Types of Buying Decision Behavior

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Buying-Decision Behavior
 Buying behavior differs greatly form a tube of
toothpaste, a tennis racket, a digital camera, and a new
car.
 This means the buying decision behavior of employee
can range form a habitual buying to a complex buying.

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Buying-Decision Behavior
1. Complex Buying Behavior:
 Customers undertake complex buying
decision when they are highly involved in a
purchase and perceive significant differences
among brands.
 Consumers may be highly involved when the
product is expensive, risky, purchased
infrequently, and highly self expensive.
 Typically, the consumer has much to learn
about the product category.
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Buying-Decision Behavior
1. Complex Buying Behavior: cont…
 For example, a laptop or a mobile, buyer may
not know that attributes to consider.
 This buyer will pass through a learning
process, first developing beliefs about the
product, then attitudes, and then making a
thoughtful purchase choice.

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Buying-Decision Behavior
2. Dissonance Reducing Buying Behavior:
 In dissonance reducing buying behavior consumer
involvement is very high due to high price and
infrequent purchase with less significance
differences among brands.
 In this case buyer purchases the product which is
easily available.
 After the product purchase, consumer may face
dissonance post purchase behavior.

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Buying-Decision Behavior
3. Habitual buying behavior:
 In habitual buying behavior consumer involvement
is low as well as there is no significance among
brands names.
 The good example is a lighter or match box.
 They just go for it and purchase it, there is no brand
loyalty. Consumers do not need information
regarding brand purchase, characteristics.
 For such brands TV commercials, news papers and
magazines build positive attitude of consumers
towards.
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Buying-Decision Behavior
4. Variety seeking buying behavior:
 In variety seeking buying behavior situation
consumer involvement is vey low but there are
significance differences among brands.
 In this situation consumers perceive brand
switching.
 A good example is purchase of chips.
 In such case consumer purchase chips and
consumes. Next time they purchase another brand
just to change the taste.

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Business Buying Behavior

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Business Buying Behavior
 Organizational buying refers to the buying behavior of
organizations that they purchase the products for
production, reproduction, resale and intuitional usages, such
as educational organizations, government, producers
wholesalers, retailers, and private organization.
 Organization consists of business, retailing, government and
non-government organization.
 Business organization buy product to business use or
produce other product and retailer buy products to resell at
profitable prices. Similarly Government bodies buy
products for office use and non-government organization
buy product to provide service to their customers.
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Business Buying Behavior cont…
 Users, influencers, buyers, deciders and gatekeepers are
major participants in the organizational buying process.
 Organizational buying behavior is influenced by
marketing stimuli and other stimuli. Marketing stimuli
includes products, prices, place and promotion and
other stimuli includes economic, technological,
political, cultural and competition.
 According to Pride and Ferrel Organizational buying
behavior refers to the purchase behavior of producer,
government units, institutions and resellers.
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Business vs Consumer Markets
 For marketers, the selling environment of business
markets present uniquely different circumstances
when compared to selling to consumers. There are
two ways in which consumer and business markets
differ:
i. Business markets are more likely to be price driven than
brand driven, and
ii. Demand in business markets tends to be more volatile
than consumer markets.
However, the two markets are dissimilar in other
ways requiring marketers to take a different approach
when selling to business customers than to
consumers.

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Business vs Consumer Markets
 Business and consumer markets differ in following
circumstances.
i. How Decisions Are Made
ii. Existence of Experienced Purchasers
iii. Time Needed to Make Buying Decision
iv. Size of Purchases
v. Number of Buyers
vi. Type of Promotional Effort Needed to Reach
Buyer

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Business vs Consumer Markets
Buying Differences: Buying Center Decisions
• In the consumer market a very large percentage of purchase decisions are
made by a single person. There are situations in which multiple people may
be involved in a consumer purchase decision, such as a child influencing a
parent to choose a certain brand of cereal or a husband and wife deciding
together to buy a house, but most of the time purchases are individual
decisions.
• The business market is significantly different. While single person
purchasing is not unusual, especially within a small company, a significant
percentage of business buying, especially within larger organizations,
requires the input of many. In the marketing literature those associated
with the purchase decision are known to be part of a Buying Center, which
consists of individuals within an organization that perform one or more of
the following roles:
Buyer Decider
Influencer User Initiator Gatekeeper
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 Buyer – responsible for dealing with suppliers and
placing orders (e.g., purchasing agent)
 Decider – has the power to make the final purchase
decision (e.g., CEO)
 Influencer – has the ability to affect what is ordered
such as setting order specifications (e.g., engineers,
researchers, product managers)
 User – those who will actually use the product when
it is received (e.g., office staff)
 Initiator – any Buying Center member who is the
first to determine that a need exists
 Gatekeeper – anyone who controls access to other
Buying Center members (e.g., administrative
assistant)
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Business vs Consumer Markets
Buying Differences: Experienced Purchasers
 As noted in the discussion of the Buying Center, organizations
often employ purchasing agents or professional buyers
whose job is to negotiate the best deals for their
company. Unlike consumers, who often lack information
when making purchase decisions, professional buyers are
generally as knowledgeable about the product and the
industry as the marketer who is selling to them.
Buying Differences: Decision Making Time
 Depending on the product, business purchase decisions can
drag on for an extensive period. Unlike consumer markets
where impulse purchasing is rampant, the number of people
involved in business purchase decisions results in decisions
taking weeks, months or even years.
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Business vs Consumer Markets
Buying Differences: Size of Purchases
 For products that are regularly used and frequently
purchased, businesses will often buy a larger volume at one
time compared to consumer purchases. Because of this
business purchasers often demand price breaks (e.g.,
discounts) for higher order levels.
Buying Differences: Number of Buyers
 While there are several million companies worldwide that
operate in the overall business market, within a particular
market the number is much smaller. For example, while in
the United States there are over 95 million households who
may shop at a grocery store, there are only a few thousand
grocery stores with many of these centrally controlled as part
of a chain of stores?
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Business vs Consumer Markets
• Buying Differences: Type of Promotions
 Companies who primarily target consumers often
use mass advertising methods to reach an often
widely dispersed market.
 For business-to-business marketers the size of
individual orders, along with a smaller number of
buyers, makes person-to-person contact by sales
representatives a more effective means of
promotion.

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Types of Business Purchase Decisions

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Types of Business Purchase Decisions
Straight Re-Purchase -
 These purchase situations involve routine ordering.
 In most cases buyers simply reorder the same products or
services that were previously purchased. In fact, many larger
companies have programmed re-purchases into an
automated ordering system that initiates electronic orders
when inventory falls below a certain pre-determined level.
 For the supplier benefiting from the re-purchase this
situation is ideal since the purchaser is not looking to
evaluate other products.
 For competitors who are not getting the order it may require
extensive marketing efforts to persuade the buyer to consider
other product or service options.
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Types of Business Purchase Decisions
Modified Re-Purchase –
 These purchases occur when products or services previously
considered a straight re-purchase are for some reason now under a
re-evaluation process.
 There are many reasons why a product is moved to the status of a
modified re-purchase. Some of these reasons include: end of
purchase contract period, change in who is involved in making the
purchase, supplier is removed from an approved suppliers list,
mandate from top level of organization to re-evaluate all
purchasing, or strong marketing effort by competitors.
 In this circumstance the incumbent supplier faces the same
challenges they may have faced when they initially convinced the
buyer to make the purchase. For competitors the door is now open
and they must work hard to make sure their message is heard by
those in charge of the purchase decision.

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Types of Business Purchase Decisions
New Task Purchase –
 As the name suggests, these purchases are ones the
buyer has never or rarely made before.
 In some ways new task purchases can be considered
as either minor or major depending on the total cost
or overall importance of the purchase. In either case
the buyer will spend considerably more time
evaluating alternatives.
 For example, if faced with a major new task
purchase, which often involves complex items, such
as computer systems, buildings, robotic assembly
lines, etc., the purchase cycle from first recognizing
the need to placement of the order may be months
or even years.
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Organizational
Buying process

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Organizational Buying Process
1. Need Recognition:-
 First step of organizational buying process is need
recognition in which someone in the company
recognizes a need that can be met by acquiring a
good or a service.
 When the need or problem arises, the organization
has to take the decision whether to make or
purchase the product.
 Needs are recognized through internal stimuli and
external stimuli.
 For example if the organization recognizes the need
for the purpose of expansion of office, function, new
branches are open or new product are developed.
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Organizational Buying Process
2 General need description:-
 Needs description is second step of organizational
buying process. In this step of organizational buying
process, organization, organization describes the
general characteristics and quantity of a needed
items.
 Helps of engineers, users and consultants should be
taken to prepare need description of complex goods.

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Organizational Buying Process
3 Product speciation:-
 At this stage of organizational buying process,
organization decides on the product and specifies the
best technical product characteristics for needed
items.
 If organization thinks to purchase externally then the
product features, outlook and its requirement are
determined. The product or items characteristics
such as the product quantity, quality, price, method of
payment, mode of payment, delivery date, and place
design of the product.

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Organizational Buying Process
4 Suppliers Search:-
 At this stage of organizational buying process, the
buyer searches or identify possible potential
suppliers who can supply goods and services
according to their committed product specifications.
 Buyer prepare a list of suppliers to select good and
proper suppliers. This list is prepared by looking at
trade directory, searching in internet, asking other
companies for suggestions etc.
 Regular products are purchase from regular suppliers
but if the goods to be bought are new, complicated,
and costly, it needs long time to search suppliers.

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Organizational Buying Process
5 Proposal solicitation:-
 Proposal solicitation is the fifth step of organizational
buying process. In this stage the buyer invites
qualified suppliers to submit proposal from public
media.
 If the product is costly and complicated, the buyer
demands detailed proposal and if the product is
technical, business organization calls for presenting
the product itself. It should meet all the required
technical specification

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Organizational Buying Process
6 Supplier selection:-
 The organizational buyer evaluates the proposal and
selects the most reliable and capable supplier who
can supply products to the organization according to
the requirement.
 While evaluating process they can adopt several
criteria such as the past performance of the suppliers,
regularity, punctuality, product quality and quantity,
goodwill, price, terms and conditions of delivery of
goods, relationship with the buyers, business
efficiency and services etc.

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Organizational Buying Process
7 Purchase decision:-
 After selecting suppliers, they make purchase
decision.
 While make purchase decision, the buyers should be
clear or they take specific details about the terms of
sales/ credit arrangement, technical and additional
services.
 Organization writes the final order with the chosen
supplier, listing, the technical specifications, quantity
needed, expected time of delivery, return policies and
warranties.

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Organizational Buying Process
8 Performance evaluation:-
 Performance review or evaluation is the final step of
organizational buying process. At this step of the
business buying process, the organization reviews
supplier performance.
 The organization rates its satisfaction with suppliers
deciding whether to continue, modifies or drop them.

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Major factors influencing
Business Buyers’ Behavior

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Factors determining organizational buying decision

• There are various factors that determine buying

behavior of business buyers. The major ones are as
follows.

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1 Environmental Factors:-
• Environmental factors affects organizational buying
behavior. This includes
i. Economic Factors
ii. Technological factors:-
iii. Political and legal factors:-
iv. Social Responsibility:-
v. Competition:-

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1 Environmental Factors:-
i. Economic Factors:- Economic factors affects organizational buying behavior. The economic
condition of country determines several factors such as level of demand, production facility,
consumption pattern, investment, economic health, saving. The economic condition
determines the purchasing power of industrial users. The prosperity is economically good
condition and recession is economically bad condition for marketing.
ii. Technological factors:-The level of technology, pace of technological change, innovation
capacity, technology transfer directly affects to the organizational buying decision.
Technological change affects the production process, packaging, communication and
transportation. Fast growing new technology creates a revolution in purchasing and selling
pattern of, information search, and material management.
iii.Political and legal factors:- Political system, political situation, political philosophy,
government policies, laws rules and regulation also affects organizational buying decision.
The political stability and favorable climate affects the organization buying decision
positively. It provide the environment of good investment.
iv.Social Responsibility:- The investor's benefits increase socially accepted goods and
services. The environmental pollution issues, consumer health issues, child labor issues,
social responsibility issues influences the product production. These are the serious rising
issues in the business field which influences the organizational buying decision.
v. Competition:- Competition of market also affects the buying decision of organizational
users. This competition includes pure competition, monopolistic competition, and oligopoly
competition.

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 2 Organizational factors:-
i. Objective:- Goods are purchase to meet organizational objective. Buying objective
should match with organizational objective. If organization's objective is to produce
quality products purchase objective also should be to purchase quality raw
materials. Thus organizational buying decision is also affective by objective.
ii.Policies:- Buying policy also affects organizational buying behavior. Goods should
be purchased according to buying policy of the organization. If the raw material
purchasing policy is to buy from national supplier, they must follow it. Similarly, if
the producer want to implement Nepalese technology. They should be aware of
implementation of this policy.
iii.Procedure:- Procedure is the methods and process adopted by an organization to
buy goods and services. Goods or services are can be purchased directly through
agreement, or through tender, or through catalogue, and so on. Whichever
procedure organization has adopted the buyer should follow it.
iv.Organizational Structure:- The organizational buying should depend on the
boundary of authority, responsibility and relationship. In these complexities, big or
reputed authorized companies specialize purchasing department for their convenience.
Purchasing structure may be centralized, decentralized, and committee purchase.
v. System:- Purchasing system also directly affects organizational buying behavior. An
organization can adopt any one or more such as concentrated system, decentralized
system, huge quantity purchase system, small quantity purchase system and other
purchasing system. 36
 3. Interpersonal Factors:-
• The organizational buying decision involves in the individual personnel or
staffs with different interest, status, authority and influence. These
interpersonal factors affects the organizational buying decision.
i. Authority:- Organizational buying is based on authority. The organization
has a different members and it has long hierarchy of authority. The
organizational buying is influenced by the authorized people who have
authority of final decision.
ii. Interest:- Users influencers, buyers, decider, and gatekeepers are involved
in organizational buying process. Their own interest affects organizational
buying decision. As their interest becomes different, buying process may be
complicated.
iii. Status:- The status determines the job position and role performed in the
organization. The buyer status influences product and suppliers selection
process.

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 4 Personal factors:-
i. Age:- Age of person involve in purchase decision affects organizational buying
behaviors. Youngsters make quick buying decision in comparison of older aged
persons but older aged person tend to rational decision in comparison of
youngsters. Similarly young people try to find new suppliers whereas older
person try to give continuation to the existing suppliers.
ii. Education:- Organizational buying is rational. Educational buyers carefully
search and evaluate different product and suppliers. They use different
important information and compare brand, quality, competitors and delivery
system while buying process. Thus, buyer's education affects organizational
buying decision.
iii.Job position :- A job position represent the hierarchy of the organization.
Hierarchy is based on the authority and decision power. The authority and
power level of the buyer's influence on the process of buying decision.
iv.Personality:- The personality factors differ from buyers to buyers. It is an
internal structure, traits, appearance and confidence which helps to influence
buying responses. Buyer's personality represents on selection of brand,
quality, purchase behavior and traits with the product and sellers.
v. Risk attitudes :- People can be risk takers or risk averters. Risk takers are aggressive
towards buying whereas risk averters are pessimistic towards buying. Such attitudes of
buyers towards risk directly affect the organizational buying behaviors. 38