Mgmt 204 - Organizational Buyers

Kyle Fulmer

Professor Moranville

18 December 2017

MGMT 204

Question 1:

        Organizational buyers are those manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that buy products and services for their own use or for resale. The three types of buying situations include new buy, straight rebuy, and modified rebuy. New buy is when the organization is a first time buyer of the product or service. This involves greater potential risks in the purchase, so the buying center is enlarged to include all those who have a stake in the new buy. One example of that is Procter & Gamble purchased a multi million dollar fiber optic network from Corning Inc. for its corporate offices in Cincinnati represented a new buy.  The next type is straight rebuy which the buyer or purchasing manager reorders an existing product or service from the list of acceptable suppliers, probably without even checking with users or influencers from the engineering, production, or quality control departments. Office supplies and maintenance service are usually obtained as straight rebuys. Modified rebuys the users influencers or deciders in the buying center want to change the product specifications, price, delivery schedule, or supplier. Although the item purchased is largely the same as with the straight rebuy, the changes usually necessitate enlarging the buying center to include people outside the purchasing department. Five examples of this would include Giant Food Stores, Target, Walgreens, Dick’s Sporting Goods, and Home Depot. All of these stores buy products from other companies and then resell them to consumers.

Question 2:

        Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas. Economists, managers, and political leaders believe that it hinders world trade because it limits the amount of easy trade between countries by putting up barriers to make it more difficult. Some people on the other hand support it because it limits the outsourcing of jobs, protects a nation’s political security, discourages economic dependency on other countries, and promotes development of domestic industries. The Trade Feedback Effect explains a nation’s greater need for imports stimulating the exports of other countries. Increased demand for exports of other countries energizes their economic activity resulting in higher national income, which increases their demand for imports. I believe that protectionism should not be enabled, and just allow countries to support themselves whichever way is necessary to sustain their economy.

Question 3:

        A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits. Not-for-profit organizations also segment  the clients they serve to satisfy client needs more effectively while achieving the organization’s goals. The first step in market segmentation is to group potential buyers into segments. Then group the products to be sold into categories. Next, develop a market-product grid and estimate the size of markets. After that, select your target markets, and then finally take marketing actions to reach target markets. The three market segmentation strategies are having one product and multiple target market segments, multiple products and multiple market segments, or segments of one or mass customization. Magazines are an example of one product with multiple market segments. They are a single distinct product aimed toward multiple market segments. A car brand, such as Ford, has multiple lines of cars that are all aimed at different market segments of consumers, representing multiple products and multiple market segments. For mass customization, Apple uses BTO (built-to-order) systems that trim work-in-progress inventories and shorten delivery times to customers. They restrict its computer manufacturing line to only a few basic models that can be assembled in four minutes. Geographic segmentation  is one way to segment consumer markets. This way is based of off where consumers live or work. Next is demographic segmentation which is based on some objective physical, measurable, or other classification attributes. Then there is psychographic segmentation in which some subjective mental or emotional attributes, aspirations, or needs of prospective customers are identified. Finally, behavioral segmentation is based on some observable actions or attitudes by prospective customers, such as where they buy, what benefits they seek, how frequently they buy, and why they buy. Some ways to select a target market include market size, expected growth, competitive position, or cost of reaching the segment. Market size is the estimated size of the market to see if it is worth pursuing. Expected growth represents that even though a market may be small, it may grow very quickly into a very large market. The competitive position is the amount of competition for the product or service being sold to a certain market segment. Lastly, cost of reaching the segment is best described as how much it would cost to advertise to that particular market segment and then deciding if it is worth the amount spent for the profit to be made.