organization buying behavior presentation 2

8/7/2019 Organization Buying Behavior Presentation 2

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2003 Prentice Hall, Inc.

Organizational BuyingOrganizational Buying

Organizational buyingis:

the decision-making process bywhich formal organizations

establish the need for purchased

products and services and identify,

evaluate, and choose among

alternative brands and suppliers.


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Compared to Consumer Markets,

Business Markets have . . .

Fewer buyers

Larger buyers

Geographically concentrated buyers

Close relationships with their

supplier-customers


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Fluctuatingdemand

Derived demand

Professional

purchasing

Multip

le buyinginfluences

Multiple salescalls

Direct purchasing

Leasing

Other Business Market Characteristics


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The Business Market IncludesFor-Profit

Companies and Two Specialized Groups:

The institutional market

Schools, hospitals, prisons, etc. with captive

audiences

Cost andqualitystandards drive purchases The government market

Bidding process awardscontracts


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Buying Situations

Straight rebuy

Modified rebuy

New task

Routine reorders

from approved

vendorlist

Lowinvolvement,

minimal time

commitment

Example: copier

paper


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Buying Situations

Straight rebuy

Modified rebuy

New task

Specifications,prices, delivery

terms or otheraspects requiremodification

Moderate level of

involvement andtime commitment

Example: desktopcomputers


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Buying Situations

Straight rebuy

Modified rebuy

New task

Purchasing aproduct orservice

for the firsttime High level of

involvement andtime commitment;

multiple influences Example: selecting

a web site designfirm orconsultant


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Participants in Business BuyingParticipants in Business Buying

Initiators

Users

Influencers

Deciders

Approvers

Buyers

Buying center members fill one or more

rolesin the purchase decision process:

Gatekeepers


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Influences on Business BuyersInfluences on Business Buyers

Major Influences

Environmental

Organizational

Interpersonal

Individual

Demand level

Economic outlook

Interest rates Technological

change

Politics/regulations

Competition

Concerns forsocialresponsibility


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Objectives

Po

licies

Procedures

Organizational

structures

Systems


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Interests

Authority

Status

Empathy

Persuasiveness


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Major Influences

Environmental

Organizational

Interpersonal

Individual

Age

Income

Education

Job position

Personality

Risk attitudes

Culture


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A Model of the Industrial Buying Process


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Need Recognition

- simply the understanding that you need something

- can be caused by an emergency, or just the execution

ofyour plans to do something



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Information Search

- make a list ofwho are the best potentialsuppliers

- purpose is to know,in detail,what you need, and what

youshould buy

- have to develop a list of technicalspecifications

eg. Waterproof, orwithstand heat of 200 degrees


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Delineation of Suppliers

- collect information on potentialsuppliers


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Sales Demonstration/Proposal

- potentialsuppliers are then invited to make a

presentation, orcome for a meeting to provide a

proposal

- incl

udes technical

and economicconsiderations


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Advertisements

- usually done in trade magazines and newsletters


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Technical articles, extensive Internet searches

- the buying group examines thisinformation to

determine howit fits their requirements


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Word of Mouth

Personal and interpersonalinfluences

Review of Internal Proposals


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Purchasing/Procurement ProcessPurchasing/Procurement Process

Problemrecognition

General needdescription

Productspecification

Suppliersearch

Proposalsolicitation

Supplierselection

Order-routine

specification Performance

review

Eight Buyphases of Industrial Buying

organization buying behavior presentation 2

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