Chapter 7: Organizational Buyer Behavior of Market Group

1. Organizational demand is derived demand: it comes ultimately from the

demand for consumer goods or services.
2. Through good environmental scanning, marketers can identify emerging
industries, companies, and associations.
3. Hotel managers need to understand the financial health of the corporations
and associations that they serve. If clients fall on hard times, managers need
to look for replacements for their lost business.
4. Compared with consumer purchases, a business purchase usually involves
more buyers and a more professional purchasing effort.
5. Professional meeting planners receive training in negotiation skills. Hotels
must have well-trained salespeople to deal with well-trained buyers.
6. Organizational buyers usually face more complex buying decisions than
consumer buyers, because their purchases involve large sums of money,
complex technical features, and economic considerations.
7. In the organizational buying process, buyer and seller are often very
dependent of each other. In other words, sales is a consultative process.
8. The decision-making unit of a buying organization, sometimes called the
buying center, is defined as all those individuals and groups who participate
in the purchasing decision-making process, who share common goals and
risks arising from the decisions.
9. The buying proposal is initiated by users who help define product
specifications.
10.Influencers have a direct influence on the buying decision but do not make
the final decision themselves. Examples of these members include past
presidents or spouses to executives.
11.A companys sales manager selects a hotel and negotiates the arrangements.
Therefore, the sales manager is a decider.
12.Although a sales manager may select and negotiate the arrangements in the
buying process, they must seek the formal permission of the approver.
13.Gatekeepers have the power to prevent sellers or information from reaching
members of the buying center. A secretary is an easy example of a

gatekeeper.
14.Larger sellers use multilevel, in-depth selling to reach as many buying
participants as possible. Their salespeople virtually live with their highvolume customers.
15.Some vendors believe that the most important influences are economic. They
see buyers as favoring the supplier who offers the lowest price, best product,
or most service. This view suggests that hospitality marketers should
concentrate on price and cost variables.
16.In reality, organizational buyers commonly respond to both economic and
personal factors. They may respond to favors, attention, and risk avoidance.
17.Organizational buyers are heavily influenced by the current and expected
economic market. Factors such as the level of primary demand, the economic
outlook and the cost are important.
18.The hospitality marketer has to be familiar with the organizations specific
objectives, policies, and structure when contemplating buying decisions.
19.Hospitality marketers are unlikely to know the group dynamics that take
place during the buying decision process, but must learn the personalities
and interpersonal factors that shape the organizational environment.
20.Buyers exhibit different buying styles, which is why is marketers must know
their customers and adapt their tactics to known environmental,
organizational, interpersonal, and individual factors.
21.The eight stages of the organizational buying process are defined as
buyphases.
22.The buying process begins when someone in the company recognizes a need
that can be met by acquiring a good or service. Problem recognition can be a
result of internal or external stimuli.
23.Determining the requirements of the product that would fulfill the problem is
called formulating the general need description.
24.When the buyer compares hotels via trade directories, a computer search,
phoning properties directly, or visiting a site, we say they are conducting a
supplier search.
25.The final step in the buying process is actually completed postpurchase.
Performance Review of the product determines if the product met the buyers

specifications and if the buyer will purchase from the company again.
26.The group business market is often more sophisticated and requires more
technical information than the consumer market.
27.Many group business markets will book more than a year in advance. During
this time cognitive dissonance may develop so marketers must keep in
contact with the buyer to assure that they made the right decision in
choosing the sellers hotel.
28.The four main categories of group business are conventions, association
meetings, corporate meetings, and SMERF groups.
29.Conventions attract large numbers but occur less frequently than meetings.
30.The Accepted Practices Exchange brings a set of standards and best practices
to all parties involved in the creation and implementation of a meeting.
31.Conventions are a specialty market requiring extensive meeting facilities.
October is the most popular month for conventions, followed by November,
September, and April.
32.Many hotels contract with independent audiovisual companies since their
premises are not large enough to store equipment and personnel.
33.Convention bureaus are nonprofit marketing organizations that help hotels
sign conventions and meetings.
34.The most important attributes of a destination for an association meeting
planner are availability of hotel and facilities, ease of transportation, distance
for the attendees, and transportation costs.
35.The corporations major concern is that their meetings be productive and
accomplish the companys objectives: to educate their employees and
rejuvenate enthusiasm.
36.Corporate culture must be integrated into the meeting planning to ensure
that the right mix of benefits is delivered to the client.
37.Incentive travel rewards participants for achieving a goal usually for both
individual and team performance. For instance, employees of the best
performing region might be recognized and win a trip to a lavish international
destination.

38.Destination packages are moving away from in-house planners to incentive

houses since they specialize in purchasing blocks of airline seats and hotel
rooms and can put together packages more efficiently than in-house
planners.
39.SMERF stands for social, military, educational, religious and fraternal
organizations. These are smaller specialty organizations that are price
sensitive.
40.SMERFs provide good filler business during off-peak times because groups
prefer weekend and off-season bookings.
41.Many restaurants are adding private rooms and hiring salespeople to gain
their share of the meetings market.
42.Taking a consultative approach is more effective than negotiating items
separately. By disclosing the budget first, the chef and planners can develop
alternatives within a specific price range.
43.It is commonplace for hotels to give complimentary room-nights for every
fifty room-nights that the group produces.
44.Most meeting planners want their bill within one week of the event and 25
percent want it within two days.
45.One of the most important aspects creating a successful function is a
prefunction meeting between the hotel staff and the meeting planner to
review event logistics.
46.Because of competition the corporate rate qualification requirements have
been dropped and are now given to any businessperson that requests it.
47.The basic corporate rate is about 10 15% below the hotels rack rate. It
often includes other benefits besides a discounted rate.
48.Although the corporate contract rate is a discounted rate, it is higher than the
group rate.
49.In addition to developing hotel contracts, travel managers set per diem rates
that specify the amount a company traveler can spend on food and beverage.
50.Some corporations use in-house travel agencies, also known as in-plants,
which also represent other corporations, providing the advantage of
negotiating leverage.

51.Hotels compensate in-house travel agencies by straight commissions,

monthly fees, or a combination of commissions and fees.