ANALYZING Chapter

BUSINESS MARKETS 7
Some of the worlds most valuable brands belong to business
marketers. ABB, Caterpillar, DuPont, FedEx, GE, Hewlett-
Packard, IBM, Intel and Siemens, to name a few.

They need to embrace holistic marketing principles, such as

building strong loyalty relationship with their customers, just
like any marketer.
WHAT IS ORGANIZATIONAL
BUYING?
Organizational buying refers to 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.
CHARACTERISTICS OF BUSINESS
MARKETS
Fewer buyers Direct purchasing
Close supplier-customer Geographically concentrated
relationships buyers
Professional purchasing Derived demand
Many buying influences Inelastic demand
Multiple sales calls Fluctuating demand
BUYING SITUATION
Straight Rebuy: when the purchasing
department reorders on a routine basis
and chooses from suppliers on an
approved list.
Modified Rebuy: when the buyer wants
to change product specifications, prices,
delivery requirements, or other terms.

New Task: when the purchaser buys a

product or service for the first time.
STAGES IN THE BUYING
PROCESS
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 items general
characteristics, required quantity, and technical specifications
3. Supplier Search

Catalog Vertical
sites markets

Pure
Buying Play
alliances auction

Spot &
Private
barter
exchanges
markets
4.Proposal solicitation
The buyer next invites qualified suppliers to submit written proposals

5.Supplier selection
Before selecting a supplier, the buying center will specify and rank desired supplier
attributes

6.Order-routine specification
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.

7.Performance review
The buyer periodically reviews the performance of the chosen supplier(s)
BUYGRID FRAMEWORK
Buy classes
New Modified Straight
task rebuy Rebuy
Problem recognition Yes Maybe No
General need description Yes Maybe No
Product specification Yes Yes Yes
Buyphases Supplier search Yes Maybe No
Proposal solicitation Yes Maybe No
Supplier selection Yes Maybe No
Order-routine specification Yes Maybe No
Performance review Yes Yes Yes
THE BUYING CENTER
Initiators:
Initiators: requests
requests the
the product
product

Users:: will
Users will use
use the
the product
product

Influencers:
Influencers: influences
influences the
the
buying
buying decision
decision
Deciders:
Deciders: makes
makes the
the decision
decision of
of
what
what to
to purchase
purchase
Approvers:
Approvers: authorizes
authorizes the
the
proposal
proposal
Buyers:
Buyers: have
have the
the formal
formal
authority
authority to
to purchase
purchase
Gatekeepers:
Gatekeepers: havehave the
the power
power to
to
prevent
prevent seller
seller information
information from
from
reaching
reaching members
members of of the
the buying
buying
center
center