Organizational Buyers Flashcards
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Three vendors submitted bids to a company looking to purchase a new shelving system. The bids were submitted to the purchasing manager, but his assistant receives and distributes all of the purchasing manager's mail. Here, the assistant acts as a(n) _____ in the buying center.

gatekeeper

For important non-routine purchases, the person with formal authority to approve the supplier is the _____, often someone in a specific functional area.

decider

What is a new buy?

Has the largest buying center.

What is a modified rebuy?

<p>Minor changes to an existing order.</p> Signup and view all the answers

What is a straight rebuy?

<p>Has the shortest decision time.</p> Signup and view all the answers

Which characteristics are typical in a new buy buying situation? (Select all that apply)

<p>The buying center includes more people.</p> Signup and view all the answers

A(n) _____ occurs when an organizational buyer simply reorders additional units of products with no changes from an approved supplier.

<p>straight rebuy</p> Signup and view all the answers

What is the role of the gatekeeper in a buying center?

<p>To control the flow of information.</p> Signup and view all the answers

A(n) _____ occurs when an organizational buyer has purchased a similar product in the past but has decided to change something like the specifications, price, or supplier.

<p>modified rebuy</p> Signup and view all the answers

About how many online transactions are performed by organizational buyers?

<p>About 70 percent.</p> Signup and view all the answers

Straight rebuys, modified rebuys, and new buys are the three types of _____ .

<p>buying situations</p> Signup and view all the answers

Which of the following are primary reasons for the popularity of online buying in all three kinds of organizational markets? (Select all that apply)

<p>Reduced marketing costs</p> Signup and view all the answers

Organizational buyers are ______.

<p>those manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that buy products and services for their own use or resale.</p> Signup and view all the answers

What are the three main types of organizational buyers?

<p>Industrial firms, resellers, government units.</p> Signup and view all the answers

What one department is almost always represented by a person in the buyer center?

<p>Purchasing department.</p> Signup and view all the answers

What are the three types of buying situations or buy classes?

<p>New buy, straight rebuy, modified rebuy.</p> Signup and view all the answers

What are e-marketplaces?

<p>Online trading communities that bring together buyers and supplier organizations to make possible real-time exchange of information, money, products, and services.</p> Signup and view all the answers

In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices?

<p>Traditional auction creates upward pressure, reverse auction creates downward pressure.</p> Signup and view all the answers

Business-to-business marketing involves the marketing of products and services to organizations for use in the creation of goods and services that ______.

<p>they produce and market to others.</p> Signup and view all the answers

What are the three markets organizational buyers are divided into?

<p>Government, industrial, reseller.</p> Signup and view all the answers

Which two organizational buyers could be considered part of the industrial market?

<p>Public utilities, mining companies.</p> Signup and view all the answers

Business-to-business marketing fundamentally differs from consumer marketing in which way?

<p>Business-to-business marketing involves buyers who intend to resell the product or use it in the creation of other products.</p> Signup and view all the answers

The many federal, state, and local agencies that buy goods and services for the constituents they serve are considered ______ markets.

<p>government.</p> Signup and view all the answers

Many companies today have broadened their buying objectives to include an emphasis on buying from minority- and women-owned businesses.

<p>False</p> Signup and view all the answers

The best thing about the organizational buying process is the ease with which it can be conducted.

<p>False</p> Signup and view all the answers

In NAICS coding, the fifth digit represents ______.

<p>a specific industry.</p> Signup and view all the answers

What is the main reason that business organizations buy products?

<p>To increase profitability.</p> Signup and view all the answers

What two items are characteristic of the organizational buying process as compared to the consumer buying process?

<p>Supplier capability becomes more important; more individuals are involved in the decision.</p> Signup and view all the answers

Who in the buying center controls the flow of information?

<p>Gatekeeper.</p> Signup and view all the answers

Study Notes

Organizational Buyers

  • Organizational buyers include manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies purchasing products for their own use or resale.
  • They are categorized into three main types: industrial firms, resellers (wholesalers and retailers), and government units.

Types of Buying Situations

  • Three distinct buying situations exist:
    • New buy: First-time purchase of a product or service.
    • Straight rebuy: Reordering from an approved list of suppliers without changes.
    • Modified rebuy: Changes made to specifications, pricing, or suppliers.

E-Marketplaces and Auctions

  • E-marketplaces, also known as B2B exchanges or e-hubs, facilitate real-time exchanges between buyers and suppliers.
  • In traditional auctions, bidding generally causes price increases; in reverse auctions, buyers invite suppliers to compete, leading to price decreases.

Business-to-Business Marketing

  • This marketing strategy focuses on promoting goods and services to organizations, highlighting their utility in the creation of products for resale.

Derived Demand

  • Demand for industrial products is derived from consumer demand; for instance, an increase in consumer purchases leads to higher industrial demands.

NAICS (North American Industry Classification System)

  • NAICS provides standardized industry definitions across Canada, Mexico, and the United States, using a six-digit coding system.

Buying Center and Roles

  • A buying center comprises individuals participating in purchasing decisions, including roles such as:
    • User: Actual product user.
    • Buyer: The person formally selecting suppliers.
    • Influencer: Affects decisions by defining specifications.
    • Gatekeeper: Controls information flow within the process.
    • Decider: Authoritative figure approving selections.

Characteristics of Organizational Buying

  • Organizational purchases typically involve larger order sizes and may include more complex negotiations compared to consumer purchases.
  • Decision-making in organizational buying is substantially influenced by multiple individuals, especially in significant transactions.

Organizational Buying Behavior

  • The process includes recognizing product needs, evaluating alternatives, and making purchase decisions, heavily influenced by defined organizational buying criteria (e.g., price, quality, delivery).
  • Increasing emphasis on inclusive procurement from minority- and women-owned businesses.
  • Adoption of sustainable practices into purchasing objectives is becoming common.

Supplier Development

  • This refers to efforts by buyers to cultivate relationships with suppliers, enhancing their product capabilities to better align with buyer needs.

Reciprocity in Business

  • This practice involves organizations agreeing to buy from one another, fostering mutual benefit and partnership dynamics.

The Purchase Decision Process

  • Steps in this process include recognizing needs, gathering information, evaluating options, and making contract awards.
  • Important aspects can include informal evaluations and competitive bidding, particularly for substantial financial commitments.

Evaluation Factors

  • Key attributes used by industrial buyers to assess suppliers include price, past performance, ability to meet delivery schedules, and warranties.

Characteristics of Different Buying Situations

  • New buys engage the largest buying centers with intensive decision time, while straight rebuys involve speedy, uncomplicated procurement processes. Modified rebuys strike a middle ground requiring adjustment and slightly more deliberation.

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Test your knowledge on organizational buyers with these flashcards. This quiz covers definitions and types of organizational buyers, including manufacturers, wholesalers, and service companies. Perfect for understanding key concepts in business purchasing.

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