Conceptual aspects of organisational buying behaviour

S. Ramesh Kumar Selling strategies that target the organisational customer and use the concept of the buying centre, buying situations and the buying stages will result in unique strategies for different customer groups, thus making business-to-business marketing more e ffective. Business-to-business marketing is an area which is gaining an identity of its own in the Indian context. Marketers can benefit from the conceptual aspects associated with organisational buying behaviour. This article attempts to explore some dimensions a ssociated with business-to-business marketing situations. Applying the buying centre concept The decision-making unit in a buying organisation consists of the buying centre. This is made up of the decider who gives the `yes' or `no' decision, the initiator or the user who initiates the need for the product, the influencer who exerts influence on the buying process, the user who gives feedback on the product, the purchasers or the buyers who formalise the purchasing process and the gatekeepers (such as secretaries and clerks) who control the flow of information in an organisation. The basic aspects to be noted about the buying centre are that: --The influences across the centre can vary from one product category to another. --The composition itself can vary from one product to another. --Monitoring the buying centre should be a dynamic process; personnel may enter and leave an organisation and hence constant monitoring is required. --Informal power equations in an organisation can affect a buying centre. --In a smaller organisation, the same employee (as a participant in the buying centre) can play several roles involved in the buying centre. For example, in a small-scale industry, the managing director who monitors the stock levels of various requiremen ts may initiate the purchase of drill bits and also select the brand during the purchasing process. --The composition of the buying centre will vary across the different phases of industrial buying. This means that the buying centre which faces the marketer during the pre-sale phase can be different from the one which deals with the same marketer after the sale of the product is over. An organisation marketing computers will face financial executives, corporate planning and perhaps the departmental heads of respective departments where the computer is intended to be used during the pre-sale phase. The same organisation may have to work with the training department of the buyer organisation after the sale is over. John R. Devincentis and Neil Rackham in their article Breadth of a Salesman (The McKinsey Quarterly 1998, No 4 issue) highlight the importance of the changing sales function.

There can be three kinds of customers. One group can comprise the price-sensitive ones called the transactional ones. In India this segment exists in most product categories ranging from consumables to projects. The second group of customers require `consultative selling'. This will require the marketing organisation to have analytical and intimate knowledge of the customer's requirements and provide a consultative edge to the total offering. The third group of customers are the ones who require the `enterprise sales effort' by which they may have a strategic association with the marketer. This approach should enable the marketer to bring in marketing efforts which may require inputs from sev eral functional areas of the marketing and buying organisation. This eventually results in offering the customer a strategic product. This approach leads to continuous improvement between the customer and the marketer. The `Docutech' model of digital cop ier which was developed by Xerox for Boeing is a good example of this approach. These customer groups add a new dimension to business-to-business marketing. The `three-value philosophy' of buying organisations can also help a marketer categorise buying centres according to the value expected by the organisation. There has been a rad ical shift of the value concept in business-to-business marketing -- from the price-performance equation to the three kinds of expectations based on the type of customers. The implications of the shift in the value-orientation of buying organisations are that a marketing manager should be able to develop parameters for classifying buying organisations and train the sales force to cater to the three kinds of customer groups . There is a need to break away from the `products-benefits-brand' sales pitch which is generally the approach in business-to-business marketing. While the ideal approach may be the `enterprise sales effort', this may not suit every customer. A marketing organisation may have to deal with all the three types of customer organisations and the respective buying centres. There is a need to evolve sel ling strategies for all the customer groups and define value for each of them. The three buying situations There is a need to discuss the three kinds of buying situations before they can be applied to the buying centre and the different stages involved in the organisational buying process. The first kind of buying situation is the `new buy' situation in which a company buys a product for the first time and does not have any experience with the vendors or the product it is attempting to buy. This situation is very important, especially for a project situation in which consultative selling efforts are involved. A company attempting to market an ERP package to an organisation has to obtain the precise customised requirements of the buying organisation before formulating a solution. For insta nce, lifts for a commercial complex can be classified under a new buy situation. The second type of buying situation is a `straight re-buy' situation in which a buying organisation records or repeats the previous order without changes; hospital consumables and office stationery may be examples. In this situation, the organisation whi ch is currently the supplier, the `in-supplier', will have to ensure that it is able to sustain its offerings and

service so that competitors do not enter the scene. These competitors are `out-suppliers' who would like to enter the buying organisation. The third kind of situation is the `modified re-buy' situation in which the buying organisation brings in changes in its requirements. An automobile company may prefer to use an updated version of bearings. A company working on updating its offerings can create a modified re-buy situation by working with the influences of the buying centre in the organisation. A company marketing x-ray equipment can introduce an updated offering for the replacement market -- hospitals which had procured the earlier vers ion. In such equipment, new product introductions always create a modified re-buy situation and hence a company should introduce new products to stay ahead of the competition. Even in consumables, there is scope to create a modified re-buy situation with new products; self-stick pads from 3M and waterproof medicated plasters from Johnson and Johnson are examples. A modified re-buy situation can also be created through services such as the consultative sales efforts discussed earlier or through better product delivery promises. Stages in organisational buying There are three areas of operation in industrial buying. The initiation stage: This is a stage in which a problem or a need is recognised by the organisation. For example, because of the changing environmental trends, a manufacturer of pharmaceutical products may want to introduce certain kinds of medicinal fo rmulations in the form of capsules. This may require specific kinds of raw materials and changes in the production process. Special kinds of industrial automation or instrumentation may be required. The recognition of a need can be from the environment, from the move made by competitors or it may be a move made by a buying organisation to pre-empt competition. While the buying organisation itself may be monitoring its direct competition, a supplier can initiate the process of change and create a `new buy' situation by highlighting the need for a specific product or service. Grill-type of lifts have been banned in the country from the next millennium and hence a lift manufacturer can create a new bu y situation for sophisticated lifts in high-rise buildings. The same lift company can also create a modified re-buy situation by offering a lift which is not sophisticated. By pioneering consultative selling, a company has an early entry into the buying organisation in spite of the fact that the buying organisation can make use of a consultant in a complex new buy situation. Apart from problem recognition, the initiation st age also deals with the determination and description of the characteristics of the required product and service. There may be a need for an advanced industrial instrumentation system in a power plant and this calls for the firming up of characteristics of several kinds of instruments which are likely to be used in the instrumentation system. Search stage: This stage consists of information search regarding vendors, their credibility, their compatibility with the requirements of the buying organisation, an analysis of the offerings of different companies and the selection of a supplier. Compa nies that have pioneered the consultative selling approach in the early new buy phase will have a reasonable edge over other companies in the search stage.

Though it may not be possible to state that firms entering the initiation stage will end up with the order, there is a likelihood that these companies may be considered more favourably than companies which enter only during the search stage. In complex n ew buy situations such as electrical projects, the company, which may have entered the initiation stage, might have even formulated the broad specifications of the project. The search stage is equally important for organisations that are currently not in business with buying organisations. In industrial automation where there are frequent changes in hardware and software, the buying organisation and the respective buying ce ntres need to be apprised of the latest in the field. An `out-supplier' taking this approach, especially where the `in-supplier' is not active on this front, will benefit when the buying organisation formulates an extension programme. In certain cases the buying organisation may have different plants at different locations and an `out-supplier' may be able to dislodge the `in-supplier' for a new bid in a specific location. This also means that the `in-supplier' has to be associated wi th the search stage, by providing current information, even after the product is sold or project is executed. The `in-supplier' has to maintain a preferred position every time the buyer organisation gets involved in the analysis of proposals to cater to an emerging need such as expansion, updated offerings and so on. The feedback stage: This stage is concerned with the establishment of order routine, performance feedback and so on, and hence the focus shifts to the user. Product management of the marketing organisation can play a vital role in scheduling of delivery, complaint redressal, providing inputs for new product development and generally ensuring that the buying organisation is satisfied after the sale is over. Service departments also become important in this stage. Formulating selling strategies using the buying centre, buying situations and the buying stages will result in unique strategies for respective customer groups. This is marketing orientation in practice.

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