Organizational Buying

16 – 04 - 09
 Type Of Orgn
• Classified into 3 types: Industries, Resellers,
Govts
• Orgns do not make purchases. They establish
relationships
• Industry purchases to aid production or service,
Resellers purchase to redistribute at a profit,
Govt purchases to satisfy mandatory functions
• Two main characteristics of Orgn buying:-
• Purchases are in bulk
• There are more than one person involved in
decision making
Factors influencing Orgn Buying
• Economic conditions
• Technological Pressures
• Political situations
• Competitive pressures
• Govt Policies
• Orgns policies, systems, procedures, objectives
• Interpersonal factors:- individual motives, likes
and dislikes
 Stages in Buying
• Recognition of a problem
• Clearly identify the need
• Identify a vendor
• Call for quotations from identified vendors
• Evaluate quotes, ascertain vendor competence,
Negotiate and place order
• On completion of order review performance
• Satisfactory performance leads to repeat order
 Reseller Buying
• Reputation of manufacturer
• Quality of product
• Assurance of service
• Exclusivity clause in agreement
• Product price, discounts and brand
 Govt Buying
• Involves many departments
• Bureaucratic procedure
• Considerable delay in decision making
• Standard items purchased under system
of DGS&D. It ensures uniform price and
source of supply
 Participants in B2B Buying
• User
• Influencer
• Buyer
• Decider
• Gate Keepers
 Nature of B2B Buying Behavior
• Buying is a basic activity for all formal orgns

• Buying is a complex process, not an instantaneous act

• Responsibility for buying is delegated to specialists

• Orgn buying behavior is defined as the decision making

process by which formal orgns establish the need for
purchased products or services, identify evaluate &
choose among competitive brands and suppliers

• Buying motivation may differ depending upon the

purchase purpose i.e. for resale, production or usage
 Characteristics of B2B Buying
Behavior
• More people are involved in decision
making
• Involves technical complexities
• Takes long time to decide
• Significant lag between marketing effort
and buying response
• Different marketing strategy for each
buying orgns
 Stages in B2B Buying
• Recognition of a problem or solution
• Determine quantity of needed item
• Description of needed items
• Search for potential sources
• Evaluation of quotations
• Selection of supplier and order placement
• Performance feed back
 Factors influencing Buying
decisions
• Environmental
• Economic
• Organizational
• Political
• Interpersonal
• Legal
• Technological
• Suppliers / Competition
• Individual
 Definitions
• Influencer: Generally technical people i.e.
design engineers, quality control
engineers & outside consultants
• Deciders: May be one or more people.
Most important peg of the buying decision
• Gatekeepers: Control flow of information
to members of buying center.
 Webster & Wind Model
• Environmental Variables: Physical,
technological, Economic, Politico legal, Labor
unions, Cultural, Customer demands,
Competitive pressures, Supplier information
• Organizational Variables: Objectives / Goals,
Organization structure, Purchasing policies &
procedures, Evaluation & reward system,
Degree of decentralization,
• Buying Center variables: Authority, Size, Key
influencers, Interpersonal relationship,
Communication
 Contd……….
• Individual Variables: Personal goals,
education, Experience, Expertise, Values,
Job position, Lifestyle, Income

• Orgn Buying Decisions: Choice of

suppliers, Delay decision & search for
more info, Make or lease or buy, Do not
buy, Wait & watch
 The Sheth Model
• Component 1: Differences among individual
buyer due to-----a) background of individuals b)
Information Sources c) Active search d)
Perceptual e) Distortion f) Satisfaction with past
purchases
• Component 2: Variables that determine if the
buying decision is autonomous or joint a)
Product specific factors i.e. Time pressure,
Perceived risk, Type of purchase b) Company
specific factors i.e. Size, Orientation, degree of
centralizaion
 Contd……….
• Component 3: Methods used in conflict
resolution i.e. Problem solving,
Persuasion, Bargaining, Politics

• Situation Factors: Economic conditions,

Labor disputes, M&A etc
• All the above leads to Supplier or Brand
choice
 B2B Buying situations
• New Product concept
• Prototype development buying

• Regular buying for existing products

• Buying for modified products

• Buying for global products