Buying

Behavior and
the Buying
Process
chapter 3

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Some Questions Answered in This
Chapter Are:
• What are the different types of customers?
• How do organizations make purchase decisions?
• Which factors do organizations consider when
evaluating products and services?
• Who is involved in the buying decision?
• What should salespeople do in the different types of
buying situations?
• Which changes are occurring in organizational buying,
and how will these changes affect salespeople?

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“I look at the buying process it takes, the many
buying decisions involved, and I’m fascinated.
First, the process is quite complex. . . . Second,
the buying process is multifaceted. . . . It is
important to understand your buyers in order
to execute a successful plan.”
Jenna Weber , Hormel

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 1- Types of Customers

• Producers
– Products included in manufacturing
– Products and services to support the
manufacturing operation
• OEM (Original Equipment Manufacturers) purchasers
– Goods to use in making their products (Dell in
Airports)
• End users
– Goods and services to support their own
production and operations 3-4
 End User Buying Situations
• Capital equipment • Maintenance, repair,
– items are major and operating (MRO)
purchases such as supplies
mainframe computers – include paper towels
and machine tools. and replacement parts
for machinery.

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 Types of Customers
• Resellers • Profit margin
– Finished products or – how much a reseller
services with makes on each sale.
the intention to resell • Turnover
them.
– how quickly an item
sells, and how much
effort it takes to sell.
• Effort
– How much effort it
takes to sell the
product. 3-6
 Types of Customers

• Government agencies
– The largest customers…. Goods and services
valued at more than $1 trillion annually in USA
• Institutions
– Different needs and buying processes
(Universities, hospitals)
• Consumers
– Products and services for use by themselves or
by their families
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 2. Organizational Buying and Selling

• Complexity of the organizational buying

process
– Purchasing agents (buying teams)
– Evaluations and negotiations
– Complexity is increasing

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Organizational Buying and Selling

• Derived versus direct demand

– Purchases made by these customers ultimately
depend on the demand for their products—
either other organizations or consumers.

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 3- Steps in the
Organizational Buying Process
Exhibit 3.1

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 Creeping Commitment

• Creeping commitment
– a customer becomes increasingly committed to a
particular course of action while going through
the steps in the buying process.
– As decisions are made at each step, the range of
alternatives narrows; the customer becomes
more and more committed to a specific course of
action and even to a specific vendor.
– Critical that salespeople be involved in the initial
steps
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 4. Types of Organizational
Buying Decisions
• New tasks
– A customer purchases a product or service for
the first time
• Straight rebuys
– A customer buys the same product from the
original source

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 Types of Organizational
Buying Decisions
• Modified rebuys
– The customer has purchased the product in the
past but is looking for new information

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 Types of Organizational
Buying Decisions
Exhibit 3.2

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5. Who Makes the Buying Decision?

Users Gatekeepers Initiators

Deciders Influencers

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 Importance of Hospital Buying Center Members in the
Buying Process for Intensive Care Monitoring Equipment

Exhibit 3.3

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 Supplier Evaluation and Choice

• At various steps in the buying process,

members of the buying center evaluate
alternative methods for:
– Solving a problem (# 2)
– Qualifications of potential suppliers (# 4)
– Proposals submitted by potential suppliers (# 5)
– Performance of products purchased (# 8)

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 6. Factors Influencing
Organizational Buying Decisions
Exhibit 3.4

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Organizational Needs and Criteria

• Economic criteria
– Life-cycle costing (total cost of ownership)… the
cost of equipment or supplies over their useful
lives.
• Quality criteria
– What are organizational buyers looking for?
• Service criteria
– Value analysis

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 Life-Cycle Costing
Exhibit 3.5

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 Individual Needs of Buying Center
Members
• Types of needs • Risk reduction
– Financial security – Collect additional
– Self-esteem information
– Recognition – Develop vendor loyalty
– Spread the risk

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 Professional Purchasing’s
Growing Importance
• Supply chain management
– Logistics
– Managing inventory while controlling costs
– Just-in-time inventory control system
– Automatic replenishment
– Electronic data interchange

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 EDI Transactions
Exhibit 3.6

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 Professional Purchasing’s
Growing Importance
• Supplier relationship management
– strategy by which organizational buyers evaluate
the relative importance of suppliers and use that
information to determine with whom they want
to develop partnerships
– Identify the annual spend
– Summarize the benefits
and needs satisfied by a
supplier

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 The Internet and Business-to-
Business Selling
• Reverse auction
– an auction, but instead of a seller offering a
product and buyers bidding, a buyer offers a
contract and sellers bid
– instead of prices rising, they fall as sellers
compete to win the sale.

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