When you finish chapter 7, you should: Know who the business and organizational customers are, see why multiple influence is common in business and organizational purchase decisions and understand how it affects the practice of marketing, understand the problem-solving behaviour of organizational buyers, know the basic methods used in organizational buying,...
Chapter 7: The Buying Behaviour of Business and Organizational Customers For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Business vs Consumer Buying The following is a summary of the characteristics of business to business markets when compared to consumer markets: Characteristic Sales volume Purchase volume Number of buyers Size of individual buyers Location of buyers Buyer-seller relationship Nature of channel Nature of buying Nature of buying influence Type of negotiations Use of reciprocity Use of leasing Primary promotional method Business to Business Market Greater Larger Fewer Larger Geographically concentrated Closer More direct More professional Multiple More complex Yes Greater Personal selling Consumer Market Smaller Smaller Many Smaller Diffuse More impersonal More indirect More personal Single Simpler No Smaller Advertising Source: Bingham, F.G., Jr., and Raffield, B.T., Business to Business Marketing Management, Irwin, 1990 Exhibit 71 72 For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Different Types of Customers Manufacturers Producers Farms, mines, etc Financial Institutions Other providers All business and organizational customers Intermediaries Governments Nonprofits Exhibit 72 73 Wholesalers Retailers Federal Provincial and Local National Local For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Typical Components of Cost-in Use ACQUISITION COSTS + POSSESSION COSTS + USAGE COSTS = Price Interest Field defects Paperwork Storage Training Shopping time Quality control User labour Expediting Taxes & insurance Product longevity Mistakes in order Shrinkage & obsolescence Replacement Prepurchase product evaluation General internal handling Disposal TOTAL COST-IN-USE SOURCE: Cespedes, Frank V., Concurrent Marketing, Harvard School of Business Press, 1995 Exhibit 73 74 For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Buying Centres Buyers Users Buying Centre Gatekeepers 75 Influencers Deciders For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Overlapping Needs Risk Innovation Job security Survival Comfort Individual’s Needs Career advancement Customer satisfaction Overlap in Needs Money-rewards Other needs 76 Company’s Needs Growth Profit Other needs For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Organizational Buying Processes Type of Process Characteristics New-Task Buying Modified Rebuy Straight Rebuy Time Required Much Medium Little Multiple Influences Much Some Little Review of Suppliers Much Some None Information Needed Much Some Little Exhibit 75 77 For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Basic Methods in Organizational Buying Inspection Sampling Basic Methods Description Negotiated Contracts 78 For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Buyer-Seller Relationships Information sharing Linkages Finance R&D Cooperation Quality Quality R&D Salesperson Purchasing manager Supplier Relationship Accounting Marketing Accounting Production Exhibit 77 79 Customer Production Engineering Legal bonds Adaptations For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Types of Organizational Buyers Manufacturers Service Producers Retailers & Wholesalers Governments 710 Focus: Grouped by Industry Focus: Close to Customers Focus: Buying for Targets Focus: Bids & Regulations For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited ... Number of buyers Size of individual buyers Location of buyers Buyer-seller relationship Nature of channel Nature of buying Nature of buying influence Type of negotiations Use of reciprocity Use of. .. Wholesalers Retailers Federal Provincial and Local National Local For use with Shapiro, Wong, Perreault, and McCarthy texts Copyright © 2002 McGraw-Hill Ryerson Limited Typical Components of Cost-in... Different Types of Customers Manufacturers Producers Farms, mines, etc Financial Institutions Other providers All business and organizational customers Intermediaries Governments Nonprofits Exhibit 72