Chapter Four Organizational Buyer Behavior

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Copyright 2006 The McGraw-Hill Companies, Inc. All rights reservedMcGraw-Hill/Irwin

Chapter Four

Organizational Buyer Behavior

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SELLING BUSINESS TO BUSINESS SUCCESSFULLY.UNDERSTANDING WHAT MAKES BUYERS BUY

THE THEORIES OF BUYER MOTIVATION

REWARD-MEASUREMENT THEORY

THINK: BENEFITS

BEHAVIOR CHOICE THEORY

THINK: SITUATION

ROLE THEORY THINK: NORMS / EXPECTATIONS

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BUYING CENTER ROLES

PERSON

SECRETARY

VICE PRESIDENT

OFFICE MANAGER

SECRETARY & OFFICEMANAGER

OFFICE MANAGER

VICE PRESIDENT OFOPERATIONS

ROLE

Initiator-reports that fax keeps breakingdown

Controller-sets budget for purchase ofnew fax

Gatekeeper-gathers review from vendors.

Influencers-view demonstrations narrowchoices

Recommender-recommends a particular

product to decision maker

Decision Maker Selects fax to purchase

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DIMENSIONS OF BUYING CENTERS

TIME DIMENSIONS TIME IS HIGHLY FRAGMENTED: Many participants for short time

participation

TIME IS NOT FRAGMENTED: Same people stay through entire process

VERTICAL DIMENSIONS

How many layers of management are involved in decision-making

HORIZONTAL DIMENSIONS

How many departments are involved in decision-making

FORMALIZATION DIMENSION

Purchasing tasks and roles are guided and enforcedbywritten procedures

and policies

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TIME FRAGMENTATION INFLUENCES SELLERSMARKETING EFFORTS

INVOLVEMENT INFLUENCE

NUMBER OF DECISION MAKERS

HIGHLY MANY FEW MINIMALLY

FRAGMENTED A LITTLE A LOT FRAGMENTED

DECISION CYCLE TIME INFLUENCE

SIZE OF BUYING CENTER

LONGER LARGE SMALL SHORTER

DECISION CYCLE A LITTLE A LOT DECISION CYCLE

EXPERIENCE OF DECISION MAKERSEXPERIENCE OF DECISION MAKERS

TIME SPENT ON DECISION STAGESTIME SPENT ON DECISION STAGES

Sales objective is to move to the right on the continuum

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RECOGNIZING THEBUYERS DILEMMA: RISK

THERE ARE THREE KINDS OF RISK TO OVERCOME

FINANCIAL RISK

POTENTIAL FOR LOST REVENUE WITH

FAULTY PRODUCT

PERFORMANCE RISK PRODUCT WONT PERFORM AS INTENDED

SOCIAL RISK

THE PURCHASE WILL NOT MEET APPROVAL OF A REFERENCE

GROUP

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OVERCOMING RISK

THREE OPTIONS BUYERS USE TO REDUCE RISK

GATHER MORE INFORMATION FROM MORE SOURCES

USING LOYALTY TO PRESENT SUPPLIERSBUILD

TRUST

SPREAD THE RISK BY USING MORE DECISIONMAKERS OR GETTING MORE SUPPLIERS

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USING INFORMATION TO REDUCE RISK

ImpersonalPersonal

Trade publications

Word of mouth from

colleagues,

consultants, and

coworkers

Noncommercial

Sales literature

Advertising

Websites

Direct mail

Personal selling

Trade shows

Telemarketing

E-mail

Commercial

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BUYING DETERMINANTS THEORY

Individual

factors

Organizational

factors

Market factors

Environmental factors

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EXPANDED BUYING DETERMINANTS THEORY

Organizational Factors

Extrinsic reward

systemsRole expectations

Corporate culture and

intrinsic rewards

Cross-functional

purchasing teams

Policies supporting

vertical and

horizontal

dimensions

Individual factorsExperience: new buy straight rebuy

Choice of reward-Role orientation

Valence of reward

Probability perceptions

Environmental factorsMarket factors