C HAPTER
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-2

THE NATURE AND SIZE OF
ORGANIZATIONAL MARKETS
•
Business Marketing
•
Organizational Buyers
•
Industrial Markets ( Industrial Firms )
•
Reseller Markets ( Resellers )
•
Government Markets ( Government Units )
•
Global Organizational Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-6

FIGURE 6-1 Type and number of organizational customers in the U.S.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-7

Moscow Yellow Pages
What type of market?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-8

MEASURING DOMESTIC AND
GLOBAL INDUSTRIAL, RESELLER,
AND GOVERNMENT MARKETS
•
North American
Industry
Classification
System (NAICS)
•
North American
Product
Classification
System (NAPCS)
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-9

FIGURE 6-2 NAICS breakdown for information industries sector:
NAICS code 51 (abbreviated)
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-10

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
Demand Characteristics

Derived Demand
•
Size of the Order or Purchase
•
Number of Potential Buyers
•
Organizational Buying Objectives
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-13

FIGURE 6-3 Key characteristics of organizational buying behavior
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-14

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
Organizational Buying Criteria

ISO 9000

Reverse Marketing
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-16

FIGURE 6-A Key organizational buying criteria
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-17

MARKETING NEWSNET
Harley-Davidson’s Supplier
Collaboration Creates Customer
Value…and a Great Ride
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-18

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
Buyer-Seller Relationships and
Supply Partnerships

Reciprocity

Supply Partnership
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-19

ETHICS AND SOCIAL
RESPONSIBILITY ALERT
Scratching Each Other’s Back—
The Ethics of Reciprocity in
Organizational Buying
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-20

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
The Buying Center: A Cross-Functional
Group

Buying Center

Buying Committee

People in the Buying Center
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-21

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
The Buying Center: A Cross-Functional
Group

Roles in the Buying Center
•
Users
•
Influencers
•
Buyers
•
Deciders
•
Gatekeepers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-22

Buying Center
Who is in the buying center and what roles do they play?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-23

FIGURE 6-B Five roles in the buying center
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-24

CHARACTERISTICS OF
ORGANIZATIONAL BUYING
•
The Buying Center: A Cross-Functional
Group

Buying Situations ( Buy Classes ) and the
Buying Center
•
Straight Rebuy
•
Modified Rebuy
•
New Buy
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-25

FIGURE 6-4 How the buying situation affects buying center behavior
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-26

CHARTING THE ORGANIZATIONAL
BUYING PROCESS
•
Organizational Buying Behavior
•
Stages in the Organizational Buying
Process
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-29

FIGURE 6-5 Comparing the stages in consumer and organizational purchases
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-30

CHARTING THE ORGANIZATIONAL
BUYING PROCESS
•
Buying a Machine Vision System

Problem Recognition
•
Make-Buy Decision

Information Search
•
Value Analysis

Alternative Evaluation
• Bidder’s List
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-31

CHARTING THE ORGANIZATIONAL
BUYING PROCESS
•
Buying a Machine Vision System

Purchase Decision

Postpurchase Behavior
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-32

ONLINE BUYING IN
ORGANIZATIONAL MARKETS
•
Prominence of Online Buying in
Organizational Markets
•
E-marketplaces : Virtual Organizational
Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-36

WEB LINK eBay Means Business Too
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-37

ONLINE BUYING IN
ORGANIZATIONAL MARKETS
•
Online Auctions in Organizational
Markets

Traditional Auction

Reverse Auction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-38

FIGURE 6-6 How buyer and seller participants and price behavior differ by type of online auction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-39

Business marketing is 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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-57

Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-58

Industrial firms are organizational buyers that in some way reprocesses a product or service they buy before selling it again to the next buyer.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-59

Resellers are wholesalers and retailers that buy physical products and resell them again without any processing.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-60

Government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-61

The 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).
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-62

Derived demand means the demand for industrial products and services is driven by, or derived from, demand for consumer products and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-63

Organizational buying criteria are the objective attributes of the supplier’s products and services and the capabilities of the supplier itself.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-64

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).
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-65

Reverse marketing involves 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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-66

Reciprocity is an industrial buying practice in which two organizations agree to purchase each other’s products and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-67

A supply partnership 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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-68

A buying center is the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-69

Buy classes consist of three types of buying situations: straight rebuy; modified rebuy; and new buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-70

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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-71

A make-buy decision is an evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-72

Value analysis is a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-73

A bidder’s list is a list of firms believed to be qualified to supply a given item.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-74

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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-75

A traditional auction is 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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-76

A reverse auction is 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.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 6-77