CHAPTER 2

BUSINESS PURCHASING
BEHAVIOR
 How to decision is made?

Who the decision maker are?

How the seller and buyer interact?

LEARNING OBJECTIVE
 The steps that the business buyers go through in the
purchasing process
 The overall process of business buyer behavior, based on
different perspective
 How marketing strategies can be initially formulated for
different types of buying situation
 How functional areas within the buying organization and
individuals influence the purchase decision.
 The effect that organization structure and internal conflict
have on the buying process
 Ethical concern in buyer seller relationship
 STAGE OF BUSINESS CONSIDERATION PURCHASING PROCESS
STEP
Problem recognition
Need definition
Characteristic of needed item
Identification or source of supply Determination of possible
Solicitation of proposal
Evaluation of proposal
Execution and timing of orders
Performance evaluation
BUYER CONSIDERATION
Identification of need by primary Need creation understanding
areas
Definition of product or service
to satisfy need
Firm specification develop.
Involvement of other areas
vendor
Providing supplier with firm
specification request
Determination of best overall
solution
Implementation by purchasing
Evaluation of product and
vendor
SELLER CONSIDERATION
primary area motives
Presence with customer
Can influence specifications.
Understanding secondary areas
motive
Presence in market place.
Ongoing contact with company.
Meeting or influencing
specification and request.
Continuing contact with buyer
Response as agreed upon, close
contact
Correction as required or new
opportunity not previously
identified.
 MODEL OF BUSINESS BUYER BEHAVIOR

 Individual And Group Decision Making : The Sheth Model

 The Role of Buyer : The Webster and Wind Model

 Purchase Situation : The Buy grid Model

The Type Of Purchase Situation:
- modified Rebuy
- Straight Rebuy
- New Task Purchase
 COMPARASION OF BUSINESS
PERCHASE SITUATION
Type of New Task Modified Rebuy Straight Rebuy
Purchase
Situation
Factors Influencing High perceived Low perceived risk
risk High frequency of
Low frequency of purchase
purchase High product
Low product familiarity
familiarity High choice
Limited choice criteria
criteria
Related Consumer Extensive problem Limited problem Routinized
Behavior solving behavior solving response behavior
 RESPONSE TO DIFFERING BUYING SITUATIONS
BUYING SUPPLIER STATUS
SITATION
IN SUPPLIER OUT SUPPLIER

NEW TASK Monitor changing or emerging

purchasing needs in organization

Isolate specific needs Isolate specific needs

If possible, participate actively in If possible, participate actively

early phases of buying process in early phases of buying
by supplying information and process by supplying
technical advice. information and technical
advice
STRAIGHT REBUY Reinforced buyer-seller Convince organization that
relationship by meeting the potential benefit of
organization’s expectation reexamining requirements
and supplier exceed the costs

Be alert and responsive to Attempt to gain a position

changing needs of customer on organization preferred
list of supplier, even as a
second or third choice
MODIFIED REBUY Act immediately to remedy Define and respond to the
problems with customer organization problem with
existing supplier

Reexamine and respond to Encourage organization to

customer needs sample alternative affering.
 BUSINESS PURCHASE MOTIVES
 ECONIMICMOTIVES

economic motives naturally vary by firm, although increasingly there has

been a trend toward reliability, customer service and efficiency rather than
just offering a lower price
a. favorable pricing
b. product or service quality
c. assurance of supply
d. customer service
 NON ECONOMIC MOTIVES
non-economic motives represent factors that are difficult to quantify. It is
important to understood and acted upon the business marketer.
a. prestige
b. career security
c. friendship and social consideration
d. other personal needs
 ECONOMIC MOTIVES
 Favorable pricing
price is being considered in view of other attributes that a supplier may
posses. Lower price does not guarantee the buyers preference. A method
used by buyers that can also be used by seller to understand buyer’s
perspective is value analysis.
 Product or Service quality
product or service quality is the degree to which the product performs as
specified. The absence of good quality components can severely damage a
firm’s reputation, which can be long and difficult to rebuild.
 Assurance of supply
the assurance of a continued supply is normally of paramount importance
to a business user. The supply itself may content component parts,
assemblies and raw materials. An interruption in supply can cause a
complete shutdown in sales
 Customer Service
the product availability, order cycle time, distribution system flexibility,
malfunction handling, information support and product support are the
dimensions of customer service.
 NON-ECONOMIC MOTIVES
 Pestige
not only individual buyer also the purchasing firm may have a need for
prestige that could influence buying decision. Although hard to identify,
this can be a strong purchase motive.
 Career security
the person making the decision usually interested not only in the welfare
of the company but also in his or her own well-bieng, so he or she might
take the lowest amount of personal risk possible.
 Friendship and social consideration
another concern that can develop on an individual basis is the friendship of
the selling individual to the buyer.
 Other personal needs
there can be any number of additional influences on the individual that
deal with the individual’s feelings, personal ambitions,etc.
 ECONOMIC AND NON ECONOMIC MOTIVES
INFULENCING THE BUSINESS BUYER
ECONOMIC MOTIVES NON-ECONOMIC MOTIVES
PRODUCT
&SERVICE
PRICING PRESTIGE

CAREER
QUALITY SECURITY
FRIENDSHIP
AND
ASSURANCE SOOCIAL
OF SUPPLY NEEDS
OTHER
CUSTOMER PERSONAL
SERVICE FINAL NEEDS
PURCHAS
E DEC
FUNCTIONAL AREAS IN THE BUYER
ORGANIZATION
 PURCHASING
 PRODUCTION
 ENGINEERING
 RESERCH AND DEVELOPMENT
 FINANCE AND ACCOUNTING
 MARKETING
 GENERAL MANAGER
 THE BUYING COMMITE
 THE BUYERS ORGANIZATION STUCTURE
 PURCHASING AT FIRST LEVEL
PRESIDENT

PRODUCTION ACCOUNTING MARKETING PURCHASING

 PURCHASING AT SECOND LEVEL

PRESIDENT

PRODUCTION ACCOUNTING MARKETING

PURCHASING
  DECENTRALIZED PURCHASING
PRESIDENT

ACCOUNTING PRODUCTION MARKETING

LOCATION A LOCATION B LOCATION C

PURCHASING LOCATION B PURCHASING LOCATION B PURCHASING LOCATION B

 CENTRALIZED PURCHASING

PRESIDENT

ACCOUNTING PRODUCTION MARKETING

PURCHASING

LOCATION A LOCATION B LOCATION C

INDIVIDUAL IN THE BUYER’S ORGANIZATION
 Initiators
are individuals who identify the need. They are the first people
who become involved in the purchasing process and typically have
a great deal of influencer.
 Gatekeepers
are those individuals who control flows of information or
transactions between other individuals
 Influencer
are individual who can modify the purchase decision
 Decider
are those persons who finally make the actual determination of
what will be purchased and who the supplier will be.
 User
are those individual who ultimately use the product
Conflict in the Purchasing Organization
To avoid conflict that causing offensive position and defensive
position, need to understand source of power, such us:
 Legitimate power
source of power which is based on position or title formally
conferred
 Coercive power
a power that might have influence the purchase decision
 Referent power
a form of power based on traditional power relationship that have
previously
 Reward power
this type the opposite of coercive power, which it to say that if one
party agrees to the demands of another, it will receive a positive
reward.
Conflict Resolution Strategy
 Competition
a party in conflict could use its legitimate authority
 Escalation
a party in conflict appeal to a superior for support
 Collaboration
this one occurs when the individuals involved in a dispute work jointly together to solve
the problem at hand
 Avoidance
conditions where the parties involved do not attempt to solve the problem at hand
 Accommodation
conditions where a party will be very considerate of the needs of another
 Compromise
when individuals negotiate a solution based on give-take of various elements
 Coalition
where groups from alliances then revert to competition to resolve the issue in their favor
with their newly estabilished power position
 Ethical Consideration Across The Marketing Mix
 Product actions
 Misrepresenting the product materials or components
 Reducing product content or quality once a contract has been made
 Using another firms designs our patents without the frim agreement
 Pricing actions
 Pricing fixing
 Predatory pricing
 Price discrimination
 Promotion action
 Gifts and entertainment
 Place action
 Utilizing privileged information against a channel member
 Violating the letter or spirit of sales and service agreement between channel
members
 Developing too many channel members for other to remain profitable
 QUESTIONS!
 If you were a business marketer, how might you approach a
firm going through each of the purchasing steps?
 Explain the basic process of the Sheth model of buying
behavior. How can it assist you to identify important variable
and consideration that occur in the purchasing process?
 Identify the condition and the business purchasing behavior
normally associated with a new task purchase, modified
rebuy, and straight rebuy. What problems and opportunities
do each of these situations create for business marketer.