Outline of Chapter 6: Business and Organizational Buying Behavior

Outline of Chapter 6 BUSINESS AND ORGANIZATIONAL BUYING BEHAVIOR BUSINESS AND ORGANIZATIONAL CUSTOMERS BUSINESS AND ORGANIZATIONAL CUSTOMERS-- buyers who buy for resale or to produce other goods and services. Their purchases are either used in production of a final good or passes on as part of their product for sale to a consumer down-stream of their position in the production process. • Basic purchasing needs are economic • Even small differences in the 4Ps are important • Specifications describe the need PURCHASING SPECIFICATIONS--a stated description of what the firm wants to buy. Often in an RFP or other formal document. • Customers may expect quality certification ISO 9000--a way for a supplier to document its quality procedures according to internationally recognized standards. MANY PEOPLE MAY INFLUENCE A PURCHASE DECISION PURCHASING MANAGERS--buying specialists for their employers. MULTIPLE BUYING INFLUENCE--several people share in making a purchase decision BUYING CENTER--all the people who participate in or influence a purchase. VENDOR ANALYSIS--formal rating of suppliers on all relevant areas of performance. • Behavioral needs are relevant too – behaviors are often not stated in the specifications – proximity/responsiveness • Ethical conflicts may arise – policies often cover REQUISITION--a request to buy something. ORGANIZATIONAL BUYERS ARE PROBLEM SOLVERS • Three kinds of buying processes are useful NEW-TASK BUYING--new need, buyer wants a great deal of information. STRAIGHT REBUY- routine repurchase, often purchased before MODIFIED REBUY--some review of the buying decision. BUYER-SELLER RELATIONSHIPS IN BUSINESS MARKETS • Close relationships may produce mutual benefits • Cooperation treats problems as joint responsibilities • Shared information is useful but may be risky JUST-IN-TIME DELIVERY-- getting products there just before the customer needs them. WALMART • Contracts spell out obligations NEGOTIATED CONTRACT BUYING--agreeing to a contract that allows for changes in the purchase arrangements. • Specific adaptations invest in the relationship • Powerful customer may control the relationship • Buyers may still use several sources to spread their risk RECIPROCITY--"if you buy from me, I'll buy from you." E-COMMERCE IS RESHAPING MANY MARKETS • Community sites mainly offer digital information • Catalog sites make it convenient to search for products • Procurement hubs operate for the benefit of buyers • Interactive competitive bidding systems drive down prices COMPETITIVE BIDS--terms of sale offered by different suppliers in response to the buyer's purchase specifications. RFQ • Auction sites focus on unique items eBay for businesses • Collaboration hubs support cooperation • Websites within and across industries • Internet (ro)bots search for product--by description • E-commerce order systems are common • Variations in buying by customer type MANUFACTURERS ARE IMPORTANT CUSTOMERS • There are not many big ones • Customers cluster in geographic areas NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS) CODES--codes used to identify groups of firms in similar lines of business. (Was SIC) SERVICES FIRMS--SMALLER AND MORE SPREAD OUT • Buying may not be as formal RETAILERS AND WHOLESALERS BUY FOR THEIR CUSTOMERS (are not end consumers) • Committee buying is impersonal • Buyers watch computer output closely • Reorders are straight rebuys OPEN TO BUY--buyer has budgeted funds available RESIDENT BUYERS--independent buying agents who work in central markets for several retailer or wholesaler customers based in outlying areas or other countries. THE GOVERNMENT MARKET • Size and diversity • Competitive bids are usually required • The approved supplier list • Negotiated contracts are common too • Is it unethical to "buy help"? FOREIGN CORRUPT PRACTICES ACT--a law passed by the U.S. Congress in 1977 that prohibits U.S. firms from paying bribes to foreign officials.