CHAPTER
ORGANIZATIONAL
MARKETS AND
BUYER BEHAVIOR
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
• Distinguish among industrial, reseller,
and government markets.
• Recognize key characteristics of
organizational buying that make it
different from consumer buying.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
• Understand how buying centers and
buying situations influence
organizational purchasing
• Recognize the growing important of
online buying in industrial, reseller, and
government markets.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
ORGANIZATIONAL MARKETS
AND BUYER BEHAVIOR
BUYING PAPER IS SERIOUS
BUSINESS AT JCPENNEY.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
THE NATURE AND SIZE OF
ORGANIZATIONAL MARKETS
• Business marketing
• Organizational buyers
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
THE NATURE AND SIZE OF
ORGANIZATIONAL MARKETS
• Industrial Markets
 Industrial firms
• Reseller Market
 Resellers
• Government Markets
 Government Units
• Global Organizational Markets
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
MEASURING DOMESTIC AND
GLOBAL INDUSTRIAL, RESELLER,
AND GOVERNMENT MARKETS
• North American Industry
Classification System
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What are the three main types of
organizational buyer?
A: Industrial firms, resellers, and
government units.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. What is the North American industry
Classification System (NAICS)?
A: NAICS provides common industry
definitions for Canada, Mexico, and the
United States, which facilitate the
measurement of economic activity in the
three member countries of the North
American Free Trade Agreement.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
• Demand Characteristics
 Derived demand
• Size of the Order or Purchase
• Number of Potential Buyers
• Organizational Buying Objectives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
• Organizational Buying Criteria
 ISO 9000
 Reverse marketing
• Buyer-Seller Relationships and Supply
Partnerships
 Reciprocity
 Supply partnership
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
• The Buying Center: A CrossFunctional Group
• People in the Buying Center
• Roles in the Buying Center
• Buying Situations and the
Buying Center
 Buy classes
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What one department is almost always
represented by a person in the buying
center?
A: Purchasing Department
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Concept Check
2. What are the three types of buying
situations or buying classes?
A: Straight rebuy, modified rebuy, and
new buy
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CHARTING THE ORGANZATIONAL
BUYING PROCESS
• Stages in the Organizational Buying
Process
 Organizational buying behavior
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CHARTING THE ORGANZATIONAL
BUYING PROCESS
• Buying a Machine Vision System
• Problem Recognition
 Make-buy decision
• Information Search
 Value analysis
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CHARTING THE ORGANZATIONAL
BUYING PROCESS
• Buying a Machine Vision System
(cont.)
• Alternative Evaluation
 Bidder’s list
• Purchase Decision
• Postpurchase Behavior
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What is a make-buy decision?
A: An evaluation of whether
components and assemblies will be
purchased from outside suppliers or
built by the company itself.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. What is a bidder’s list?
A: A list of firms believed to be qualified
to supply a given item.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
ONLINE BUYING IN
ORGANIZATIONAL MARKETS
• Prominence of Online Buying in
Organizational Markets
• E-Marketplaces: Virtual
Organizational Markets
• Online Auctions in
Organizational Markets
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
ONLINE BUYING IN
ORGANIZATIONAL MARKETS
• Online Auctions in Organizational
Markets (cont)
 Traditional auction
 Reverse auction
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What are e-marketplaces?
A: E-marketplaces are online trading
communities that bring together
buyers and supplier organizations.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. In general, which type of online
auction creates upward pressure on bid
prices and which type creates downward
pressure on bid prices?
A: traditional auction, reverse auction.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin