BUSINESS ORGANIZATIONAL CUSTOMERS A BIG OPPORTUNITY business and organizational customers any buyers who buy for resale or to produce other goods and services producers of goods and services manufacturers farmers real estate developers hotels banks doctors and lawyers intermediaries wholesalers and retailers government units federal agencies in the US and other countries as well as state and local governments nonprofit organizations national organizations like the American Red Cross and Girl Scouts as well as local organizations like museums and churches not all organizational customers are business firms marketing managers often refer to organizational customers collectively as the business to business market Business and Organizational Customers and Their Buying Behavior Business Organizational Markets and Customers Are Different fewer larger buyers economic needs behavioral needs ethical issues purchasing managers multiple buying influence buying procedures A Model of Business and Organizational Buying defining the problem buying process managing the buyer seller relationship Characteristics of Types of Organizational Customers manufacturers producers of services retailers and wholesalers government units for many firms marketing strategy planning is about meeting the needs of organizational customers not final customers a firm can target both final consumers and organizations but different marketing mixes are needed STEP TWO THE BUYING PROCESS after the buying organization defines the problem describes the need and specifies the product the next step involves the buying process buyers gather information solicit proposals from suppliers and choose a supplier Organizational Buying Process TYPE OF PROCESS CHARACTERISTICS New Task Buying Modified Rebuy Straight Rebuy Time Required Multiple Influence Review of Suppliers Information Needed Much Much Much Much Medium Some Some Some Little Little None Little new task buying occurs when a customer organization has a new need and wants a great deal of information can involve setting product specifications evaluating sources of supply and establishing an order routine that can be followed in the future if results are satisfactory multiple buying influence is most often found straight rebuy a routine purchase that may have been made many times before don t bother looking for new information or new sources of supply most of a company s small or recurring purchases take up only a small part of can be an important purchase but only after the firm has decided that it will be the organized buyer s time routine modified rebuy the in between process where some review of the buying situation is done though not as much as in new task buying an alert marketer can turn these situations into opportunities by providing more information or a better marketing mix e commerce computer systems automatically handle a larger portion of straight rebuys if conditions change buyers modify the computer instructions new task buying situations motivate them to seek specific information starts when a user who becomes aware of a need and begins researching solutions even though a wide variety of information sources are available business buyers will use the sources they trust amount of information a customer collects depends on the importance of the purchase and the level of uncertainty about what choice might be best provide an opportunity for a new supplier search engines are the first step for gathering information want sites with useful content buyers share experience in online communities competitive bid the terms of a sale offered by the supplier in response to the purchase specifications posted by a buyer rather than search for suppliers buyers might post their requirements and invite qualified suppliers to submit a bid vendor analysis a formal rating of suppliers on all relevant areas of performance purpose is not only to get a low price from the supplier on a given part or service but to lower the total costs associated with purchases HOW CLOSE RELATIONSHIPS MAY OR MAY NOT BE BENEFICIAL benefits mutual trust and long term outlook lowered total cost brings people of different business backgrounds together cons can reduce flexibility may not be worth the investment take time and attention to manage FIVE KEY DIMENSIONS OF A BUYER SELLER RELATIONSHIP a buyer and seller work together to achieve mutual and individual objectives b treat problems that arise as a joint responsibility 1 cooperation 2 information sharing a exchange of proprietary cost data or demand forecasts or working jointly on new product designs b can lead to better decisions and better planning 3 operational linkages a direct ties between the internal operations of the buyer and seller firms b c involve ongoing coordination activities between firms reduces total inventory costs maintains adequate inventory levels and keeps production lines moving just in time delivery reliably getting products there just before the customer needs them d 4 legal bonds a highly complex relationships may need to be spelled out in legal contracts b may only apply for a short period of time but some have long term contracts c negotiated contract buying agreeing to contracts that allow for changes in the purchase 5 relationship specific adaptations a involve changes in a firm s product or procedures that are unique to the needs or capabilities of a relationship partner b industrial suppliers often custom design a new product just for one customer c outsource contract with an outside firm to produce goods or services rather than to produce them internally i can cut costs North American Industry Classification System NAICS codes groups of firms in similar lines of business how the US government collects and publishes data number of establishments sales volumes number of employees all broken NAICS CODE breakdowns start with broad industry categories such as construction within each two digit industry breakdown much more detailed data may be down by geographic areas manufacturing retail trade etc available for three digit industries then each three digit group of firms is further subdivided into more detailed four five and six digit classifications THE GOVERNMENT MARKET the government is the largest customer group in many countries about 30 of US GDP spent by various government units run schools police departments military organizations supermarkets public utilities research labs offices hospitals and even liquor