Chapter 7 Organizational Buyer
Behavior of Group Markets
OBJECTIVES
• Understand the organizational
buying process.
• Identify and discuss the importance
of the participants in the
organizational buying process.
• Identify the major influences on
organizational buyers.
• List the eight stages of the
organizational buying process.
• Identify and describe the group
markets in the hospitality industry.
Types of Decisions and the Decision
Process
• Organizational buyers face more
complex buying decisions than
consumer buyers.
• Their purchases often involve large
sums of money, complex technical
features, economic considerations,
and interactions among many
people at all levels.
– the more complex the
purchase, the more likely it
is that several people will
participate in the decision-
making
• In the organizational buying
process, buyer and seller are often
very dependent on each other.
Participants in the Organizational
Buying Process
The Buying Center
• The decision-making unit of a
buying organization is sometimes
called the buying center:
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• Users - those who use the
product or service
• Influencers - directly
influence the buying
decision but
do not themselves make the
final decision
• Deciders - select product
requirements and suppliers
• Approvers - authorize
proposed actions of
deciders or buyers
• Buyers - have formal
authority for selecting
suppliers and arranging the
terms of purchase
• Gatekeepers - have the
power to prevent sellers or
information from reaching
members of the buying
center
• Buying centers vary by number &
type of participant, so salespersons
calling on organizational customers
must determine:
• who are the major decision
participants?
• what decisions do they
influence?
• what is their level of
influence?
• what evaluation criteria
does each participant use?
• When a buying center has multiple
participants, the seller may not
have time/resources to reach them
all.
 • smaller sellers concentrate
on reaching key buying
influencers and deciders
• Most deciders like to feel in control
of the purchasing decision, so
going over a decider’s head &
working with the boss will be
resented.
• In most cases the boss will leave
the decision up to the decider, and
the ill will created by not dealing
with the decider directly will result
in him or her choosing another
company.
• Larger sellers use multilevel, in-
depth selling to reach as many
buying participants as possible.
• their salespeople virtually
“live” with their high-
volume customers
• Organizational buyers are subject
to many influences as they make
buying decisions, and some
vendors assume the most
important influences are economic.
• A study of buyers in ten large
companies concluded that
emotions & feelings play a part in
the decision.
• In reality, organizational buyers
commonly respond to both
economic and personal factors.
• where there is substantial
similarity in supplier offers,
price becomes an important
determinant
• when competing products
differ substantially, buyers
are faced with many
decision variables other
than price
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Major Influences on Organizational
Buyers
• The various influences on
organizational buyers may be
classified into four main groups:
• environmental,
organizational,
interpersonal, individual
• Environmental Factors
• Organizational buyers are heavily
influenced by
the current and expected economic
environment.
• Factors such as the level of primary
demand, the economic outlook,
and the cost are important.
• In a recession, companies cut their
travel budgets, whereas in good
times, travel budgets are usually
increased.
• Organizational Factors
• Each organization has specific
objectives, policies, procedures,
organizational structures, and
systems related to buying.
• The hospitality marketer has to be
as familiar with them and wants to
know…
• how many people are
involved in the buying
decision?
• who are they?
• what are the evaluation
criteria?
• what are the company’s
policies & constraints on the
buyers?
• Interpersonal Factors
 • The buying center usually includes
several participants, with differing
levels of interest, authority, and
persuasiveness.
• hospitality marketers are
unlikely to know the group
dynamics taking place
during the buying decision
process
• Salespeople commonly learn the
personalities and interpersonal
factors that shape the
organizational environment and
provide useful insight into group
dynamics.
• Individual Factors
• Each participant in the buying
decision process has personal
motivations, perceptions, and
preferences.
• Age, income, education,
professional identification,
personality, and attitudes toward
risk all influence
the participant in the buying
process.
• buyers definitely exhibit
different buying styles
• Hospitality marketers must know
their customers
and adapt their tactics to known
environmental, organizational,
interpersonal, and individual
influences.
Organizational Buying Decisions
• Organizational buyers do not buy
goods and services for personal
consumption.
– they buy hospitality
products to provide training,
reward employees and
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distributors, and to provide
lodging for their employees
• Eight stages of the organizational
buying process have been
identified and are called
buyphases.
– this model is called the
buygrid framework
The Buygrid Framework
Stage 1 - Problem Recognition
• The buying process begins when
someone in the company
recognizes a problem or need that
can be met by acquiring a good or
a service.
– problem recognition can
occur because of internal
or external stimuli
• Internally, a new product may
create the need for a series of
meetings to explain the product to
the sales force.
• Externally, the buyer sees an ad or
receives a call from a hotel sales
representative who offers a
favorable corporate program.
Stage 2 - General Need Description
• Having recognized a need, the
buyer goes on to determine the
requirements of the product and to
formulate a general need
description.
• The corporate meeting planner
works with others to gain insight
into the requirements of the
meeting.
– they determine the
importance of the price,
meeting space, sleeping
 rooms, food and beverage,
and other factors
• Alert marketers can help buyers
define their companies’ needs and
show how their hotel
can satisfy them.
Stage 3 - Product Specification
• Once the general requirements are
determined, the specific
requirements for the meeting can
be developed.
• Information often requested
includes availability
of water, ceiling heights, door
widths, security, and procedures
for receiving and storing materials
prior to the event.
• A salesperson must be prepared to
answer their prospective client’s
questions about their hotel’s
capabilities to fulfill the product
specification.
Stage 4 - Supplier Search
• The buyer now conducts a supplier
search to identify the most
appropriate hotels.
– the buyer can examine
trade directories, do a
computer search, or phone
familiar hotels
• Hotels that qualify may receive a
site visit from the meeting planner,
who eventually develops a short
list of qualified suppliers.
Stage 5 - Proposal Solicitations
• Once the meeting planner has
drawn up a short list of suppliers,
qualified hotels are invited to
submit proposals.
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– hotel marketers must be
skilled in researching,
writing
& presenting proposals
• Proposals should be marketing
oriented, not simply technical
documents.
– they should position their
company’s capabilities and
resources so that they stand
out from the competition
– many hotels have
developed videos for this
purpose
Stage 6 - Supplier Selection
• In this stage, members of the
buying center review the proposals
and move toward supplier
selection.
– they conduct an analysis of
the hotel, considering
physical facilities, ability to
deliver service, and
the professionalism of its
employees
• In general, meeting planners
consider the following attributes in
making their selection of a
location:
– sleeping rooms & meeting
rooms
– food & beverage
– check-in/checkout & billing
procedures
– staff
• The buying center may attempt to
negotiate with preferred suppliers
for better prices & terms before
making the final selection.
 • There are several ways the hotel
marketer can counter the request
for a lower price.
– dates can be moved from a
high demand period to
a need period for the hotel
– menus can be changed.
• The marketer can cite the value of
the services the buyer now
receives, especially where services
are superior to competitors
Stage 7 - Order-Routine Specification
• The buyer writes the final order
with the chosen hotels, listing
technical order-routine
specifications of the meeting.
– the hotel responds by
offering the buyer a formal
contract
• The contract specifies cutoff dates
for room blocks, date when hotel
will release the room block for sale
to other guests, and minimum
guarantees for food and beverage
functions.
• Many hotels & restaurants have
turned what should have been a
profitable banquet into a loss by
not having or enforcing minimum
guarantees.
Stage 8 - Performance Review
• The buyer does a postpurchase
performance review of the product
to determine if the product meets
the buyer’s specifications and if the
buyer will purchase from the
company again.
• It is important for hotels to have at
least daily meetings with a meeting
planner to make sure everything is
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going well and correct things that
did not go well.
• This manages the buyer’s
perceived service & helps avoid a
negative postpurchase evaluation
by the buyer.
Group Business Markets
• One of the most important types of
organizational business is group
business
– it is important for marketing
managers to understand
differences between a group
and a consumer market
– group business is often
more sophisticated and
requires more technical
information than the
consumer market
• Many group markets book more
than a year in advance, and during
this time, cognitive dissonance can
develop.
– marketers must keep in
contact with the buyer to
assure them that they made
the right decision in
choosing the seller’s hotel
• The four main categories of group
business are conventions,
association meetings, corporate
meetings, and SMERF.
KEY TERMS
• Buying center. All those
individuals and groups who
participate in the purchasing and
decision making process and who
share common goals
and the risks arising from the
decisions.
• Convention. A specialty market recognizes a problem or need that
requiring extensive meeting can be met by acquiring a good or
facilities. a service.

• Corporate meeting. A meeting • Product specification. The stage

held by a corporation for its
employees.
• Derived demand. Organizational
demand that ultimately comes
from (derives from) the demand for
consumer goods.
• General need description. Stage
of the industrial buying process in
which a company describes the
general characteristics & quantity
of a needed item.
• Incentive travel. A reward that
participants receive for achieving
or exceeding a goal.
• Order-routine specification. The
stage of the industrial buying
process in which a buyer writes
the final order with the chosen
supplier(s), listing the technical
specifications,quantity needed,
expected time of delivery, return
policies,warranties, etc.
of an industrial buying process in
which the buying organization
decides on and specifies the best
technical product characteristics
for a needed item.
• SMERF. Social, Military,
Educational, Religious & Fraternal
organizations - specialty markets
with a common price sensitive
thread.
• Supplier search. The stage of the
industrial buying process in which a
buyer tries to find the best vendor.
• Supplier selection. The stage of
the industrial buying process in
which a buyer receives proposals
and selects a supplier or suppliers.

• Organizational buying process.

The decision making process by
which formal organizations
establish the need for purchased
products and services and identify,
evaluate, and choose among
alternative brands and suppliers.

• Performance review. The stage

of an industrial buying process in
which a buyer rates its satisfaction
with suppliers, deciding whether to
continue, modify, or drop the
relationship.

• Problem recognition. The stage

of the industrial buying process in
which someone in a company