 Business organizations not only sell; they

also buy vast quantities of raw materials,

manufactured components, plant &
equipment, supplies & business services.
 German software co. SAP has become a
leading seller to the business market by
specializing in software to automate business
functions, such as finance & factory
management. SAP’s leadership strategy is to
focus carefully on what customers want, &
show them how SAP’s software applications
can improve profits, raise revenue, or reduce
cost. Partly through acquisitions, Sap offers
IT customers one-stop shopping to
standardize business processes.
Organizational Buying
 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.

Source: Webster & Wind

Business Market vs. Consumer Market
 Fewer, larger buyers
 Close supplier-customer relationship
 Professional purchasing
 Several buying influences
 Multiple sales calls
 Derived demand
 Inelastic demand
 Fluctuating demand
 Direct purchasing
 2.Smaller customer base and importance and
power of the customer.
 3.Trained purchasing agents ,quotation and
proposals.
 4.technical experts,senior
management,business marketers sales
representatives etc.
 5.In case of capital equipment
 6.Demand derived from demand for consumer
goods.
 Close monitoring of the buying patterns of the
ultimate consumers.
 7.The demand is not affected by changes in
price specially in the short run.
 8.Demand for business goods are more
volatile than demand for consumer goods and
services.(Acceleration effect:an increase in
consumer demand leads to much larger
increase in demand for plant and equipment
neccesary to produce aditnal outputssss)
 Custom furniture
Installed components
Buildings
New
New Task
Task Buying
Buying Weapon systems

New vehicles
Involved Decision Making

Elec. Equip
Consultants
Modified Computer equip.
Modified Rebuy
Rebuy

Utilities
Office Supplies
Bulk chemicals Straight
Straight Rebuy
Rebuy
Buying Situations
 Straight Rebuy
 Modified Rebuy
 New Task
 Systems Buying & Selling
 Many business buyers prefer to buy a total
solution to a problem from one seller.
 Systems Contracting: A single supplier
provides the buyer with his or her entire
requirement of MRO supplies. During the
contract period the supplier manages the
customer’s inventory.
 STRAIGHT REBUY:Purchasing reorder supplies,office
supplies ,bulk chemicals on a routine basis.Here
outsuppliers attempt to offer new and better thing with
a goal to get small order against the original supplier
and then increase the share over the time.
 MODIFY REBUY:The buyer wants to modify product
specifications,prices,delivery requirements or other
terms.The modified rebuy usually involves additional
participants on both sides.The in suppliers become
nervous and want to protect the account.
 The out suppliers see an oppurtunity to propose a
better offer to gain some business.
 Eg:split AC
 NEW TASK:A purchaser buys a product or service
for the first time.The greater the cost or risk the
larger the no. of participants.
 The business buyer makes the fewest decisions in
the straight rebuy situation and the most in the new
task situation .
 New task buying is the marketers greatest
oppurtuinity and challenge.
 In the new task situation ,the buyer must
determine product specifications,price
limits,deliver terms and times,service
terms,payment terms,order quantities
,acceptable suppliers,and the selected
supplier.
 MISSIONARY SALES FORCE:Because of the
complicated selling involved many companies
use a missionary sales force consisting of their
most effective salespeople.
 The brand promise and the manufacturers
brand name recognition will be important in
establishing trust & the customers willingness
to consider change.
The Buying Center
 The decision making unit of a buying
organization.

 It is composed of “ all those individuals and

groups who participate in the purchasing
decision – making process, who share some
common goals and the risks arising from the
decisions.
Participants in the Business Buying
Process(pg-179)(bigdua)ss

Users

Initiators Influencers

Gatekeepers

Buyers Deciders

Approvers
 Major Influences on Industrial
Buying Behavior(bioe)s
Environmental
Organizational
•Level of
demand Interpersonal
•Economic •Objectives Individual
outlook •Interests •Age
•Policies
•Interest rate •Authority •Income Business
•Procedures •Education
•Rate of techno- •Status •Job position Buyer
logical change •Personality
•Organizational
•Political and structures •Empathy •Risk attitudes
regulatory •Culture
developments •Systems •Persuasive-
ness
•Competitive
developments
•Social responsi-
bility concerns
Buying Center Targeting
 Who are the major decision participants?
 What decisions do they influence?
 What is their level of influence?
 What evaluation criteria do they use?

 The business marketer is not likely to know

exactly what kind of group dynamics takes
place during the decision process.Key Buying
Influencers(small sellers concentrate on dem)
 Multilevel In Depth Selling(lareg sellers go 4)
Buying Center Targeting
 Types of Business Customers
 Price Oriented Customers
 Solution Oriented Customers
 Gold Standard Customers
 Strategic Value Customers
 Organizational Factors

Decentralized
Purchasing- Cross-
Centralized Purchasing
Department Functional
Purchasing of Small
Upgrading Roles
Ticket Items

Purchasing-
Internet Long-Term Performance Lean
Purchasing Contracts Evaluation & Production
Pro. Buyers
The Procurement Process
 Purchasing Orientations
 Buying Orientations
 Procurement Orientation
 Supply Chain Management Orientation
 Purchasing Processes
 Routine Products
 Leverage Products
 Strategic Products
 Bottleneck Products
 Need Problem
Problem Recognition
Recognition
Recognition
General
General Need
Need Description
Description

Info Product
Product Specification
Specification
Search/ Supplier
Supplier Search
Search
Eval
Proposal
Proposal Solicitation
Solicitation

Purchase Supplier
Supplier Selection
Selection

Order
Order Routine
Routine Specification
Specification
Post
Performance
Performance Review
Review
Purchase
 Buy Grid Framework
BUYCLASSES
New Task Modified Straight
Rebuy Rebuy

Problem Recognition Yes Maybe No

General Need Yes Maybe No
BUYPHASES
Description
Product Specification Yes Yes Yes
Supplier Search Yes Maybe No
Proposal Solicitation Yes Maybe No
Supplier Selection Yes Maybe No
Order Routine Specs. Yes Maybe No
Performance Review Yes Yes Yes
Supplier Selection-Vendor Analysis
Attributes Rating Scale

Imp. Poor Fair Good Excellent

(1) (2) (3) (4)
Wts.
Price .30 *
Supplier .20 *
Reputation
Prod. Reliability .30 *

Service .10 *
Reliability
Supplier .10 *
Flexibility
 Institutional
Institutional Markets
Markets

Low
Low Budgets
Budgets Captive
Captive Patrons
Patrons
 Government
Government Markets
Markets

Domestic
Domestic Suppliers
Suppliers Public
Public Review
Review

Cost
Cost Minimization
Minimization Open
Open Bids
Bids

Paperwork
Paperwork
Reaching the Technical Buyer:
New Marketing Strategies for
Manufacturers
A GlobalSpec White Paper

(Excerpts)
Emerging Paradigms
 The way buyers and sellers of technical
products connect is undergoing a
revolutionary change.
 Print catalogs, advertising, direct mail
and trade shows until recently, the
primary marketing vehicles for
manufacturers are losing effectiveness
and popularity.
 Today, the Internet has emerged as the
marketing medium that delivers the most impact
and greatest return on investment for
manufacturers. The reason: their target
audience of engineers and technical buyers are
on the Internet. Over 85 percent of engineers
use the Internet to research specifications, find
more comprehensive product information,
shorten design cycles and get finished products
to market more quickly.
 Many leading technical product
manufacturers have figured out that their
target market of engineers and technical
buyers are online and therefore that is
where they need to be as well.
 They are changing their marketing mix
to compete on the Internet and,
ultimately, increase their business.
 The Internet is revolutionizing the workplace
and in particular the relationship between
buyers and sellers of technical products.
Engineers and technical buyers are now
embracing the Internet as their primary
means of product sourcing.
 They require and expect a flexible, easy-to-
use, and robust online searching
environment that allows them to use
familiar terms and technical specifications
to find products and components.
 Because engineers are using the Internet to
find technical products, manufacturers that
provide product information on the Internet
will see an increase in their business.
 Many leading manufacturers are already
using the Internet to reach an engineering
audience, maintain market share and
attract new customers. Their strategy is to
reallocate their marketing mix to take
advantage of online marketing
opportunities.
 How can manufacturers that embrace online
marketing ensure they are found on the Internet by
their target market of technical buyers and
engineers? Relying on company Web sites and
general search engines is not enough. Manufacturers
need an online marketing vehicle where their
products will be discovered and showcased to a
qualified engineering audience, and that will offer
measurable, positive results in terms of leads, sales
and return on investment (ROI).
 The Internet has significantly changed expectations of
buyers, and their expectations continue to grow as the
Internet grows. Buyers demand and have come to expect
24/7/365 availability, complete and up-to-date product
information, and sophisticated searching mechanisms that
return meaningful results to their queries.
 The company that is stuck in the “Stone Age” of the
Internet – still posting static product catalogs with limited
searching capabilities – will suffer, because buyers will
look elsewhere when confronted with such archaic Web
sites.
 The evidence is clear that B2B marketers must use the Internet
as a major component of their marketing mix in order to reach
today’s savvy buyers. And not just use the Internet, but harness
all of its sophisticated capabilities for posting, searching,
classifying, disseminating and sharing information.

 A recent Gartner Dataquest survey found that over 90 percent

of engineers use the Internet to research technical products.
They are seeking out product manufacturers and detailed
product specifications and want to be able to share this
information with team members and other technical buyers in
their organization.
 The Company Web Site
 Online Banners and E-mail
 Bringing Buyers and Sellers Together on the Internet: An Online
Searching Environment for Product Sourcing
 Make it easy to find multiple suppliers and products in one place.
 Offer the ability to drill down to research specific products based on
technical specifications.
 Classify and standardize products from multiple suppliers, allowing
Reaching
for unbiased comparisonthe Technical
of products. Buyer: New
 Return only relevant results
Marketing that exactly
Strategies for match the detailed or
Manufacturers
complex specifications engineers are searching on.
 This type of environment made possible by the Internet would
enable engineers to complete their sourcing process without
ever having to leave the online system or their desk.