Organizational buying behavior

B2B Marketing

Organizational buying behavior

Consumer vs. Organizational buying behavior Main types of buying situations in B2B Stages of decision in B2B Roles in B2B procurement Influences on organizational behavior Buying centres in summary

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Consumer vs. Organizational buying behavior

Decisions made by consumers are quite simple Organizational buying processes are more complicated, there are several phases and steps Different buying behavior for different products and target groups Simple consumer goods like food and beverages are bought very spontaneously influenced by advertising and product presentation For premium consumer goods (expensive clothes, computers) buying behavior is getting more rational comparison Private investment goods price bargaining

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B2B products organizational procurement starts

More than one person involved Buying process follows certain rules Price comparison, standardisation, tenders = Ausschreibungen)

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B2B systems
involve more capabilities and greater workloads From the buyer s and the supplier s side decision has more extensive consequences

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B2B facilities
Industrial plants Manufacturing installations Office buildings

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Main types of buying situations in B2B

Straigtht rebuy routine decision, repetitive process (energy, office supplies, raw materials, wood, cigarettes), component suppliers for the automotive industry little or no new information Modified rebuy more complicated but less sophisticated: cars, trucks, computers, consulting modified rebuys are often treated too uncautious New task calls for thorough research industrial plant highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, military equipment, infrastructure) reevaluation of alternatives and search for new information and new alternatives

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Buying phases
Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Performance review
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Stages of decision in B2B procurement

Backhaus developed a widely usable model to distinguish between 5 phases of procurement Preliminary application (initiation phase) Tender proposal Negotiation Processing of order Warranty and services

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Preliminary application
Recognition of a problem (need) and a general solution Released by top management = operating department or external consultants Result request for an offer addressed to a number of potential suppliers

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Tender preparation phase

Determination of characteristics and quantity of needed items Search for and qualification of potential sources Supplier has to provide an offer Tries to be incomparable with his competitors Customer tries to make the offer best comparable

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Negotiation phase
= core selling process Comprises acquisition and analysis of proposals, evaluation of proposals and selection of suppliers

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Processing phase/warranty/ service phase

Contains selection of an order routine Realisation of the transaction along with the fixation of after sales service tasks

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Roles in B2B procurement buying center concept

Group of people involved in the buying process buying center Webster/Wind model shows 5 different roles not institutionalised This causes probleme in identifying and targeting the right people within the decision process

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Buying center
Role keepers have different tasks not mandatory Buyer User Initiator Gatekeeper Influencer
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Buyer
Formal authority to sign contracts Member of purchasing department Influences the vendor selection Not in technical details Main criteria: price + terms and conditions of the contract

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User
Person working with the product Interested in benefits and unobstructed function of the product to buy Large knowhow and preconceived opinion

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Influencer
A person with high technical knowledge and practical experience definition of minimum requirements on technical or company standards

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Gatekeeper
Controls the flow of information within the buying center Assistant of decision maker Influence by preparing the decision and the relevant documents (Scriptum p 33-34 + summary)

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Decider
Right to say yes or no Mightiest person

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Initiator
Person who brings new ideas and solutions into the company

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Specific marketing considerations in the industrial facilities business

Long decision taking process High risk Complex buying center The specific competitive situation

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Product policy
Focuses on innovation Has to care for high flexibility in research and development And manufacturing and assembling

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Price
Strict bid and tender rules High transparency Add value with service offering to achieve a differentiating position Another aspect: financing and sourcing models

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Distribution policy
Focus on negotiation phase Provide excellent people in the selling center High technical knowledge

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Communication
Problem solver! Proving success with comparable tasks Reference projects!

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