Executive Summary

Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services, and then identify, evaluate, and choose among alternative brands and suppliers. The business market consists of all of the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others: profit-seeking companies, institutions, and government agencies.

Compared to consumer markets, business markets generally have fewer and larger buyers, a closer customer-supplier relationship, and more geographically concentrated buyers. Demand in the business market is derived from demand in the consumer market and fluctuates with the business cycle. Nonetheless, the total demand for many business goods and services is quite price-inelastic. Business marketers need to be aware of the role of professional purchasers and their influencers, the need for multiple sales calls, and the importance of direct purchasing, reciprocity, and leasing.

Three types of buying situations are the straight rebuy, the modified rebuy, and the new task. Systems buying is a practice in which the buyer wants to purchase a total solution to its problem from one seller. The buying center is the decision-making unit of a buying organization. It consists of initiators, users, influencers, deciders, approvers, buyers, and gatekeepers.

To influence the buying center, marketers must be aware of environmental, organizational, interpersonal, individual, and cultural factors. The buying process consists of eight stages called buyphases: (1) problem recognition, (2) general need description, (3) product specification, (4) supplier search, (5) proposal solicitation, (6) supplier selection, (7) order-routine specification, and (8) performance review. Successful marketers anticipate and provide what buyers are seeking in each buyphase, increasing the chances that they will be selected and, ultimately, build a long-term relationship with their customers.

NOTES

1. Frederick E. Webster Jr. and Yoram Wind, Organizational Buying Behavior (Upper Saddle River, NJ: Prentice-Hall, 1972), p. 2.

2. Robert Hiebeler, Thomas B. Kelly, and Charles Ketteman, Best Practices: Building Your Business with Customer-focused Solutions (New York: Arthur Andersen/Simon & Schuster, 1998), pp. 122-24.

3. Hiebeler, Kelly, and Ketteman, Best Practices, pp. 124-26.

4. Laura M. Litvan, "Selling to Uncle Sam: New, Easier Rules," Nation's Business, March 1995, pp. 46-48; Ellen Messmer, "Feds Do E-Commerce the Hard Way," Network World, April 13,

1998, pp. 31-32; Anna Muoio, "Fast Agency, Slow Government," Fast Company, December

5. Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial Buying and Creative Marketing (Boston: Allyn & Bacon, 1967).

6. See Daniel H. McQuiston, "Novelty, Complexity, and Importance as Causal Determinants of Industrial Buyer Behavior," Journal of Marketing, April 1989, pp. 66-79; and Peter Doyle, Arch G. Woodside, and Paul Mitchell, "Organizational Buying in New Task and Rebuy Situations," Industrial Marketing Management, February 1979, pp. 7-11.

7. Urban B. Ozanne and Gilbert A. Churchill, Jr., "Five Dimensions of the Industrial Adoption Process," Journal of Marketing Research, August 1971, pp. 322-28.

8. See Donald W. Jackson Jr., Janet E. Keith, and Richard K. Burdick, "Purchasing Agents' Perceptions of Industrial Buying Center Influence: A Situational Approach," Journal of Marketing, Fall 1984, pp. 75-83.

9. Webster and Wind, Organizational Buying Behavior, p. 6.

11. See " 'I Think You Have a Great Product, but It's Not My Decision,' " American Salesman, April 1994, pp. 11-13.

13. Webster and Wind, Organizational Buying Behavior, pp. 33-37.

14. Sara Lorge, "Purchasing Power," Sales & Marketing Management, June 1998, pp. 43-46; Joann Muller, "The One-Year Itch at Daimler-Chrysler," Business Week, November 15, 1999, p. 42.

15. Tim Minahan, "OEM Buying Survey—Part 2: Buyers Get New Roles but Keep Old Tasks," Purchasing, July 16, 1998, pp. 208-209.

16. Shawn Tully, "Purchasing's New Muscle," Fortune, February 20, 1995; Mark Fitzgerald, "Decentralizing Control of Purchasing," Editor and Publisher, June 18, 1994, pp. 8, 10.

17. Mohanbir Sawhney and Steven Kaplan, "Let's Get Vertical," Business 2.0, September 1999, p. 85.

18. Robert Yoegel, "The Evolution of B-to-B Selling on the 'Net,' " Target Marketing, August 1998, p. 34; Andy Reinhardt, "Extranets: Log On, Link Up, Save Big," Business Week, June 22, 1998, p. 134; John Evan Frook, "Buying Behemoth—By Shifting $5B in Spending to Extranets, GE Could Ignite a Development Frenzy," InternetWeek, August 17, 1998, p. 1; John Jesitus, "Procuring an Edge," Industry Week, June 23, 1997, pp. 56-62.

19. Lance Dixon, "JLG Industries Offers JIT II Advice," Purchasing, January 15, 1998, p. 39.

20. (Germany, Japan) Teresa C. Morrison, Wayne A. Conaway, and Joseph J. Douress, Dun & Bradstreet's Guide to Doing Business Around the World (New York: Prentice-Hall, 1997); (Korean) "Tips, Tricks and Pitfalls to Avoid when Doing Business in the Tough but Lucrative Korean Market," Business America, June 1997, p. 7.

21. Robinson, Faris, and Wind, Industrial Buying and Creative Marketing.

22. John H. Sheridan, "Buying Globally Made Easier," Industry Week, February 2, 1998, pp. 63-64.

23. See "Xerox Multinational Supplier Quality Survey," Purchasing January 12, 1995, p. 112.

24. Minahan, "OEM Buying Survey—Part 2: Buyers Get New Roles but Keep Old Tasks." To see how the Internet is affecting supplier selection, see Kevin Ferguson, "Purchasing in Packs," Business Week, November 1, 1999, pp. EB32-38.

25. Rick Mullin, "Taking Customer Relations to the Next Level," The Journal of Business Strategy, January-February 1997, pp. 22-26.

26. Donna Del Moro, "Single-Source Newsprint Supply," Editor & Publisher, October 25, 1997, pp. 42-45.

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