ORGANIZA- TIONAL MARKETS AND BUYER BEHAVIOR C HAPTER

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS Business Marketing Industrial Markets (Producers) Reseller Markets (Resellers) Government Markets (Fed, St, City) Not for Profit Associations Key is intended use

Organizational Customers in the U.S. Not for Profit Associations 56,000

HOW TO MEASURE ORGANIZATIONAL MARKETS (NAICS)

1. Find your competition 2. Measure your markets size and your share of it 3. Monitor growth in other industries to spot new business opportunities THE BENEFITS OF NAICS CODES

DEMAND CHARACTERISTICS OF ORGANIZATIONAL BUYING Demand is... DescriptionDescriptionDerivedDerived Demand for business products results from demand for consumer products InelasticInelastic A change in price will not significantly affect the demand for product JointJoint Multiple items are used together in final product. Demand for one item affects all FluctuatingFluctuating Demand for business products is more volatile than for consumer products

Characteristics of Organizational Buying Behavior

CharacteristicCharacteristic Demand Volume # of Customers Location Distribution Nature of Buy Buy Influence Negotiations Reciprocity Leasing Promotion Business Market Organizational Larger Fewer Concentrated More Direct More Professional Multiple More Complex Yes Greater Personal Selling Consumer Market Individual Smaller Many Dispersed More Indirect More Personal Single Simpler No Lesser Advertising Business vs Consumer Markets

HOW BUSINESSES CHOOSE A VENDOR

BUYER-SELLER RELATIONSHIPS IN ORGANIZATIONAL BUYING Reciprocity Ford and Firestone Supply Partnership – Walmart and P & G Supply Partnership – Walmart and P & G

BUYING CENTERS

Buying Situations and the Buying Center 1) Straight Rebuy 2) Modified Rebuy 3) New Buy BUSINESS BUYING SITUATIONS

How the buying situation affects buying center behavior

ONLINE BUYING IN ORGANIZATIONAL MARKETS 80% of e-trade dollar value is B2B WHY? 1.Buyers need timely, detailed information 2.Buyers need to get that info quickly 3.E-trade reduces processing costs 4.E-trade reduces marketing costs 5.Wider potential customer or supplier base

ONLINE BUYING IN ORGANIZATIONAL MARKETS Online Auctions in Organizational Markets Traditional Auction –looking for buyers Traditional Auction –looking for buyers Reverse Auction- looking for sellers Reverse Auction- looking for sellers

How buyer and seller participants and price behavior differ by type of online auction

Concept Check 1. What are the three main types of organizational buyers? A: industrial firms; resellers; government units

Concept Check A: The NAICS provides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of NAFTA. 2. What is the North American Industry Classification System (NAICS)?

Concept Check 2. In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices? A: traditional auction; reverse auction

Concept Check 2. What are the three types of buying situations or buy classes? A: straight rebuy; modified rebuy; new buy

Concept Check 1. What are e-marketplaces? A: E-marketplaces are online trading communities that bring together buyers and supplier organizations.

Business Marketing Business marketing - The marketing of goods and services to individuals and organizations for purposes other than personal consumption.

North American Industry Classification System (NAICS) The NAICS provides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of the North American Free Trade Agreement (NAFTA).

Supply Partnership A supply partnership exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer.

Buying Center A buying center is the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.

E-marketplaces are online trading communities that bring together buyers and supplier organizations to make possible the real time exchange of information, money, products, and services. E-Marketplaces

A traditional auction is an online auction in which a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other. Traditional Auction

A reverse auction is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other. Reverse Auction