Buying Behavior and the Buying Process

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Buying Behavior and the Buying Process
CHAPTER 4
Some questions answered in this chapter are

• What are the different types of customers?
• How do organizations make purchase decisions?
• Which factors do organizations consider when
  evaluating products and services?
• Who is involved in the buying decision?
• What should salespeople do in the different types
  of buying situations?
• Which changes are occurring in organizational
  buying, and how will these changes affect
  salespeople?

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Types of Customers

• Producers
• Products included in manufacturing
• Services to support the manufacturing operation
• OEM purchasers
• Goods to use in making their products
• End users
• Goods and services to support their own
  production and operations

Capital equipment items are major purchases such
as mainframe computers and machine tools.
Maintenance, repair, and operating (MRO) supplies
include paper towels and replacement parts for
machinery.
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Types of Customers (continued)

• Resellers
• Finished products or services with the intention
  to resell them.

Turnover is how quickly an item sells, and how
much effort it takes to sell.
Profit margin is how much a reseller makes on
each sale.
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Types of Customers (continued)

• Government agencies
• Goods and services valued at more than 1
  trillion annually
• Institutions
• Different needs and buying processes
• Consumers
• Products and services for use by themselves or by
  their families

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Organizational Buying and Selling

• Complexity of the organizational buying process
• Purchasing agents
• Evaluations and negotiations
• Complexity is increasing
• Derived versus direct demand
• Customers customers

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Steps in the Buying Process
Step 9 Payment
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How do Organizations Make Buying Decisions?

• Steps in the buying process
• Choices to attend a university related to the 8
  steps in the organizational buying process
• Creeping commitment
• Narrowing range of alternatives
• Critical that salespeople be involved in the
  initial steps

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Types of Organizational Buying Decisions

• New tasks
• A customer purchases a product or service for the
  first time
• Straight rebuys
• A customer buys the same product from the
  original source
• Modified rebuys
• The customer has purchased the product in the
  past but is looking for new information

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Who Makes the Buying Decision?
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Factors Influencing Organizational Buying
Decisions
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Organizational Needs and Criteria

• Economic criteria
• Life-cycle costing (total cost of ownership)
• Quality criteria
• What are organizational buyers looking for?
• Service criteria
• Value analysis

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Life Cycle Costing
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Individual Needs of Buying Center Members

• Types of needs
• Financial security
• Self-esteem
• Recognition
• Risk reduction
• Collect additional information
• Develop supplier loyalty
• Spread the risk

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Professional Purchasings Growing Importance

• Supply chain management
• Logistics
• Managing inventory while controlling costs
• Just-in-time inventory control system
• Material requirements planning
• Automatic replenishment
• Electronic data interchange

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Professional Purchasings Growing Importance
(continued)

• Supplier relationship management
• Identify the annual spend
• Summarize the benefits and needs satisfied by a
  supplier

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Professional Purchasings Growing Importance
(continued)

• The Internet and business-to-business selling
• Extranets
• Reverse auctions

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Summary

• Selling to organizations differs from selling to
  consumers because organizations are more
  concentrated, demand is derived, and the buying
  process is more complex.
• The organizational buying process consists of
  eight steps.
• The length of the buying process and the role of
  various participants depend on the customers
  past experiences.
• The people involved in the buying process are
  referred to as the buying center.
• Organizations are facing an increasingly dynamic
  and competitive environment.
• The Internet is playing a much more important
  role in business-to-business transactions.

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Appendix Multiattribute Model of Product
Evaluation and Choice

• Based on the idea that people view a product as a
  collection of characteristics or attributes.
• Buyers evaluate a product by considering how each
  characteristic satisfies the firms needs and
  perhaps their individual needs.
• Performance evaluation of characteristics
• Importance weights

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Information about Laptop Computers
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Performance Evaluation of Laptop Computers
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Appendix Multiattribute Model of Product
Evaluation and Choice (continued)

• Overall evaluation
• Value offered
• Supplier selection
• Implications for salespeople

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Information Used to Perform and Overall Evaluation
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Value Offered by Each Brand
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Approaches for Changing Perceived Value

• Increase the performance rating for your product.
• Decrease the performance rating for a competitive
  product.
• Increase or decrease an importance weight.
• Add a new dimension.
• Decrease the price of your product.

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