CHAPTER 19
ORGANIZATIONAL BUYER BEHAVIOR
LEARNING OBJECTIVES
LO1: Describe the organizational purchase process
LO2: Summarize the external factors that influence organizational culture
SUMMARY
LO1: Describe the organizational purchase process
Like households, organizations make many buying decisions. In some instances, these buying
decisions are routine replacement decisions; at other times, they involve new, complex purchase
decisions. Three purchase situations are common to organizational buying: straight rebuy, modified
rebuy, and new task. Each of these purchase situations will elicit different organizational behaviors.
LO2: Summarize the external factors that influence organizational culture
Organizations have a style or manner of operating that we characterize as organizational culture.
Firmo-graphics (organization characteristics such as size, activities, objectives, location, and industry
category, and characteristics of the composition of the organization such as the gender, age, education,
and income distribution of employees) have a major influence on organizational culture. The process
of grouping buyer organizations into market segments on the basis of similar firmographics is called
macrosegmentation.
LO3: Summarize the internal factors that influence organizational culture
Internal factors affecting organizational culture include organizational values, perception, learning,
memory, motives, and emotions. Organizations hold values that influence the organization’s style.
LO4: Explain the influence of organizational buyer segments on marketing strategy
Each of the factors discussed in this chapter is important for marketing strategy because each
contributes to the type of buyer that an organization faces. One important way to segment
organizational buyers is in terms of transactional versus relational exchanges Transactional exchanges
involve single transactions, are short lived, involve few investments by the buyer and seller in the
LECTURE TIPS AND AIDS
1) A good way to begin this chapter is to have students discuss the organizational similarities and
2) For a high-involvement purchase such as a new car, have students describe how a household
might make that decision. Then discuss how a commercial firm would make the same car purchase
3) Invite the purchasing agent for the university or a nearby firm to class. Have him or her describe
the process he or she goes through for various types of organizational purchases.
REVIEW QUESTIONS
1) How can an organization have a culture? What factors contribute to different organizational
cultures?
Organizations have a type of self-concept in the beliefs and attitudes the organization members
have about the organization and how it operates. Likewise, organizations have a type of lifestyle in
that they have distinct ways of operating. We characterize these two aspects of an organization as
2) How would different organizational activities and objectives affect organizational culture?
The activities and objectives of organizations influence their style and behavior. However, we
cannot assume two organizations have the same organizational culture just because they share
common objectives or activities. Organizational objectives can be categorized as commercial,
governmental, nonprofit, and cooperative. The general nature of organizational activity is
described as routine, complex, or technical. Commercial firms can be usefully divided into public
(stock is widely traded) and private (one or a few individuals own a controlling share of the firm)
3) What are organizational values? How do they differ from personal values?
Organizations have values with respect to risk taking, competition, hard work, problem solving,
individualism, decision making, change, and performance among others. An organization’s values
4) What are firmographics, and how do they influence organizational culture?
This refers to the size, location, industry category, type of ownership, and employee demographics
of an organization. Each of these impacts an organization’s culture in unique ways. For example,
West Coast firms tend to have more informal cultures than do East Coast firms. Different
combinations of these firmographics help create unique organizational cultures.
5) Define macrosegmentation, and describe the variables used to create a macrosegmentation of an
segments, based on differences in needs due to firmographics are called macrosegments.
6) What types of reference groups exist in organizational markets?
Lead users, trade associations, financial analysts, and dealer organizations all influence an
organization’s decision to buy or not buy a given product, or to buy or not buy from a given
supplier.
7) What are lead users, and how do they influence word–of-mouth communication and the sales of a
new product?
Lead users are innovative organizations that lead change and try new products and process early.
Other organizations often imitate their actions. As a result, lead users are often asked for their
opinions, and can greatly accelerate or slow the sales of a new product they may be evaluating.
8) What is a decision-making unit? How does it vary by purchase situation?
A group of individuals assigned the task of participating in an organizational decision. The size
and structure of the decision-making unit typically varies by firmographics (larger firms have
9) How can a seller organization influence perceptions of a buyer organization?
The stages of exposure, attention, and interpretation are the same whether for organizations,
households, or individuals. Therefore, the basic principles of the perception process apply. In
general, while organizations can be influenced through advertising, personal contact plays a larger
role in marketing to organizations.
10) What are organizational motives?
11) What is a two-stage decision process?
A two-stage decision process involves two discrete stages of decision making. The first stage uses
12) What is the distinction between relational and transactional exchanges?
Transactional exchanges involve single transactions, are short lived, involve few investments by
13) What are the three purchase situations commonly encountered by organizations? How do
organizations typically respond to each situation?
Straight Rebuy: This situation occurs when the purchase is of minor importance and is not
periodically. Price and/or reliability tend to be the dominant evaluative criteria. No consideration
14) In what ways does the Internet play a role in the organizational decision process?
Just as the Internet has become a major force in consumer decisions, so too is it an important tool
Discussion Questions
15) Describe three organizations with distinctly different organizational cultures. Explain why they
have different organizational cultures and the factors that have helped shape the style of each.
a. The EPA is a government organization with a technical activity. The combination of these two
characteristics contributes to a unique set of objectives, activities, and organizational style.
16) Respond to the questions in Consumer Insight 19–1.
Answers will vary, but the main point is for students to demonstrate that they have applied their
knowledge of firmographics and organizational culture to these practical contexts. One example of
a response could be that Google has a large size and has had to adapt its culture as it has grown.
Answers will vary in this exercise. However, students will likely find a great difference in the
stated organizational values of companies even within the same industry, similar to the example
from the text about Apple and HP. Those values should inform each of the two chosen companies’
17) Describe how Hewlett-Packard might vary in its organizational culture from the following. Justify
your response.
a) Dell Computer
b) Lenovo
18) Discuss how the following pairs differ from each other in terms of organizational activities and
objectives. Discuss how these differences influence organizational cultures.
a) Wal-mart, Target
c) Amazon.com, Banana Republic
19) What role does brand/brand image play in the organizational decision process?
Brand image and equity play a role in the evaluation process for organization. Obviously, brand can
be a surrogate indicator of quality. And research suggests that while brand may not always be the
most important consideration, it can result in organizational buyers paying a higher price.
20) Discuss how Acer might use a macrosegmentation strategy to sell computers to businesses.
Acer could segment businesses on the basis of size and type of business activity (industry). These
differences, if meaningfully related to differences in needs, could greatly aid their marketing and sales
efforts.
21) Discuss how a small bio-technology firm could influence the reference group infrastructure and the
lead users to accelerate adoption of its products in the market.
By placing information and making contacts with all members of the infrastructure, a firm can greatly
22) “Industrial purchases, unlike consumer purchases, do not have an emotional component.” Comment.
Most will quickly agree that organizations are simply collections of people, and because people have
emotions, these emotions will be reflected by the organization. For example, a purchasing manager
who interacts with a salesperson over time is likely to have an emotional attachment (liking) to that
23) For each of the three purchase situations described in the chapter (Table 19-2), describe a typical
purchase for the following:
a) Wendy’s
b) Mercedes-Benz
c) Target
24) Respond to the questions in Consumer Insight 19–2.
Customers are more valuable as they are more loyal and as they are lower cost to serve. Such
customers are termed “most valuable customers” for a reason – they generate the most profits and
they are likely to engage in positive WOM. This doesn’t mean they aren’t demanding, only that they
are worth the effort to satisfy.
Underperformers can be moved to partner status by making them more loyal and willing to pay for