1. Organizational Buyer Behavior
Marketing for Hospitality and Tourism
Kotler, Bowen, Makens and Baloglu
Organizational Buyer Behavior
Chapter 7

2. Learning Objectives Understand the organizational buying process.
Identify and discuss the importance of the participants in the organizational buying process.
Identify the major influences on organizational buyers.
List the eight stages of the organizational buying process.
Identify and describe the group markets in the hospitality industry.

3. The Organizational Buying Process
Large Sums of Money
Complex Technical Features
Economic Considerations
Interactions among Many People
Market Structure and Demand
Organizational demand is derived demand; it comes ultimately from the demand for consumer goods or services
It is derived or a function of the businesses that supply the hospitality and travel industry with meetings, special events, and other functions
Compared with consumer purchases, a business purchase usually involves more buyers and a more professional purchasing effort
Types of Decisions and the Decision Process
Organizational buyers usually face more complex buying decisions than consumer buyers
Their purchases often involve:
Large sums of money
Complex technical features
Room sizes, room setups, breakout rooms, audiovisual equipment, and the like
Economic considerations
Interactions among many people at all levels of the organization

4. Participants in the Organizational Buying Process
Users
Influencers
Deciders
The decision-making unit of a buying organization, sometimes called the buying center includes all members of the organization who play any of six roles in the purchase-decision process
Users
Those who use the product or service. They often initiate the buying proposal and help define product specifications
Influencers
Directly influence the buying decision but do not make the final decision themselves
They often help define specifications and provide information for evaluating alternatives
Deciders
Select product requirements and suppliers
Approvers
Authorize the proposed actions of deciders or buyers
Buyers
Have formal authority for selecting suppliers and arranging the terms of purchase
May help shape product specifications and play a major role in selecting vendors and negotiating
Gatekeepers
Have the power to prevent sellers or information from reaching members of the buying center
The growth of international tourists has led to the growth of international commerce. Sheer numbers of visitors are impressive. The U.S. National Tourism and Travel Office has forecasted 88.3 million foreign visitors by 2019 with the largest growth from: China, Columbia, India, Brazil and Mexico.
Approvers
Buyers
Gatekeepers

5. Major Influences on Organizational Buyers
Influencers
Environmental
Organizational
Interpersonal
Individual
Organizational buyers are subject to many influences as they make their buying decisions
Organizational buyers commonly respond to both economic and personal factors
The various influences on organizational buyers may be classified into four main groups: environmental, organizational, interpersonal, and individual
Environmental Factors
Organizational buyers
Heavily influenced by the current and expected economic environment
Factors such as the level of primary demand, the economic outlook, and the cost are important
Organizational Factors
Each organization has specific objectives, policies, procedures, organizational structures, and systems related to buying
Interpersonal Factors
The buying center usually includes several participants, with differing levels of interest, authority, and persuasiveness
Individual Factors
Each participant in the buying decision process has personal motivations, perceptions, and preferences
The participant’s age, income, education, professional identification, personality, and attitudes toward risk all influence the participant in the buying process

6. Buyphases Problem Recognition General Need Description Product
Specification
Supplier
Search
Proposal
Solicitations
Supplier
Selection
Order-Routine
Specification
Performance
Review
Eight stages of the organizational buying process have been identified and are called buyphases
Problem Recognition
The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or a service. Problem recognition can occur because of internal or external stimuli
General Need Description
Having recognized a need, the buyer goes on to determine the requirements of the product and to formulate a general need description
Product Specification
Once the general requirements have been determined, the specific requirements for the meeting can be developed
Supplier Search
The buyer now conducts a supplier search to identify the most appropriate hotels
Proposal Solicitations
Once the meeting planner has drawn up a short list of suppliers, qualified hotels are invited to submit proposals
Supplier Selection
In this stage, members of the buying center review the proposals and move toward supplier selection
Frequently, the buying center specifies desired supplier attributes and suggests their relative importance
Order-Routine Specification
The buyer now writes the final order with the chosen hotels, listing the technical order-routine specifications of the meeting
Performance Review
The buyer does a postpurchase performance review of the product
During this phase the buyer determines if the product meets the buyer’s specifications and if the buyer will purchase from the company again

7. (Social, Military, Educational, Religious & Fraternal)
Group Markets
Conventions
Association Meetings
Corporate Meetings
SMERF
(Social, Military, Educational, Religious & Fraternal)
One of the most important types of organizational business is group business
The group business market is often more sophisticated and requires more technical information than the consumer market
Many group markets book more than a year in advance. During this time, cognitive dissonance can develop; thus, marketers must keep in contact with the buyer to assure them that they made the right decision in choosing the seller’s hotel
The four main categories of group business are conventions, association meetings, corporate meetings, and SMERF (social, military, educational, religious, and fraternal organizations) groups
Conventions
Conventions are a specialty market requiring extensive meeting facilities
They are usually the annual meeting of an association and include general sessions, committee meetings, and special-interest sessions
Convention Bureaus
Convention bureaus are nonprofit marketing organizations that help hotels sign conventions and meetings. These organizations are often supported by a hotel or sales tax and are run by chambers of commerce, visitor bureaus, or city and county governments
Association Meetings
Associations sponsor many types of meetings, including regional, special-interest, educational, and board meetings
There are over 71,000 associations; 92 percent of them hold meetings
These associations create 227,000 association meetings annually, generating meeting business valued at $70 billion
The most important attributes of a destination for an association meeting planner are availability of hotel and facilities, ease of transportation, distance from attendees, and transportation costs
Corporate Meetings
For employees of a company, a corporate meeting is a command performance
They are directed to attend the meeting without choice
One implication of required attendance is a short lead time
Because corporations do not have to develop and implement a marketing plan to gain attendees, they often plan meetings with a few weeks’ lead time
Corporate meetings can range in size from a board meeting for people to a sales meeting for several hundred people
Overall, 35 percent of corporate meeting are for people, 39% have attendees, 18 percent have are people and 18% are for over 100 attendees
The corporation’s major concern is that the meeting be productive and accomplish the company’s objectives.
Types of corporate meetings include training, management, and planning
Incentive Travel
Incentive travel, a unique subset of corporate group business, is a reward participants receive for achieving or exceeding a goal
Because travel serves as the reward, participants must perceive the destination and the hotel as something special
SMERFs
SMERF stands for social, military, educational, religious, and fraternal organizations
On a broader scale, this meeting classification includes smaller specialty organizations that are price sensitive
The individual pays for the majority of the functions sponsored by these organizations, and sometimes the expenses are not tax deductible
As a result, participants are usually price conscious

8. Key Terms
Buying center all those individuals and groups who participate in the purchasing and decision-making process and who share common goals and the risks arising from the decisions.
Convention a specialty market requiring extensive meeting facilities. It is usually the annual meeting of an association and includes general sessions, committee meetings, and special-interest sessions.
Corporate meeting a meeting held by a corporation for its employees.
Derived demand organizational demand that ultimately comes from (derives from) the demand for consumer goods.
General need description the stage in the industrial buying process in which a company describes the general characteristics and quantity of a needed item.
Incentive travel a reward that participants receive for achieving or exceeding a goal.
Order-routine specification the stage of the industrial buying process in which a buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, warranties, and so on.

9. Key Terms (cont.)
Organizational buying process 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.
Performance review the stage of an industrial buying process in which a buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop the relationship.
Problem recognition the stage of the industrial buying process in which someone in a company recognizes a problem or need that can be met by acquiring a good or a service.
Product specification the stage of an industrial buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
SMERF SMERF stands for social, military, educational, religious, and fraternal organizations. This group of specialty markets has a common price-sensitive thread.
Supplier search the stage of the industrial buying process in which a buyer tries to find the best vendor.
Supplier selection the stage of the industrial buying process in which a buyer receives proposals and selects a supplier or suppliers.