ndustrial Buying Process

&
Factors

By
Ashwin Raphel IG
Blessy Varghese
Buying Process
( Buy - Phase Model )
8
Evaluation of product performance
7
Selection of an order procedure
6
Evaluation of proposals &
selection of a suppiler
5
Acquisition and
analysis of
proposals 4
Search of qualified
suppliers
3
Development of
detailed
specifications 2
Definition of product - type
needed 1
Recognition of a need
 An organization needs
Example -new office space .
1 - Recognition of a Crowded Condition
need
Definition of product - type needed
Built a new office , add on to
existing
building or simply find a larg
place to
rent
Development of detailed specifications / buy
An architect would help creat
specifications by drawing pla

Search of qualified Then

suppliers
the suppliers will be contacted , inclu
those recommended by the architect

Acquisition and analysis of proposals

Receiving & reviewing bids from ea
contractor

valuation of proposals & selection

The architect
of & the executives wou
a supplier meet , evaluate the proposals , and
select a contractor
Selection of an order Creation
procedureof a contract – specifying whe
building will be complete , what it will
like , and when payments will be made

Evaluation of product performance

Evaluation begins as the project be
S o m e C o n ce p ts
in
B u y - G rid M o d e l
• NEW BUYS
•
• STRAIGHT REBUYS
•
• MODIFIED REBUYS
Marketing Implications of
The
Buy-Grid
THEORIES OF BUYER MOTIVATION

• REWARD-MEASUREMENT THEORY
—THINK: BENEFITS
—
• BEHAVIOR CHOICE THEORY
—THINK: SITUATION
—
• ROLE THEORY
—THINK: NORMS / EXPECTATIONS
•
 REWARD - MEASUREMENT THEORY
Motivation = Valence XProbability
•This points out that •The degree of •Perceived
buyers are motivated by importance or Probability , or
both INTRINSIC REWARDS value attached to the perception
( those rewards they give a reward . that effort on a
themselves ) & EXTRINSIC •It varies from particular set
REWARDS ( rewards given by person to person . of tasks will
the organization ) lead to
Example accomplishment
of performance
outcomes that
will , in turn ,
lead to the
desired reward .
 BEHAVIOR CHOICE THEORY
• This theory states that buyers
go through a choice process
to arrive at decisions of how
they will buy .
•
• Process
• IDENTIFYING SITUATION --------- 1
• EVALUATE PERSONAL RELEVANCE
----------- 2
• ASSESS ACTION ALTERNATIVES &
 1
IDENTIFYING
SITUATION
E x a m p le

The degree to which the individual works

to achieve Personal benefit --- SELF -
ORIENTATION .
The degree to which the individual works
to achieve Company --- COMPANY - ORIENTATION
.
E x a m p le
 2
EVALUATE PERSONAL
RELEVANCE
• The buyer examines the reward
structures, both formal & informal,
associated with the situation as
defined in stage one.
Situation 1 – opportunity to purchase a
product – reward structure associated
with product , such as satisfaction with
the product .

Situation 2 – opportunity to show off

decision - making skills – reward
structure associated include promotions ,
management recognition , and the like .
3 ASSESS ACTION
ALTERNATIVES &
REQUIREMENTS
• The buyer looks at the amount of
control over the task:
– Are there any choices in what the
buyer can and can’t do !
– Company policies & procedures
may limit the choice of buying
activities
• Example:
• Company policy may require
soliciting at last three bids.
 4
CHOOSE BEHAVIOR
STRATEGY
• There are two type of strategy
Selecting AT & T --- high self -
– OFFENSIVE
orientation
– DEFENSIVE
Selecting another --- high
company - orientation

E x a m p le
 ROLE THEORY
•This theory suggests that people behave
within a set of norms or expectations
of others due to the role in which they
have been placed .
•When a person makes a purchase decision
alone for an organization , the decision
is said to be autonomous .
•When more than one person is involved ,
the group of participants in the
company are called the buying centers
or decision - making units ( DMU ).
•Role theory helps us to understand how
those participants interact because it
defines the role take when involved in
purchase
 ROLES IN THE BUYING
CENTER
• Initiator – Starts the purchase process by
recognizing the need.
•
• Decision maker – The person who makes the final
decision.
•
• Controller – Controls or sets the budget for the
purchase.
•
• Influencers – Are those individuals who seek to
affect the decision maker’s finial decision
through recommendations of which vendors to
include or which products are best suited to
solve the organization’s needs.
•
Example
PERSON ROLE
•SECRETARY
•

Initiator-reports that fax keeps breaking

•
•VICE PRESIDENT
down
•OFFICE MANAGER
•

•SECRETARY & OFFICE Controller-sets budget for purchase of new

•

fax
MANAGER •

•VICE PRESIDENT OF • Gatekeeper-gathers review from vendors.

•

OPERATIONS •

Recommender/Influencer-recommends a
•

particular product to decision maker

•

• Decision Maker – Selects fax to purchase

BUYING DETERMINANTS
THEORY
• General theory of why buyers buy
• The theory describes as due the combined
effects of four factors.

Environmental
Government regulations
factors and technology .

Market factors Size and number of

competitors .
Organizational Company size , corporate
factors culture , and policies .
Individual
factors
Age , experience , and
education .
 Reference
• Business Marketing – F Robert
Dwyer and John F Tanner.
Thank U !!!