Chapter 6

Organization Markets &

Organizational Buying Behavior
 Objectives of this session

 The concept of organizational buying

 Difference between consumer markets

and organizational markets

 Organizational markets in India

Organizational buying behavior
 Organizational buying is entirely
different from that of consumer
buying
 It involves a through & deep analysis
 Organizations purchase products
ranging from high complex
machinery, small components, bought
on regular basis & those that are
rarely purchased
 Differences between organizational &
consumer markets
Consumers market Organizational Market
Less time spent on More time spent in
purchasing process purchasing process

Large number of Organizational buyers

consumers buyer are few in number

Quantity of purchase is Quantity of purchase is

comparatively low more

Segmentation on Segmentation on
geographic, demographic Purchasing approach,
and psychographic situational factors, personal
factors characteristics
 Organizational buying situation
 New task

 Straight rebuy

 Modified rebuy
 System buying: a process in which an
organization selects only one supplier for
all its raw material requirements

 System selling: a process in which a seller

himself sells all the raw materials needed
by a customer
Organizational markets in India
 Industrial markets in India can be divided
into three sectors

 Chemical and pharmaceutical companies

 Energy and natural resources
 Industrial and automotive sector
 Chemical and Pharmaceutical

Products are produced in bulk quantities & are

conventionally sold to organizational customers

Opportunity for growth in specialty chemicals

segments i.e. chemicals

Pharmaceutical companies are set to have a very

high growth rate with most global companies
making strategic moves such as mergers or
acquisitions.
 Energy and natural resources
 Due to population growth and increasing
urbanization natural resources are depleted
 Dependence upon conventional sources for
energy
 Search for alternative source for energy
 Further sub segments: oil& gas, coal & lignite,
forests & timber, precious metals
 Industrial and automotive
 Success of companies directly linked to financial
& economical status of the country
 Over the years has changed into highly
competitive industry
 Large number of competitors (related to
infrastructure)
 Sub segments: cars two/three wheelers, heavy
vehicles, electrical, electronics, hardware etc.
 Participants In Organizational
Buying
 Initiators
 Influencers
 Users
 Deciders
 Approvers
 Buyers
 Gatekeepers
 Stages Of Buying
 Problem Recognition
 General Need Recognition
 Product Specification
 Searching for potential Suppliers
 Value Analysis
 Vendor Analysis
 Order-Routine Specification
 Multiple Sourcing
 Performance Review