This document discusses organizational buying and the business buying process. It defines organizational buying as the process by which formal organizations identify, evaluate, and choose products and services. There are differences between business and consumer markets - business markets involve transactions between businesses while consumer markets involve direct sales to individuals. The business buying process involves multiple participants and typically includes problem recognition, defining needs, searching for suppliers, soliciting proposals, selecting suppliers, ordering, and reviewing performance. Key participants in the buying center include initiators, users, influencers, deciders, approvers, buyers, and gatekeepers.

1. Marketing management:
Analyzing
Business
Market
by: Chester John G. Calinga

2. CONTENT
I II
What is
Organizational
Buying?
The differences
between Business
and Consumer
markets
III
Buying Situations
for Business
Buyers
IV
Participants in the
Business Buying
Process

3. WHAT IS ORGANIZATIONAL
BUYING?
Organizational buying - refers to the decision-making
process by which formal organizations establish the
need for purchased products and services, and identify,
evaluate, and choose among alternative brands and
suppliers.
The Business market consists of all the organizations
that acquire goods and services used in the production
of other products or services that are sold, rented, or
supplied to others.
More money and items change hands in sales to
business buyers than consumer buyers.

4. • A business market is a sales market in which businesses sell to
other businesses. This includes both retail and wholesale
businesses. With a business-to-business (B2B) transaction, the
buyer company purchases products from a seller company, then
uses those products to aid in the production of other goods or
resells the purchased products directly to the consumer. Here are
the main types of business markets:
• Industrial markets that focus on the sale of industrial products or
services
• Government markets in which government entities comprise
the majority of buyers
• Financial service markets for things like banking and commercial
credit
Business Market Consumer Market
The differences between Business
and Consumer markets
A consumer market is a type of sales market in which a
business sells directly to consumers, also known as a
business-to-consumer (B2C) market. In a consumer
market, consumers usually pay the same price for each
product, although they can use coupons or merchant
discounts to pay a reduced price.
Here are the main types of consumer markets:
• Food and beverage products
• Consumer products
• Transportation products
• Retail products

5. Buying Situations for Business Buyers
3 TYPES OF BUYING
SITUATION
In a straight rebuy, the purchasingdepartment reorders
supplies such as office supplieson a routine basis and
chooses from suppliers on anapproved list.
Out-suppliers attempt to offer something new or
takeadvantage of dissatisfactionwith current supplier.
Straight Rebuy
A new-task purchaser buys a product or service for the first
time.
The greater the cost or risk, the larger the number of
participants, and the greater their information gathering -the
longer the time to make a decision.
The business buyer makes the fewest decisions in the straight
rebuy situation and the most in the new-task situation.
New Task
The buyer in a modified rebuy wants to change product
specifications, prices, delivery requirements or other terms.
The in-suppliers become nervous and wants to protect the
account.
The out-suppliers sees an opportunity to propose a better
offer to gain some business.
Modified Rebuy

6. Participants in the
Business Buying
Process
Initiat
ors
Users
Users or others in the
organization who
request that something
be purchased.
Those who will use the
product or service. In
many cases, the users
initiate the buying
proposal and help
define the
requirements.
Influence
rs
People who influence
the buying decision,
often by helping
define specifications
and providing
information for
evaluating
alternatives.
Decider
s
People who decide
on product
requirements or on
suppliers.
The decision unit of a buying organization is called the buying
center.
The buying center includes all members of the organization who play
any of the following seven roles in the purchase decision process.

7. Participants in the
Business Buying
Process
Approvers Buyers
People who
authorize the
proposed actions of
deciders or buyers.
People who have
formal authority to
select the supplier
and arrange the
purchase terms.
Gatekeepers
People who have
the power to
prevent sellers or
information from
reaching members
of the buying
center.
cont.

8. The
Purchasing/Procureme
nt Process
1 . Problem recognition
2 . General need description
and Product specification
3 . Supplier search
4. Proposal solicitation
5 . Supplier selection
6. Order-routine specification
7. Performance review

9. The buying process begins when someone in the
company recognizes a problem or a need that can be
met by acquiring a good or service.
The recognition can be triggered by internal or
external stimuli.
The internal stimuli might be a decision to develop a
new product that requires new equipment and
materials.
The external stimuli may be triggered when a buyer
gets new ideas at trade shows, sees an add, or receives
a call from a sales representative who offers a better
product or a lower price.
Problem
Recognition
General Need
Description and
Product Specification
Next, the buyer determines the needed item’s
general characteristics and required quantity.
For standard items, this task is simple.
For complex items, the buyer will work with others-
engineers, users- to define characteristics such as
reliability, durability, or price.
Business marketers can help by describing how
their
products meet or even exceed the buyer’s needs.

10. The buyer next tries to identify the most
appropriate suppliers through:
• Trade directories
• Contacts with other companies.
• Trade advertisement
• Trade shows
• The Internet
Supplier Search Proposal Solicitation
The buyer next invites qualified suppliers to
submit proposals.
If the item is complex or expensive, the
proposal will be written and detailed
After evaluating the proposals, the buyer
will invite a few suppliers to make formal
presentations.

11. Before selecting a supplier, the buying
center will specify and rank desired supplier
attributes, often using supplier-evaluation
models.
To develop compelling value propositions
, business marketers need to better
understand how a business buyers arrive at
their valuations.
Companies are increasingly reducing the
number of their suppliers. There is even a
trend toward single sourcing
Supplier
Selection
Order-Routine
Specification
After selecting the suppliers, the buyer
negotiates the finalorder, listing the technical
specifications, the quantityneeded, the
expected time of delivery, return policies,
warranties and so on.
Many industrial buyers lease heavy
equipment such as machinery and trucks.
The lessee gains a number of advantages:
• The latest products
• Better service
• The conservation of capital
• Some tax advantages

12. Performance Review
The buyer periodically reviews the performance of thechosen
supplier(s) using on of three methods:
1 . The buyer may contact end users and ask for their
evaluations.
2. The buyer may rate the supplier on several criteria using a
weighted-score method
3. The buyer may aggregate the cost of poor performance to
come up with adjusted costs of purchase, including price.