Introduction to

Organizational Buying
Behaviour
Organizational buying behavior refers to the decision-making process that
businesses and organizations go through when purchasing goods and services. It
involves complex factors such as company policies, budgets, and the needs of
multiple stakeholders.

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by Akanksha Tyagi
Stages and Types of Organizational Buying
Behaviour
The stages of organizational buying behavior are:

• Problem recognition
• Information search
• Evaluation of alternatives
• Purchase decision
• Post-purchase evaluation

The four types of organizational buying behavior are:

• Straight rebuy
• Modified rebuy
• New task
• Systems buying
4 Factors of Organisational Buying Behaviour
Organisational Factors
The structure, policies, and procedures of the
organisation impact its buying decisions. For
example, a large corporation may have a
centralised procurement department that follows
strict protocols.
Interpersonal Factors
The relationships and dynamics between the
members of the buying centre, such as the
influencers, deciders, and gatekeepers, shape the
decision-making process.
Environmental Factors
External factors like the economy, competition,
and government regulations can influence an
organisation's buying behaviour. A recession may
cause them to cut costs and be more price-
sensitive.
Individual Factors
The personal motivations, perceptions, and biases
of the key decision-makers can sway the
organisation's buying choices. For instance, a
risk-averse manager may favour a conservative
option.
Market Segmentation
Market segmentation is the process of dividing a larger market into smaller, more manageable segments based on
shared characteristics.

They might segment their market based on factors like age, income, lifestyle, or geographic location.

Sure! Here are four common bases for market segmentation, along with examples:

Demographic Segmentation: This divides the market based on demographic factors such as age, gender,
income, education, occupation, family size, etc.

• Example: For instance, a toy company might target children aged 5-10 with its colourful
building blocks.

Geographic Segmentation: This categorizes the market based on geographic boundaries such as region, city
size, climate, population density, etc.
• Example: A sunscreen brand might focus its marketing efforts on regions with sunny climates
where people spend a lot of time outdoors.

Psychographic Segmentation: This segments the market based on psychological and lifestyle factors such as
personality, values, interests, hobbies, social class, etc.
• Example: A fitness brand might target health-conscious consumers who value outdoor activities,
adventure, and eco-friendly products.

Behavioural Segmentation: This divides the market based on consumer behaviour, including usage patterns,
brand loyalty, benefits sought, purchase occasions, etc.
• Example: A coffee shop might offer loyalty rewards to frequent customers to encourage repeat
business and build brand loyalty.
Target Explanation
Understand the Target Audience 1

Thoroughly research and analyze your

potential customers to identify their
specific needs, preferences, and pain
points.
Prioritize Key Segments
Evaluate each market segment and focus
your efforts on the ones that offer the
greatest potential for growth and
profitability.
2 Segment the Market
Divide the broader market into smaller,
more manageable groups based on shared
characteristics like demographics,
psychographics, or behaviors.
3
Positioning explanation
Positioning refers to the strategic placement of a product or service in the minds
of consumers relative to competing offerings. It involves highlighting the unique
features and benefits that differentiate the offering and create a distinct brand
identity.

For example, Apple positions its products as premium, innovative, and design-
focused, while Walmart positions itself as a low-cost, value-driven retailer.
What is Marketing Strategy?
Marketing strategy is the comprehensive plan that outlines an organization's overall marketing goals and how it will
achieve them. It involves segmenting the target market, positioning the brand, and developing a mix of marketing
tactics to reach and engage customers effectively.

For example, a software company may have a marketing strategy that focuses on positioning its product as the most
user-friendly solution for small businesses, targeting this segment through social media ads, content marketing, and
partnerships with industry influencers.
Marketing Strategies used in different stages
of Product Life Cycle
Introduction Stage:

Mass Marketing: This strategy involves targeting a broad audience to create awareness about
the new product. It aims to reach as many potential customers as possible through channels
such as television, print media, and online advertising.

Public Relations: Leveraging PR activities to generate buzz and media coverage around the
new product can help create interest and anticipation among consumers.

Promotions: Offering introductory discounts, free samples, or promotional events can attract
early adopters and encourage trial among target customers.

Growth Stage:

Segmented Marketing: In this stage, the market begins to expand, and companies may target
specific segments of consumers who have shown interest in the product. This involves tailoring
marketing messages and strategies to meet the needs and preferences of different customer
groups.

Product Extensions: Introducing variations or extensions of the original product to cater to

different segments or address additional needs can help sustain growth momentum.

Channel Expansion: Companies may expand distribution channels to reach new geographic
areas or target demographics, thereby increasing market penetration.
What is the Product Cycle? Stages of the
Product Cycle

Introduction
The product life cycle describes the stages a product goes through, from
1 launch to eventual decline.

Growth
2 Sales rapidly increase as the product gains market acceptance.

Maturity
3 Sales plateau as the product reaches market saturation.

Decline
Sales slowly decrease as the product becomes
4
obsolete or is replaced by newer alternatives.

The product life cycle is a crucial concept in marketing strategy, as it helps businesses understand and plan for the
evolution of their products over time. Understanding where a product is in its life cycle can inform decisions
New Product Development Process

8 —
Steps Key Stages

The new product development process is crucial for businesses to stay competitive and meet evolving customer
needs. This 8-step process outlines the key stages from idea generation to product launch:

1. Idea Generation: Gather insights from market research, customer feedback, and internal brainstorming to
identify potential new product opportunities.
2. Idea Screening: Evaluate and prioritize the most promising ideas based on criteria like market potential,
feasibility, and alignment with business goals.
3. Concept Development: Further refine the selected ideas into tangible product concepts, including
defining the key features, benefits, and positioning.
4. Concept Testing: Gather feedback from target customers to validate the appeal and viability of the
product concepts.
5. Business Analysis: Conduct a thorough financial and market analysis to assess the commercial potential
and risks of developing the new product.
6. Product Development: Engineer the product, create prototypes, and finalize the design, manufacturing,
and quality control processes.
7. Test Marketing: Pilot the new product in a limited market to evaluate its performance and gather real-
world feedback before a full-scale launch.
8. Commercialization: Execute the full-scale product launch, including production, distribution, marketing,
and sales activities.
Conclusion
In conclusion, we have explored the key aspects of organizational buying
behavior, including the stages of the decision-making process, the different types
of organizational buyers, and the critical factors that influence their decisions.
Understanding these concepts is essential for businesses to effectively market
and sell their products or services to organizations.