Professional Documents
Culture Documents
3 - Jerry
3 - Jerry
Analyzing Business
Markets
Li Xiaoming (Jerry)
Objectives
Understand the nature of the business
market and how it differs from the
consumer market.
Learn how institutions and government
agencies buy.
Identify the different buying situations
faced by organizational buyers.
2003 Prentice Hall, Inc.
Objectives
Identify the participants in the
business buying process and the
various influences impacting
business buying decisions.
Understand how business buyers
make their decisions.
2003 Prentice Hall, Inc.
Organizational Buying
Organizational buying is:
the decision-making process by
which formal organizations
establish the need for purchased
products and services and identify,
evaluate, and choose among
alternative brands and suppliers.
2003 Prentice Hall, Inc.
Organizational Buying
Compared to Consumer Markets,
Business Markets have . . .
Fewer buyers
Larger buyers
Geographically concentrated buyers
Close relationships with their
supplier-customers
2003 Prentice Hall, Inc.
Organizational Buying
Other Business Market Characteristics
Fluctuating
demand
Multiple buying
influences
Derived demand
Inelastic demand
Direct purchasing
Professional
purchasing
Reciprocity
Leasing
Organizational Buying
The Business Market Includes For-Profit
Companies and Two Specialized Groups:
The institutional market
Schools,
Organizational Buying
Buying Situations
Straight rebuy
Modified rebuy
New task
Routine reorders
from approved
vendor list
Low involvement,
minimal time
commitment
Example: copier
paper
Organizational Buying
Buying Situations
Straight rebuy
Modified rebuy
New task
Specifications,
prices, delivery
terms or other
aspects require
modification
Moderate level of
involvement and
time commitment
Example: desktop
computers
Organizational Buying
Buying Situations
Straight rebuy
Modified rebuy
New task
Purchasing a
product or service
for the first time
High level of
involvement and
time commitment;
multiple influences
Example: selecting a
web site design firm
or consultant
Organizational Buying
Systems Buying
A single provider provides the total
package for the buyers needs
May involve turnkey solutions
Systems Selling
Manufacturers sell entire systems
Supplier provides all MRO items
2003 Prentice Hall, Inc.
Participants in Business
Buying
Buying center members fill one or more
roles in the purchase decision process:
Initiators
Deciders
Users
Approvers
Influencers
Buyers
Gatekeepers
2003 Prentice Hall, Inc.
Influences on Business
Buyers
Major Influences
Environmental
Organizational
Interpersonal
Individual
2003 Prentice Hall, Inc.
Demand level
Economic outlook
Interest rates
Technological change
Politics/regulations
Competition
Concerns for social
responsibility
Influences on Business
Buyers
Major Influences
Objectives
Policies
Environmental
Organizational
Procedures
Interpersonal
Organizational
structures
Individual
Systems
Influences on Business
Buyers
Major Influences
Interests
Authority
Environmental
Organizational
Interpersonal
Individual
2003 Prentice Hall, Inc.
Status
Empathy
Persuasiveness
Influences on Business
Buyers
Major Influences
Age
Income
Environmental
Education
Organizational
Job position
Interpersonal
Personality
Individual
2003 Prentice Hall, Inc.
Risk attitudes
Culture
The Purchasing/
Procurement Process
Three Company Purchasing
Orientations
Buying
Orientation
Commoditization
Multisourcing
Procurement
Orientation
The Purchasing/
Procurement Process
Types of Purchasing
Processes
Routine products
Leverage products
Strategic products
Bottleneck products
2003 Prentice Hall, Inc.
The Purchasing/
Procurement Process
Stages in the Buying Process
Problem Recognition
General Need Description and
Product Specification
Supplier Search
Vertical hubs
Functional hubs
Direct external links to major suppliers
Buying alliances
Buyphases
New
Modified
Straight
Task
Rebuy
Rebuy
1. Problem recognition
Yes
Maybe
No
Yes
Maybe
No
3. Product specification
Yes
Yes
Yes
4. Supplier search
Yes
Maybe
No
5. Proposal solicitation
Yes
Maybe
No
6. Supplier selection
Yes
Maybe
No
7. Order-routine specification
Yes
Maybe
No
8. Performance review
Yes
Yes
Yes
The Purchasing/
Procurement Process
General Need Description and
Product Specification
Product value analysis
Supplier Search
Vertical hubs
Functional hubs
Direct extranet links to
major suppliers
Buying alliances
Company buying sites
Request for proposals (RFPs)
2003 Prentice Hall, Inc.
The Purchasing/
Procurement Process
Proposal Solicitation
Supplier Selection
Attributes
Rating Scale
Importance
Weights
Price
.30
Supplier reputation
.20
Product reliability
.30
Service reliability
.10
Supplier Flexibility
.10
Poor
(1)
Fair
(2)
Good
(3)
Excellent
(4)
x
x
x
x
x
The Purchasing/
Procurement Process
Customer
value assessment
Routine-order products
Procedural-problem products
Political-problem products
Order-Routine Specification
Blanket contract
Stockless purchase plans
Performance Review
Buyflow map
2003 Prentice Hall, Inc.
Thank you!