Organizational Buying Behavior

Introduction

Till 1985, business markets were called industrial markets or markets for producer goods
and industrial markets almost totally concentrated on goods required by manufacturing
companies. Now business marketing may be defined as an ongoing process of
discovering & converting business consumer’s needs, desire expectations & requirement
into products and service specifications and then, in turn, through pricing, channeling and
after sales service, the process of convincing more and more of these buyers to use and
continue to use these business goods &services. A business customer emphasizes to
assure supply of business product in time and as per prescribed quality, suppliers of
business goods and services must maintain quality and timely deliveries.
For e.g. consider the process of producing & selling shoes product manufacturers, who
sell shoes to whole sellers, who sell to retailers, who finally sell them to consumer. Each
party in the supply chain also has to buy many other goods and services.

Definition

Organizational buying is the decision making process by which formal organization

establishes and the need for purchase products and services & identify, evaluate and
choose among alternative brands & suppliers.

Factors affecting consumer buying behavior

1. Cultural factor
Cultural factor
↓
Culture Sub-culture Social class
A. Culture.
Culture is the most basic fundamental department of a person’s wants and
behavior. It includes a set of beliefs. Attitudes, habits and form of behavior
For e.g. in Islamic countries like Pakistan, Malaysia, iran, and arab emirate
etc. black color attract to people more, but in India this color represents
badness for people.

B. Sub-culture
Each culture will contain smaller group of sub culture that provide more
specific identification and socialization for its members. The sub-culture
division is certain socio-culture and demographic variables like nationality,
religion, geographic, and life style etc.
For e.g. Burkha famous in Muslim women
 C. Social class
We have different social classes like upper, middle and lower class. Different
class of people has different thinking and purchase power ability.
For e.g. which car Mukesh Ambani will buy and which car we can buy is
totally different.

2. Social factors
3.
A. Reference group
A person’s reference groups are those groups that have a direct or indirect influence
on the person’s attitude or behavior. Groups having different influence on a person
could comprise of people with whom the person interacts on a continuous basis, such
as family, friends, neighbors and colleagues etc.

B. Family
Marketer is interested in questions relating to family purchases
Who takes the buying decision?
Who uses the product?
Who influences buying?
There may be different people or only one member of the family may do all activities.
Marketer is interested in the roles and relative influence of the husband, wife and
children in the purchase of a large variety of products and services.
C. Roles and status
A Person participates in many groups-family, clubs, and organizations. The person’s
position in each group can be defined in terms of roles and status. A role consists of
the activity that a person is expected to perform. Each role carries a status.
For e.g. a supreme court justice has more status than a sales manager and a sales
manager has more status than an office clerk.

3. Personal factors
A. Age and stage in the life cycle
People’s choice of goods and services changes over their life time. This change can
be observed right from childhood to maturity. Especially in taste and preference
relating to clothes, furniture, and recreation etc.
B. Occupation
Occupation also influences consumption patterns
For e.g. a blue collar worker will buy work clothes, work shoes, and lunch boxes.
And a company president will buy expensive suit, air travel and car and country club
membership etc.
C. Economic circumstances
Product choice greatly affected by economic circumstances, income, saving and asset,
debts, borrowing power, and attitude towards spending versus saving, are the
elements of a person’s purchasing power. However, this must be backed by the
willingness to buy a product.
D. Life style
 People from the sub culture, social class, and occupation may lead quite different life
style.
For e.g. Mukesh Ambani lives better life style as compared to common man living
life style.
E. Personality and self concept
Each person has a distinct personality that influence buying behavior. People like to
purchase the brand, which suits to their personality. So there should be a match
between the individual’s personality and brand personality.
For e.g. pepsi attract youth generation(YEH HAI YOUNGISTAN MERI JAAN)

4. Psychological factor
A. Learning
Learning involves changes in an individual’s behavior arising from experience
For e.g. suppose you buy a CHEVROLET car. If your experience is good, your
response to car and CHEVROLET will be you assume that CHEVROLET makes
good cars.
B. Beliefs
A belief is a descriptive thought that a person holds something. Belief may be based
on knowledge, opinion, or faith. Manufacturer are vary interested in the belief people
carry their heads about their products and services. These belief make up products
and brand image, and people act on their image.
For e.g. certain countries enjoy a reputation for certain goods: Japan for automobiles
and computer electronics, the United States for high-tech innovation, soft drinks, and
cigarettes, and luxuries goods.
C. Attitude
An attitude is a person’s enduring favorable or unfavorable evaluations, emotional
feelings, and attention tendencies towards some object or idea. People have attitude
towards almost everything like region, policies, music, food etc.
For e.g. once a consumer has developed a brand loyalty, it is hard to change his
attitude and beliefs towards that brand,
D. Motivation
A person has many needs at any given time. Some needs are biogenic; they arise from
physiological states of tension such as hunger, thirst, discomfort etc.

Factors Affecting Organizational-Buying Behavior

1. Environmental factors
A. Level of demand of the product they produce
For e.g. Demand for the car manufacturing company depends upon the demand of the
car in the consumer market.
B. Economic Outlook
Also affects the organizational buying. It includes the purchasing power of the
customer, regulating authority etc.
C. Interest rate in market
For e.g. few years back purchasing a car was much difficult because of high interest
rate and procedural complexity but today you can have a car at 0% interest rate which
has made the task of the company mare easier.
D. Rate of technology
Change because of high R&D budget and improved facilities provided by the big
MNCs today’s technology is very rapidly changing compare to the past scenario. TV
took 45 years to spread in 80% of the home all over the world but mobile took less
than 15years to spread all over the world, this shows the speed at which technology is
changing.

2. Organizational factors
A. Purchase department upgrading
In the past purchase department occupied a low position in the management
hierarchy. Recent competitive purchases have led many companies to upgrade their
purchase department. Today purchasing department are staffed with MBAs and other
professional which highlights its increased importance in the global arena. Scenario
has been changed from purchasing at low cost to value for money. So, markets to
their firm require a well trained sales person to make an efficient sales call.
B. Cross functional roles
Today’s purchasing department is performing more cross functional roles than in the
past. They are not involved just in buying but also in the functions like Now product
Development to Strategy Development with the suppliers also.
C. Centralized purchasing
In the MNCs most of the purchasing done centrally to make it unified and make the
purchasing faster one.
D. Internet purchasing
Has led the purchase procedure simplified, faster and cheaper, which has removed
number of intermediaries also by the millennium, B2B buying on the web may
amount to over $134 billion per year.

3. Interpersonal factors and Individual factors

Organizational buying involves several participants with differing interests, authority,
status, empathy and persuasiveness, which also affect the decision making.
Each buyer carries personal motives, perception and preferences, which are
influenced by buyer’s age, income, education, job position, personality, attitudes
towards risk and culture.

4. Cultural factors
Culture of the nation and culture of the organization both affects buying decisions.
Here are some rules of social and business etiquette those marketers should
understand when doing business in other countries.

France: If you speak French, apologize for your lack of knowledge, The French are
quite proud of their language and believe that everyone should be able to speak it.
 Germany: Germans are also sticklers for titles. Try to introduce people using their
full, correct little, no matter how long it is. Also, Germans shake hands at both the
beginning and at the end of business meetings.

Design Process of buying behavior

Consumer buying behavior
Marketing to each stage of the buying process
Consumer buying behavior is a complex beast. But, no matter what the purchase,
every consumer follows the above buying process when making a purchase. As a
small business owner, you need to become skilled at identifying which stage a
potential customer is in, and then providing relevant marketing materials to bring
them one step closer to purchasing from you. And just as important to successful
sales, start analyzing where and when potential customers drop off your radar.
Knowing when prospects leave your buying process will help you pinpoint what
marketing materials you need to improve.

Organizational-Buying Behavior