Introduction to

Organizational Buying
Behaviour
Organizational buying behavior refers to the decision-making process that
businesses and organizations go through when purchasing goods and services. It
involves complex factors such as company policies, budgets, and the needs of
multiple stakeholders.

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by Akanksha Tyagi
Stages and Types of Organizational Buying
Behaviour
The stages of organizational buying behavior are:

• Problem recognition
• Information search
• Evaluation of alternatives
• Purchase decision
• Post-purchase evaluation

The four types of organizational buying behavior are:

• Straight rebuy
• Modified rebuy
• New task
• Systems buying
4 Factors of Organisational Buying Behaviour
Organisational Factors
The structure, policies, and procedures of the
organisation impact its buying decisions. For
example, a large corporation may have a
centralised procurement department that follows
strict protocols.
Interpersonal Factors
The relationships and dynamics between the
members of the buying centre, such as the
influencers, deciders, and gatekeepers, shape the
decision-making process.
Environmental Factors
External factors like the economy, competition,
and government regulations can influence an
organisation's buying behaviour. A recession may
cause them to cut costs and be more price-
sensitive.
Individual Factors
The personal motivations, perceptions, and biases
of the key decision-makers can sway the
organisation's buying choices. For instance, a
risk-averse manager may favour a conservative
option.
Market Segmentation
1. Market segmentation is the process of dividing a larger market into smaller, more manageable segments
based on shared characteristics.

2. Effective segmentation allows businesses to better understand their target audience and tailor their products,
messaging, and marketing strategies accordingly.

3. Example: A software company may segment the market for their accounting software by company size
(small, medium, enterprise), industry (e.g. healthcare, retail, manufacturing), and geographic location.
Target Explanation
Understand the Target Audience 1

Thoroughly research and analyze your

potential customers to identify their
specific needs, preferences, and pain
points.
Prioritize Key Segments
Evaluate each market segment and focus
your efforts on the ones that offer the
greatest potential for growth and
profitability.
2 Segment the Market
Divide the broader market into smaller,
more manageable groups based on shared
characteristics like demographics,
psychographics, or behaviors.
3
Positioning explanation
Positioning refers to the strategic placement of a product or service in the minds
of consumers relative to competing offerings. It involves highlighting the unique
features and benefits that differentiate the offering and create a distinct brand
identity.

For example, Apple positions its products as premium, innovative, and design-
focused, while Walmart positions itself as a low-cost, value-driven retailer.
What is Marketing Strategy?
Marketing strategy is the comprehensive plan that outlines an organization's overall marketing goals and how it will
achieve them. It involves segmenting the target market, positioning the brand, and developing a mix of marketing
tactics to reach and engage customers effectively.

For example, a software company may have a marketing strategy that focuses on positioning its product as the most
user-friendly solution for small businesses, targeting this segment through social media ads, content marketing, and
partnerships with industry influencers.
Types of Marketing Strategies
Differentiation Strategy
Focus on making your product or service stand out from competitors through unique
features, quality, design, or branding. Example: Apple's premium branding and
design-focused products.

Cost Leadership Strategy

Aim to be the low-cost provider in the market by optimizing operations and driving
down prices. Example: Walmart's focus on everyday low prices.

Niche Strategy
Target a specific, underserved segment of the market and dominate that niche.
Example: Harley-Davidson's focus on the motorcycle enthusiast market.
What is the Product Cycle? Stages of the
Product Cycle

Introduction
The product life cycle describes the stages a product goes through, from
1 launch to eventual decline.

Growth
2 Sales rapidly increase as the product gains market acceptance.

Maturity
3 Sales plateau as the product reaches market saturation.

Decline
Sales slowly decrease as the product becomes
4
obsolete or is replaced by newer alternatives.

The product life cycle is a crucial concept in marketing strategy, as it helps businesses understand and plan for the
evolution of their products over time. Understanding where a product is in its life cycle can inform decisions
New Product Development Process

8 —
Steps Key Stages

The new product development process is crucial for businesses to stay competitive and meet evolving customer
needs. This 8-step process outlines the key stages from idea generation to product launch:

1. Idea Generation: Gather insights from market research, customer feedback, and internal brainstorming to
identify potential new product opportunities.
2. Idea Screening: Evaluate and prioritize the most promising ideas based on criteria like market potential,
feasibility, and alignment with business goals.
3. Concept Development: Further refine the selected ideas into tangible product concepts, including
defining the key features, benefits, and positioning.
4. Concept Testing: Gather feedback from target customers to validate the appeal and viability of the
product concepts.
5. Business Analysis: Conduct a thorough financial and market analysis to assess the commercial potential
and risks of developing the new product.
6. Product Development: Engineer the product, create prototypes, and finalize the design, manufacturing,
and quality control processes.
7. Test Marketing: Pilot the new product in a limited market to evaluate its performance and gather real-
world feedback before a full-scale launch.
8. Commercialization: Execute the full-scale product launch, including production, distribution, marketing,
and sales activities.
Conclusion
In conclusion, we have explored the key aspects of organizational buying
behavior, including the stages of the decision-making process, the different types
of organizational buyers, and the critical factors that influence their decisions.
Understanding these concepts is essential for businesses to effectively market
and sell their products or services to organizations.