Ch 3 Organizational Buying and Buying Behavior Copyright

Understanding customers is vital for B 2 B marketing process Understanding buyer behavior is the key for a successful B 2 B marketing process Major questions: › › › Who are they? What do they need? What do they buy? How much do they buy? Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Companies buy many things Just like consumers, companies need and buy many product and services: Raw materials, chemicals Parts, components, semi-finished products Machines, packaging materials, production systems Computers, trucks, cars, forklifts, office supplies Cleaning services, security services, catering services IT services, legal consultancy, logistics services. . . & many others Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Risk-Value Matrix Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 4

Business Buyer Behavior Model Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Business Buyer Behavior- Major Influences Copyright © 2011 Pearson Education, Inc. publishing as Prentice

Departments in companies Companies have many departments performing different business functions: Manufacturing/Operations, R&D, Engineering, Quality, Marketing, Sales, Purchasing, IT, Accounting, Finance, Human Resources. . . Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7

The Buying Center s d e e rn e om ing t s Cu buy and avior beh nt e m n r ve ies o G nc age External Factors Internal Factors Technology Accounting Management Marketing Legal Production/Mfg. Finance Service Inde stan pende n sett dards- t i org ng aniz atio ns Var io Pub us lics Stakeholders in each discipline within the buying organization contribute expertise such that internal and external factors are accommodated. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 8

Buying Center A buying center is comprised of all those individuals and groups who participate in the buying decisionmaking process, Decision making unit of buying situation Several people involved from several departments Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 9

Buying Center A B 2 B marketer must identify the individuals and groups involved in the buying decision process, Also must understand the roles of buying centre members. Understanding the buying center roles helps industrial marketers to develop an effective sales & marketing strategy. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 10

Roles in the Buying Center Initiator (suggester) End User Infleuncer Gatekeeper Decision Maker Buyer

Roles in the Buying Center 1. Initiators: Usually the need for a product/item and in turn a supplier arises from the users. But there can be occasions when the top management, maintenance or the engineering department or any such recognise or feel the need. These people who “initiate” or start the buying process are called initiators. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 12

Roles in the Buying Center 2. Users: Under this category come users of products or services. If they are technically sound like the R&D, engineering who can also communicate well. They play a vital role in the buying process. They also act as initiators. They will be the users of the product or service to be bought. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13

Roles in the Buying Center 3. Influencers: Technical personnel, experts and consultants and qualified engineers play the role of influencers by drawing specifications of products. They are, people in the organisation who influence the buying decision. It can also be the top management when the cost involved is high and benefits long term. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 14

Roles in the Buying Center 4. Gate Keepers: A gatekeeper is like a filter of information. They allow only that information favorable to their opinion to flow to the decision makers. Usually, purchasing managers may act as gatekeepers. They are the people whom our industrial marketer would first get in touch with. They have the power to prevent the sellers or information from reaching members of the buying centre. They could be at any level and sometimes even be the receptionists and telephone operators. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 15

Roles in the Buying Center 5. Deciders: Generally, for routine purchases, the purchase executive may be the decider. But for high value and technically complex products, senior executives are the deciders. the marketing person must be aware of the deciders in the organisation and try to maintain contacts with them. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 16

Roles in the Buying Center 6. Buyers: They are people who have formal authority to select the supplier and arrange the purchase terms. They play a very important role in selecting vendors and negotiating. The major responsibilities of buyers are obtaining proposals, evaluating them and selecting the supplier, negotiating the terms and conditions, issuing of purchase orders, follow up and keeping track of deliveries. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17

Approaching the Buying Center When a buying center includes many participants, the business marketer will not have the time or resources to reach all of them. Small sellers could concentrate on reaching the key buying influencers. Large sellers go for multi-level in-depth selling to reach as many buying participants as possible. Functional responsibilities and job titles are sometimes not true indicators of the relative influence of buying center members in a purchase decision task. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18

The Buying Center: Members must meet 3 needs in the decision process: Organization Needs o Benefits of the product or service Individual’s Professional Needs o Based on professional activities and functions of the job Individual’s Personal Needs o Career, quality of life, recognition Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 19

The Buying Center Members must reduce 3 sources of risks in the buying decision process: 1 - Financial risks: cost of the item 2 - Performance risk: if the product will not perform as intended 3 - Social risk: if the purchase will not meet the approval of an important reference group Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 20

The Buying Center Try to reduce those risks in three ways: 1 - Gather more product/supplier information 2 - Remain loyal to present suppliers 3 - Spread the risk to other members in the organization or among suppliers Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 21

Organizational Buying Vs. Consumer Buying Involves more Buyers Stakeholders in Buying Center are driven by professional responsibilities Different decisions occur simultaneously within the Buying Center Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 22

Staj başvuru zamanı!! http: //www. hurriyet. com. tr/hangi-sirket-kacstajyer-alacak-40737137 Copyright © 2011 Pearson Education, Inc.

Consumer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 24

B 2 B Buying Decision Process 1. Problem recognition 2. General need description 3. Product Specification 4. Supplier/Source search 5. Proposal solicitation 6. Selection 7. Make the transaction routine 8. Evaluate performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 25

Factors of the Buying Decision Process Interaction is fluid and broad based Process is simultaneous, not sequential Alternative suppliers are listed Seller and buyer seek long-term profitable relationships. Relationships build loyalty! Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 26

Buying Decision Process: Definition Stage The first attempt at describing a solution Buying center participants assess problem and need to determine what is necessary to resolve/satisfy it The complexity of the solution and the number of organizational units to be involved (size of the buying center) is determined Successful suppliers are involved, often in the development of the Product Specification Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 27

Which departments will be involved? A special, expensive computer software buying situation of company? An expensive machinery buying for manufacturing process? A human resources consultancy service Car rental service of 200 cars for sales persons use Buying of 10 Printers to be used in the offices of the company Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 28

Buying Decision Process: Supplier Search Look in company files and trade directories, contact suppliers for information, solicit proposals from known sellers, examine websites, catalogs, and trade publications Conduct a value analysis - an evaluation of each component of a potential purchase; examine quality, design, materials, item reduction/deletion to save costs, etc. Conduct seller analysis - a formal and systematic evaluation of current and potential suppliers; focuses on price, quality, delivery service, availability and overall reliability Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 29

Buying Decision Process: Supplier Selection An organization can decide to use several suppliers, called multiple sourcing. Multiple sourcing reduces the possibility of a shortage by strike, bankruptcy and other supplier related sourcing problems. An organization can decide to use one supplier, called sole sourcing. This is often discouraged unless only one supplier exists for the product; however it is fairly common because of the improved communication and stability between buyer and supplier. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 30

Buying Decision Process: Aggrement & routines After selecting a supplier, the buyer will negotiate the final order by listing the technical specifications, agreed upon price, quantities, expected time of delivery, return policies, warranties and any other terms of negotiation. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 31

Buying Decision Process: Delivery Stage Meet the customer’s technical requirements Meet the customer’s delivery timing requirements Meet the customer special logistics and delivery requirements Meet the agreement overall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 32

Buying Decision Process: Supplier Evaluation Stage Compare products with specs Results become feedback for other stages in future business purchasing decisions Evalutae overall buying process and supplier as a whole Evalutae the company’s buying process for this spesific buying situation and make necessary modifications Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 33

Three types of buying situation New Task Modified Rebuy Straight Rebuy Copyright © 2011

Typical New Task Situation A need not yet faced by Organization New offering with new technology Requires many sources of information and assistance Utilizes complete buying process to investigate alternatives Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 35

New task buying examples A robotic assembly line purchase of a car maker company A food company wants to buy logistics services first time from a logistics company A special computer software program buying situation of a textile company Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 36

Typical Re-Buy Situation Modified Re-Buy › Modified buying Situation › Limit exposure from competitive forces › e. g. Lap-top computers buying of Yasar University (or a company) Straight Re-Buy › Buying situation that is routine › Established solutions › e. g. Paper buying of Yasar University (or a company) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 37

New Task to Straight Re-Buy Yes. Then next purchase New Task No. Then next purchase Definition Re-Buy Definition Selection Solution Delivery Is the buyer satisfied? Selection Solution Delivery End Game Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 38

Complex Re-Buy Modified Re-Buy Straight Re-Buy Definition Selection Define changes to process Satisfied, No differences Solution Delivery yes End Game Is the buyer satisfied? Selection Dissatisfied Small Difference no How different is the next situation? Large Difference Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Solution Delivery End Game To New Task 39

Value Image B 2 B marketer has to create a total value image in customer’s mind The total of all impressions that a customer has of the firm (whether relevant to the buying situation) This is similar to product positioning that occurs with consumer goods Needs to be maximized in the “mind” of the buyer Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 40

Value Elements in B 2 B Product quality Process quality of the suplier Technical capabilites of the supplier Delivery timing Pre-sales services During sales services After sales services Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Trust Supply flexibilities Cooperation Communication Ease of doing business Return polices Responsiveness Frequency of customer visits 41

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