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Organizational Buying & Buying behavior

Organizational Buying & Buying behavior. Characteristics of B2B buying Forces Influencing Organizational Buying Behavior B2B: Purchasing Objectives B2B Buying: Phased Decision Process Buying Decision Techniques Buyer –Seller Relationship in Marketing Case studies.

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Organizational Buying & Buying behavior

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  1. Organizational Buying & Buying behavior Characteristics of B2B buying ForcesInfluencing OrganizationalBuying Behavior B2B: Purchasing Objectives B2B Buying: Phased Decision Process Buying Decision Techniques Buyer –Seller Relationship in Marketing Case studies Fifth Lecture CONTENTS & COVERAGE

  2. Characteristicsof the Org- Org buying (B2B)( Ex: Croma buying home appliances from LG) Relatively few customers Expertise in buying Geographical Concentration Importance of repeat transactions Prefer to buy direct from manufacturer Global Competition

  3. ForcesInfluencing OrganizationalBuying Behavior • Economic Outlook: Domestic & Global • Pace of Technological Change EnvironmentalForces • Goals, Objectives, and Strategies OrganizationalForces OrganizationalBuyingBehavior • Roles, relative influence, • and patterns of interaction • of buying decision • participants GroupForces IndividualForces • Job function, pastexperience and buyingmotives of individualdecision participants

  4. B2B: Purchasing Objectives SUPPLIER (VENDOR) • Product quality • Lowest price • Timely delivery • Prompt service • Supplier –Buyer • Relationship BUYER (CUSTOMER) OBJECTIVES : BUYING RIGHT ITEM (QUALITY) IN RIGHT QUANTITY AT RIGHT TIME AT RIGHT PRICE

  5. B2B Buying: Phased Decision Process Met decides to buy Split air conditioners for renovation • Establish the need of the buyer • Determine what is required and how much • Understand the detailed specifications of the product • Involve supplier while finalizing specifications • Identify the potential suppliers • Selected and shortlist suppliers • Obtain Proposals/ tenders/bids • Evaluate the proposals and select the suppliers • Place orders/work out terms & condiions : servicing/ penalty clause/ delivery schedule • Performance feed back against guarantees and follow up

  6. The Internet has dramatically Changes Org. Buying Search for the suppliers, sending communication, obtaining quotations, etc

  7. Org- Org buying: UsefulTerminology • RFT: Request for Tender • RFP: Request for Proposal • RFQ: Request for Quotation • RFI:Request for Information • EOI: Expression of Interest

  8. Buying Decision Technique: VAT Method 1 Value Analysis Technique (VAT): Main features: It pertains to value improvement in product or process due to the use of superior technology/ revision of product specification / quality parameters resulting into: • Superior product features (cars, laptops, LCD TV, etc) • Low input cost and cost of production (Energy saving lamps, new generation ACs) • Lower wastage ( Use of Internet, etc) • Higher price realization • Wider customer acceptance, etc

  9. Buying Decision Technique: LCCT Method 2 :Life Cycle Costing Technique (LCCT): Main Features: Itis generally applied to machinery/ plant equipment which covers various costs associated during the life period i.e equipment costs, start up expenses, maintenance costs, depreciation and salvage value. The Capital Budgeting methods for evaluation the project will include : IRR, payback period, ROI, DSCR, etc Examples: • Setting up of a cement plant • Construction of a high way project • Starting a SEZ

  10. Buying Decision Technique: Method 3:The Weighted Point Method ( Central Air Conditioning in MET: Supplier Blue Star)

  11. Buyer –Seller Relationship in Marketing(Content & Style of information presented) Contents: Meeting the needs of product features, prices, services ,etc Style: Interaction to develop confidence, trust & lasting relationship

  12. Customer Relationship Management ( CRM) : Aims & Objectives Aim: Aim is to build mutually satisfying long term relationship with key parties like customers, distributors and suppliers to earn their long term preference and business Objectives: • Retain each valued customer • Develop and build lasting relationship • Provide excellent real time service • Ensure company’s profitability • Introduce CRM soft ware technology to generate latest market related information which would facilitate evolving timely changes in the marketing strategy of the company.

  13. Case study: Selection of a vendorfor CAPITAL GOODS: TEXTILLE MACHINERY

  14. Selection of a vendor for supply ofAUTO COMPONENTS(SEAT BELTS) to Maruti

  15. THANK YOU

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