Lec 13-Understanding Organizations as Customers- 1

Summary

This course segment delves into organizational buying behavior, contrasting it with consumer buying. It covers distinguishing between industrial, reseller, and government markets, highlighting the unique characteristics of organizational buying such as derived demand, large order sizes, and fewer potential buyers. The script also outlines the stages of the organizational buying process, emphasizing the importance of understanding these differences for effective marketing strategies.

Takeaways

• 🏢 Understanding Organizations as Customers: The course focuses on how organizations behave as consumers in the market.
• 📈 Organizational Buying Behavior: It is distinct from consumer buying, with unique decision-making processes.
• 🔍 Distinguishing Organizational Markets: The script covers industrial, reseller, and government markets, each with its own characteristics.
• 🛍️ Organizational Buying Process: It involves stages such as problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior.
• 💼 Business Marketing: It involves marketing production services to companies, governments, or non-profit organizations for use in creating goods and services.
• 🔑 Key Characteristics of Organizational Buying: Includes derived demand, large order sizes, fewer potential buyers, and technical nature of products or services.
• 🔑 Buying Objectives: Organizations buy to achieve their objectives, which may include increasing profits, improving decision-making, or meeting the needs of the groups they serve.
• 📊 Buying Criteria: Organizations consider price, quality, delivery schedules, technical capability, warranties, past performance, and supplier facilities when making purchases.
• 🤝 Supplier Development: Organizations may work with suppliers to improve efficiency, quality, and reduce costs, creating a mutually beneficial relationship.
• 🤝 Supply Partnerships: Organizations can form partnerships with suppliers to lower costs or increase the value of production services delivered to consumers.
• 🔑 The Buying Center: Involves multiple individuals and roles in the decision-making process for organizational purchases.

Q & A

What is the main focus of the second topic in the course on 'Introduction to Marketing Essentials'?

The main focus of the second topic is understanding organizations as consumers and customers, and how they behave in the market.

What are the three types of organizational markets discussed in the script?

The three types of organizational markets are Industrial markets, Reseller markets, and Government markets.

How does business marketing differ from consumer marketing?

Business marketing involves marketing of production services to companies, governments, or non-profit organizations for use in the creation of goods and services they can produce and market to others, whereas consumer marketing targets individual consumers.

What is the concept of 'derived demand' in the context of organizational buying?

Derived demand refers to the demand for industrial products and services that is driven by or derived from the demand for consumer products and services.

What are the key characteristics that differentiate organizational buying from consumer buying?

Key characteristics that differentiate organizational buying include the presence of technically qualified buyers, established purchasing policies and procedures, multiple buying influences, reciprocal arrangements, and widespread online buying.

Why is it important to understand the organizational buying process separately from the individual consumer buying process?

It is important because organizations and individuals have different decision-making processes, objectives, and constraints, which require different marketing strategies and approaches.

What is the significance of 'sustainable procurement' in buyer-supplier relationships?

Sustainable procurement involves practices where companies ensure that their suppliers meet certain environmental, social, and economic standards, promoting long-term value creation and responsible business practices.

Can you provide an example of a supply partnership mentioned in the script?

An example of a supply partnership mentioned is between Intel, a manufacturer of microprocessors, and its suppliers, where Intel supports its suppliers in quality management and investment in equipment, and suppliers provide Intel with high-quality products at a lower cost.

What is the term used to describe the group of individuals involved in the organizational buying decision process?

The term used is 'buying center,' which includes all individuals who play a role in the decision-making process for purchasing within an organization.

How does the organizational buying process typically differ from the consumer buying process in terms of the number of participants?

The organizational buying process typically involves more individuals compared to the consumer buying process, as it often includes multiple stakeholders with different roles and responsibilities.

What are some of the key buying criteria that organizational buyers consider when making a purchase?

Key buying criteria for organizational buyers include price, quality specifications, delivery schedules, technical capability, warranties, past performance, production facilities, and capacities.