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McGraw
-
Hill/Irwin


Copyright © 2009 by The McGraw
-
Hill Companies, Inc. All Rights Reserved.

LEARNING OBJECTIVES (LO)


AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:

Distinguish among industrial, reseller,
and government organizational
markets
.

LO1

Describe the key characteristics of
organizational buying that make it
different from consumer buying
.

LO2

6
-
2

LO3

LEARNING OBJECTIVES (LO)


AFTER READING CHAPTER 6, YOU SHOULD BE ABLE TO:

Explain how buying centers and
buying situations influence
organizational purchasing
.

Recognize the importance and nature
of online buying in industrial, reseller,
and government organizational
markets
.

LO4

6
-
3

BUYING PAPER IS A GLOBAL

BUSINESS DECISION AT JCPENNEY

6
-
4


Business Marketing

THE NATURE AND SIZE OF
ORGANIZATIONAL MARKETS

LO1


Organizational Buyers


Industrial Markets

(Industrial Firms)


Reseller Markets

(Resellers)


Government Markets

(Government Units)


Global Organizational Markets



Retailers



Wholesalers

6
-
5

FIGURE 6
-
A

Type and number of
organization establishments in the U.S.

6
-
6

MEASURING DOMESTIC AND GLOBAL
INDUSTRIAL, RESELLER, AND

GOVERNMENT MARKETS

LO1


North American

Industry
Classification

System (NAICS)


North American
Product
Classification
System (NAPCS)

6
-
7

FIGURE 6
-
1

NAICS breakdown for the
information industries sector:

NAICS code 51 (abbreviated)

6
-
8

FIGURE 6
-
2

Key characteristics and
dimensions of organizational buying
behavior

6
-
9


Derived Demand


Size of Order or Purchase


Number of Potential Buyers


Organizational Buying Objectives

CHARACTERISTICS OF

ORGANIZATIONAL BUYING

LO2

6
-
10

FIGURE 6
-
B

Key organizational buying
criteria

6
-
11


Just
-
in
-
Time


Organizational Buying Criteria

CHARACTERISTICS OF

ORGANIZATIONAL BUYING

LO2


ISO 9000


Supplier Development

6
-
12

MARKETING MATTERS

Harley
-
Davidson’s Supplier Collaboration
Creates Customer Value…and a Great Ride

6
-
13


Buyer
-
Seller Relationships and
Supply Partnerships

CHARACTERISTICS OF

ORGANIZATIONAL BUYING

LO2


Reciprocity


Supply Partnership

6
-
14

CHARACTERISTICS OF

ORGANIZATIONAL BUYING

THE BUYING CENTER

A CROSS
-
FUNCTIONAL GROUP

LO3


Buying Center


Buying Committee


People in the Buying Center


Roles in the Buying Center


Users


Influencers


Buyers


Deciders


Gatekeepers

6
-
15

CHARACTERISTICS OF

ORGANIZATIONAL BUYING

THE BUYING CENTER

A CROSS
-
FUNCTIONAL GROUP

LO3


Buy Classes


Straight Rebuy


Modified Rebuy


New Rebuy

6
-
16

FIGURE 6
-
3

The buying situation affects
buying center behavior in different ways

6
-
17

FIGURE 6
-
4

Comparing the stages in a
consumer and organizational purchase
decision process

6
-
18


Organizational
Buying Behavior

for a Machine

Vision System

CHARTING THE

ORGANIZATIONAL BUYING PROCESS

STAGES IN BUYING A MACHINE VISION SYSTEM

LO3


Stage 1: Problem Recognition


Stage 2: Information Search


Make
-
Buy Decision


Value Analysis

6
-
19

CHARTING THE

ORGANIZATIONAL BUYING PROCESS

STAGES IN BUYING A MACHINE VISION SYSTEM

LO3


Stage 3: Alternative Evaluation


Stage 4: Purchase Decision


Bidder’s List


Stage 5: Postpurchase Behavior

6
-
20

FIGURE 6
-
5

Product and supplier selection
criteria for buying machine vision
equipment emphasize factors other than
price

6
-
21


Prominence of Online Buying

in Organizational Markets

ONLINE BUYING IN

ORGANIZATIONAL MARKETS

LO4


E
-
marketplaces


Reverse Auction


Online Auctions in
Organizational Markets


Traditional Auction

6
-
22

FIGURE 6
-
6

How buyer and seller
participants and price behavior differ by
type of online auction

6
-
23



LANDS’ END: WHERE BUYERS RULE

VIDEO CASE
6

6
-
24

VIDEO CASE

6

LANDS’ END

1.

(
a
)

Who is likely to comprise

the buying center in the decision
to select a new supplier for Lands’
End? (
b
) Which of the buying
center members are

likely to play the roles of users,
influencers, buyers, deciders,

and gatekeepers?

6
-
25

VIDEO CASE

6

LANDS’ END

2.

(
a
) Which stages of the
organizational buying decision
process does Lands’ End follow
when it selects a new supplier?
(
b
) What selection criteria does
the company utilize in the
process.

6
-
26

VIDEO CASE

6

LANDS’ END

3.

Describe purchases Lands’ End
buyers typically face in each of
the three buying situations:
straight rebuy, modified rebuy,
new buy.

6
-
27




HOW ORGANIZATIONS

CAN IMPROVE

THEIR PURCHASING

SUPPLEMENTAL

LECTURE NOTE
6
-
1

6
-
28



DAKTRONICS: REACHING

AN ORGANIZATION’S

BUYING CENTER

IN
-
CLASS ACTIVITY
6
-
1

6
-
29

Daktronics Brochure (Cover & Sports)

6
-
30

6
-
31

6
-
32

Business Marketing

Business marketing

involves the
marketing of goods and services
to companies, governments, or
not
-
for
-
profit organizations for use
in the creation of goods and
services that they can produce
and market to others.

6
-
33

Organizational Buyers

Organizational buyers

are those
manufacturers, wholesalers,
retailers, and government
agencies that buy goods and
services for their own use or for
resale.

6
-
34

North American Industry
Classification System (NAICS)

The
North American Industry
Classification System (NAICS)
provides
common industry definitions for Canada,
Mexico, and the United States, which
makes easier the measurement of
economic activity in the three member
countries of the North American Free Trade
Agreement (NAFTA).

6
-
35

Derived Demand

Derived demand

is the demand
for industrial products and
services is driven by, or derived
from, demand for consumer
products and services.

6
-
36

Organizational Buying Criteria

Organizational buying criteria
are the objective attributes of the
supplier’s products and services
and the capabilities of the supplier
itself.

6
-
37

ISO 9000

ISO 9000
consists of standards

for registration and certification of a
manufacturer’s quality management
and assurance system based on an
on
-
site audit of practices and
procedures developed by the
International Standards Organization
(ISO).

6
-
38

Supplier Development

Supplier development

is the
deliberate effort by organizational
buyers to build relationships that
shape suppliers’ products,
services, and capabilities to fit a
buyer’s needs and those of its
customers.

6
-
39

Reciprocity

Reciprocity
is an industrial

buying practice in which two
organizations agree to purchase
each other’s products and
services.

6
-
40

Supply Partnership

Supply partnership

is a relationship
that exists when a buyer and its
supplier adopt mutually beneficial
objectives, policies, and procedures
for the purpose of lowering the cost

or increasing the value of products
and services delivered to the ultimate
consumer.

6
-
41

Buying Center

A
buying center

consists of a
group of people in an organization
who participate in the buying
process and share common goals,
risks, and knowledge important

to a purchase decision.

6
-
42

Buy Classes

Buy classes

consists of three
types of organizational buying
situations: straight rebuy, new buy,
and modified rebuy.

6
-
43

Organizational Buying Behavior

Organizational buying behavior

is the decision
-
making process
that organizations use to establish
the need for products and services
and identify, evaluate, and choose
among alternative brands and
suppliers.

6
-
44

Make
-
Buy Decision

A
make
-
buy decision

involves an
evaluation of whether components
and assemblies will be purchased
from outside suppliers or built by
the company itself.

6
-
45

Value Analysis

Value analysis

involves a
systematic appraisal of the design,
quality, and performance of a
product to reduce purchasing
costs.

6
-
46

Bidder’s List

A
bidder’s list

is a list of firms
believed to be qualified to supply

a given item.

6
-
47

E
-
marketplaces

E
-
marketplaces

are online trading
communities that bring together
buyers and supplier organizations to
make possible the real time exchange
of information, money, products, and
services. Also called
B2B exchanges

or
e
-
hubs
.

6
-
48

Traditional Auction

A
traditional auction

is, within

an e
-
marketplace, an online
auction in which a seller puts an
item up for sale and would
-
be
buyers are invited to bid in
competition with each other.

6
-
49

Reverse Auction

A
reverse auction

is, within an

e
-
marketplace, an online auction
in which a buyer communicates a
need for a product or service and
would
-
be suppliers are invited to
bid in competition with each other.

6
-
50