Chapter 05 – Understanding Organizations as Customers
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APPLYING MARKETING KNOWLEDGE
1. Describe the major differences among industrial firms, resellers, and government
units in the United States.
Answers:
a. Industrial firms, which account for the majority of all organizational buyers, in some
2. List and discuss the key characteristics of organizational buying that make it different
from consumer buying.
Answer: Although the buying processes organizations go through when making a purchase
also apply to consumer buying, there are some key differences:
3. (a) What is a buying center? (b) Describe the roles assumed by people in a buying
center and (c) what useful questions should be raised to guide any analysis of the
structure and behavior of a buying center.
Answers:
a. Buying center. A buying center consists of a group of individuals within an
Chapter 05 – Understanding Organizations as Customers
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• Users are people in the organization who actually use the product or service.
c. Questions. Four questions guide an analysis of a buying center:
• Which individuals are in the buying center for the product or service?
4. A firm that is marketing multimillion-dollar wastewater treatment systems to cities
has been unable to sell a new type of system. This setback has occurred even though
the firm’s systems are cheaper than competitive systems and meet U.S.
Environmental Protection Agency (EPA) specifications. To date, the firm’s marketing
efforts have been directed to city purchasing departments and the various state EPAs
to get on approved bidder’s lists. Talks with city-employed personnel have indicated
that the new system is very different from current systems and therefore city sanitary
and sewer department engineers, directors of these two departments, and city council
members are unfamiliar with the workings of the system. Consulting engineers, hired
by cities to work on the engineering and design features of these systems and paid on
a percentage of system cost, are also reluctant to favor the new system. (a) What roles
do the various individuals play in the purchase process for a wastewater treatment
system? (b) How could the firm improve the marketing effort behind the new system?
Answers:
a. Roles played. A number of different constituencies exist in the buying center for a
wastewater treatment system for cities, and each plays one or more roles:
Role Constituency
1. Users City sanitary and sewer department engineers
Chapter 05 – Understanding Organizations as Customers
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Chapter 05 – Understanding Organizations as Customers
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BUILDING YOUR MARKETING PLAN
Your marketing plan may need an estimate of the size of the market potential or
industry potential for a particular product-market in which you compete. Use these steps:
1. Define the product-market precisely, such as ice cream.
4. Follow the instructions to find the specific NAICS code and economic census data that
detail the dollar sales and provide the estimate of market or industry potential.
Chapter 05 – Understanding Organizations as Customers
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TEACHING NOTE FOR VIDEO CASE VC-5
Trek: Building Better Bikes through Organizational Buying
This case focuses on Trek’s organizational buying process, including its buying center,
vendor selection and evaluation, buying situations, and buyer-seller relationships. Environmental
[Video 5-3: Trek Video Case (kerin.tv/cr8e/v5-3)]
Synopsis
Richard Burke and Bevill Hogg founded trek Bicycle in 1976. With just five
employees, they began manufacturing bicycles in a Wisconsin barn. The first year they
manufactured 900 custom-made bicycles that sold quickly. Today, Trek is one of the leading
manufacturers of bicycles and cycling products with more than $800 million in sales and 2,000
employees. Trek’s products are now marketed through 1,700 dealers in North America and
wholly owned subsidiaries in seven countries, and through distributors in 80 other countries. Its
brands include Trek, Gary Fisher, and Bontrager. As a global company, Trek’s mission also
has evolved, and today the mission is to “Help the world use the bicycle as a simple solution to
complex problems.” Trek employees believe that the bicycle is the most efficient form of
Teaching Suggestions
Before the case is discussed in class, consider asking students to interview a purchasing
manager from a local business. Suggest that they conduct the interview by asking the purchasing
manager to describe the roles of the buying center at the company. This activity will provide a
good background for the class discussion:
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2. Ask your students how important Trek’s “Eco” perspective is to them. What does “green”
mean to them?
Answers to Questions
1. (a) What is the role of the buying center at Trek? (b) Who is likely to comprise the
buying center in the decision to select a new supplier at Trek?
Answers:
a. Buying center roles. The role of the buying center is to find suppliers who can provide
materials, components, and parts that satisfy Trek’s quality requirements, sizing
2. What selection criteria does Trek utilize when it selects a new supplier or evaluates an
existing supplier?
Answer:
Trek uses four criteria when it selects a new supplier and evaluation existing suppliers.
3. How has Trek’s interest in the environmental impact of its business influenced its
organizational buying process?
Answer:
Trek has a clear interest in minimizing the environmental impact of bicycle production and
Chapter 05 – Understanding Organizations as Customers
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4. Provide an example of each of the three buying situations—straight rebuy, modified
rebuy, and new buy—at Trek.
Answers:
a. Straight rebuy. This buying situation involves a buyer or purchasing agent reordering
a product or service from the list of acceptable suppliers, probably without checking
b. Modified rebuy. In this buying situation, consideration is given to changing product
specifications and inclusion of input from other buying group members. At Trek, a
Epilogue
Trek continues to select suppliers that help create eco-friendly bicycles. One aspect of
this is to manufacture new bikes that are made from steel because it is easier to obtain and
recycle. In addition, Trek is starting a program to provide funds to bike shops to recycle old tire
ICA 5-1: IN-CLASS ACTIVITY
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Daktronics: Reaching an Organization’s Buying Center1
Learning Objective. To have students identify what kinds of buying information should be in a
Daktronics brochure selling video displays that will satisfy initial evaluative criteria of an
organizational buyer making a “new buy.”
Nature of the Activity. To have students identify who might be in the buying center and what
information each person would likely seek.
Estimated Class Time and Teaching Suggestions. About 15 minutes, this ICA can be done
individually or in 4-person teams.
Materials Needed.
• Copies for each student of the “Buying a College Football Scoreboard” handout.
Steps to Teach this ICA.
2. OPTIONAL: Form students into 4-person teams.
4. Give students this background mini-lecture on Daktronics:
“Daktronics is the world leader in providing large screen LED video displays,
electronic scoreboards, computer-programmable displays, and digital billboards. In
5. Ask the class the following question and write the answers on the board:
“Who might be members of the buying center for the college football
scoreboard and why might they be in it?”
Chapter 05 – Understanding Organizations as Customers
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Some answers and reasons include:
a. Athletic department representatives (head football coach, athletic director).
A scoreboard is a big part of student experiences at a home football game.
6. Pass out copies of the “Buying a College Football Scoreboard” Handout to each
student.
7. Describe these factors that might affect the buying decision:
a. Supplier’s past experience in building scoreboards.
8. Then ask the class to put checks “√’s” in the boxes that indicate the information that
9. “Buying a College Football Scoreboard Answers” Handout. The “√’s” on the
handout should lead to student discussion on these points and illustrate the wide
Chapter 05 – Understanding Organizations as Customers
BUYING A COLLEGE FOOTBALL SCOREBOARD HANDOUT:
(1) WHO IS IN THE “BUYING CENTER” AND
(2) WHAT FACTORS AFFECT THE BUYING DECISION OF EACH?
Individual in
the “Buying
Center”
Factors Affecting the Buying Decision
Attractive-
ness
Ease of
Installation/
Operation
Technical
Support/
Service
Price
Athletic
department
representatives
College President
College vice-
president of
finance
College alumni
relations/develop
ment director
College director
of buildings and
grounds
College director
of purchasing
Potential sponsor
Chapter 05 – Understanding Organizations as Customers
BUYING A COLLEGE FOOTBALL SCOREBOARD ANSWERS HANDOUT:
(1) WHO IS IN THE “BUYING CENTER” AND
(2) WHAT FACTORS AFFECT THE BUYING DECISION OF EACH?
Individual in
the “Buying
Center”
Factors Affecting the Buying Decision
Attractive-
ness
Ease of
Installation/
Operation
Technical
Support/
Service
Price
Athletic
department
representatives
√
College President
√
√
College vice-
president of
finance
√
√
√
College alumni
relations/develop
ment director
√
College director
of buildings and
grounds
√
√
College director
of purchasing
√
√
√
Potential sponsor
√
√
√
Chapter 05 – Understanding Organizations as Customers
Connect Exercises
Exercise 1: Characteristics of Organizations
Activity Summary: In this click and drag activity, students evaluate the organizational buying
process from the perspective of the owner of Tom’s Training gym. Students are provided with
the five steps of the organizational buying process (problem recognition, information search,
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: B2B Buying Process
Learning Objective: LO 05-02 Describe the key characteristics of organizational buying that
make it different from consumer buying
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could follow up this activity with an exercise that highlights the
differences between organizational buying and consumer buying. Begin by writing the 5 stages
Exercise 2: Types of Organizational Markets
Activity Summary: This click and drag activity covers the three types of organizational
markets, industrial, reseller and government. Students are given six firms to classify into the
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Organizational Markets
Learning Objective: LO 05-01 Distinguish among industrial, reseller, and government
organizational markets.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could follow up this activity by discussing why an
understanding of the different types of markets is relevant to marketers. Begin the conversation
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Exercise 3: Buy-Class Situations
Activity Summary: In this click and drag activity, students classify six organizational
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Buying Situations
Learning Objectives: LO 05-03 Explain how buying centers and buying situations influence
organizational purchasing.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to role play the purchase of office furniture
under three different buy-class situations. The instructor could break the class up into groups of 4
Exercise 4: Trek: Building Better Bikes through Organizational Buying
Activity Summary: In this 8-minute video case, students learn how Trek Bicycles uses
organizational buying in its bicycle manufacturing process. Students are exposed to Trek’s
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topics: Organizational Markets, Buying Center, Electronic Commerce
Learning Objectives: LO 05-01 Distinguish among industrial, reseller, and government
organizational markets.
LO 05-02 Describe the key characteristics of organizational buying that
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Exercise 5: iSeeit! Video Case: B2B Buying Process
Activity Summary: In this straightforward whiteboard animation video, the B2B buying process
is explored in the context of Hope Springs purchasing 500 new tablet computers. After watching
LO 05-03 Explain how buying centers and buying situations influence
organizational purchasing.
AACSB: Knowledge Application
Blooms: Understand
Difficulty Level: 1 Easy, 2 Medium