ORGANISATIONAL BUYING

BEHAVIOUR
Presented BY:
Abhilash M P
A30301913068
Organizational
Buying Process
1. Problem
Recognition
2. General
Description
of Need
3. Product
Specifications
4. Supplier
Search
5. Acquisition
and Analysis
of Proposals
6. Supplier
Selection
7. Selection
of
Order Routine
8. Performance
Review
Three Buying Situations
NEW TASK
STRAIGHT
RE-BUY
MODIFIED
RE-BUY
NEW TASK
New taskthe problem or need is totally
different from previous experiences.
Significant amount of information is required.
Buyers operate in the extensive problem solving
stage.
Buyers lack well defined criteria.
Lack strong predispositions toward a solution.
MODIFIED RE-BUY
Modified re-buydecision makers feel there
are benefits to be derived by reevaluating
alternatives.
Most likely to occur when displeased with the
performance of current supplier.
Buyers operate in the limited problem solving
stage.
Buyers have well defined criteria.
STRAIGHT RE-BUY
Straight re-buythe problem or need is a
recurring or continuing situation.
Buyers have experience in the area in question.
Require little or no new information.
Buyers operate in the routine problem solving
stage.
APPROACHES TO BUYING
DECISION
Causal purchasesinvolve no information search or analysis.
Routine low prioritydecisions are more important and
involve a moderate amount of analysis.
FORCES INFLUENCING ORGANIZATIONAL BUYING
BEHAVIOUR
Environmental
Forces
Organizational
Forces
Group
Forces
Individual
Forces
Organizational
Buying
Behavior
Economic Outlook:
Domestic & Global
Pace of Technological
Change
Global Trade Relations
Goals, Objectives, and
Strategies
Organizational Position
of Purchasing
Roles, relative
influence, and patterns
of interaction of buying
decision participants
Job function, past
experience, and buying
motives of individual
decision participants
A projected change in
business conditions can
drastically alter buying
plan.
PERCEIVED RISK
COMPONENTS
1. Uncertainty about the outcomes of a
decision.
2. The magnitude of consequences
associated with making the wrong
selection.
MAJOR INFLUENCES ON BUSINESS
BUYER
Environmental Factors
Expected demand for the product that the buying
organization is selling, expected shortages for
the item, expected changes in technology
related to the item etc. are the environmental
factors that will have an effect.
Organizational Factors
Changes in purchasing department organization
like centralized purchasing, decentralized
purchasing and changes in purchasing
practices like long-term contracts, relationship
purchasing, zero-based pricing, vendor-
performance evaluation are the organization
factors of importance to marketers.


Inter-personal Factors
These factors are the relationship between buyers
and sales representatives of various competitor
companies.

Individual Factors
These factors related to the buyer. What sort of
ways of interacting and service are appreciated by
the buyers and what ways are considered as
irritants? Marketers have to understand the
reactions of buyers.

DECISION MAKING
PROCESS

1. Problem recognition: The process begins when someone in the
organization recognizes a problem or need that can be met by
acquiring a good or service. Problem recognition can occur as a
result of internal or external stimuli. External stimuli can be a
presentation by a salesperson, an ad, or information picked up at a
trade show.

2. General need description: Having recognized that a need exists,
the buyers must add further refinement to its description . Working
with engineers, users, purchasing agents, and others, the buyer
identifies and prioritizes important product characteristics.

3. Product specification: Technical specifications come next. This is usually the
responsibility of the engineering department. Engineers design several
alternatives, depending on the priority list established earlier.

4. Supplier search: The buyer now tries to identify the most appropriate vendor.
The buyer can examine trade directories, perform a computer search, or phone
other companies for recommendations. Marketers can participate in this stage by
contacting possible opinion leaders and soliciting support or by contacting the
buyer directly. Personal selling plays a major role at this stage.

5. Proposal solicitation: Qualified suppliers are next invited to submit proposals.
Some suppliers send only a catalog or a sales representative. Proposal
development is a complex task that requires extensive research and skilled
writing and presentation. In extreme cases, such proposals are comparable to
complete marketing strategies found in the consumer sector.



6. Supplier selection: At this stage, the various
proposals are screened and a choice is made. A
significant part of this selection is evaluating the
vendor.
For example, for routine-order products, delivery,
reliability, price, and supplier reputation are
highly important. These factors can serve as
appeals in sales presentations and in trade ads.


7. Order-routine specification: The buyer now
writes the final order with the chosen supplier,
listing the technical specifications, the quantity
needed, the warranty, and so on.

8. Performance review: In this final stage, the
buyer reviews the supplier's performance. This
may be a very simple or a very complex process.

THE BUYING SITUATION
Howard and Sheth identified three types of buying situation

1) Extensive problem solving: When a problem or need is new, the
means of solving that problem is expensive and uncertainty is high, a
consumer is likely to conduct extensive problem solving.

2) Limited problem solving: This occurs when the consumer has some
experience with the product in question and may be inclined to stay
loyal to the brand previously purchased.

3) Automatic response: This happens when companies who have built
up a large brand franchise will wish to move their customers to the
state of automatic response