Organisational Buying and Buying Behaviour

Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Organisational Buying and

Buying Behaviour
Chapter 3
Chapter Questions
• What are the purchasing objectives of business buyers?
• How is the buying process (buyphases) of organisations?
• What are the types of buying situations (buyclasses) in business organisations?
Is vendor analysis/ multi-attribute model useful ?
• What is the buygrid framework?
• Who are buying centre members and key influentials?
• What are the roles in organisational buying?
• Which are the comprehensive models of organisational buying behavior?
• Which are the contemporary purchasing activities? 2

Purchasing Objectives of Business
Buyers
• Purchasing objectives
– Perfect delivery /ready availability
– Superior quality of product / service
– Lowest price
– Good long-term supplier relationship
• Personal objectives
– Higher status
– Job security
– Salary increments
– Promotions
– Social considerations
3
Buying Process of Organisational Buyers
• Eight phases (Buyphases) of buying process:

1. Problem / Need recognition
2. Decide characteristics and quantity of needed product
3. Develop specifications / description of needed product
4. Search for potential suppliers
5. Obtain & analyze supplier proposals
6. Evaluate and select suppliers
7. Select an order routine
8. Performance feedback & post – purchase evaluation
4
Supplier/Vendor Analysis using Multi
attribute model
Attributes Weight Supplier Total
(or Criteria) (or Importance) Performance Rating Score
Product Quality 3 8 24
Service Quality 3 7 21
Price 2 6 12
Reputation 1 8 08
Flexibility 1 6 06
Total 10 71
Performance rating scale : 1-10, ( 10 = excellent, 1 = poor )
5
Buying Process of Organisational Buyers
• Types of Buying Situations (Buyclasses)

1. New Task / New purchase
– More information, risk, decision time, people involved
2. Modified Rebuy / Change in Supplier

– Due to existing suppliers’ poor performance, or change in
specifications
– Hence, search for alternate supplier
3. Straight Rebuy / Repeat Purchase

– Due to existing suppliers’ good performance
– Routine, low risk decision. Less information needed
6
Buygrid Framework
Buyclasses
Buyphases New Modified Straight
Task Rebuy Rebuy
1. Problem / need recognition Yes May be No
2. Characteristics, Quantity of needed Yes May be No
product
3. Specification of needed product Yes May be No
4. Potential suppliers’ search Yes Yes No
5. Obtain and analyze supplier Yes Yes May be
proposals
6. Evaluate proposals and select Yes Yes No
suppliers
7. Select an order routine Yes Yes May be
8. Performance feedback and Yes Yes Yes
evaluation
7
Buying Centre Members And Key
Influentials
• Buying centre, or purchase committee, consists of members

who make buying decisions, share common objectives and
risks
• Key influentials are the few most influential members
• Buying centre members are:

– Top management persons
– Technical persons: Key influentials for new task and modified
rebuy situations and technical products
– Buyers / purchasers: Key influentials for straight rebuy
– Commercial persons: Finance & Marketing persons 8
9
Influentials
Buyers
Deciders
Users
Gatekeepers
Organisational
Roles in
Buying
Models of Organisational Buying
Behaviour
• Most important factors influencing organisational
buyers:
– Organisational / Task – oriented
– Personal / non-task oriented
– Enviromental
– Buying Centre
• Most comprehensive models:

– Webster and Wind
– Sheth
– Choffray and Lilien 10
The Webster and Wind Model
Environmental Variables: Technological, Economic, etc.
Organisational Variables: Technology (for purchasing), Buying

Centre structure, buying goals and tasks, buying centre members.
Buying centre variables: Interpersonal interactions, Group

functioning: Buying and non-buying tasks, external influences.
Individual variables
Buying Decision Process:

Individual and Group. Buying
Decision
11
The Sheth Model
Componet-1 Componet-2 Componet-3
Differences in Variables that • Methods Situational

individual determine if used for Factors
buyers’ buying decision conflict
expectations is autonomous or resolution in
caused by joint : joint Supplier
factors: • Product decision or
• Background specific making Brand choice
• Information • Company process
sources specific • Problem
• Past solving
purchases • Persuasion
• Perceptual • Bargaining
distortion • Politicking
12
The Choffray and Lilien Model
Obtain alternative offers from

suppliers
Organisational Constraints Environmental Constraints
Source of information Likely alternative offers
Evaluation criteria Individual preferences formed
Negotiation
Organisational preferences
Group problem solving
Organisational choice
13
Contemporary Purchasing Activities
• Just-in-time (JIT) Delivery
• Out sourcing
• World sourcing
• Single sourcing
• Value analysis / Value engineering
• Supplier evaluation system/Multi attribute model
• Buying committee/Buying centre 14

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15
16
Multilevel Marketing of Amway India
17

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Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.

Organisational Buying and

• How is the buying process (buyphases) of organisations?

• What are the types of buying situations (buyclasses) in business organisations?

Is vendor analysis/ multi-attribute model useful ?

• What is the buygrid framework?

• Who are buying centre members and key influentials?

• What are the roles in organisational buying?

• Which are the comprehensive models of organisational buying behavior?

• Which are the contemporary purchasing activities? 2

• Eight phases (Buyphases) of buying process:

Performance rating scale : 1-10, ( 10 = excellent, 1 = poor )

• Types of Buying Situations (Buyclasses)

2. Modified Rebuy / Change in Supplier

3. Straight Rebuy / Repeat Purchase

• Buying centre, or purchase committee, consists of members

• Key influentials are the few most influential members

• Buying centre members are:

• Most comprehensive models:

Organisational Variables: Technology (for purchasing), Buying

Buying centre variables: Interpersonal interactions, Group

Buying Decision Process:

Componet-1 Componet-2 Componet-3

Differences in Variables that • Methods Situational

Obtain alternative offers from

Organisational Constraints Environmental Constraints

Source of information Likely alternative offers

Evaluation criteria Individual preferences formed

• Just-in-time (JIT) Delivery

• Buying committee/Buying centre 14

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