Organizational Buying Behavior

Dr. Neeraj Pandey

Understanding the dynamics of OBB is crucial for identifying

profitable market segments, locating buying influences
within these segments and reaching organizational buyers
efficiently and effectively with an offering that responds to
their needs

8 Stage Model of Organizational Buying Process

1. Problem
Recognition

2. General
Description
of Need

4. Supplier
Search

Organizational
Buying Process

6. Supplier
Selection

7. Selection
of
Order Routine

3. Product
Specifications

5. Acquisition
and Analysis
of Proposals

8. Performance
Review
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Three Buying Situations

1. New task
2. Modified rebuy
3. Straight rebuy

Three Buying Situations

1. New Task

New taskproblem or need totally different from

previous experiences.
Significant amount of information required
Buyers operate in extensive problem solving
stage

Buyers lack well defined criteria.

Lack strong predisposition toward solution
(Extensive Problem Solving)

Three Buying Situations

2. Modified Rebuy
Modified rebuydecision makers feel
benefits to be derived by reevaluating
alternatives.

Most likely to occur when buyers displeased

with current suppliers performance
Buyers operate in limited problem-solving
stage.

Buyers have well-defined criteria.

(Limited Problem Solving)

Three Buying Situations

3. Straight rebuy
Straight rebuyproblem or need is
recurring or continuing requirement.
Buyers have experience in area.
Require little or no new information
Buyers operate in routine problem-solving
stage
(Routine Problem Solving)

Buying Decision Approaches

Casual purchasesinvolve no information search or analysis.

Routine low prioritydecisions more important and

involve moderate amount of analysis.

Forces Influencing Organizational Buying

Behavior
Economic Outlook:

Projected change in
business conditions
can drastically alter
buying plan.

Organizational
Buying
Behavior

Environmental
Forces

Domestic & Global

Pace of Technological
Change
Global Trade Relations

Organizational
Forces

Goals, Objectives, and

Strategies, Size
Organizational Position
of Purchasing

Group
Forces

Individual
Forces

Roles, relative
influence, and patterns
of interaction of buying
decision participants
Job function, past
experience, and buying
motives of individual
decision participants
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Strategic Priorities in Purchasing

Becoming Business Partners,
Not Just Buyers

Shift from administrative role to valuecreating function that serves internal stakeholders
and provides competitive edge in market.

Exploring New Value Frontiers:

Its Not Just About Price

Focus on suppliers capabilities, emphasizing

business outcomes, total ownership costs, and
potential for long-term value creation.

Putting Suppliers Inside:

The Best Value Chain Wins

Develop fewer and deeper relationships with

strategic suppliers and involve them in decisionmaking processes, ranging from new product
development to cost-reduction initiatives.

Pursuing Low-Cost Sources:

A World Worth Exploring

Overcome hurdles imposed by geographical

differences and seek out cost-effective suppliers
around globe.

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Pursuing Low-Cost Sources

Job-Protection restrictions due to national law
Cost-cutting is imperative ($22.50 vs 90 cents)
Push their suppliers to do the outsourcing for them

Questions for the Industrial Salesperson

when Assessing Group Forces
1.

Which member takes part in the buying process?

2.

What is each members relative influence in decision?

3.

What criteria is important to each member in evaluation

process?

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Roles in the Buying Center

Initiator

Influencers

Gatekeepers

Decider

Purchaser

Users

Buying Center Roles

INITIATOR

Initially perceives a problem and initiates the buying process to solve

it.

INFLUENCER

Affects the purchasing decision by providing technical information or

other relevant (internal or external) information.

GATEKEEPER

Controls the information to be reviewed by members of the buying

group.

DECIDER

Actually makes the buying decision, whether or not they have formal
authority to do so. Could be the owner, an engineer or even the buyer.

BUYER

Has formal authority to select and purchase products or services and

the responsibility to implement and follow all procurement
procedures.

USER

Actually use the product in question. Can be inconsequential or major

players in the process.

Members of the buying center assume different

roles throughout the procurement process

Clues for
Identifying
Powerful
Buying
Center
Members

1. Isolate the Personal Stakeholders

2. Follow the Information Flow
3. Identify the Experts
4. Trace the Connections to the Top
5. Understand Purchasings Role

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Selective Processes in Information Processing

Selective exposure.
Selective attention.
Selective perception.
Selective retention.

16

Perceived Risk Components

1. Uncertainty about decision
outcomes.
2. Magnitude of consequences
associated with making wrong
selection.

17

Major Elements of Organizational Buying Behavior

Organizational buyers
behavior influenced by
environmental,
organizational, group,
and individual factors.

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Discussions