After reviewing Chapter 4 from the textbook, post a 500-word synopsis of your understanding of the marketing concepts. In your posting, include questions about any marketing concepts that are unclear.
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Chapter 4
Business, Government,
and Institutional Buying
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Chapter Outline
Categories of organizational buyers
The organizational buying process
Purchase-type influences on organizational buying
Structural influences on organizational buying
Behavioral influences on organizational buying
Stages in the organizational buying process
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Business-to-Business or B 2 B Marketing
Marketing products and services to producers, intermediaries, government agencies, and other institutions rather than to consumers
Major area for profitable internet marketing
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Categories of Organizational Buyers
Producers: Buy goods and services in order to produce other goods and services for sale
Intermediaries: Purchase products to resell at a profit
Government agencies: Operate at the federal, state, and local levels
Other institutions: Hospitals, museums, universities, nursing homes, and churches
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Figure 4.1: A Model of the Organizational Buying Process
Jump to Figure 4.1: A model of the Organizational Buying Process, Appendix
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5
Purchase-Type Influences on Organizational Buying, 1
Straight rebuy: Routinely reordering a product from the same supplier that it had been purchased from in the past
Fast and requires few employees
Common among organizations that practice just-in-time inventory
Just-in-time inventory: System of replenishing parts or goods for resale just before they are needed
Modified rebuy: Consideration of a limited number of alternatives before making a selection
Organizational buyer considers the new information and decides what changes to make
If the change proves satisfactory and the product is required routinely, the buyer may then make it a straight rebuy
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Purchase-Type Influences on Organizational Buying, 2
New task purchase: Involves an extensive search for information and a formal decision process
Used for big-ticket items
Time consuming
Involves a relatively large number of decision makers
May involve joint decision making
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Marketing Tactics for Reaching Organizational Buyers, 1
Type of Purchase Marketing Element Promotional Approach
Straight rebuy Advertising
Use reminder advertising
Build image for company
Promotion Hospitality events at trade shows
Selling Any personal selling is designed to build relationships
Automate the purchasing process, perhaps through E D I or electronic data exchange
Modified rebuy Advertising
Use comparison advertising to show differences between your product and similar products
Promotion Customer site demonstrations, hospitality events at trade shows
Selling Protect relationship with current customers with plant tours, special trade-in pricing, and other offers
Anticipate or respond quickly to changes in customer needs
Source: Based on F. Robert Dwyer and John F. Tanner Junior, Business Marketing, 4th edition (Burr Ridge, I L: McGraw-Hill or Irwin, 2009), p. 73.
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Marketing Tactics for Reaching Organizational Buyers, 2
Type of Purchase Marketing Element Promotional Approach
New task purchase Advertising Detailed, educational ads to try to get users to try product, substitute for old method
Promotion
Use demonstrations at trade shows to show how it works
Offer free trials or demonstrations at the customer’s site
Selling
Heavy emphasis on understanding customers’ needs and showing how new product satisfies needs better than old methods
Source: Based on F. Robert Dwyer and John F. Tanner Junior, Business Marketing, 4th edition (Burr Ridge, I L: McGraw-Hill or Irwin, 2009), p. 73.
© McGraw-Hill Education
Structural Influences on Organizational Buying, 1
Structural influences: Design of the organizational environment and how it affects the purchasing process
Purchasing roles
Buying center: Organizational group formed from different departments with the responsibility of evaluating and selecting products for purchase
Organization-specific factors
Orientation: Dominant function in an organization may control purchasing decisions
Size: Joint decision making is likely in large organizations, and autonomous decision making is likely in small organizations
Degree of centralization: Joint decision making is less in a centralized organization than in a decentralized organization
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Structural Influences on Organizational Buying, 2
Purchasing policies and procedures
Ensure that appropriate products and services are purchased efficiently and that responsibility for buying is assigned appropriately
Sole sourcing: All of a particular type of product is obtained from a single supplier
Simplifies the buying process and converts formerly modified rebuys into simpler straight rebuys
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Purchasing Roles
Initiators: Start the buying process by recognizing a need or a problem in the organization
Users: Use the product to be purchased
Influencers: Affect the buying decision by helping define the specifications for what is needed
Buyers: Have formal authority and responsibility to select the supplier and negotiate the terms of the contract
Deciders: Have the formal and informal power to select or approve the supplier that receives the contract
Gatekeepers: Control the flow of information in the buying center
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Behavioral Influences on Organizational Buying: Personal Motivations
Organizational buyers are subject to the same personal motives or motivational forces as other individuals
While examining buyer motivations, it is necessary to:
Consider both personal and nonpersonal motivational forces
Recognize that the relative importance of the forces is not a fixed quantity
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Behavioral Influences on Organizational Buying: Role
Perceptions, 1
Manner in which individuals behave depends on:
Their perception of their role
Their commitment to what they believe is expected of their role
Maturity of the role type
Extent to which the institution is committed to the role type
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Behavioral Influences on Organizational Buying: Role Perceptions, 2
Organizations can be divided based on differences in degree of employee commitment
Innovative firms
Individuals in the firm approach their occupational roles with a weak commitment to expected norms of behavior
Adaptive firms
Individuals have moderate commitment
Lethargic firms
There is strong commitment to traditionally accepted behavior
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Stages in the Organizational Buying Process, 1
Organizational need
Organizational purchases are resulted by recognizing needs and a willingness and ability to meet them
Vendor analysis: Process by which organizational buyers rate each potential supplier on various performance measures
Used to:
Develop a list of approved vendors
Compare competing vendors
Compare performance on evaluation criteria and evaluate the process of vendor selection
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Stages in the Organizational Buying Process, 2
Purchase activities
Number of purchasing activities to be performed and their difficulty are influenced by:
Complexity of product or service
Number of suppliers available and pricing
Importance of product to buying organization
Pricing
Postpurchase evaluation: Evaluation of vendors and the products to determine whether the products are acceptable for future purchases
Different functional areas have different evaluation criteria
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APPENDIX
Figure 4.1: A Model of the Organizational Buying Process, Appendix
Starting from the top, the figure presents three rectangles that are labeled purchase-type influences, structural influences, and behavioral influences. Arrows originate from each of the three rectangles and point to a large rectangle labeled organizational buying process. Four rectangles are placed in a horizontal order within the large box. Box one is labeled organizational need. An arrow from this box points to the second box labeled vendor analysis. An arrow from the second box points to the third box labeled purchase activities. An arrow from the third box points to the fourth box that is labeled postpurchase evaluation. An arrow from the fourth box points to the first box labeled organizational need.
Jump back to Figure 4.1: A model of the Organizational Buying Process
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