TOPIC

INDUSTRIAL BUYING BEHAVIOUR

DEFINATION
AN ORGANISATIONAL BUYING IS A PROCESS BY WHICH A COMPANY/ORGANISATION ESTABLISHES A NEED FOR PURCHASING PRODUCTS AND CHOOSE AMONG COMPETING BRANDS AND SUPPLIERS.
REASON TO BUY PRODUCT:
IN PRODUCTION OF ANOTHER PRODUCT TO SELL RENTED SUPPLIED TO OTHERS

DIFFERENCE BETWEEN CONSUMER AND INDUSTRIAL BUYING BEHAVIOR

AREAS BUYER BEHAVIOR INDUSTRIAL FUNCTIONAL INVOLVEMENT CONSUMER FAMILY INVOLVEMENT

RATIONAL/TASK MOTIVES
TECHNICAL EXPERTISE

SOCIAL/PSYCHOLO GICAL MOTIVES PREDOMINATE

LESS TECHNICAL

INTERPERSONAL,ST NON PERSONAL ABLE RELATION RELATION TO SOME EXTENT

DECISION MAKING

DISTINT, OBSERVABLE STAGES

UNOBSERVABLE MENTAL STAGES

BUYING CENTRE ROLES

IT IS DIVIDED INTO TWO MAIN

TYPES:PRIMARY ROLES. SECONDARY ROLES.

PRIMARY ROLES: DECIDERS: ORGANISATIONAL MEMBERS WHO DECISION MAKING POWERS: VICE PRESIDENT FINANCE INFLUENCERS: INFLUENCE THE DECISION MAKING PROCESS BY PROVIDING INFORMATION ON CRITERIA FOR BUYING CONSULTANTS: Eg. INSIDE THE ORGANIZATION: R AND D SPECIALIST AND OUTSIDE: CONSULTANTS

SECONDARY ROLES
USERS: THEY USE SO THEY INITIATE THE PURCHASE PROCESS: WORKERS BUYERS: HIGH LEVEL OFFICERS, MAJOR ROLE IS SELECTION OF SUPPLIERS AND NEGOTIATING PURCHASES . Eg PURCHASE DEPARTMENT. GATEKEEPERS: CONTROL THE FLOW OF INFO. Eg. RECEPTIONIST, SECRETARY.

STRAIGHT REBUY: when there is repetitive OR routine order given by the buyer to older supplier

MODIFY REBUY: WHEN BUYER WANTS TO MODIFY ANY PURCHASE: Eg EARLIER PENTIUM PC BUT NOW WANTS NEW i3 PROCESSOR PC.

NEW TASK: Buyer goes for first time purchase of product. Supplier becomes benchmark for next purchase.

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

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

DISTRIBUTION POLICY
Focus on negotiation phase Provide excellent people in the selling center High technical knowledge

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

Organizational buying behavior:

Professional purchasing: professional buyers with education and experience who know their tasks and responsibilities Derived demand: developments in industrial markets are often related to changes in the end-user markets upstream in the value chain Inelastic, fluctuating demand: due to the derived demand, price-elasticity in industrial markets is frequently lower than in consumer markets Geographical concentration: many industrial markets are geographical concentrated (e.g. Silicon Valley) Large order quantities and large amounts of money involved Limited number of customers: industrial suppliers often supply only a few companies compared to companies that deliver directly to consumers

Aspect Buying objective Buying motive Purchasing function

Industrial market Enable production Mainly rational Professional buying Many persons involved, much discussion Negotiations, intense interaction Large Often large Derived, fluctuation Rather inelastic Mostly limited Sometimes large geographic concentration

Consumer market Personal need satisfaction Also emotional Consumers Often impulsive, without consulting others Often without negotiation, little interaction Limited Mostly small Autonomous, relatively stable Rather elastic Very large Large spread

Decision making
Characteristics Product & market knowledge Order size Demand Price elasticity Number of customers Spread of customers

Models of industrial buying behavior

Variables that affect the buying process:
Characteristics of the product Strategic importance Sums of money involved Characteristics of the purchasing market Degree of risk Role of the purchasing department in the organization Affect of purchase on existing routines

Models of industrial buying behavior

Variables that affect the buying decision: Task variables
Relate to tasks, responsibilities and competences assigned to a person making the decision

Non-task variables
Relate to the professionals personality

CONCLUSION
Industrial buying behavior was discussed from different perspectives:
Organizational perspective Models that regard the interaction between two or more parties

Purchase process model offers organizations a tool for structuring their purchasing processes. E-procurement solutions offer the purchasing professional many opportunities to deal with problems.