Unit 7

Analyzing Business Markets.

 Introduction:
Organizational Buyer
‣ Buy to reprocess then resell
‣ Purchase raw materials
‣ Purchase “big ticket” items
that end consumers would
benefit from but never buy
(CAT Scan machine)
‣ Often gather multiple “bids”
before making purchase
decision
‣ Purchase decision is made by
a team not an individual
End Consumer
‣ Buy the final version of the
product
‣ Buy items of lesser value to
benefit the individual or
family
‣ Decision making process is
done by individual or family
‣ Would have no use for the
items an organizational buyer
requires (bridge repair bids)
 Three types of Organizational Buyers:

1. Industrial Markets
‣ Industrial firms – buy a good and reprocess it for re-sale –
company that buys cotton for re-sale to clothing
manufacturers
‣Reseller Market (wholesalers and retailers)
‣ Resellers – buy a product and re-sell it without re-processing
‣ Costco, Reitman's
‣Government Markets
‣ Government Units – Federal, Provincial and local
government departments that purchase goods and services
for their constituents (construction of new school)
‣most organizational marketing is done on a global scale

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved. LO 1

Organizational Buying Criteria:
‣ Not unlike end consumer decision making to buy
‣ Look at the objective attributes of the supplier's products and
services and the capabilities of the supplier itself.
‣ 7 most common criteria are:
‣ Price
‣ Ability to meet required specifications
‣ Ability to meet required delivery schedules
‣ Technical ability
‣ Warranties
‣ Past performance
‣ Production facilities and capacity

‣ ISO 9000 standards – quality management and quality control

certification system
‣ Supplier Development – develop relationships to shape suppliers to
meet their specific needs
FIGURE 6-2
Key characteristics of organizational buying behaviour

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved. LO 2

 CHARACTERISTICS OF ORGANIZATIONAL
BUYING
‣ The Buying Centre: A Cross-Functional Group
‣ People in the Buying Centre
‣ Buyer or purchaser and someone from the functional area with
knowledge of what is required.
‣ Roles in the Buying Centre
‣ User – people who will use the product
‣ Influencer – helps define specs of what is bought
‣ Buyer – select supplier and negotiate contract
‣ Decider – approves supplier who received contract
‣ Gatekeeper – controls information to the buying center
‣ Buying Situations and the Buying Centre
‣ Number of people in the buying centre depends on nature of the
purchase
‣ Buy classes – Straight buy; Modified buy; New buy
© 2011 McGraw-Hill Ryerson Ltd. All rights reserved. LO 2, 3
FIGURE 6-4 Comparing the stages in consumer and
organizational purchases

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved. LO 3

 ONLINE BUYING IN ORGANIZATIONAL
MARKETS
‣ Prominence of Online Buying in Organizational Markets
‣ Organizational Buyers account for 80% of the total worldwide
value of ALL online transactions.
‣ Why do OB buy online?
‣ Timely information
‣ Reduces order processing order costs
‣ Reduce marketing costs such as sales and advertising
‣ E-Marketplaces: Virtual Organizational Markets
‣ On-line, third party trading platform for buyer/seller exchanges
‣ XSAG.com
‣ Online Auctions in Organizational Markets
‣ Traditional Auction – item goes up for sale, buyers bid
‣ Reverse Auction – buyers require a product, sellers offer

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved. LO 4