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Chapter 06 - Understanding Organizations as Customers
6-17
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 play one or more roles:
Role Constituency
Chapter 06 - Understanding Organizations as Customers
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Chapter 06 - 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 (see Chapter 8) for a particular product-market in which you compete.
Use these steps:
1. Define the product-market precisely, such as ice cream.
Chapter 06 - Understanding Organizations as Customers
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TEACHING NOTE FOR VIDEO CASE VC-6
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 impact considerations in Trek’s buying process are also described. This case
covers most of the topics covered in Chapter 6 for a product familiar to students.
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
human transportation and that it can combat climate change, ease urban congestion, and build
human fitness. The firm’s motto: “We believe in bikes.”
Trek’s success at accomplishing its mission is the result of many important business
practices including its organizational buying process. The process begins when managers
specify types of materials needed to produce a Trek product. The next step is to ask the buying
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:
1. A good starting point for introducing this case is to ask if students are familiar with Trek
Bicycle or its brands. Ask them to describe how (a) the buying process influences the
Chapter 06 - Understanding Organizations as Customers
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product they know and (b) the textbook description corresponds to different aspects of
Trek’s organizational buying process.
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:
2. What selection criteria does Trek utilize when it selects a new supplier or evaluates an
existing supplier?
Answer:
3. How has Trek’s interest in the environmental impact of its business influenced its
organizational buying process?
Answer:
Chapter 06 - 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:
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
tubes—they are made into bags, seat bags, and panniers! Trek has also become involved in
many events such as the Iceman Cometh race and the Crankworx festival. Events such as these
provide exposure to bicycle enthusiasts and allow Trek to showcase its new materials and
technologies.
Innovation in its products and its manufacturing process is also important at Trek. Trek
recently received patents for a “Lighted Bicycle Wheel Hub Assembly,” which uses the rotation
of the wheel hub to power light emitting diodes (LEDs), and an “Adjustable Nose Width Bicycle
Seat Assembly,” which uses an actuator to adjust the distance between the left and right sides of
the nose portion of the seat. Trek also recently contracted for the development of a demand
planning and inventory management system to manage the annual production of more than
300,000 bikes, parts, and accessories in 25 countries. Today, Trek’s CEO is John Burke, the son
of founder Richard Burke. John spent a year and a half as a Trek salesperson, and then took over
as the head of sales and marketing for 10 years before becoming CEO.
6-23
TEACHING NOTE FOR APPENDIX D CASE D-6
Motetronix Technology: Marketing Smart Dust
Synopsis
Marketing a new technology is hard, creative work—as shown in this case describing
Motetronix Technology’s initial look at the organizational buying process for “smart dust.”
As a comparative unknown in the industry, Motetronix executives are studying how to
penetrate the buying process and buying center in companies that would use its technology and
products. After describing “smart dust” and various applications, the case describes the buying
process and possible participants in company buying centers. The student’s job is to decipher
this information and organize it to give direction to Motetronix marketing.
Teaching Suggestions
This case is most suitable for that portion of the course when consumer and
industrial/organization buyer behavior is discussed. Therefore, the case should follow Chapters
5 and 6. Because of the high-tech flavor of smart dust, the case makes for an interesting
reference back to Chapter 3 on the environment of marketing and a nice introduction to Chapters
10 and 11 on product management and Chapters 17, 18, and 20 on IMC, advertising, and
personal selling.
Answers to Questions
1. What type of buying situation is involved in the purchase of smart dust, and what will
be important buying criteria used by companies considering using smart dust in their
products or in their facility?
Answers:
2. Describe the purchase decision process for adopting smart dust, and state how
members in the buying center for this technology might play a part in this process.
Answers:
Chapter 06 - Understanding Organizations as Customers
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3. What effect will perceived risk have on a company’s decision to use smart dust in its
products or in its facility?
Answer:
Chapter 06 - Understanding Organizations as Customers
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ICA 6-1: IN-CLASS ACTIVITY
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.
1. OPTIONAL: Bookmark the Daktronics YouTube video clip [TRT = 0:30]
2. OPTIONAL: Form students into 4-person teams.
3. Click on the Internet icon to play the Daktronics YouTube video clip. [TRT = 0:30]
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
late 2013, Daktronics installed a state-of-the-art center-hung scoreboard in Madison
Square Garden in New York City. It also delivered four ‘Digital Street Furniture’
LED video displays at the University of California, San Diego, to provide messages
to be seen by those on foot or in slow-moving vehicles.
For this activity, let’s assume a small college is thinking about buying a new
scoreboard for its football stadium.”
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 06 - Understanding Organizations as Customers
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Some answers and reasons include:
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
might be important to each member of the buying center. Ask them to explain their
answers.
9. “Buying a College Football Scoreboard Answers” Handout. The “√’s” on the
Marketing Lesson. In trying to reach complex buying centers in organizations in
different market segments, Daktronics can use its website, press releases, promotional brochures
and initial calls by sales representatives to obtain good sales leads. Then Daktronics can follow-
up by responding to questions, setting up a demonstration, writing proposals, etc.
Chapter 06 - Understanding Organizations as Customers
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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
Past
Experience
in College
Scoreboards
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 06 - Understanding Organizations as Customers
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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
Past
Experience
in College
Scoreboards
Attractive-
ness
Ease of
Installation/
Operation
Technical
Support/
Service
Price
Chapter 06 - Understanding Organizations as Customers
6-29
Connect Application Exercises
Application 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,
alternative evaluation, purchase decision, and postpurchase behavior). The draggable items
(losing clients, web search, narrow down, balanced body, new class) provide hints to students as
students match the items to the correct stage of the organizational buying process.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: B2B Buying Process
Learning Objective: LO 06-02 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 five
Application 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
appropriate organizational market (Corning, Chase Bank, Sysco, Walgreens Pharmacy, USPS,
and NASA). As students click on the firm, a hint provides the student with details on its typical
transaction.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Organizational Markets
Learning Objective: LO 06-01 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
Chapter 06 - Understanding Organizations as Customers
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Application Exercise 3: Buy-Class Situations
Activity Summary: In this click and drag activity, students classify six organizational
transactions into the proper buy-class situation. Students are given three buy-class situations
(new, straight rebuy, modified rebuy) and six transactions (solar panels, shipping crane, copier
paper, legal pads and pens, record-keeping software, and service trucks). As students mouse-over
the transaction, they are given descriptive hints about the transaction to be classified.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Buying Situations
Learning Objectives: LO 06-03 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
Application 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
history and mission, focusing on its dependence on high quality vendors to manufacture the
highest quality bicycle. After watching the video, students are asked five questions related to
organizational markets, derived demand, supplier development, buying centers, and online
buying.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topics: Organizational Markets, Buying Center, Electronic Commerce
Learning Objectives: LO 06-01 Distinguish among industrial, reseller, and government
organizational markets.
LO 06-02 Describe the key characteristics of organizational buying that
make it different from consumer buying.
LO 06-03 Explain how buying centers and buying situations influence
organizational purchasing.
LO 06-04 Recognize the importance and nature of online buying in
industrial, reseller, and government organizational markets.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to think about how Trek’s international
expansion into countries like South Africa, Mexico, Australia, Poland, and France has affected
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Application 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
the 3-minute video, students are asked five follow-up questions related to organizational buying
criteria, marketing mix, buying center, buy-class, and buying centers.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topics: Organizational Markets, B2B Buying Process, Buying Center, Buying Situations
Learning Objectives: LO 06-01 Distinguish among industrial, reseller, and government
organizational markets.
LO 06-02 Describe the key characteristics of organizational buying that
make it different from consumer buying.
LO 06-03 Explain how buying centers and buying situations influence
organizational purchasing.
AACSB: Knowledge Application
Blooms: Understand
Difficulty Level: 1 Easy, 2 Medium
Follow-Up Activity: Instructors could ask students to create buying centers for Hope Springs for
the purchase of different types of products ranging from printer paper, to a delivery truck, to a
