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Eleventh Edition
Hutt and Speh
Organizational Buying
Behavior
Chapter 2
Chapter Topics
Inside and outside forces influence organizational
buying. In this chapter you will learn:
1. The organizational buying process
2. The four main factors that impact organizational
buying decisions
3. A model of organizational buying behavior
4. How knowledge of organizational buying enables
marketers to make more informed decisions on
product design, pricing and promotion
2
Buying as a Process
Buying is a process, not an event
There are various points in the process that
are referred to as Critical Decision Points
and Evolving Information Requirements
It starts with Problem Recognition
4. Supplier
Search
6. Supplier
Selection
2. General
Description
of Need
3. Product
Specifications
Organizational
Buying
Process
5. Acquisition
and Analysis
of Proposals
7. Selection
of
Order Routine
8. Performance
Review
5
Buying Process
There other events that influence the buying
process, most notably:
1.
2.
3.
4.
Economic conditions
Competition
Basic shifts in the organizational objectives
The buying situation
A projected
change in
business
conditions can
alter buying
plans drastically.
Organizational
Buying
Behavior
Environmental
Forces
Economic outlook:
domestic & global
Pace of technological
change
Global trade relations
Organizational
Forces
Group
Forces
Roles, relative
influence and patterns
of interaction of buying
decision participants
Individual
Forces
10
11
E-Procurement
Purchasing managers use the Internet to find
new suppliers, communicate with current
suppliers, or place an order
E-procurement cut purchasing cycle time in half,
reduced material costs by 14 percent and
purchasing administrative costs by 60 percent,
and enhanced the ability of procurement units to
identify new suppliers on a global scale
12
13
Decentralized Purchasing
Decentralized purchasing allows local branches to
purchase what they need. This results in local control,
and for many kinds of services this makes sense
Example: Stop and Shop buys products from local
farmers
14
16
17
Evaluative Criteria
Industrial product users value:
1. Prompt delivery
2. Efficient and effective service
Engineering values:
3. Product quality
4. Standardization
5. Testing
Purchasing values:
6. Price advantage and economy
7. Shipping and forwarding
18
Evaluative Differences
Education: Engineers have a different
educational background than purchasing agents
Also, various occupations have different
dispositions. For example:
1. Engineers are usually cold, analytical and
suspecting.
2. Salespeople are usually warm, open and
optimistic.
19
Customer Relationship
Management Strategies for
Business Markets
Chapter 3
Chapter Topics
Well developed relationships give business marketers a
significant competitive advantage. Topics include:
1. Patterns of buyer-seller relationships
2. Factors that influence customer profitability
3. Strategies for designing effective customer
relationships
4. How successful firms excel at customer relationship
management
5. Critical determinants for managing strategic
alliances
21
Types of Relationships
Continuum of buyer-seller relationships
Transactional, Value-added and Collaborative exchanges
The Relationship Spectrum
22
Switching Costs
24
25
Differentiation Strategy
For a differentiation strategy to work:
The value created, measured by higher margins
and higher sales volumes, has to exceed the cost
of creating and delivering the customized features
and services.
To determine this, the marketer needs to
understand the drivers of profitability.
26
27
28
29
Customer Profitably
As mentioned previously, some customers are
profitable and some arent
To determine this, we look at the cost/profitability
structure with the plan to:
1.
2.
3.
30
CRM Technology
CRM programs are software systems that capture
information and integrate sales, marketing and
customer service information
CRM programs can gather information from many
sources including email, call centers, service and
sales reps
The information is available to the right people in
the organization in real time
32
33
Evaluating Relationships
Some relationship-building efforts fail because
expectations of the parties dont mesh
Example: Seller wants a business relationship
whereas the customer responds in a transactional
mode
By understanding and isolating customer needs,
the marketer is better equipped to match their
product offerings to a particular customers needs
34
Targeting RM Programs
Some companies are Relationship Oriented (RO), and
some are not
RO companies seek to develop relationships with current
or potential supplier