Lec 14-Understanding Organizations as Customers-2

Summary

This module delves into the intricacies of organizational purchasing, highlighting the influence of buying centers and situations on business transactions. It introduces the concept of e-marketplaces and virtual auctioning, emphasizing their growing importance in facilitating online business-to-business transactions. The script discusses the roles within buying centers, types of buying situations, and the evolution of organizational buying behavior in the digital age, showcasing how technology streamlines processes and expands market reach.

Takeaways

• 📚 The script introduces the concept of marketing in an organizational context, focusing on how buying centers and buying situations influence business purchases.
• 🛒 It explains the role of e-marketplaces in facilitating transactions between buyers and sellers in a virtual environment.
• 🔍 The importance of understanding the structure and behavior of buying centers within organizations is highlighted for effective marketing strategies.
• 👥 Buying centers consist of various roles including users, influencers, buyers, deciders, and gatekeepers, each with unique functions in the purchasing process.
• 🛍️ The script outlines three types of buying situations: new purchase, straight rebuy, and modified rebuy, each with distinct characteristics and implications for the buying center.
• ⏱️ Decision time in buying centers can vary from long in new purchase situations to short in straight rebuys, with modified rebuys falling in between.
• 💡 Problem definition within buying centers ranges from uncertain in new purchases to well-defined in straight rebuys, with modified rebuys involving minor modifications.
• 🎯 Buying objectives differ across the three buying situations, with new purchases seeking innovative solutions and both straight and modified rebuys focusing on cost-efficiency.
• 🔑 The influence of different members within a buying center can shift depending on the buying situation, from technical personnel in new purchases to purchasing agents in straight rebuys.
• 🌐 Online buying in organizational markets is significant, accounting for 80% of the global dollar value of all online transactions, reflecting the scale of business-to-business e-commerce.
• 🔍 E-marketplaces are described as online trading communities that bring together buyers and suppliers, offering real-time exchange of information, money, products, and services.

Q & A

What are the three main topics discussed in the 'Introduction to Marketing' module?

The three main topics discussed are the influence of buying centers and buying situations on organizational purchasing, the importance and nature of online buying in organizational markets, and understanding e-marketplaces and how virtual auctioning works.

What is a buying center and what role does it play in the purchasing process?

A buying center is a cross-functional group of individuals within an organization who participate in the purchasing process. They share common goals, risks, and knowledge important to a particular purchase decision, and may include users, influencers, buyers, deciders, and gatekeepers.

How does the composition of a buying center vary depending on the item being bought?

The composition of a buying center depends on the specific item being purchased. Different items may involve different sets of people, and while a buyer or purchasing manager is almost always a member, individuals from other functional areas are included based on the nature of the purchase.

What are the five specific roles identified in a buying center?

The five specific roles in a buying center are users, influencers, buyers, deciders, and gatekeepers. Users are the ones who use the product or service, influencers help define the specifications, buyers have the authority to select suppliers, deciders have the power to approve suppliers, and gatekeepers control the flow of information.

What are the three types of buying situations identified in organizational buying?

The three types of buying situations are new purchase (Nu by), straight rebuy (Straight R by), and modified rebuy (Modified R by). Each situation has different characteristics in terms of the number of people involved, decision time, problem definition, buying objectives, supplier considerations, and buying influence.

How does the number of people involved in a buying center differ across the three types of buying situations?

In a new purchase situation, there can be many people involved due to the uncertainty and potential risk. In a straight rebuy, typically one person is responsible for the repurchase. In a modified rebuy, there may be two or three people involved who may play different roles in the buying center.

What is the significance of online buying in organizational markets?

Online buying in organizational markets is significant due to its ability to provide timely supplier information, reduce buyer order processing costs, and help marketers reduce marketing costs, especially sales and advertising expenses. It also broadens the potential customer base for various products and services.

What are e-marketplaces and what role do they play in organizational buying?

E-marketplaces are online trading communities that bring together buyers and suppliers, similar to physical marketplaces. They provide a platform for the real-time exchange of information, money, products, and services, and can be independent trading communities or private exchanges that streamline a company's purchase transactions.

How do traditional auctions differ from reverse auctions in the context of organizational buying?

In a traditional auction, a seller puts an item up for sale, and multiple buyers bid against each other, driving prices up. In a reverse auction, a buyer communicates a need, and multiple suppliers bid against each other, driving prices down. Reverse auctions benefit organizations by reducing the cost of purchases.

What are the benefits of online auctions for organizational buyers and business marketers?

Online auctions benefit organizational buyers by providing a platform to reduce the cost of purchases through reverse auctions. For business marketers, they offer a way to compete for business by bidding on requirements, potentially expanding their customer base and increasing sales.