L2A
Chapter 4 Business, Government, and Institutional Buying
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Business-to-Business (B2B) Marketing
Marketing products and services to producers, intermediaries, government agencies, and other institutions rather than to consumers
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Categories of Organizational Buyers
Producers - Buy goods and services in order to produce other goods and services for sale
Intermediaries - Purchases products to resell at a profit
Government agencies - Operate at the federal, state, and local levels
Other institutions - Hospitals, museums, universities, nursing homes, and churches
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Figure 4.1 - A Model of The Organizational Buying Process
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Purchase-Type Influences on Organizational Buying
Straight rebuy: Routinely reordering a product from the same supplier that it had been purchased from in the past
Fast and requires few employees
Common among organizations that practice just-in-time inventory
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Purchase-Type Influences on Organizational Buying
Modified rebuy: Consideration of a limited number of alternatives before making a selection
Organizational buyer considers the new information and decides what changes to make
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Purchase-Type Influences on Organizational Buying
New task purchase: Involves an extensive search for information and a formal decision process
Most often used for big-ticket items
Time consuming
Involves a relatively large number of decision makers
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Marketing Tactics for Reaching Organizational Buyers
| Type of Purchase | Marketing Element | Promotional Approach |
| Straight rebuy | Advertising Promotion Selling | Use reminder advertising Build image for company Hospitality events at trade shows Any personal selling is designed to build relationships Automate the purchasing process |
| Modified rebuy | Advertising Promotion Selling | Use comparison advertising to show differences between your product and similar products Customer site demonstrations, hospitality events at trade shows Protect relationship with current customers Anticipate or respond quickly to changes in customer needs |
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Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Marketing Tactics for Reaching Organizational Buyers
| Type of Purchase | Marketing Element | Promotional Approach |
| New task purchase | Advertising Promotion Selling | Detailed, educational ads to try to get users to try product, substitute for old method Use demonstrations at trade shows to show how it works Offer free trials or demonstrations at the customer’s site Emphasize on understanding customers’ needs Showing how new product satisfies needs better than old methods |
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Structural Influences on Organizational Buying
Structural influences - Design of the organizational environment and how it affects the purchasing process
Purchasing roles
Buying center: Organizational group formed from different departments which has the responsibility to evaluate and select products for purchase
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Purchasing Roles
Start the buying process by recognizing a need or a problem in the organization
Initiators
Use the product to be purchased
Users
Affect the buying decision by helping define the specifications for what is needed
Influencers
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Purchasing Roles
Have formal authority and responsibility to select the supplier and negotiate the terms of the contract
Buyers
Have the formal and informal power to select or approve the supplier that receives the contract
Deciders
Control the flow of information to a buying center
Gatekeepers
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Organization-Specific Factors
Dominant function in an organization that may control purchasing decisions
Orientation
Large organization - Joint decision making
Small organization - Autonomous decision making
Size
Centralized organization - Joint decision making is less
Decentralized organization - Joint decision making is more
Degree of centralization
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Purchasing Policies and Procedures
Ensures that:
Appropriate products and services are purchased efficiently
Responsibility for buying is assigned appropriately
Sole sourcing: All of a type of product is obtained from a single supplier
Simplifies the buying process
Converts formerly modified rebuys into simpler straight rebuys
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Behavioral Influences on Organizational Buying: Personal Motivations
Organizational buyers are subject to the same personal motives or motivational forces as other individuals
Considering both personal and nonpersonal motivational forces is necessary
Relative importance of each is not a fixed quantity
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Behavioral Influences on Organizational Buying: Role Perceptions
Manner in which individuals behave depends on:
Their perception of their role
Their commitment to what they believe is expected of their role
Maturity of the role type
Extent to which the institution is committed to the role type
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Behavioral Influences on Organizational Buying: Role Perceptions
Organizations can be divided based on differences in degree of employee commitment
Innovative - Weak commitment to expected norms of behavior
Adaptive - Moderate commitment
Lethargic - Strong commitment to traditionally accepted behavior
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Stages in The Organizational Buying Process
Organizational need - Recognizing needs, and a willingness and ability to meet them
Results in purchase
Vendor analysis: Organizational buyers rate each potential supplier on various performance measures
Helps develop a list of approved vendors
Helps compare competing vendors
Helps compare performance on evaluation criteria
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Stages in The Organizational Buying Process
Purchase activities - Influenced by:
Complexity of product or service
Number of suppliers available and pricing
Importance of product to buying organization
Postpurchase evaluation - Evaluation of vendors and the products to determine whether the products are acceptable for future purchases
Different functional areas have different evaluation criteria
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Figure 4.4 - Functional Areas and Their Key Concerns in Organizational Buying
Source: Michael H. Morris, Leyland F. Pitt, and Earl D. Honeycutt, Jr., Business-to-Business Marketing, 3rd ed. (Thousand Oaks, CA: Sage Publications, 2001), p. 66.
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