CHAPTER 3

ORGANIZATIONAL BUYING BEHAVIOR

Dynamism

 Forces inside and outside the organization influence the organizational buyer
 Crucial to reach organizational buyers efficiently and effectively with an
offering that responds to their needs
Major Stages of the Organizational
Buying
Stages
Process
Description
Problem recognition When someone in the organization recognizes a problem that can be solved or an
opportunity that can be captured by acquiring a specific product. Can be
triggered by internal or external forces.
General description of need Determining the characteristics needed in the equipment.
Product specification Developing a detailed and precise description of the needed equipment.
Supplier search Identifying a set of alternative suppliers that could satisfy the requirements.
Acquisition and analysis of Proposals are acquired from the set of possible suppliers and evaluated by the
proposals buying unit.
Supplier selection Negotiations with the finalists are conducted and a supplier is chosen.
Selection of order routine Attention is centered on the buying situation rather than on products because
organizations with significant experience in purchasing a particular product will
approach the decision quite differently from first time buyers.

Performance review After the purchase, evaluation will be made on the equipment and the service
support provided by the supplier.
Buying Situations
Buying situations Description Problem solving extend

New task Decision makers perceive the problem or need as Extensive problem solving
totally different from previous experiences; therefore,
they need a significant amount of information to
explore alternative ways of solving the problem and
searching for alternative suppliers.
Straight rebuy A continuing or recurring requirement, buyers have Routine problem solving
substantial experience in dealing with the need and
require little or no new information. Evaluation of
new alternative solutions is unnecessary and unlikely
to yield appreciable improvements.
Modified rebuy Decision makers feel they can derive significant Limited problem solving
benefits by reevaluating alternatives. The buyers have
experience in satisfying the continuing or recurring
requirement, but they believe it worthwhile to seek
additional information and perhaps to consider
alternative solutions.
Buying Determinants Theory
Factors Description Example

Environmental Characteristics of the world beyond the  Economy

factors market level  Technology
 Political
 Social
Market factors Characteristics of the market that  Number and relative size of competitors
influence buyer behavior  Substitute products
 Number and relative size of customers
Organizational Characteristics of the organization that  Size of the company
factors influence buying behavior  Profitability
 Corporate culture
 Distribution of power
 Organizational policy
Individual Demographic and psychographic factors  Age
factors that influence an individual’s buying  Education
behavior  Title or organization level of the buyer
 Risk taker or avoidance
Buying Center

 Consists of individuals who participate in the purchasing decision and share the goals
and risks arising from the decision
 Size
 Varies, but an average buying center usually includes more than 4 persons per purchase
 The number of people involved in all stages of one purchase may be as many as 20
individuals
 Composition of the buying center may also change from one purchasing situation to
another
 Could evolves during the purchasing process in response to the information
requirements of the specific situation
 A person could assume all roles or separate individuals could assume different roles
 Sometimes, a single person might assume multiple role within a buying center.
Buying Center
Roles Description
Users Personnel who use the product in question. May have anywhere from inconsequential to
extremely important influence on the purchase decision. May even develop the product
specifications.
Gatekeepers Control the flow of information, which is to be reviewed by other members of the buying
center. May do so by disseminating printed information or by controlling which salesperson
speaks to which individuals in the buying center.
Influencer Affect the purchasing decision by supplying information for the evaluation of alternatives or
by setting buying specifications. Typically, employees from technical departments will have
significant influence on the purchase decision.
Deciders Actually make the buying decision, whether or not they have the formal authority to do so.
The identity of the decider is the most difficult to determine. Buyers may have formal
authority to buy but the president of the firm may actually make the decision.
Buyer Formal authority to select a supplier and implement all procedures connected with securing
the product. More powerful members of the organization often usurp the power of the
buyer. Usually assumed by the purchasing agent, who executes the administrative functions
associated with a purchase order.