3.

B to B Decision Making

Business to Business Marketing by Shah M Saad Husain 1

Organizational Purchases
• Purchase Function in Organizations
• Cultural Influences on the Buying Process
• Procedures and Policies
• Ethics, Moral and Legal Frameworks
• Choosing a Supplier
• Recommendations
• Building a Shortlist
• Trade association Sources
• Use of Outside Agencies
• Manger’s Experience
• Centralized and Decentralized Buying
• Single or Multisource Suppliers
• Single – close cooperative relationship, attention and service, useful
in scarcity or volatility, high setup costs and commitment by Supplier
• Multisource – problems with one supplier, competition, new products
and offerings

Business to Business Marketing by Shah M Saad Husain 2

 A. Decision Making Unit

B. Decision Making Process

C. Buying Decision Difficulty

Business to Business Marketing by Shah M Saad Husain 3

A. Decision Making Unit

• Suggester
• Purchaser
• Advisor
• Decision Maker
• End User
• Gate Keeper

Business to Business Marketing by Shah M Saad Husain 4

The DMU in B2B Markets
 Complex structure
 Many people involved
 Long time to make decisions
 Buying for the organization
 Mainly rational reasons for purchase
 Seller might know DMUs over a long period
 DMU members can change
 High value goods, services, projects
 End user is probably not the decision maker.

Business to Business Marketing by Shah M Saad Husain 5

The DMU in B2C Markets
 Simple structure
 Few people involved
 Short time to make decisions
 Buying for self
 Mainly emotional reasons for purchase
 DMU members met at time of purchase
 DMU members stay the same
 Relatively low value products
 End user probably the decision maker.
6
Factors influencing the DMU or buying centre
 Vertical decision making
 Horizontal decision making
 Group influences on decision making
 The power of any one or more members to influence the others
 Political differences and jealousies between group members
 The inclination to discuss, prevaricate and not make a decision
 The inclination to compromise and select the least risky option
 The inclination to minimize the risk, go for the more risky option
 Individual Influences on decision making
 Management position within the organization
 Whether a prospective user of the product or service
 Being the ‘official’ buyer in the organization for the category of products
 Being seen as an expert in the product/service area
 Having access to information not available to others
 Being a gatekeeper to the decision maker.

Business to Business Marketing by Shah M Saad Husain 7

Managing Risk

 Performance risks – sale or return if product is

substandard in some way, technological upgrades.

 Financial risks – partnership agreements, sharing the

risk, spreading the costs, rental and leasing.

 Informational risks – supply of good information, expert

advice and consulting.

 Social (ego) risks – reassurance, seller corporate

image building, loyalty building measures.

Business to Business Marketing by Shah M Saad Husain 8

Marketing to Buying Centres
 Identify the decision-making unit members.
 Recognise the different roles that are played out.
 Prioritise levels of importance and power to make the
final decision.
 Appreciate both the group and individual pressures.
 Understand individual, group and company needs.
 Understand buyer policies and procedures.
 Be able to trace product ordering information flows, both
back and forth.
 Monitor and evaluate changes.
 Develop strategies and tactics to manage the process.
 Build in control mechanisms.

Business to Business Marketing by Shah M Saad Husain 9

B. Decision Making Process - DMP

 The preparation period

 Problem recognition
 Information search procedures
 Alternative valuation
 Written tender
 Negotiation
 Preferred buyer status
 Trial
 Choice
 Post-purchase evaluation

Business to Business Marketing by Shah M Saad Husain 10

DMP in B2B Markets
 Complex and intense
 Often a long process
 Detailed multifaceted information needed
 Rational reasons driving the purchase
 Formal benchmarking suppliers
 Trial of the product or service
 Penalties for product malfunction or shortfall
 Product/service contracts
 Negotiations often part of the process
 Formal preferred supply list.
Business to Business Marketing by Shah M Saad Husain 11
DMP in B2C Markets

 Simple and straightforward process

 Emotional and rational benefits wanted
 Impulsive purchase
 Product trial the exception
 Guarantees but no penalty for breakdown
 Contracts not usual
 Negotiation not usual
 Informal preferred retailer/brand.

Business to Business Marketing by Shah M Saad Husain 12

C. The Buying Decision Difficulty (BDD)

 Straightforward rebuy
 Modified rebuy
 New purchase
 Mixture of decision difficulty
 Switching costs
 Financial costs
 Resource costs
 Product costs
 Service costs
 Individual risk
 Supplier risk

Business to Business Marketing by Shah M Saad Husain 13

BDD in B2B Markets

 Routine purchases increasingly have to be questioned

 No impulse purchases
 All purchases questioned and measured by others
 Supplier contracts often given
 Heavy risk for wrong purchase
 Heavy switching costs
 Experts involved with difficult decisions
 Little legal protection against supplier duress
 Preferred suppliers sometimes used
 The more difficult the decision, the larger the DMU

Business to Business Marketing by Shah M Saad Husain 14

BDD in B2C Markets

 Habitual purchasing seldom questioned

 Impulse purchases
 Personal disappointment for wrong purchase
 No switching costs
 No experts except consumer groups
 Consumer legal protection against supplier duress
 Simple DMU.
Business to Business Marketing by Shah M Saad Husain 15