Organizational Buyer Behavior

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					CHAPTER 19
Organizational Buyer Behavior
Organizational Purchase Process
 Often compared with family purchases
 Have relatively objective and clearly
  articulated criteria
 Made by individuals unknown to other
  organizational members
 Businesses often engage in reciprocal
  purchases, form strategic alliances with
  their suppliers, and proactive in helping
Decision-Making Unit
   Individuals within an organization who
    participate in making a given purchase

   They function as buying centers when
    they consist of individuals from various
    areas (e.g., engineering, accounting,
Purchase Situation
   Straight Rebuy
     Purchase is of minor importance and is not
     Generally the case when reordering basic
      supplies and component parts
     Often handled under a contract
     Price or reliability tend to be the dominant
      evaluative criteria
   Modified Rebuy
     The purchase is moderately important to the firm
      or the choice is more complex
     Typically involves a product or service that the
      organization is accustomed to purchasing
     Strategic issues begin to play a role
   New Task
     Occurs when the buying decision is very
      important and the choice is quite complex
     The buying organization will typically have had
      little experience with the decision and with the
 Time involved is frequently quite long

 The marketing strategy and tactics differ from one
 purchase situation to the other

 Marketers must understand the purchase task
 confronting their organizational consumers and
 develop appropriate marketing strategies
      Steps in the Organizational
          Decision Process

   Problem Recognition
     Sales managers and director of operations play
      the key role in recognizing the need
     Table 19-4 shows that the head of a department is
      most likely to recognize a problem or need to
   Information Search
     Can be both formal and informal
     For complex technology products, organizational
     buyers often hire consultants
   Evaluation and Selection
     Two-stage process between the evaluation of
     possible vendors and selection of a given
      ○ 1st stage- making the buyer’s approved vendor
      ○ 2nd stage- involve other decision rules, such as
        disjunctive, lexicographic, compensatory, or
     Brand image and equity also play a role in the
     evaluation process
   Purchase and Decision Implementation
     Once the decision to buy has been made, the
     method of purchase must be determined
     Terms and conditions-payments, warranties,
      delivery dates, and so forth-are both complex
      and critical
     Firms that are marketing to organizations
      increasingly use the Internet to sell their
      products directly to customers or through
      online wholesalers
   Usage and Postpurchase Evaluation
     A major component of postpurchase
      evaluation is the service the seller provides
      during and after the sale
     Dissatisfied organizational buyers may switch
      suppliers or engage in negative word-of-
      mouth communications
   Relationship marketing is at least as
    important in industrial marketing as it is
    in consumer marketing
     The basic idea at the organizational level is
     for the seller to work closely with the buyer
     over time with the objective of enhancing the
     buyer’s profits or operations while also
     making a profit
    Internet’s Role in the
Organization Decision Process

   Business-to-Business e-commerce in the US
    is estimated at over $6 trillion
Organizational Culture

 Organizations have a type of self-concept in
  the beliefs and attitudes the organization
  members have about the organization and
  how it operates
 Also has a type of lifestyle in that they have
  distinct ways of operating
     These two are known as organizational culture
   Corporate culture is often used to refer to
    the organizational culture of a business firm
    External Factors Influencing
      Organizational Culture

   Firmographics involve both organizational
    characteristics and characteristics of the
    composition of the organization
     Size-large organizations are more likely to have
     a variety of specialists who attend to
     purchasing, finance, and general management;
     in smaller companies have one or two
     individuals who have the same responsibilities
 Activities and Objectives-influence the style and

  ○ Commercial firms can be usefully divided into public
   firms and private firms
 Location-there are a number of regional
 subcultures in the US
  ○ These subcultures influence organizational cultures
    as well as individual lifestyles
  ○ Location-based differences are magnified when
    doing business in foreign cultures
 Organization Composition-organizational cultures
  influence the behaviors and values of those who
  work in the organization
 Macrosegmentation-organizations with
  distinguishing firmographics can be grouped into
  market segments
 Variations in values and behaviors
  across cultures affect organizations as
  well as individuals
 In America, Japan, and most of Europe,
  bribery and similar approaches for
  making sales are not acceptable, and
  these governments enforce a wide array
  of laws prohibiting such behaviors
Reference Groups
 Lead users-are innovative organizations
  that derive a great deal of their success
  from leading change
 Reference group infrastructure refers to
  the flow of purchase influence within an
International Factors Influencing
    Organizational Culture

   Organizational Values
     1. Risk taking is admired and rewarded
     2. Competition is more important than
       3. Hard work comes first, leisure second
       4. Individual efforts take precedence over
        collective efforts
       5. Any problem can be solved
       6. Active decision making is essential
 7. Change is positive and is actively sought
 8. Performance is more important than rank
  or status
 These values above are representative of an
  innovative organization that seeks change,
  views problems as opportunities, and
  rewards individual efforts

 To process information, a firm must go
  through the same sequential stages of
  exposure, attention, and interpretation
  as consumers
 Ad size and repetition have a positive
  effect of awareness and action
 Organizations learn through their
  experiences and perception
 Positive experiences with vendors are
  rewarding and tend to be repeated
 Negative experiences with vendors
  produce learning and avoidance
  behavior and purchasing procedures
  that don’t work are generally
Motives and Emotions
 Organizational decisions tend to be less
  emotional than many consumer
  purchase decisions
 There is considerable personal and
  career risk in organizational purchase

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