In addition to market exchanges, the organisational buying function typically involves a decision-making process that is different from consumer purchasing behaviour. Organisational buying decisions are influenced by the following key factors: the power and number of individuals in the buying group involved in the purchasing decision, the type and size of purchase and choice criteria informing the purchase decision, and the level ofrisk involved.
• The buying group. Webster and Wind (1972) identified different profiles for participants involved in an organisational buying group: users, influencers, buyers, deciders and gatekeepers. The composition of the buying group varies according to a company's requirements regarding financial control and authorisation procedures.
• The type and size of purchase. These will vary dramatically according to the scale of the purchase. Companies such as aircraft manufacturers will have low-volume, high-value orders; others selling items such as stationery will have high-volume, low-value orders. With the low-volume, high-value purchase the Internet is not likely to be involved in the transaction itself since this will involve a special contract and financing arrangement. The high-volume, low-value orders, however, are suitable for e-commerce transactions and the Internet can offer several benefits over traditional methods of purchase such as mail and fax (e.g. speed of transfer of information, access to more detailed product information).
• Choice criteria. The buying decision for organisations will typically take longer and be more complicated than consumer purchasing decisions, as professional buying groups assess product specifications against their buying requirements. To assist in this evaluation, many B2B-specific portals have been created on the Internet, with the aim of uniting buyers with sellers who have the products that match their requirements. Such portals not only provide information about potential suppliers, but also enable searching of product specifications and standards and parts catalogues.
• The level of risk. This varies depending on the type of product. In the case of routine-purchase, low-cost goods required, say, for maintenance or repair purposes the level of risk associated with a wrong purchase is low. However, in the case of a high-cost product, for example either a capital equipment purchase or a bulk quantity of raw material used in a manufacturing process, the associated risk of making a wrong purchase is high. The Internet affords buyers and sellers the opportunity to be well informed about a potential purchase, thereby reducing the risks associated with the functionality of a particular product or service. However, online fraud and forgery are increasing and global legal systems do not yet have laws to protect every aspect of commercial use of the Internet, especially online contracts (Sparrow, 2000). Therefore, the advantage of accessing a wide range of new trading partners across the Internet's global trading network is somewhat reduced by the threat of a previously unknown party entering into a contract fraudulently. As a result, the risk of trading with new suppliers via the Internet is potentially higher than in a face-to-face situation.
A key consideration is how Internet technologies can be used to facilitate a dialogue with the various members of the buying group. A possible approach to consider is selective targeting, a process involving carefully examining specific aspects of the target market and then preferentially targeting the selected market with specific online offerings. Some examples of customer segments that are commonly targeted online include:
• customers who are difficult to reach using other media - an insurance company looking to target younger drivers could use the web in this way;
• customers who are brand loyal - services to appeal to brand loyalists can be provided to support them in their role as advocates of a brand as suggested by Aaker and Joachimsthaler (2000);
• customers who are not brand loyal - conversely, incentives, promotion and a good level of service quality could be provided by the web site to try and retain such customers.
The same principles can be applied to organisational markets whereby larger customers could be offered preferential access through an extranet. Smaller companies might be offered additional services to enhance buyer-supplier relationships: online transactions, Internet-based EDI and specialist portals providing detailed information for different interests that support the buying decision.
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Co-op Mailing means that two or more businesses share in the cost and distribution of a direct mail campaign. It's kind of like having you and another non-competing business split the cost of printing, assembling and mailing an advertising flyer to a shared same market base.