Participants in Organizational Buying Process

The members of buying centers participate in the buying process of

organizations. Each of them performs individual roles indicated as follows.
1. Users. They are the ones who will use the product or service that is the subject of
purchase
2. Influencers. They are persons who influence the buying decision. Technical
experts who give suggestions in terms of specifications are examples of
influencers.
3. Deciders. They are persons who make decisions on product requirements and
suppliers. The buyer is the decider in routine buying, while the technical experts
are the deciders in highly technical purchases.
4. Approvers. They are the persons who authorize the proposed action of
deciders or buyers.
5. Buyers. They are persons who are authorized to select the supplier, and
arrange the terms of purchase.
6. Gatekeepers. They are persons who have the power to prevent sellers or
information from reaching members of the buying center.
Purchase Decision –making Process in Organization
When making purchases, organizations make use
of the decision-making process consisting of the
following stages:
1. Recognition of a problem or need.
2. Search for information about products and
suppliers.
3. Evaluation and selection of supplier
4. The purchase
5. Performance evaluation and feedback.
Recognition of a Problem or Need.
When someone in the business firm recognizes a need
that can be satisfied by buying the appropriate product or
service, the purchasing process has begun. In this stage of
the buying process, however, these are some factors that
must be considered. They are as follows:
1. Organizational purchasing is a result of product and
operational needs. The primary objective of the firm is o
make profits, and this is possible if the firm can provide
the product or service that the customers want.
2. An organization can be identified by different
employees of the firm. Changes in the internal and
external environment of the firm requires corresponding
adjustments in the firm’s operations.
3. Progressive firms are engaged in requirements
planning. Environmental demands for efficiency makes
it necessary for firms to reduce costs and uncertainties
in the continues provision of supply.
4. The firm needs to determine product
specifications. This is a very important requirement
because any discrepancy between what is really
required and what has been delivered by suppliers will
mean additional expenses if the problem is to be
corrected.
Search for Information About Products and Suppliers
If the problem or need has been recognized, the next logical
step is to find solutions. As such, the following must be undertaken:
1. A listing of products or services that will solve the problem.
2. Make or buy analysis.
3. Information must be gathered about potential suppliers.

Evaluation and Selection of Suppliers

Both the consumers and organizations evaluate alternative
suppliers and their products or services. However, organizations are
more formal and they use a set of choice criteria which show the
advantages offered by each supplier.
The Purchase
In support of the efficiency objective, organizations prefer to routinize their
purchases. If the new-task buying is satisfactory, the organization would shift to the
straight rebuy situation for repeat purchases. Most often this is undertaken through a
blanket purchase order which is actually an agreement where the supplier promises to
resupply the buyer as needed on agreed price terms over a specified period of time.

Performance Evaluation and Feedback

The efficiency objective of the organization is carried through all activities of the
firm including purchasing. One way is performance evaluation of the product and the
supplier. The evaluation commences as soon as the products are delivered.
What Influences Organizational Buyers
Buyers in organizations are not immune to influences when performing their
buying functions. They are influenced by two general factors:
1. economic –such as price, product quality, and service
2. personal –such as favors, attention and risk avoidance
Specially, influences on organizational buyers may be
classified as follows:
1. Environmental factors. The economic situation, as well as
developments in technology, politics, and competition are
the environmental factors affecting organizational buying.
2. Organizational Factors. Organizations are different in terms
of policies, organizational structure, procedures, systems
and past experiences.
3. Interpersonal factors. Members of the organization’s buying
center will have different interest, authority, and
persuasiveness.
4. Individual factors. Each buying center member has his own
personal motivations, preferences and perceptions.
 CHAPTER 4
MARKET
SEGMENTATION
WHAT IS MARKET?
The term “market” has been defined in many
ways, all depending on whose point of view is referred
to. Improvements in the definition of “market”
happened as the economics, management, and
marketing disciplines develop.

 Is a place where sellers and buyers exchange goods

(or services) upon an agreed price.
 as a group of people or organizations that buy a
particular good, service, or concept.
 is composed of people with needs to satisfy, the
money to spend, and the willingness to spend and
the ability to satisfy the objectives of the seller.
 TYPES OF MARKET
1. Type of Institution
2. Form

Markets according to type of Institution;

There are three general types:
1. Consumer Markets
2. Organizational Markets
3. International Markets
Consumer Markets
 Buyers who intend to directly consume a
product or service constitute to consumer
market. This market type maybe classified
further into product-related groupings like the
“real estate market” which refers to the
aggregate demand of buyers of houses and lots.
Organizational Markets
 This second general type of market constitutes
buyers of product or service whose intention is
to produce another product or service.
International Markets
 Refers to all type of buyers found abroad
including consumers and organizations.
MARKETS ACCORDING TO FORM

1. ThePrimary
2. The Secondary Markets
 Primary Markets
 this the type of market that is formed when a
firm introduces a new product class in
response to latent demand or needs.

Latent demand=>>refers to consumer demand

that is unarticulated or abstract. It is without
reference to a particular product or service.

Secondary Markets
 This type is an offshoot of the primary
market and it is formed when customers
develop specific needs or preferences.
Market consist of various segment. The market
for books , for instance, subdivided into the ff.
segment.
1. Students
2. Teachers
3. The General Public

MARKET SEGMENT
 People may have similar wants, financial
resources, geographic locations, buying
attitudes and buying patterns.
 Is a sub- group of a particular market which is
composed of units with more or less similar
characteristics.
MARKET SEGMENTATION

 Defined as the process of identifying the various

segments of a company’s particular market.

THE MARKET
FOR BOOKS

SEGMENTS Teachers Student General

s Public

SUB-SEGMENTS
Elementar High
College
y School
Advantages of Market Segmentation

1. Segmentation forces the marketer to be

aware of realities in the market.
2. Segmentation provides clues in the design of
products and marketing programs that will
reach the prospective customers.
3. Segmentation can help identify opportunities
for new product development.
4. Segmentation can help improve the strategic
allocation of marketing resources.
SEGMENTATION STRATEGIES
In serving the target market, the company
or the marketer may opt to adapt any of the
following;

1. Concentration or Single-segment strategy

 Refers to that long term decision of the company to deal only with a
particular segment of the market.
Example; book publisher
2. Multi-segment strategy
 Calls for providing products or services to two or more segments of the
target market. The company may even serve the entire target market.

Example; Rex Book Store

They can publishes and sells college, high school, elementary books. In
addition, they also handle books for adult who no longer go to school.
Process of segmenting Markets

• Identification of market segments in terms of

characteristics of prospective customers they
contain

• Determination of whether and to what extent

there are differences in the needs of benefits
sought by customers in the various segments

• Evaluation of the present and future

attractiveness of each segments
 Determine if
Identify needs of
market customers in
segments various
If yes segments are
different
if no

Evaluate
potential of Abandon idea of
each segment segmentation
Categories of Segmentation

 Geographic Segmentation
Requires dividing market into different geographical units like nations,
regions, provinces, cities and the likes.

For example, water might be scarce in some regions which inflates the
demand for bottled water but, at the same time, it might be in abundance in
other regions where the demand for the same is very less
 Demographic Segmentation

divides the market on the basis of demographic variables like age, gender,
marital status, family size, income, religion, race, occupation, nationality,
etc.

For example, “Age” as variable in segmenting its market, Milo, Ovaltine and
Zest-O they’d used advertisement to convey message directed towards a
particular age group which are Children and young adults.
 Behavioral Segmentation

The segments are usually divided based on their

knowledge of the product and usage of the product.

It is believed that the knowledge of the product and its

use affects the buying decision of an individual.

For example, a sports person may prefer an energy drink

as elementary (heavy user) and a not so sporty person
may buy it just because he likes the taste (light/medium
user).
 Psychographic Segmentation

Divides the audience on the basis of their personality,

lifestyle and attitude.

This segmentation process works on a premise that

consumer buying behavior can be influenced by his
personality and lifestyle.

For example, A person having a lavish lifestyle may

consider having an air conditioner in every room as a
need, whereas a person living in the same city but
having a conservative lifestyle may consider it as a
luxury.
Examples of market segmentation to

 A company that sells nutritious food might market the product to the
older people while fast-food chains target the working demographic or
teens.
 Sports brands often segment the market based on the sports they play
which help them market the sports specific products to the right
audience.
REPORT IN MARKETING –
SEGMENTATION
 Psychographic segmentation

Refersto the classification of buyers or consumers

by some psychological characteristics they posses
in common .
They may be grouped according to social class or
life style.
Segmentation by social class share similar values,
interest, behaviors, and economic positions.
Manufacturers of home appliances like Sony like
cellphone companies like Nokia carry various
models or their products. This is an indication that
they are well aware of the need to cater to the
various classes of society.
 Lifestyle

Refers to a person’s pattern of living in the

world as expressed in his or her activities,
interest, and opinions. A person of very modest
means, for instance, may choose to live an easy
life and spend his money as it comes. On the
other hand, a financially well-off person may live
like a pauper and spend a very little of his money
throughout his life. These activities will surely
affect the marketing efforts of affected
companies.
 a person may have a mental image of what he
thinks of himself as he should be. This image
will guide him to adapt a lifestyle fitted to that
image or to the attainment of such image. For
example persons who dream to getting rich will
act and make decisions that will lead to the
fulfillment of that dream. He may decide to
enroll in the prestigious school, save money for
investment purposes, read businesses
magazines, and others . His actions will tend
favor companies that cater to his needs.
Segmenting the market
according to lifestyle is usually
by manufacturers of shoes and
dresses. Other firms, however,
have already followed suit. A
fine example of life style
segmentation is very
prominent in the advertisement
of Nuvoland Philippines, Inc.,
 Behavior segmentation is a term that refers to the grouping of
buyers on the basis of their knowledge, attitude use or response to
a product. Buyer behavior maybe segmented
according to various categories, namely:
 (1) purchase occasion;
 (2)benefits sought;
 (3) user status;
 (4) user rate;
 (5) loyalty status;
 (6) readiness stage;
 (7)attitude toward product.
Occasion segmentation calls for grouping of buyers according to
occasion when they get the idea, make a purchase, or use a product .
The purchase of books and notebooks, and pencils, for instance, is
made heavily during enrollment periods in school.
 Buyers may also segmented according to the
benefits they seek from a particular product . Health
maintenance is type of benefit sought by millions
of consumers and they clearly belong to one
particular market segment. The Nescafe decaf 3n1
coffee Mix is a product used to specifically serve
the health-conscious market segment.
In other example, the very rich people
exhibits needs typical only to their class. They will
hesitate to spend money if they think their prestige
will be compromise. This provided some money if
they think their prestige will be compromised. This
has some companies with a clue as to what special
needs must be satisfied. Examples of products that
will satisfy such needs are high priced such as
watches and necklaces.
Segmentation by usage rate is also a way of market
segmentation. It is done by classifying buyers into light-
users,
And heavy users. Often times, the very few heavy users
of a product consume more than the many very many
light-users as companies are more interested in sales
volume , marketing strategies are devised to attract the
heavy users in the purchase
of specific brands.
Buyers- may also be grouped according to their loyalty to
particular brands. They may be classified as follows:
1. Those who buy only one brand a product;
2. Those who buy two or three brands;
3. Those who shift one brand to another; and
4. Those who have no brand preference.
Another way of segmenting the market is to
classify buyers according to their readiness
to buy . In this regard , they may be
categories into the following stages:
1. People who are un aware of the product;
2. People who are aware the product;
3. People who are informed the product;
4. People who are interested the product;
5. people who desires the product; and
6. people who want to buy the product;
STAG BUYER EFFECT ON BUYER MARKETING TASK
E READINESS BEHAVIOR
1 Buyer un-  Buyer don’t buy Convert to stage 2
aware because they are
un-aware the
product exists

2 Buyer aware  Buyer has a slight Convert to stage3

idea about the
product which may
lead to actual
purchase

3 Buyer in-  Buyer has more Convert to stage4

formed knowledge about
the product;
chance of buying
the product is
increased
4 Buyer  Buyer wants to convert to
interested evaluate the stage 5
product; chance
of actual
purchase is
further increased

5 Buyer de  Buyer wants to convert to

sirous have the product; stage 6 if
only hindrance is with ability
ability to pay and to pay
presence to
competing the
products
6 Buyer intends  Buyer wants to convert
to buy purchase the intention to
product consummate
d sale and
keep buyer
interested to
buy again
People’s attitude towards the product may also classified according to
their degree of enthusiasm. These are the following:

1. People who have enthusiastic attitude toward the product;

2. People who have positive attitude toward the product;
3. People who have indifferent attitude toward the product;
4. People who have a negative attitude toward the product;
5. People who have a hostile attitude toward the product.

The enthusiastic attitude is most desired by marketers while

The hostile is the most un wanted.
Buyer attitude Buyer behavior Marketing task
Enthusiastic very eager and most Make product
ready to buy available
positive Likes the product; A little selling
Will buy product when effort is necessary
needed
In different Does not have a positive Make product easy
or negative attitude and available
toward the product; may
buy little effort is
necessary
Negative Does not like the Much attitude
product; will not changing is
attempt to buy required

Hostile Much dislike for the A most difficult

product; will ever task
influence others not to of attitude
buy the product conversion