Organisational Markets or

buying behaviour, delivering

values and satisfaction
 Organization market
• It consists of all the organizations that acquire goods and
services used in the production of other products or services
that are sold, rented, or supplied to others.

• The business market are- Fewer, larger buyers, Close suppliers-

customer relationships, Professional purchasing, Multiple buying
influencers, Multiple sales calls, Derived demand, Inelastic demands,
Fluctuating demand, Geographically concentrated buyers and direct
purchasing.
Buying situations
• There are three buying situations which are categorised and mentioned
below:
• 1. Straight rebuy- The purchasing department re-orders items like office,
supplies and bulk chemicals on a daily and routine basis and choose from
the suppliers on an approved lists.

• 2. Modified rebuy- IN this buyers wants to change the product

specifications, prices, delivery requirements or other items. This needs an
additional participants on both the sides.

• 3. New task- In this buyers purchases the products first time. The larger the
risk or cost the larger the number of participants and larger their
information gathering- the longer the time to take any decisions.
 Organizational buying vs consumer buying
Bases Consumer buying behaviour
Purpose of The individual consumers buy goods and services for
Buying ultimate use or satisfy their needs. The buying
purpose of such consumers is not to earn profit by
reselling the goods and services
Quantity Although consumers buy various kinds of goods, the
quantity of goods remains small. They buy only the
necessary quantity of goods, which they need for
regular use.
Purchase Consumer buying takes decision by consumers
decision themselves. Sometimes they can consult with family
members and friends. They need not fulfill any
formality like organizational buying.
Organizational buying behaviour
The organizations buy goods and services for their
business needs. The buying purpose of them is to
earn profit by using and reselling the goods and
services.
Organizational buying is done in large quantities.
There are several reasons why organizations must
buy the goods they need in bulk. In the first place,
they use large quantities of each item and must
maintain inventories at a level high enough that
they will not run out of stock. Secondly, it is
cheaper and more efficient to make large-volume
purchases.
Organizational purchasing is a rational process
because the purchasing behavior of organizations is
guided by objective factors having to do with
production and distribution. It takes long time than
Bases Consumer buying behaviour Organizational buying behaviour
Market Most of the consumers may not have adequate Organizational purchase criteria are specifically
knowledge knowledge and information about market situation, defined. Organizational buyers usually have fewer
available goods and services, etc. The brands to choose from than do individuals, and
educated customers may be aware and have knowledge their purchases must be evaluated on
about market and goods the basis of criteria that are specific to the overall
needs of the organization. The organizational
buyers have full knowledge of market and
suppliers.
Types of Consumers buy many goods to use to satisfy personal or Organizational buyers buy limited goods to use to
goods family needs. conduct business.
Effect Consumer buying behavior is effected by age, Many individuals are involved in the buying
occupation, income level, education, gender etc. of process. Within large organizations, rarely is one
consumers. individual solely responsible for the purchase of
products for the purchase of products or services.
Instead, many individuals and departments may be
involved and departments may be involved in the
buying process.
Buying The consumer buying process is very simple. No need to Buyers and sellers in the organizational market
Process fulfill any formality. There is also no need to maintain must maintain extensive contact.
extensive contact with sellers.
Organization buying stages
• 1. Problem recognition- Someone in the company recognizes a
problem or need that can be met by acquiring a good or service

• 2. General need description and product specification- Next, the

buyer determines the needed item’s general characteristics,
required quantity, and technical specifications.
• 3. Supplier search- Catalog sites, Vertical markets, Pure- play auction,
Sport & barter markets, Private exchanges, E- procurements- vertical
hubs, Functional hubs, Direct extranet links to major suppliers, Buying
alliances, company buying sites.

• 4. Proposed solicitations- The buyer next invites qualified

suppliers to submit written proposals.

• 5. Supplier selections- Before selecting a supplier, the buying

center will specify and rank desired supplier attributes
• 6. Supplier selections- Overcoming price pressures- solution selling,
risk and gain sharing. Number of suppliers available.

• 7. Order- routine specifications- After selecting suppliers, the

buyer negotiates the final order, listing the technical
specifications, the quantity needed, the expected time of
delivery, return policies, warranties, etc.

• 8. Performance review- The buyer periodically reviews the

performance of the chosen supplier(s).
Business components
• A business component is a logical representation of one or
more tables.

• The information stored in a business component is usually

specific to a particular functional area, such as a product, a
contact, or an account. This information may or may not depend
on other business components.
Customer values and satisfaction
• Generally customer think before they buy-

- Which product will give them more values.

- They are value maximisers for less costs.
- Customer value defines as the customer evaluation of the differences
between all benefits and all costs of the products.
- Customer benefits is the bundle of benefits customer expect from a
given products or services.
• Total customer benefits is the summation of :
• Product values.
• Service values.
• Personnel values.
• Image values.
Steps in the customer value analysis
• Identify the major benefits and attributes that customer values.
• Assess the qualitative importance of different benefits and attributes.
• Assess the company’s and competitors performance on the different
customer values against rated importance.
• Examine ratings of specific segments.
• Monitor customer values over the period of time.
Dimension of customer values
• Conformance to requirements.
• Product selections.
• Price and brand
• Vale-added services.
• Relationship and experiences.
• Customer seek
• Fair prices related to their purchased products.
• Acceptable and good values.
• Valued business relationship or transactions.
• Innovativeness.
• Image status
• Value added services.
• Convenience in goods and outlets.
Customer value and its benefits
• Delighted customers.
• Benchmarking against the competitors.
• Identifying the right things
• Team works by the committed employees
• Enhanced market shares.
• Gaining competitive advantages.
• Enables competitive strategic planning.
Customer satisfaction
• Expectations are based on the customer past buying experiences, the
opinions of marketers, friends, competitors promises and
information’s.
• If the product is short of expectations then the customer is
dissatisfied.
• If the product matches the expectations then the customer is
satisfied.
• If the product exceeds the expectations then this further leads to
customer is highly satisfied and customer delighted.
• To maximise the satisfactions
• Don’t exaggerate the services or products capabilities in advertising
or other communications this will further lead to dissatisfactions

• Don’t set expectations too much low this will further lead to market
size narrower.
Customer satisfaction measurement
• Getting feedback right back.
• Drawing the right conclusions on customer loyalty from the feedback
(satisfaction does not mean to the loyalty).

• Building customer satisfaction index.

Customer dissatisfaction and its effect
• Customer stop purchasing from the company.
• Companies loses the relationship with the customer.
• Dissatisfied customers spread it to 9 to 10 some other customers.
• They lose further 9 to 10 customers.
• 90% of the customer leave without giving the reasons.
Customer retention
• It is the activity that a selling organization undertakes in order to reduce
the customer defections.
• Successful customer retention starts with the first contact an organizations
has with a customer and continues throughout the entire lifetime of a
relationship.
• Acquisition of the customer can cost 5 times more than retaining current
customers.
• On an average company loses 10% of its customer each year.
• A 5% reduction to the customer defection rate can increase profits by 25%
to 85%.
• The customer profit rate increases over the life of a retained customer.
• Reducing customer defection is very much necessary.
• Define and measure retention rate.
• Identify cause of leaving
• Estimate profit lost from customer defection i.e.customer lifetime
values.
• Estimate cost to reduce defections take appropriate actions.
• Highly satisfied delighted customer producebenefits
• They are less price sensitive.
• They remain as customer longer.
• They talk favorably about the company and products to others (i.e.
positive word of mouth recommendations).
• Lots of differences between loyalty of satisfied customers and
completely satisfied customers.
• Delighted customers have emotional and rational preferences for
products and this create high customer loyalty.
20-80-30 Rule
• 20- 20% of your customers
• 80- Generate 80% of your profit
• 30- Half of your profit is lost serving the bottom 30% of your
customer base.
Customer retention and its importance
• Good customer retention is vital for nay organizations because a slight
reduction i.e. 5% in the customer defection rate has a
disproportionately positive effect on profitability.

• Companies with high retention also grow faster.

• Customer can only retained if they are loyal and motivated to resist
competitions.
Determinants
• There are six determinants of customer retention:
• Customer expectation versus the delivered quality of the services or
products.
• Values
• Products suitability and uniqueness.
• Loyalty mechanism
• Ease of purchases.
• Customer services.
Customer retention- 8C’s
• Communication
• Convenience
• Choices
• Consistency
• Confidence
• Care
• Control
• commitment