, “A Reward/Measurement Model of Organizational Buying Behavior, Journal of Marketing, Spring, 1985. Motivation Role Perceptions Abilities & Traits Causal Attributions Purchasing Behavior Purchasing Performance Performance Measurement System Intrinsic Rewards Extrinsic Rewards Perceived Equitable Rewards Satisfaction

4. Organizational Buying Behavior Environmental Forces Organizational Forces Group Forces Individual Forces Forces Influencing Organizational Buying Behavior Adapted From: Frederick E. Webster, Jr. and Yoram Wind, A General Model for Understanding Organizational Buying Behavior, Journal of Marketing, April, 1972.

5. Environmental Forces  Economic Influences  Political & Legal Influences  Technological Influences  Environmental Uncertainty

6. Organizational Forces  Strategic Priorities  Organizational Structure & Climate  Strategic Role of Purchasing  Departments & Functional Areas Involved in Decisions

7. Individual Forces  Evaluative Criteria  Reward & Measurement Systems  Information Processing  Risk Reduction Strategies  Uncertainty about outcome  Magnitude of the consequences

8. Dimensions of the Buying Center  Time Dimension  Time fragmentation: Members come and go  Decision cycle time  Vertical and Horizontal Dimensions  Vertical: number of layers of management  Horizontal: number and types of departments and outside consultants  Formalization Dimension  How well are purchasing roles and tasks defined in purchasing policies and procedures?

9. Buying Center Roles  Initiator: Starts the purchasing process by recognizing the need  Influencers: Affect decision-maker’s final choice through recommendation  Gatekeepers: Control information into and out of the buying center  Users: Those that use the product/service  Purchasing Agent: Person that makes the purchase or does the paperwork  Decision-Maker: Person who makes final decision, or chooses between alternatives

10. Sources of Information

11. Complex Reward Structure  Reward  Raise  Recognition (pat on the back) by boss  Peer’s appreciation  Personal satisfaction  Nomination for staff award  Importance  Very important  Important  Very important  Extremely important  Important COULD THERE BE OTHER REWARDS?

12. SRI International  Situation: Purchase of new scanners to meet contract with large state government agency  Players  Akshay Menon – SRI’s Dallas operations head  Margier Cabellero – production manager  George Whitaker – Chief Financial Officer  Gloria Sigel – Human Resources Manager  Questions:  Who plays which role in the buying center?  What are the sources of risk for each?  How would this information affect your marketing of this product?