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Consumer or Organizational Products
Why was the product purchased ?
For personal or
For use in the operation of a
business or organization.
To manufacture other products
For resale to others
Some Examples of Organizational
Paper cups by McDonald's
Computer chips by Toshiba
Concrete by Local Authorities
Oil by Electricity Generators
Fertiliser by Farmers
Accountancy services by Ltd. Companies
TV’s by Comet or Dixons
Characteristics of Organizational
Derived demand Negotiations
Nature and size
and technical choice
and negotiate purchase
terms often reducing
the actual purchase
to a clerical task.
actually use the
product. They may
be the one who initiates
the purchase process
and may develop the
have the authority
have the authority
and advice. Outsiders
such as consultants
control the flow
of information to the
buying centre. Purchasing
department Staff frequently
fill the role but it could be
have the authority
to select the
supplier or model.
begin the purchase
begin the purchase
Need to identify key actors in buying decisions.
Composition and roles played in the decision
making unit have implications for
communications – target audience and
Buy phases: the organizational
Recognition of a problem (need)
Determination of specification and quantity of needed item
Search for and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and selection of supplier(s)
Selection of an order routine
Performance feedback and evaluation
Hitachi reinforces the
benefits of its eco-
by featuring its benefits
for passengers in this
Organizational Decision-making Process
Marketing advantage can be gained by:
1. Influencing need recognition.
2. Involvement in the determination of the
characteristics of the needed product.
e.g. price, return on investment.
e.g. reliability, delivery.
e.g. status, office politics.
e.g. personal risk reduction, liking/disliking.
In all cases PERCEPTION is critical.
1. Marketing and sales appeals may need to
be modified to different members of the
2. Choice criteria may change over time as
circumstances change. Suppliers may need
to change their offerings and
communications as a result.
Influences on organizational purchasing
No. of people involved in buying centre
New Task Buying
The organization makes an initial purchase of an item
to be used to perform a new job or to solve a new
problem. Often this involves development of
specifications for products and suppliers as well as
procedures for future purchases. High information
requirement from many suppliers.
Example: new IT facility.
When a new task purchase is changed on repeat
purchases. The buyer may require faster delivery
lower prices or modified specifications. Regular
suppliers become more competitive and new
suppliers may be included in the selection. Moderate
amounts of information are required.
Example: upgrading office software.
The buyer purchases the same products again
routinely under approximately the same terms of
sale. Suppliers are familiar, have provided satisfactory
service in the past and may even have set up
automatic re-ordering systems. Little information is
Example: re-ordering photocopying paper.
1. New Task.
- big gains for those suppliers involved in the decision-
making process at the start.
- many people are involved and the process is long –
suppliers need to invest heavily in time to influence all of
2. Straight Rebuy.
- current suppliers need to build a strong defensible
position and maintain it.
- potential suppliers need to reduce risk of change for
Supplier sells by taking initiative
Buyer takes initiative to persuade supplier to provide
Relationship Marketing - CRM
The process of creating, maintaining and
enhancing strong relationships with
customers and other stakeholders.
• Developing, and
Successful exchanges with customers.
• Centers on timely exchange of basic
products for highly competitive market
• Features close information, social,
and operational linkages, as well
as mutual commitments.
Types of Relationships
• Buyer-seller relationships positioned on a continuum with
transactional exchange and collaborative exchange serving as end
The Relationship Spectrum
Buyers and sellers craft different types of relationships in response to:
a) market conditions and
b) characteristics of the purchase situation.
Spectrum of Buyer-Seller Relationships
Managing Relationship Portfolio
• Mix of relationships based on customers.
• Collaborative Customers – build relationships with
trust and commitment.
• Transactional Customers – focus efforts on purchasing
staff and offer attractive benefits.
• Product is Crucial
• Good Supplier Match
Costly to Service,
but Pay Top
Price Sensitive but
• Leverage Their Buying
• Low Price and Lots of
SOURCE: From “Manage Customers for Profits (Not Just Sales)” by B.P. Shapiro et al., September-October 1987, p. 104, Harvard Business Review.
Customer Relationship Management
• A Continuing Dialogue with Customers,
• Across all their Contact and Access
• Personalized Treatment of the Most
• To Ensure Customer Retention and
Effectiveness of Marketing Initiatives.
Learning to Retain Customers
• Provide superior value to ensure high
• Nurture trust and mutual commitment.
BASF illustrate its
relations with its
order to improve
Development of buyer–seller
relationships in Industrial Markets
Evaluation of a new potential supplier
Negotiation of a trial
Contract signed or delivery built up
Long term stage
Several major purchases or large-scale deliveries have been made
Established patterns of trading in long-term stable markets