Organisational Buying Behaviour

BUYERS
• The business buyers may be a;
1. Manufacturer
2. Trader or dealer or agent
3. Service buyer or
4. System buyer
• The buying may be under three circumstances;
1. A new task – when the product developed requires new
raw materials, components etc or the changes made in the
existing product require something new for the first time.
In such cases a through study of suppliers is made and
sampling and testing takes time before the product is
finalised. In many cases it may involve the R & D as well
as the user department
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 Organisational Buying Behaviour

2. Modified re-buy – from time to time technical and or

design specifications change. These may occur due to
improved requirements of the customers, developments in
the products by the company, cost reduction, quality
improvements etc.
3. Straight re-buy – the most common buying situation when
there is continuous production. The buyer only needs to
study the requirements and the inventory norms of the
company and place orders on the supplier.
In this case, however, he needs to keep a watch on the
pricing and negotiate where ever necessary
To understand the buying behaviour of the organisation (the
buyers), the above buying situations are studied with different
buying phases.
This grid used for this study is known as BUYGRID MODEL
We also discuss appropriate marketing strategies over various
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Buying Situations and Phases
 Organisation buying behaviour

OBJECTIVES IN ORG. BUYING

Task Oriented Objectives
1. Profit making a must
2. Must buy at lowest prices while not compromising on;
a. Technical service
b. Product quality
c. Assured delivery
3. In some organisations, the buyers may be constrained
due to budgetary allocation and may be forced to buy
only at lowest prices till it meets the minimum
requirements.
4. RECIPROCITY – When the buyers and sellers agree on
some long term relationship.

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 Organisation buying behaviour

Non-task Objectives

1. When the purchasing decisions are influenced by social

considerations such as friendship, reputation and mutually
beneficial interactions

2. The buyers take pride, a personal objective, in making

correct buying decision and simultaneously accomplishing
the organisational goals

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 Organisational Buying Behaviour

Buying Centers
• It is very important for a marketing man to know
1. What are the buying centers
2. Who are buyers
3. Who are the groups of people influencing the buying
decisions
• The buying decisions in an organisation could be influenced
by various department / functional heads e.g.
1. Marketing
2. Manufacturing
3. R & D
4. Engineering
5. Quality control and of course
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6. Purchasing
 Organisational Buying Behaviour

Buying Centers
• Two roles basically
1. Primary
• Deciders
• Influencers
2. Secondary
• Users
• Buyers
• Gatekeepers

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 Organisational Buying Behaviour

BUY GRID MODEL

Buy Phases Buy Classes
New Modified Straight
Task Re-buy Re-buy
Anticipation or recognition of the problem (NEED)

Determination of characteristics and quantity of needed

item

Description of characteristics and quantity of needed

item

Search for and qualification of potential sources

Acquisition and analysis of proposals

Evaluation of proposals and selection of suppliers

Selection of an order routine

Performance feedback and evaluation

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 Organisational Buying Behaviour

Influence by Buying centers

Phases New Task Modified Re-buy Straight Re-buy
Need identification R&D Engineering Production
Engineering Production Purchasing
Production Purchasing
Purchasing
Establishing of R&D R&D Engineering
specifications Engineering Engineering Production
Production Production Purchasing
Purchasing Purchasing
Quality Control
Modification/Evalua R & D Engineering Engineering
tion of alternative Engineering Production Production
sources Purchasing Purchasing Purchasing

Supplier selection R&D Engineering Engineering

Engineering Production Production
Purchasing Purchasing Purchasing
Quality Control 8
SALES MANAGEMENT
Organisational Buying Behaviour

• A salesman and the prospective buyer when interact are an example of

“buyer-seller dyad”. THE DICTIONERY MEANING OF DYAD IS “A PAIR
OF UNITS TREATED AS ONE”.

Salesman-customer

Role characteristics Personal characteristics

Personal affiliation

Needs and expectations Adjustments

Choice of Strategy Negotiation

Adapt

Exchange

Experiences forming good or bad notions giving repeat sales

Or no orders for future
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 Organisational Buying Behaviour

• Another most important activity to be studied by the marketer

is to find out
1. Organisational structure
• How does the organisation structure affects the
buying decisions
• Who are the decision makers
• Authority of the persons dealing with the buyers etc
• Centralised or individualised buying
• New techniques in buying e.g. JIT, zero inventory or
use of third party logistics
2. Interaction of buying centers
• Involvement of buying centers
• Joint decision making approach
• The various buying centers’ interaction with each 10
other and the effect on the supplier
 Organisational Buying Behaviour

3. Approach of buying by individual or groups

• Every individual at his position looks to the buying
decision from his angle which may be individual view
or functional view
• The individual looks from the information and
knowledge that he has or he is exposed to
• The perceived risk that he is taking on a decision
• The marketer therefore must view from all above as
also ensuring that he is not creating a conflict
between the various individuals of the group
• Also to understand if any buying committee is formed
or the individuals are involved
4. Process of evaluating the suppliers
• A very important process to understand by the
supplier
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 Organisational Buying Behaviour

The expectations of a buyer from a supplier

• Timely supplies
• Meeting quality standards and supply of products
with minimum defects
• Meet costs control standards
• Have complete knowledge about the commodity
dealing in
• Ability to understand the process of
manufacturing and upgrading from time to time
• Timely response to buyers
• Meet emergencies
• Keep buyers informed of the developments
• Based on these the above the weighted point method
is adopted for evaluating the supplier 12
 Organisational Buying Behaviour

• The four major factors that are considered by the buyers

for evaluating the suppliers are;
1. Quality
2. Delivery
3. Price/Cost reducing suggestions
4. Response speed

(Pricing Index)

• Strategic alliances of suppliers with buyer organisation

are useful to organisation

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