Organizational Buying Process chapter 1.pdf

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1. Hutt, Business Marketing Management: B2B, 13th Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or
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Hutt, Business Marketing Management: B2B, 13th Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
The Organizational Buying
Process

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The Organizational Buying Process)
Table 2-1 Major Stages of the Organizational Buying Process
DescriptionStage
ManagersatP&Gneednewhigh-speedpackagingequipment tosupport
anewproductlaunch.
1.ProblemRecognition
Productionmanagersworkwithapurchasingmanagerto determinethe
characteristicsneededinthenewpackaging system.
2.GeneralDescriptionof Need
Anexperiencedproductionmanagerassistsapurchasing managerin
developingadetailedandprecisedescriptionof theneededequipment.
3.ProductSpecifications
Afterconferringwithproductionmanagers,apurchasingmanager
identifiesasetofalternativesuppliersthatcouldsatisfy P&G’s
requirements.
4.SupplierSearch
Alternativeproposalsareevaluatedbyapurchasingmanager anda
numberofmembersoftheproductiondepartment.
5.AcquisitionandAnalysis of
Proposals
Negotiationswiththetwofinalistsareconducted,andasup-plieris
chosen.
6.SupplierSelection
Adeliverydateisestablishedfortheproductionequipment.7.SelectionofOrderRoutine
Afterequipmentisinstalled,purchasingandproductionman-agers
evaluatetheperformanceoftheequipmentandtheser-vicesupport
providedbythesupplier.
8.PerformanceReview

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The Organizational Buying Process
Push versus Pull Marketing Strategies

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Hutt, Business Marketing Management: B2B, 13th Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or
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Factors Influencing the
Organizational Buying
Process: Types of Customer
Buying Situations

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Types of Customer Buying Situations

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Types of Customer Buying Situations
•
New Task
•
A new task buying situation is one where the organization decision makers
perceive the problem or need as totally different from previous
experiences
•
Extensive problem solving is an elaborate decision-making process in
which organizational buyers operate, when confronting a new-task buying
situation
•
Supplier selection and performance review
•
Buying-decision Approaches and Strategy Guidelines
•
Judgmental new-task decisions and strategic new-task decisions

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Types of Customer Buying Situations
•
Straight Rebuy
•
Straight rebuy is when there is a continuing or recurring requirement, buyers have
substantial experience in dealing with the need and require little or no new
information.
•
Routine problem solving is the decision process employed by organizational
buyers in the straight rebuy.
•
Buying-decision approaches and strategy guidelines
•
Casual purchases
•
Routine low-priority purchases
•
Justifier

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Types of Customer Buying Situations
•
Modified Rebuy
•
It is the situation where organizational decision makers feel
significant benefits may be derived by re-evaluating alternatives
.
•
Limited problem solving
•
Buying-decision Approaches and Strategy Guidelines
•
Simple modified rebuy
•
Complex modified rebuy

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Hutt, Business Marketing Management: B2B, 13th Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or
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Factors Influencing the
Organizational Buying
Process: Environmental
Forces

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Environmental Forces
•
Economic Forces
•
Technological Forces
•
Natural Forces
•
Political/Legal Forces

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Factors Influencing the
Organizational Buying
Process: Organizational
Forces

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Organizational Forces
•
Growing Influence of
Purchasing

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Organizational Forces
•
Procurement Approaches
•
Total cost of ownershipincludes acquisition costs, possession
costs, and usage costs.
•
Strategy response: minimizing the buyer’s TCO
•
E-procurement
•
Reverse auctions
•
A strategic approach to reverse auctions includes a walk-away
price.

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Organizational Forces
•
Organizational Positioning of Purchasing
•
Centralized procurement
•
Strategy Response to Centralized Procurement: Key Account
Management by suppliers
•
Global account management program

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Factors Influencing the
Organizational Buying
Process: Group Forces

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•
The industrial salesperson must address three questions:
•
Which organizational members take part in the buying process?
•
What is each member’s relative influence in the decision?
•
What criteria are important to each member in evaluating
prospective suppliers?

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Group Forces
The Involvement of Buying Center Participants at Different Stages of the Procurement Process
What Is the Buying Center?
The Buying Centeris a group of individuals from different departments involved in a business purchase decision.
Each member plays a different role depending on the stage of the buying process.
Stages of Procurement
1.Identification of Need
2.Establishment of Objectives
3.Evaluation of Alternatives
4.Selection of Suppliers

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Stages of Procurement Process for a Medical Supplier
Selection of
Suppliers
Identification and
Evaluation of
Buying
Alternatives
Establishment of
Objectives
Identification of
Need
Buying Center
Participants
HighHighHighHighPhysicians
LowHighHighLowNursing
HighModerateModerateModerateAdministration
LowModerateModerateLowEngineering
ModerateLowLowLowPurchasing
For Ex. -
•Physician: “We need a new MRI machine with better imaging resolution.”
•Nursing: Adds: “It should be easy to use and comfortable for patients.”
•Administration: Says: “Let’s ensure it fits the budget and supports billing standards.”
•Engineering: Confirms: “Ensure it fits in the allocated room and connects with current systems.”
•Purchasing: Finalizes vendor contracts and negotiates payment terms.
•Focus on technical performance
for doctors.
•Emphasize ease of usefor nurses.
•Highlight cost-effectivenessto
administration and purchasing.

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•
Buying Center Influence
•
Members of the buying center assume different roles including users,
gatekeepers, influencers, deciders, and buyers.
•Users–Peoplewhowillactuallyusetheproduct.Theyprovideinputonfeatures,usability,andeffectiveness
Example:RadiologistsandtechnicianswhowilloperatetheMRImachine.
•Gatekeepers–Controltheflowofinformation.Theymightmanagevendoraccessorfilterproductbrochures.
Example:AdministrativeassistantsorITstaffwhoscreensuppliersorlimitwhomeetswithdecision-makers.
•Influencers–Shapethebuyingdecisionwithexpertiseorauthority.Theyrecommendmodelsthatfitmedicalstandards.
Example:Biomedicalengineersormedicaldirectorswhoevaluatespecsandperformance.
•Deciders–Haveformalauthoritytoapproveorselectthefinalsupplier.Theirapprovalisneededforthedealtoclose.
Example:HospitalCEOorprocurementheadwhosignsoffonthefinalpurchase.
•Buyers–Handlecontractsandpricingnegotiations.Theyworkdirectlywiththevendor.
Example:Procurementdepartmentfinalizesprice,delivery,andpaymentterms.

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•
Identifying Patterns of Influence
•Isolate personal stakeholders
Find out who personallycares about the purchase (e.g., a lead radiologist pushing for the upgrade).•Follow the information flow
See who receives and passes along product details (e.g., vendor brochures go to the admin staff first, then
radiologists).
•Identify the experts
Know who has deep product knowledge (e.g., biomedical engineers assessing MRI specifications).
•Trace connections to the top
Understand who connects to the final decision-maker (e.g., the radiologist may influence the hospital board indirectly).
•Understand purchasing’s role
Purchasing might just handle pricing, or they might strictly enforce supplier standards. You need to know their power.

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Hutt, Business Marketing Management: B2B, 13th Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or
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Factors Influencing the
Organizational Buying
Process: Individual Forces

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Individual Forces
•
Differing Evaluative Criteria
•
Evaluative criteriaare specifications that organizational buyers use to
compare alternative industrial products and services.
•
Responsive Marketing Strategy
•
Information Processing
•
Selective Processes-Selective exposure, selective attention, selective
perception, selective retention.
•
Risk-Reduction Strategies
1) uncertainty about the outcome of a decision and
2) the magnitude of consequences from making the wrong choice