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Module 2 - Organsational Buying Behaviour
Module 2 - Organsational Buying Behaviour
Organizational Buying
Behaviour
Organisation Buying
Organization buying is the decisionmaking process by which formal
organizations establish the need for
purchased products and services and
identify, evaluate, and choose among
alternative brands and suppliers.
Consumers market
Organizational Market
Large number of
consumers buyer
Organizational buyers
are few in number
Quantity of purchase
is comparatively low
Quantity of purchase
is more
Segmentation on
geographic,
demographic and
psychographic factors
Segmentation on
Purchasing approach,
situational factors,
personal characteristics
Organizational buying
situation
A business-to-business
sales situation has numerous key
differences from a business-to-consumer situation.
Marketing managers must understand how a basic buying
center works and the different types of rebuy situations.
Business Buying
Marketing managers have to deal with a different buying
situation when they sell directly to businesses.
The buying center of a business can complicate how a sale
occurs.
The marketing manager will also have to deal with three
different types of rebuys - new buy, modified rebuy and
straight rebuy.
Organizational buying
situation
New task
Straight rebuy
Modified rebuy
1.Straight rebuy
In this buying situation, only purchasing
department is involved.
They get an information from inventory control
department or section to reorder the material or
item and they seek quotations from vendors in an
approved list.
The "in-suppliers" make efforts to maintain product
and service quality.
The "out-suppliers" have to make efforts to get
their name list in the approved vendors' list and for
this purpose they have to offer something new or
find out any issues of dissatisfaction with current
suppliers and promise to provide better service.
2.Modified rebuy
In this buying situation, there is a
modification to the specifications of the
product or specifications related to delivery.
Executives apart from the purchasing
department are involved in the buying
decisions.
The company is looking for additional
suppliers or is ready to modify the
approved vendors list based on the
technical capabilities and delivery
capabilities.
4. Systems buy
Systems buying is a process in which the organization
gives a single order to a single organization for supplying a
full system.
A process in which an organization selects only one
supplier for all its raw material requirements .
The buying organization knows that no single party is
producing all the units in the system.
But it wants the system seller to engineer the system,
procure the units from various vendors and assemble,
fabricate or construct the system.
1. Initiators
2.Users
3. Influencers
4. Deciders
5. Approvers
6. Buyers
7.Gatekeepers.
1. Users
The persons who use the item. Say for safety gloves
the operators.
2. Initiators
The persons who request the purchase. The safety
officer may initiate the request for the purchase.
3. Influencers
The influencers are the tech personnel who help
develop specs and evaluate alternate products.
They are important when products involve new
and advanced technology.
4. Buyers
They are the person who actually do the buying transaction.
5. Gatekeepers
Gatekeepers are typically secretaries and tech personnel.
They control the flow of information to and among others within
the buying center.
Buyers who deal directly with a vendor are gatekeepers
6. Deciders
People who decide on product requirements and suppliers. It is the
final approval for product specifications and suppliers' list.
7. Approvers
Persons who approve the purchase. In the case of safety gloves,
the personal manager may have the power to approve.
Environmental factors
3.
Interpersonal factors
These factors are the relationship between buyers and sales
representatives of various competitor companies.
4. 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.
7. A post-purchase evaluation is
conducted and the feedback provided
to the vendor.
Just as consumers go through an evaluation period after they purchase
goods and services, so do businesses.
The buying unit might survey users of the product to see how satisfied they
were with it.
Cessna Aircraft Company, a small U.S. airplane maker, routinely surveys
the users of the products it buys so they can voice their opinions on a
suppliers performance.
Some buyers establish on-time performance, quality,
customer satisfaction, and other measures for their vendors
to meet, and provide those vendors with the information
regularly, such as trend reports that show if their
performance is improving, remaining the same, or
worsening. (The process is similar to a performance
evaluation you might receive as an employee.)
Buying Models
Industrial buyers are influenced by many factors when they make
buying decisions.
Business buyers influenced by organisational factors or taskoriented objectives ( like best product quality, or dependable
delivery, or lowest price)
Personal factors or non-task objectives ( like promotion,
increments, job security , personal treatment, or favour )
There are two models (or frame work) available to provide a
comprehensive and integrated picture of the major factors that
combine to explain organisational buying behavior
these are :
1. The Webster and wind model
2. The sheth model
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2. Organization variables
The organization variables include
objectives, goals, organization structure ,
purchase policies and procedures , degree
of centralization in purchasing, and
evaluation and reward system.
These variables particularly influence the
composition and functioning of the buying
centre and also the degree of centralization
or decentralization in the purchasing
function in the buying organization
Ethics in purchasing
Business ethics(also corporate
ethics ) is a form ofapplied
ethicsorprofessional ethicsthat
examines ethical principles and
moral or ethical problems that arise
in a business environment. It applies
to all aspects of business conduct
and is relevant to the conduct of
individuals and entire organizations.
Use of power
Corruptions
Declaring interest
Payment of agreed terms
Supplier relation and competition
Transparency , Confidentiality and
Fairness
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