McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:
LO1
LO2
Distinguish among industrial, reseller,
and government organizational
markets.
Describe the key characteristics of
organizational buying that make it
different from consumer buying.
6-2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:
LO3
LO4
Explain how buying centers and
buying situations influence
organizational purchasing.
Recognize the importance and nature
of online buying in industrial, reseller,
and government organizational
markets.
6-3
BUYING PAPER IS A GLOBAL
BUSINESS DECISION AT JCPENNEY
6-4
LO1
THE NATURE AND SIZE OF
ORGANIZATIONAL MARKETS

Business Marketing

Organizational Buyers
• Industrial Markets
(Industrial Firms)
• Reseller Markets
(Resellers)
• Government Markets
(Government Units)
 Wholesalers
 Retailers
• Global Organizational Markets
6-5
FIGURE 6-A Type and number of
organization establishments in the U.S.
6-6
LO1

MEASURING DOMESTIC AND GLOBAL
INDUSTRIAL, RESELLER, AND
GOVERNMENT MARKETS
North American
Industry
Classification
System (NAICS)

North American
Product
Classification
System (NAPCS)
6-7
FIGURE 6-1 NAICS breakdown for the
information industries sector:
NAICS code 51 (abbreviated)
6-8
FIGURE 6-2 Key characteristics and
dimensions of organizational buying
behavior
6-9
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
LO2

Derived Demand

Size of Order or Purchase

Number of Potential Buyers

Organizational Buying Objectives
6-10
FIGURE 6-B Key organizational buying
criteria
6-11
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
LO2

Organizational Buying Criteria

ISO 9000

Supplier Development
• Just-in-Time
6-12
MARKETING MATTERS
Harley-Davidson’s Supplier Collaboration
Creates Customer Value…and a Great Ride
6-13
LO2

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
Buyer-Seller Relationships and
Supply Partnerships
• Reciprocity
• Supply Partnership
6-14
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
LO3
THE BUYING CENTER—A CROSS-FUNCTIONAL GROUP

Buying Center

Buying Committee

People in the Buying Center

Roles in the Buying Center
• Users
• Deciders
• Influencers
• Gatekeepers
• Buyers
6-15
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
LO3
THE BUYING CENTER—A CROSS-FUNCTIONAL GROUP

Buy Classes
• Straight Rebuy
• Modified Rebuy
• New Rebuy
6-16
FIGURE 6-3 The buying situation affects
buying center behavior in different ways
6-17
FIGURE 6-4 Comparing the stages in a
consumer and organizational purchase
decision process
6-18
CHARTING THE
ORGANIZATIONAL BUYING PROCESS
LO3
STAGES IN BUYING A MACHINE VISION SYSTEM

Organizational
Buying Behavior
for a Machine
Vision System

Stage 1: Problem Recognition
• Make-Buy Decision

Stage 2: Information Search
• Value Analysis
6-19
CHARTING THE
ORGANIZATIONAL BUYING PROCESS
LO3
STAGES IN BUYING A MACHINE VISION SYSTEM

Stage 3: Alternative Evaluation
• Bidder’s List

Stage 4: Purchase Decision

Stage 5: Postpurchase Behavior
6-20
FIGURE 6-5 Product and supplier selection
criteria for buying machine vision
equipment emphasize factors other than
price
6-21
ONLINE BUYING IN
ORGANIZATIONAL MARKETS
LO4

Prominence of Online Buying
in Organizational Markets

E-marketplaces

Online Auctions in
Organizational Markets

Traditional Auction

Reverse Auction
6-22
FIGURE 6-6 How buyer and seller
participants and price behavior differ by
type of online auction
6-23
VIDEO CASE 6
LANDS’ END: WHERE BUYERS RULE
6-24
VIDEO CASE 6
LANDS’ END
1. (a) Who is likely to comprise
the buying center in the decision
to select a new supplier for Lands’
End? (b) Which of the buying
center members are
likely to play the roles of users,
influencers, buyers, deciders,
and gatekeepers?
6-25
VIDEO CASE 6
LANDS’ END
2. (a) Which stages of the
organizational buying decision
process does Lands’ End follow
when it selects a new supplier?
(b) What selection criteria does
the company utilize in the
process.
6-26
VIDEO CASE 6
LANDS’ END
3. Describe purchases Lands’ End
buyers typically face in each of
the three buying situations:
straight rebuy, modified rebuy,
new buy.
6-27
SUPPLEMENTAL
LECTURE NOTE 6-1
HOW ORGANIZATIONS
CAN IMPROVE
THEIR PURCHASING
6-28
IN-CLASS ACTIVITY 6-1
DAKTRONICS: REACHING
AN ORGANIZATION’S
BUYING CENTER
6-29
Daktronics Brochure (Cover & Sports)
6-30
6-31
6-32
Business Marketing
Business marketing involves the
marketing of goods and services
to companies, governments, or
not-for-profit organizations for use
in the creation of goods and
services that they can produce
and market to others.
6-33
Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers,
retailers, and government
agencies that buy goods and
services for their own use or for
resale.
6-34
North American Industry
Classification System (NAICS)
The North American Industry
Classification System (NAICS) provides
common industry definitions for Canada,
Mexico, and the United States, which
makes easier the measurement of
economic activity in the three member
countries of the North American Free Trade
Agreement (NAFTA).
6-35
Derived Demand
Derived demand is the demand
for industrial products and
services is driven by, or derived
from, demand for consumer
products and services.
6-36
Organizational Buying Criteria
Organizational buying criteria
are the objective attributes of the
supplier’s products and services
and the capabilities of the supplier
itself.
6-37
ISO 9000
ISO 9000 consists of standards
for registration and certification of a
manufacturer’s quality management
and assurance system based on an
on-site audit of practices and
procedures developed by the
International Standards Organization
(ISO).
6-38
Supplier Development
Supplier development is the
deliberate effort by organizational
buyers to build relationships that
shape suppliers’ products,
services, and capabilities to fit a
buyer’s needs and those of its
customers.
6-39
Reciprocity
Reciprocity is an industrial
buying practice in which two
organizations agree to purchase
each other’s products and
services.
6-40
Supply Partnership
Supply partnership is a relationship
that exists when a buyer and its
supplier adopt mutually beneficial
objectives, policies, and procedures
for the purpose of lowering the cost
or increasing the value of products
and services delivered to the ultimate
consumer.
6-41
Buying Center
A buying center consists of a
group of people in an organization
who participate in the buying
process and share common goals,
risks, and knowledge important
to a purchase decision.
6-42
Buy Classes
Buy classes consists of three
types of organizational buying
situations: straight rebuy, new buy,
and modified rebuy.
6-43
Organizational Buying Behavior
Organizational buying behavior
is the decision-making process
that organizations use to establish
the need for products and services
and identify, evaluate, and choose
among alternative brands and
suppliers.
6-44
Make-Buy Decision
A make-buy decision involves an
evaluation of whether components
and assemblies will be purchased
from outside suppliers or built by
the company itself.
6-45
Value Analysis
Value analysis involves a
systematic appraisal of the design,
quality, and performance of a
product to reduce purchasing
costs.
6-46
Bidder’s List
A bidder’s list is a list of firms
believed to be qualified to supply
a given item.
6-47
E-marketplaces
E-marketplaces are online trading
communities that bring together
buyers and supplier organizations to
make possible the real time exchange
of information, money, products, and
services. Also called B2B exchanges
or e-hubs.
6-48
Traditional Auction
A traditional auction is, within
an e-marketplace, an online
auction in which a seller puts an
item up for sale and would-be
buyers are invited to bid in
competition with each other.
6-49
Reverse Auction
A reverse auction is, within an
e-marketplace, an online auction
in which a buyer communicates a
need for a product or service and
would-be suppliers are invited to
bid in competition with each other.
6-50