Organizational Buying Behavior PDF

MARKETING REVIEWER THE BUYING BEHAVIOR OF ORGANIZATIONAL MARKETS -Organizational markets are those that buy good for production or reselling purposes. These are the following categories: INDUSTRIAL MARKETS- Where businesses buy other products from other businesses to make their own products. EX:...

MARKETING REVIEWER THE BUYING BEHAVIOR OF ORGANIZATIONAL MARKETS -Organizational markets are those that buy good for production or reselling purposes. These are the following categories: INDUSTRIAL MARKETS- Where businesses buy other products from other businesses to make their own products. EX: To make a car, the company/business first need to buy parts of cars, like, engine, metal, glass etc. from other businesses to make their own car to sell. RESELLER MARKETS- Where businesses buy goods which they sell later. EX: One example of a reseller market is a sari-sari store, where they first buy their goods from a wholesale market and then sell them. 3 TYPES OF RESELLERS: WHOLESALER- When a business buys a bulk of products at a cheap price. EX: A farm grows a lot of tomatoes and sells them to a grocery wholesaler. RETAILER- Retailers buy products from wholesalers or distributors and sell them individually at a higher price. EX: A toy store sells toys like dolls, action figures, and games to children and parents. They buy the toys in bulk from wholesalers and sell them one by one at a higher price. DISTRIBUTORS- A distributor is a business that takes products from the maker and delivers them to stores or wholesalers. EX: A company picks up shoes from the factory and delivers them to many stores. GOVERNMENT MARKETS- Government agencies that buy products for use in the production of public goods and services. EX: National Food Authority which buys palay from farmer then later sell to wet markets. NON-PROFIT ORGANIZATIONS- groups that work to help others or support a cause without aiming to make money for themselves. EX: RED CROSS Helps people during disasters, provides medical care, and supports communities in need. ORGANIZATIONAL BUYING AND ITS CHARACTERISTICS *Highlighted words are keywords! * - Organizational buying behavior has unique characteristics regarding the following: DEMAND- The demand for products and services as required by organizations are derived from the demand for consumer products and service. POTENTIAL BUYERS- Business firms that sell to individual consumers and families are confronted by thousands of potential buyers. BUYING OBJECTIVES - Individuals and families buy products and services to satisfy their respective needs, physical or otherwise. BUYING CRITERIA - Organizations are concerned not only with short-term profits but also with the attainment of long-term objectives. As such, they use the following criteria when buying products or services: 1. price: 2. ability of the seller to meet the quality specifications required for the item: 3. ability of the seller to meet required delivery schedules; 4. technical capability of the seller; 5. warranties and claim policies in the event of poor performance; 6. past performance of the seller on previous contracts; and 7. production facilities and capacity of the seller. SIZE OF ORDER OR PURCHASE - The size of goods purchased by an organization is typically larger than those purchased by an individual consumer. BUYER-SELLER INTERACTION – Interaction between buyer and seller in consumer buying is different from those in organizational buying. THE BUYING CENTER - The buying center is a group consisting of several people from different departments who participate in the decision process of buying. KINDS OF BUYING PROCESS NEW-TASK BUYING- is when a business buys something it hasn't bought before, either because it’s the first time, or they need it for a new purpose. They have to do a lot of research before making the purchase because it's something new to them. Ex: A company decides to buy computers for the first time to set up a new office. Since they've never bought computers before, this is new task buying. STRAIGHT REBUY- is when a business buys something again that they’ve bought before. It’s a simple repeat purchase because they’re happy with it and don’t need to change anything. Ex: A coffee shop buys the same brand of coffee beans every month because they’ve been using it for a long time and are happy with the quality. MODIFIED REBUY- is when a business buys a product they’ve bought before, but this time they make some changes to the order. Ex: A company regularly buys office chairs, but now they want ergonomic chairs for better comfort. PARTICIPANTS IN ORGANIZATIONAL BUYING PROCESS USERS- they use the products, and their opinions help the company. They know what will make their job easier and can tell the company if a product works well or not. INFLUENCERS- are people who help guide the buying decision by giving their advice, knowledge, or recommendations. DECIDERS- are important because they are the ones who make the final decision on what to buy. They have the authority to approve or reject the options that others have suggested. APPROVERS- they are the people who give official approval for the purchase before it happens. BUYERS- they are the ones who actually make the purchase happen. Without buyers, the company couldn’t get the products or services it needs. GATEKEEPERS- They control who gets to talk to the decision-makers and what information they get. They help keep things organized and make sure only relevant information reaches the people. PURCHASE DECISION-MAKING PROCESS IN ORGANIZATIONS 1. RECOGNITION OF THE PROBLEM- It happens when a company realizes it has a problem or a need that must be solved by buying something new. Ex: It’s like realizing you need a new phone because your old one stopped working properly. 2. SEARCH FOR INFORMATION ABOUT PRODUCTS AND SUPPLIERS- after a company recognizes that it has a problem or a need, the next step is to gather information to find the best products or suppliers to solve the problem. 3. EVALUATION AND SELECTION OF SUPPLIERS- where the company looks at all the suppliers they've researched and chooses the one that offers the best product. 4. THE PURCHASE- is when the company actually buys what it needs. This is the step where the company places the order. 5. PERFORMANCE EVALUATION AND FEEDBACK- The last step is when the company checks if the product or service is working well, and gives feedback to the supplier. WHAT INFLUENCES ORGANIZATIONAL BUYERS? ECONOMIC- This means that the overall economy, such as things like prices, income levels, and market conditions, can affect what companies decide to buy, when, and how much they spend. Ex: If the economy is strong, they may decide to buy more trucks because they have more money and the demand for their business is high. PERSONAL- the people making decisions bring their own experiences, preferences, and personal beliefs into the process. Ex: The buyer might choose the brand they’ve worked with before because it has been reliable in the past. MARKET SEGMENTATION AND TARGETING WHAT IS MARKET? PLACE- where people buy and sell things. BUYER- all the people or businesses who are interested in buying something similar. OPPURTUNITY- where buyers and sellers meet to make deals or trade. TYPES OF MARKETS 1. Markets According to Type of Institute 2. Markets According to Form 1. MARKETS ACCORDING TO TYPE OF INSTITUE a. Consumer Markets - It is constituted by the buyers who buy something and use it for themselves. Ex: You bought a phone and use it for personal use. b. Organizational Markets - Constitutes buyers of products or services to produce another product or services. Ex: Governments c. International Markets -Refers to all types of buyers found abroad. Ex: Thing you buy from abroad. 2. MARKETS ACCORDING TO FORM a. Primary Markets -They are first time buyers and has no knowledge about the product. b. Secondary Markets -It is formed when customers develop specific needs or preference. -They already know something about the product. MARKET SEGAMENTATION -Markets have various segment. The market for books, for instance may be sub-divided into different topics. Ex: There are aisles for students, teachers, scifi and many more. SUB-SEGMENT -A more detailed segment to specify the items to knw the needs and wants. Ex: Teachers ---> Elemetary segment sub-segment