This document discusses organizational buying behavior. It defines business-to-business marketing as marketing products and services to companies, governments, and non-profits. Organizational buyers include manufacturers, wholesalers, retailers, and government agencies that purchase goods and services for their own use or for resale. The North American Industry Classification System (NAICS) provides common industry definitions for Canada, Mexico, and the United States. Derived demand refers to the demand for industrial products and services driven by demand for consumer products and services.

1. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Understanding
Organizations As
Customers
Roger A. Kerin
Steven W. H artley
MARKETING
THE CORE
Eighth Edition
CHAPTER
5

2. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 5, YOU SHOULD BE ABLE TO:
1. Distinguish among industrial, reseller, and
government organizational markets.
2. Describe the key characteristics of organizational
buying that make it different from consumer buying.
3. Explain how buying centers and buying situations
influence organizational purchasing.
4. Recognize the importance and nature of online
buying in industrial, reseller, and government
organizational markets.
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3. ©McGraw-Hill Education.
ORGANIZATIONAL BUYING IS MARKETING,
TOO! PURCHASING PUBLICATION PAPER
FOR JC PENNEY
JC Penney
Website
JCPMedia:
• Buys 100,000+ tons of
paper/year for newspaper
inserts and direct mail.
• 10 companies around the
world supply the paper.
• Sizable revenue and
expense.
5-3
Coutresy of JCPenney

4. ©McGraw-Hill Education.
BUSINESS-TO-BUSINESS MARKETING AND
ORGANIZATIONAL BUYERS
Business-to-Business Marketing
Organizational Buyers
1. Industrial markets (industrial
firms)
2. Reseller markets (resellers)
• Wholesalers
• Retailers
3. Government markets
(government agencies)
NASA
5-4
Courtesy of Lockheed Martin Company

5. ©McGraw-Hill Education.
MEASURING DOMESTIC AND GLOBAL INDUSTRIAL,
RESELLER, AND GOVERNMENT MARKETS
North American Industry
Classification System
(NAICS)
North American Free
Trade Agreement
(NAFTA)
NAFTA
Web Site
NAICS
Web Site
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6. ©McGraw-Hill Education.
FIGURE 5-1 Key characteristics and dimensions of
organizational buying behavior.
Access the text alternative for these images.

7. ©McGraw-Hill Education.
ORGANIZATIONAL BUYING
DEMAND CHARACTERISTICS
Derived demand
Size of order or purchase
Number of potential buyers
Organizational buying objectives:
• Profits
• Women/minority suppliers/vendors
• Efficiency
• Environment/sustainability
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©Karie Hamilton/Bloomberg via Getty Images

8. ©McGraw-Hill Education.
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
ORGANIZATIONAL BUYING CRITERIA
Organizational buying criteria
• Price
• Ability to meet specs
• Ability to meet schedules
• Technical capacity
• Past performance
• Warranties
• Production capacity
Supplier development
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9. ©McGraw-Hill Education.
FIGURE 5-2 Product and supplier selection criteria for buying
machine vision equipment emphasize factors other than price.
Machine vision inspection camera
used in auto industry to perform a
gear inspection.
Percentage of machine vision buyers
citing individual selection criteria as
important when making supplier
decision.
Access the text alternative for these images. 5-9
Courtesy of Keyence Corporation of America

10. ©McGraw-Hill Education.
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
BUYER-SELLER RELATIONSHIPS & SUPPLY PARTNERSHIPS
Reciprocity
Supply partnership
Sustainable procurement
• To benefit the environment
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11. ©McGraw-Hill Education.
MARKETING MATTERS
Milsco Manufacturing—Delivering a Great Ride
for Customers’ Seats
Milsco Manufacturing:
• 3 million seats
• 200 unique variations
• 84-year partnership with
Harley-Davidson
• 100 new products/year to
meet customer requirements
Milsco Website
5-11
©Lluis Gene/AFP/Getty Images

12. ©McGraw-Hill Education.
MAKING RESPONSIBLE DECISIONS
Sustainable Procurement for Sustainable Growth
Starbucks is a leader in sustainable
procurement:
• Integrates environmental considerations into
the organization’s buying process
• Coffee growers in 20 countries
• Fair price for beans
• Ecologically sound growing
©Jewel Samad/AFP/Getty Images
Starbucks
Sustainability
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13. ©McGraw-Hill Education.
ORGANIZATIONAL BUYING FUNCTION AND
PROCESS AND THE BUYING CENTER
Organizational buying behavior
Buying function in organization
responsible for:
• Selection and purchase of products
• For organization’s use or resale
• Formal bids
• Purchasing contract awards
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14. ©McGraw-Hill Education.
FIGURE 5-3 Comparing the stages in a consumer and organizational
purchase decision process.
Access the text alternative for these images.

15. ©McGraw-Hill Education.
ORGANIZATIONAL BUYING PROCESS AND
THE BUYING CENTER (1 of 2)
Buying center
Buying committee
People in the buying center
Roles in the buying center
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
5-15
©monkeybusinessimages/Getty Images

16. ©McGraw-Hill Education.
CHARACTERISTICS OF
ORGANIZATIONAL BUYING
THE BUYING CENTER (2 of 2)
Number of people in buying center
depends on the buying situation.
Buy classes
• New rebuy
• Straight rebuy
• Modified rebuy
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17. ©McGraw-Hill Education.
FIGURE 5-4 The buying situation affects buying center
behavior in different ways.
Access the text alternative for these images.

18. ©McGraw-Hill Education.
ONLINE BUYING IN
BUSINESS-TO-BUSINESS MARKETING
The prominence of online buying in
organizational markets provides timely
information.
E-Marketplaces.
Online auctions in organizational
markets:
• Traditional auction
• Reverse auction
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19. ©McGraw-Hill Education.
MARKETING MATTERS
eBay Means Business for Entrepreneurs
eBay offers trading platform for millions of
small businesses.
• 81% of small businesses sell to 5+ foreign
countries.
• 82% report it helped business grow.
• 78% reduced costs.
• 79% became more profitable.
eBay Website
5-19
©Grzegorz Knec/Alamy Stock Photo

20. ©McGraw-Hill Education.
FIGURE 5-5 Buyer and seller participants and price behavior differ by
type of online auction.
Access the text alternative for these images.

21. ©McGraw-Hill Education.
Business-to-Business Marketing
Business-to-business marketing involves
the marketing of products and services to
companies, governments, or not-for-profit
organizations for use in the creation of
goods and services that they can produce
and market to others.
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22. ©McGraw-Hill Education.
Organizational Buyers
Organizational buyers are those
manufacturers, wholesalers, retailers, and
government agencies that buy goods and
services for their own use or for resale.
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23. ©McGraw-Hill Education.
North American Industry Classification System
(NAICS)
The North American Industry
Classification System (NAICS) provides
common industry definitions for Canada,
Mexico, and the United States, which makes
it easier to measure economic activity in the
three member countries of the North
American Free Trade Agreement (NAFTA).
5-23

24. ©McGraw-Hill Education.
Derived Demand
Derived demand is the demand for
industrial products and services that is
driven by, or derived from, the demand for
consumer products and services.
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25. ©McGraw-Hill Education.
Organizational Buying Criteria
Organizational buying criteria are the
objective attributes of the supplier’s products
and services and the capabilities of the
supplier itself.
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26. ©McGraw-Hill Education.
Organizational Buying Behavior
Organizational buying behavior is the
decision-making process that organizations
use to establish the need for product and
services and identify, evaluate, and choose
among alternative brands and suppliers.
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27. ©McGraw-Hill Education.
Supplier Development
Supplier development is the deliberate
effort by organizational buyers to build
relationships that shape suppliers’ products,
services, and capabilities to fit a buyer’s
needs and those of its customers.
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28. ©McGraw-Hill Education.
Reciprocity
Reciprocity is an industrial buying practice
in which two organizations agree to
purchase each other’s products and
services.
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29. ©McGraw-Hill Education.
Supply Partnership
A supply partnership is a relationship that
exists when a buyer and its supplier adopt
mutually beneficial objectives, policies, and
procedures for the purpose of lowering the
cost or increasing the value of products and
services delivered to the ultimate consumer.
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30. ©McGraw-Hill Education.
Buying Center
A buying center consists of the group of
people in an organization who participate in
the buying process and share common
goals, risks, and knowledge important to a
purchase decision.
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31. ©McGraw-Hill Education.
Buy Classes
Buy classes consist of three types of
organizational buying situations: straight
rebuy, new buy, and modified rebuy.
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32. ©McGraw-Hill Education.
E-marketplaces
E-marketplaces are online trading
communities that bring together buyers and
supplier organizations to make possible the
real time exchange of information, money,
products, and services. Also called B2B
exchanges or e-hubs.
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33. ©McGraw-Hill Education.
Traditional Auction
A traditional auction, in an e-marketplace,
is an online auction in which a seller puts an
item up for sale and would-be buyers are
invited to bid in competition with each other.
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34. ©McGraw-Hill Education.
Reverse Auction
A reverse auction, in an e-marketplace, is
an online auction in which a buyer
communicates a need for a product or
service and would-be suppliers are invited to
bid in competition with each other.
5-34