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CH 7. Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services,

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Presentation on theme: "CH 7. Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services,"— Presentation transcript:

1 CH 7

2 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. WHAT IS ORGANIZATIONAL BUYING? COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-2

3 Expand understanding of customer needs Compete globally as China and India reshape markets Master analytical tools and improve quantitative skills Reinstate innovation as an engine of growth Create new organizational models and linkages TOP BUSINESS MARKETING CHALLENGES COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-3

4 Fewer, larger buyers Close supplier-customer relationships Professional purchasing Many buying influences Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-4 CHARACTERISTICS OF BUSINESS MARKETS

5 BUYING SITUATION COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-5 Straight rebuy Modified rebuy New task

6 SYSTEMS BUYING AND SELLING Turnkey solution desired; bids solicited Turnkey solution desired; bids solicited Prime contractors Prime contractors Second-tier contractors Second-tier contractors System subcomponents assembled System subcomponents assembled

7 THE BUYING CENTER COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-7 Initiators Users Influencers Deciders Approvers Buyers Gatekeepers

8 Who are the major decision participants? What decisions do they influence? What is their level of influence? What evaluation criteria do they use? OF CONCERN TO BUSINESS MARKETERS COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-8

9 SALES STRATEGIES COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-9 Small Sellers Large Sellers Key Buying Influencers Key Buying Influencers Multilevel In-depth Selling Multilevel In-depth Selling

10 Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review STAGES IN THE BUYING PROCESS: BUYPHASES COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-10

11 TABLE 7.2 BUYGRID FRAMEWORK COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-11

12 Websites organized using vertical hubs Websites organized using functional hubs Direct extranet links to major suppliers Buying alliances Company buying sites METHODS OF E-PROCUREMENT COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-12

13 TABLE 7.3 VENDOR ANALYSIS COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-13

14 HANDLING PRICE-ORIENTED CUSTOMERS COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD Limit quantity purchased Allow no refunds Make no adjustments Provide no services

15 Internal engineering assessment Field value-in-use assessment Focus-group value assessment Direct survey questions Conjoint analysis Benchmarks Compositional approach Importance ratings COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD METHODS FOR RESEARCHING CUSTOMER VALUE

16 COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD ORDER ROUTINE SPECIFICATION Stockless purchase plans Stockless purchase plans Vendor-managed inventory Vendor-managed inventory Continuous replenishment Continuous replenishment

17 ESTABLISHING CORPORATE TRUST AND CREDIBILITY COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD Expertise Likeability Trustworthiness

18 FIGURE 7.1 TRUST DIMENSIONS COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD Transparent Product/Service Quality Product/Service Quality Incentive Partnering Cooperating Design Cooperating Design Product Comparison Product Comparison Supply Chain Pervasive Advocacy Pervasive Advocacy

19 FACTORS AFFECTING BUYER-SUPPLIER RELATIONSHIPS COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD Availability of alternatives Availability of alternatives Supply market dynamism Supply market dynamism Complexity of supply Complexity of supply Importance of supply Importance of supply

20 Basic buying and selling Bare bones Contractual transaction Customer supply Cooperative systems Collaborative Mutually adaptive Customer is king COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD CATEGORIES OF BUYER-SELLER RELATIONSHIPS

21 Opportunism is some form of cheating or undersupply relative to an implicit or explicit contract. WHAT IS OPPORTUNISM? COPYRIGHT © 2009 DORLING KINDERSLEY (INDIA) PVT. LTD. 7-21


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