Chapter 7

CISCO Targets Businesses

What is Organizational Buying?
Organizational buying refers to the decision-
making process by which formal organizations
establish the need for purchased products and
services, and identify, evaluate, and choose
among alternative brands and suppliers.
Characteristics of Business Markets
Fewer, larger buyers Multiple sales calls
Close supplier- Derived demand
customer relationships Fluctuating demand
Professional purchasing Inelastic demand
Many buying influences Geographically
concentrated buyers
Direct purchasing
Buying Situation

Straight
Straight rebuy
rebuy

Modified
Modified rebuy
rebuy

New
New task
task
Systems Buying and Selling
Turnkey solution System
desired; subcomponents
bids solicited assembled

Prime Second-tier
contractors contractors
The Buying Center
Initiators
Initiators

Users
Users

Influencers
Influencers

Deciders
Deciders

Approvers
Approvers

Buyers
Buyers

Gatekeepers
Gatekeepers
Copyright © 2009 Pearson Education, Inc.
 Publishing as Prentice Hall 7-7
Of Concern to Business Marketers
Who are the major decision participants?
What decisions do they influence?
What is their level of influence?
What evaluation criteria do they use?
Sales Strategies

Key Buying
Small Sellers Influencers

Multilevel
Large Sellers In-depth
Selling
Stages in the Buying Process: Buyphases
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance review
Forms of Electronic Marketplaces

• Catalog sites
• Vertical markets
• Pure play auction sites
• Spot markets
• Private exchanges
• Barter markets
• Buying alliances
Methods of e-Procurement
Websites organized using vertical hubs
Websites organized using functional hubs
Direct extranet links to major suppliers
Buying alliances
Company buying sites
Handling Price-Oriented Customers

Limit
Limit quantity
quantity purchased
purchased

Allow
Allow no
no refunds
refunds

Make
Make no
no adjustments
adjustments

Provide
Provide no
no services
services
 Methods for Researching
Customer Value
Internal engineering Conjoint analysis
assessment Benchmarks
Field value-in-use Compositional
assessment approach
Focus-group value Importance ratings
assessment
Direct survey questions
Order Routine Specification
Stockless
purchase plans

Vendor-managed
inventory

Continuous
replenishment
Establishing Corporate Trust
and Credibility

Expertise

Trustworthiness Likeability
Trust Dimensions
Cooperating
Transparent
Design

Product/Service Product
Quality Comparison

Incentive Supply Chain

Pervasive
Partnering
Advocacy
Factors Affecting
Buyer-Supplier Relationships

Availability of Importance of
alternatives supply

Complexity of Supply market

supply dynamism
Categories of Buyer-Seller Relationships
Basic buying and selling Cooperative systems
Bare bones Collaborative
Contractual transaction Mutually adaptive
Customer supply Customer is king
Aramark Successfully Services Institutional and
Government Markets