ORGANISATIONAL BUYING BEHAVIOUR

The behavior of an organization in buying goods or services is called organizational

buying behavior.According to Pette D. Bennett, “Organizational buying behavior is
the decision making process by which a buying group establishes the needs for goods
and services and identifies, evaluate, and chooses among alternative brand and
suppliers.

The organizations buy goods or services for business use, resale, produce other
goods or provide services

Business buy goods to use in business

industries buy goods for producing another goods

Resellers buy goods for reselling them at profitable price.

Non-governmental organizations, hospitals, educational institutes, social

organizations, religious organizations etc. buy goods to provide services to their
followers or customers.

PERSONS WHO TAKE PART IN ORG BUYING PROCESS.

Users, influencers, buyers, deciders and gate keepers are the persons who take part
in organizational buying process.

Users are the persons who use the purchased goods or services. They prepare buying
proposal and help in preparing product specification. They also help in analyzing
alternatives.

Influencers influence buying decision. They help in preparing products specification

and analyzing alternatives.

Buyers are those who buys goods or services .Buyers select suppliers and make
buying terms and conditions.

Decider is the person who makes the last decision to buy goods or services from the
selected supplier. Goods are purchased from the supplier selected by the decider.
Gatekeeper controls follow up information and other things. Technical staff and
personal assistant work as gate keeper.

FACTORS INFLUENCING INDUSTRIAL BUYING PROCESS.

I. Environmental Factors

Environment factors affect organizational buying behavior. This includes economic,

technological, political-legal, social responsibility and competition.

 Economic Factors

Economic factors affect organizational buying behavior. This includes level of

demand and economic health. The level of demand includes desire for buying goods.
This is affected by income distribution and price of product.

 Technological Factors

Technological factors also affect organizational behavior. This includes level of

technology, pace of technology, technology transfer etc. E-commerce as well as
information technology has got revolutionary change. It has directly affected
organizational buying behavior.

 Political and Legal Factors

Political and legal factors also affect organizational buying process directly. Political
factors include political system, political situation, and political thought, government
policies etc. whereas constitution, laws, rules and regulations etc. are included in
legal factors.

 Social Responsibility

A business organization should consider social responsibility while buying any goods
or services. interest of society should be protected. Interest of different pressure
group of the society also should be considered while buying goods or services.

 Competition

Competition also affects buying behavior. This competition includes pure competition,
monopolistic competition and oligopoly competition.
II. Organizational Factors

Organizational factors also affect organizational buying behavior. This includes

objectives, policies, procedures and organizational structure

 Objectives

Buying objective is determined according to organizational goal. Goods should be

purchased according to organizational objective. As goods or services need to be
purchased according to organizational goal, buying is affected by objective.

 Policies

Purchasing or buying policy also effects organizational buying behavior. Goods

should be purchased according to buying policy of the organization. If the
organization has the policy of buying domestic goods, the buyer cannot buy foreign
goods. If the purchasing policy is silent in this matter, whichever goods, foreign or
domestic, can be purchased as desired.

 Procedures

The methods and process adopted by an organization to buy goods or services is

called procedure. Goods or services can be purchased directly through agreement, or
through tender, demanding catalog etc. Any of the method can be adopted to buy
goods or services. Whichever procedure the organization has adopted, the buyer
should follow it.

 Organizational Structure

Organizational structure defines authority and relations which directly affects buying
behavior. In some organizations, goods or services are purchased by direct
order of chief executive while in some other organizations, goods or services are
bought through purchase department. So, buying behavior is affected by
organizational structure.

III. Interpersonal Factors

Interpersonal factors also affect buying behavior. This includes authority, status,
interest etc.
 Authority

The personnel whom the organizational structure gives authority to order for
purchase, no goods can be purchased without his order. Buying decision of such
authority plays an important role in buying.

 Status

If the status or level of the buyer is high, his buying decision becomes rational and
quick. His/her behavior becomes mature.

 Interest

Users, influencers, buyers, decider and gate keeper are involved in organizational
buying process. Their interest affects organizational buying process. As their interest
becomes different, buying process may be complicated.

IV. Personal Factors

Personal factors also affect buying behavior. This includes age of person, education,
level of job, personality etc.

 Age:

Age of person also affects selection and priority. Younger persons make buying
decision and supplier selection quicker than older aged persons. Similarly, the
younger persons try to find new suppliers whereas older persons try to give
continuation to the same who is supplying. So this also affects buying process.

 Education

Education makes person able to analyze good or bad. So, an educated person takes
buying decision rationally whereas uneducated person makes buying decision
irrationally. Educated person selects goods or services carefully. So, buyer’s education
also affects organizational buying behavior.

 Job Position

Buyer’s position also affects his buying behavior. Buyer’s status may be low or high.
 Personality

Personality of person working in an organization may be different. Personality affects

selection of quality, brand, price etc. So, buyer’s personality also affects
organizational buying behavior.

 Risk Attitude

Risk bearing capacity of men becomes different. Some can bear more risk and others
like to take less risk. Similarly, some like to avoid risk and some others like to face.
The capacity and attitude to bear risk also affect buying behavior. The buyers having
the capacity to take high risk become capable for making the best buying decision.

BUYING DECISIONS INVOLVED IN INDUSTRIAL BUYING

The industrial buyer has to take a lot of decisions while making purchase of an
industrial product.the number of decisions will vary depending on the type of buying
situation.there are generally 3 types of buying situation

1. straight or routine buy:

In this case purchaser will reorder the product without any modification.this is
going through a routine process in the purchase department.the buyer will select the
supplier from the suppliers list available with them,based on the past experience and
satisfaction with various suppliers.

2. modified re buy:

The term modified re buy indicates situations where the buyer wants to modify
product specification,prices etc.when a industry decided to purchase goods from
different suppliers rather than from the old suppliers due to price changes or quality
changes then it is known as modified re buy.

3. completely new task:

This means company is buying a product or service for the first time.the bigger the
cost or risk involved,more will be the number of participants involved in the decision
making and more information will be collected by them.
4. other related decisions involved in the buying decision:

New task situations involves the maximum number of decision taken.here the buyer
will be interested in knowing and deciding on

 Product specification.

 Price limits

 Delivery terms and condition

 Time of delivery

 Service terms

 Payment terms and conditions etc…