Marketing chapter 6a understanding organizations as customers

McGraw-Hill/Irwin

Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:

LO1

Distinguish among industrial, reseller, and government
organizational markets.

LO2

Describe the key characteristics of organizational buying that make
it different from consumer buying.

6-2


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:

LO3

Explain how buying centers and buying situations influence
organizational purchasing.

LO4

Recognize the importance and nature of online buying in industrial,
reseller, and government organizational markets.

6-3


BUYING PAPER IS A GLOBAL
BUSINESS DECISION AT JCPENNEY

6-4


THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

LO1

 Business Marketing


Organizational Buyers

•

Industrial Markets
(Industrial Firms)

•

Reseller Markets
(Resellers)



Wholesalers



Retailers

•

Government Markets
(Government Units)

 Global Organizational Markets
6-5


THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

•

Business Marketing

– Marketing of goods and services to companies, governments, and not-forprofit organizations for use in the creation of goods and services that they
can produce and market to others.

Slide 6-6

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

•

Organizational Buyers

–

Manufacturers, wholesalers, retailers, and government agencies that buy goods
and services for their own use or for resale.

–
–

Include all buyers in a nation except ultimate consumers
Total annual purchases of organizational buyers are far greater than those of
ultimate consumers

–

Divided into three different markets:

1)
2)
3)

Industrial Markets
Reseller Markets
Government Markets

Slide 6-6


THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

1.

Industrial Markets (Industrial Firms)

–

In some way reprocess a product or service before selling it again to the
next buyer

–
–

Approximately 12M firms
Predominately Service firms (approx 74%)

Slide 6-6


THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

2.

Reseller Markets (Resellers)

–

Buy physical products and resell them without any reprocessing

•
•

Wholesalers (approx 860,000)
Retailers (approx 3M)

Slide 6-6


THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

3.

Government Markets (Government Units)

–

Federal, state, and local agencies that buy goods and services for the
constituents they serve (approx 88,000 )

Slide 6-6


FIGURE 6-A Type and number of organization establishments in the U.S.

6-11

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

•

Global Organizational Markets

– Industrial, Reseller, and Government markets
– Largest exporting industries in U.S. focus on organizational customers, not
ultimate consumers

Slide 6-6


MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND
LO1

GOVERNMENT MARKETS

North American
Industry Classification
System (NAICS)

6-13


North American Industry Classification System (NAICS)

•
•

•

Common industry classifications for Canada, Mexico, and the United States
Easier measurement of economic activity in member countries of NAFTA
Replaced Standard Industrial Classification (SIC)

Slide 6-9


FIGURE 6-1 NAICS breakdown for the information industries sector:
NAICS code 51 (abbreviated)

6-15


MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND
LO1

GOVERNMENT MARKETS

North American Product
Classification System (NAPCS)

6-16


Concept Check

1. What are the three main types of organizational buyers?

A: Industrial Firms; Resellers; Government Units

Slide 6-11


Concept Check

2. What is the North American Industry Classification System
(NAICS)?

A: The NAICS provides 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


CHARACTERISTICS OF
LO2

ORGANIZATIONAL BUYING

 Derived Demand

 Size of Order or Purchase

 Number of Potential Buyers

 Organizational Buying Objectives

6-19


CHARACTERISTICS OF ORGANIZATIONAL BUYING



Derived Demand



Refers to the linkage between consumer demand for a company’s output
and its purchases of business products.



Demand for industrial products and services is driven by, or derived from,
demand for consumer products and services



Derived demand ultimately affects capital items and expense items.

Slide 6-13


CHARACTERISTICS OF ORGANIZATIONAL BUYING

•

Size of the Order or Purchase

– Typically much larger than consumer

•

Number of Potential Buyers

– Far fewer than consumer

•

Organizational Buying Objectives

– Help them achieve their objectives

Slide 6-13


FIGURE 6-2 Key characteristics and dimensions of organizational buying
behavior

6-22


CHARACTERISTICS OF
LO2

ORGANIZATIONAL BUYING

 Organizational Buying Criteria

 ISO 9000

 Supplier Development

6-23


CHARACTERISTICS OF ORGANIZATIONAL BUYING

Organizational Buying Criteria

Slide 6-16


CHARACTERISTICS OF ORGANIZATIONAL BUYING

•

Organizational Buying Criteria

–

The objective attributes of the supplier’s products and services and the
capabilities of the supplier itself

1.
2.

3.
4.
5.
6.
7.

Price
Ability to meet quality specifications
Ability to meet required delivery schedules
Technical capability
Warranties and claim policies
Past performance on previous contracts
Production facilities and capacity

Slide 6-16