2. Some questions answered in Chapter 4
What are the different types of customers?
How do organizations make purchase decisions?
What factors do organizations consider when evaluating products and services?
Who is involved in the buying decision?
What should salespeople do in the different types of buying situations?
What changes are occurring in organizational buying, and how will these changes affect salespeople?

3. How are these customers different
How are these customers different? What would be different in selling to them?
Consumers
Resellers
OEMs
End users
Government agencies and institutions
Think about:
their needs.
the importance of price versus product performance.
the role of the purchasing agent.
the number of people involved in making a decision.
the tendency to want long-term relationships.

4. Is buying complex?
Describe how you went about purchasing a car.

5. Is buying complex? Describe how you went about purchasing a car.
Describe what you did the last time you bought a soft drink.
What were the differences?

6. How does this illustrate derived demand?
Aluminum
mine
Corn syrup
supplier
Other raw
materials
Aluminum
manufacturer
Soft drink
manufacturer
Insurance,
trucking,
other services
Can
manufacturer
Soft drink
bottler
Distributors and
retailers
Consumer

7. Three types of buying decisions
Straight rebuy
New task
Modified rebuy

8. Straight rebuy purchase process
What research did you do before buying your last tube of toothpaste?
Financial risk: Low
Information search: Minimal
Number of people involved in decision: 1 or 2
Financial risk:
Information search:
Number of people involved in decision:

9. New task purchase process
How did you go about shopping for your first apartment?
Financial risk: High
Information search: Extensive
Number of people involved in decision: Multiple

10. Modified rebuy purchase process
What did you differently when shopping for your second apartment?
Financial risk: Moderate
Information search: Limited
Number of people involved in decision: Few

11. Selling strategy New task Modified rebuy Straight rebuy
From Exhibit 4.2
New task
Modified rebuy
Straight rebuy
For an in-supplier:
Monitor changes in customer needs; respond quickly when problems and new needs arise; provide technical information.
Act immediately when problems arise.
Reinforce relationship with customers; make sure all of the customer’s needs are satisfied.
For an out-supplier:
Suggest new approach for solving problems; provide technical advice.
Respond more quickly than present supplier when problems arise; encourage customer to consider an alternative; present information on how new alternative will increase efficiency.
Convince customer of potential benefits from reexamining choice of supplier; secure recognition and approval as alternative supplier.

12. Buying process
Which of the following stages is most critical to establishing successful long-term buying relationships between buyer and seller?
The acquisition and analysis of proposals.
The definition of the type of product needed.
The evaluation of product performance.
The receipt of an order.
The recognition of a problem or need.

13. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
Starts when someone realizes that a problem exists.
Employees in the customer’s firm or outside salespeople can trigger this recognition.

14. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
After identifying a problem, organization members develop a general approach to solving it.
Firms often look to a salesperson to help in analyzing the situation and considering solutions.

15. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
The specifications for the product needed to solve the problem are prepared.
Potential suppliers use these specifications to develop proposals.

16. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
The customer now looks for potential suppliers.
The customer may contact previous suppliers or go through an extensive search process.

17. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
Qualified suppliers are asked to submit proposals.
Salespeople work with people in their own company to develop the proposal.

18. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
The customer evaluates the proposals.
After selecting a preferred supplier, further negotiations may take place concerning price, delivery, or specific performance features.

19. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
An order is placed with the selected supplier.
Eventually, the product is shipped to the buying firm, which inspects the goods and then pays the supplier for the product.

20. Steps in the buying process
1: Recognition of a need.
2: Definition of the product-type needed.
3: Development of detailed specifications.
8: Evaluation of product performance.
4: Search for qualified suppliers.
7: Place and receive the orders.
6: Evaluation of proposals, selection of a supplier.
5: Acquisition and analysis of proposals.
The product’s performance is evaluated.
Salespeople need to work with the users to make sure the product performs well, and also need to make sure the purchasing agents are satisfied.

21. Think of a major purchase you made, such as a car or a computer.
Creeping commitment
Think of a major purchase you made, such as a car or a computer.
What were the first decisions you made?
How did these early decisions affect your choices later in the process?
Creeping commitment means that as choices are made during the buying process, the range of possible alternatives is reduced.

22. Creeping commitment takes place in a straight rebuy situation.
True
False

23. The buying center
The Chief Executive Officer for a manufacturer of leather handbags would be most likely to become a member of the buying center when the company:
orders a replacement housing for one of its assembly line machines.
instructs the printer to print 1,000 additional copies of the company newsletter.
buys a new health insurance plan for all its employees.
renews its membership in trade associations.
buys paper supplies for its laser printers.

24. The buying center: users
Often have considerable influence in the early and late steps of buying process.
Salespeople trying to convert a straight rebuy into a modified rebuy demonstrate superior performance or new benefits to the users.

25. The buying center: influencers
People who directly or indirectly provide information during the buying process.
May provide details on product specifications, criteria for evaluating proposals, and information about potential suppliers.

26. The buying center: gatekeepers
Control the flow of information and may limit the alternatives considered.
Purchasing agents often determine which potential suppliers are to be considered.
Bypassing the purchasing agent is called back-door selling.

27. The buying center: deciders
Make the final choice.
In straight rebuys it is usually the purchasing agent.
For new tasks, many people may be required to approve the decision and sign the purchase order.

28. People involved in a “buying center”
Donald McBane
President
Kathy Traub
V.P. Manufacturing
Gatekeeper
Donald Gallagher
V.P., Marketing
Thomas Greene
V.P., Purchasing
Betty MacMillan
V.P., Finance
Mike Miloszar
Quality Control Mgr
Decider
Stephen Leightman
Product Mgr.
Initiator
Barbara Allen
Purchasing Agent
Decider
Bonnie Bradbury
Controller
Infleuncer
David Kelso
Plant Manager
Ellen Rogers
Asst. Plant Mgr.
Decider
Robert Meiss
Quality Inspector
Influencer
James Guest
Quality Inspector
Influencer
Donald McFadden
Assembly Line
User

29. The multi-attribute model
Exhibit A.3
Importance weights
Brand performance ratings
Characteristic
Sales Manager
MIS Director
Apex
Bell
Deltos
Reliability 4 5 8
Weight 6 2
Size 7 3
Speed 1
Memory
Display
Service
Sales manager’s evaluation
167
152
143
MIS director’s evaluation
130
169
177

30. The multi-attribute model
Exhibit A.4
Overall evaluation (benefits points)
Computer cost
Assigned value (benefit/cost)
Sales manager
Apex
167
$1,600
$0.104
Bell
152
1,800
0.084
Deltos
143
0.079
MIS director
130
$0.081
169
0.094
177
0.098

31. Strategies to influence purchase decisions
Increase the performance rating for your product.
Decrease the performance rating for the competitor’s product.
Increase or decrease an importance weight.
Add new characteristics to the decision process.
Decrease the price of your product.

32. What are customer needs?

33. All needs of business-to-business buyers are rational needs.
Buyer’s needs
All needs of business-to-business buyers are rational needs.
True
False.

34. Factors in organizational buying
Exhibit 4.4
Friendships
Economic criteria
Risk Reduction
Quality criteria
Job Security
Service criteria
Organizational
Needs
Personal
Needs
Overlap
in needs
Survival
Self-esteem
Profit
Financial Security
Growth
Innovation
Career Growth

35. Life cycle costing Product A Product B Initial cost $35,000 $30,000
Life of machine
10 years
Power consumption per year
150 MWh
180 MWh
Power cost at $30/MWh
$45,000
$54,000
Estimated operating and maintenance cost over 10 years
$25,000
Life-cycle cost
$105,000
$114,000
Note: A more thorough analysis would calculate the net present value of the cash flow associated with each product’s purchase and cost.

36. Trends in organizational buying
Increasing importance of purchasing agents.
Centralized purchasing
Global sourcing
Outsourcing
Supply chain management
The Internet and business-to-business selling
Long-term customer-supplier relationships

37. How the selling process relates to the buying process
Identification of buyer
needs
Need recognition
Relate features to benefits
Demonstrate benefits
Information search
Overcome resistance
Alternative evaluation
Gain commitment
Purchase
Provide after-sale support
Post-purchase evaluation

38. Any questions about the terminology?
Automatic replenishment (AR)
Buying center
Capital equipment
Creeping commitment
Deciders
Derived demand
Efficient consumer response (ECR) system
Electronic data interchange (EDI)
Emotional needs
End users
Extranet
Gatekeepers
Influencers
Initiators
Just-in-time (JIT) inventory control
Life-cycle costing
Materials requirements planning (MRP)
Modified rebuy
MRO supplies
National account manager (NAM)
New task
Original equipment manufacturer (OEM)
Outsourcing
Producer
Quick-response system
Rational needs
Resellers
Services
Straight rebuy
Supply chain management
Users
Value analysis
Vendor analysis
Vendor loyalty