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  1. Slide 6-1

  2. CHAPTER ORGANIZA-TIONAL MARKETS AND BUYER BEHAVIOR Slide 6-2

  3. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Distinguish among industrial, reseller, and government organizational markets. • Describe the key characteristics of organizational buying that make it different from consumer buying. Slide 6-3

  4. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Explain how buying centers and buying situations influence organizational purchasing. • Recognize the importance and nature of online buying in industrial, reseller, and government markets. Slide 6-4

  5. BUYING PAPER IS A STRATEGIC BUSINESS DECISION AT JCPENNEY Slide 6-5

  6. THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS • Business Marketing • Organizational Buyers • Industrial Markets (Industrial Firms) • Reseller Markets (Resellers) • Government Markets (Government Units) • Global Organizational Markets Slide 6-6

  7. FIGURE 6-1Type and number of organizational customers in the U.S. Slide 6-7

  8. Moscow Yellow PagesWhat type of market? Slide 6-8

  9. MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND GOVERNMENT MARKETS • North AmericanIndustry ClassificationSystem (NAICS) • North American Product Classification System (NAPCS) Slide 6-9

  10. FIGURE 6-2NAICS breakdown for information industries sector:NAICS code 51 (abbreviated) Slide 6-10

  11. Concept Check 1. What are the three main types of organizational buyers? A: industrial firms; resellers; government units Slide 6-11

  12. Concept Check 2. What is the North American Industry Classification System (NAICS)? A: The NAICSprovides common industry definitions for Canada, Mexico, and the United States, which makes easier the measurement of economic activity in the three member countries of NAFTA. Slide 6-12

  13. CHARACTERISTICS OF ORGANIZATIONAL BUYING • Demand Characteristics • Derived Demand • Size of the Order or Purchase • Number of Potential Buyers • Organizational Buying Objectives Slide 6-13

  14. FIGURE 6-3Key characteristics of organizational buying behavior Slide 6-14

  15. MARKETING NEWSNET The Airbus A380 Superjumbo Jetis About to Take Flight Slide 6-15

  16. CHARACTERISTICS OF ORGANIZATIONAL BUYING • Organizational Buying Criteria • ISO 9000 • Reverse Marketing Slide 6-16

  17. FIGURE 6-AKey organizational buying criteria Slide 6-17

  18. MARKETING NEWSNET Harley-Davidson’s Supplier Collaboration Creates Customer Value…and a Great Ride Slide 6-18

  19. CHARACTERISTICS OF ORGANIZATIONAL BUYING • Buyer-Seller Relationships andSupply Partnerships • Reciprocity • Supply Partnership Slide 6-19

  20. ETHICS AND SOCIAL RESPONSIBILITY ALERT Scratching Each Other’s Back—The Ethics of Reciprocity in Organizational Buying Slide 6-20

  21. CHARACTERISTICS OF ORGANIZATIONAL BUYING • The Buying Center: A Cross-Functional Group • Buying Center • Buying Committee • People in the Buying Center Slide 6-21

  22. CHARACTERISTICS OF ORGANIZATIONAL BUYING • The Buying Center: A Cross-Functional Group • Roles in the Buying Center • Users • Deciders • Influencers • Gatekeepers • Buyers Slide 6-22

  23. Buying Center Who is in the buying center andwhat roles do they play? Slide 6-23

  24. FIGURE 6-B Five roles in the buying center Slide 6-24

  25. CHARACTERISTICS OF ORGANIZATIONAL BUYING • The Buying Center: A Cross-Functional Group • Buying Situations (Buy Classes) and the Buying Center • Straight Rebuy • Modified Rebuy • New Buy Slide 6-25

  26. FIGURE 6-4How the buying situation affects buying center behavior Slide 6-26

  27. Concept Check 1. What one department is almost always represented by a personin the buying center? A: purchasing department Slide 6-27

  28. Concept Check 2. What are the three types of buying situations or buy classes? A: straight rebuy; modified rebuy;new buy Slide 6-28

  29. CHARTING THE ORGANIZATIONAL BUYING PROCESS • Organizational Buying Behavior • Stages in the Organizational Buying Process Slide 6-29

  30. FIGURE 6-5Comparing the stages in consumer and organizational purchases Slide 6-30

  31. CHARTING THE ORGANIZATIONAL BUYING PROCESS • Buying a Machine Vision System • Problem Recognition • Make-Buy Decision • Information Search • Value Analysis • Alternative Evaluation • Bidder’s List Slide 6-31

  32. CHARTING THE ORGANIZATIONAL BUYING PROCESS • Buying a Machine Vision System • Purchase Decision • Postpurchase Behavior Slide 6-32

  33. Machine Vision System What is its organizational buying process? Slide 6-33

  34. Concept Check 1. What is a make-buy decision? A: An evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself. Slide 6-34

  35. Concept Check 2. What is a bidder’s list? A: A list of firms believed to be qualified to supply a given item. Slide 6-35

  36. ONLINE BUYING IN ORGANIZATIONAL MARKETS • Prominence of Online Buying in Organizational Markets • E-marketplaces: Virtual Organizational Markets Slide 6-36

  37. WEB LINK eBay Means Business Too Slide 6-37

  38. ONLINE BUYING IN ORGANIZATIONAL MARKETS • Online Auctions in Organizational Markets • Traditional Auction • Reverse Auction Slide 6-38

  39. FIGURE 6-6How buyer and seller participants and price behavior differ by type of online auction Slide 6-39

  40. Concept Check 1. What are e-marketplaces? A: E-marketplaces are online trading communities that bring together buyers and supplier organizations. Slide 6-40

  41. Concept Check 2. In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices? A: traditional auction; reverse auction Slide 6-41

  42. NAVIGATING THE NAICS GOING ONLINE Slide 6-42

  43. Going Online • 1.What is the three-digit industry subsector code for food manufacturing? Slide 6-43

  44. Going Online • 2.What is the six-digit U.S. code for dog and cat food manufacturing? Slide 6-44

  45. Going Online • 3.How many establishments and what is the value of shipments sold by the U.S. dog and cat food manufacturing industry based on the latest government statistics? Slide 6-45

  46. ORGANIZATIONAL BUYING CREATES CUSTOMERVALUE TOO! SUPPLEMENTALLECTURE NOTE 6-1 Slide 6-46

  47. HOW ORGANIZATIONSCAN IMPROVE THEIR PURCHASING SUPPLEMENTALLECTURE NOTE 6-2 Slide 6-47

  48. LANDS’ END:WHERE BUYERS RULE VIDEO CASE 6 Slide 6-48

  49. VIDEO CASE 6Lands’ End Slide 6-49

  50. VIDEO CASE 6Lands’ End • 1.Who is likely to make up the buying center in the decision to select a new supplier for Lands’ End? Which of the buying center members are likely to play the roles of users, influencers, buyers, deciders, and gatekeepers? Slide 6-50