Organisational buying

behaviour

Effective business to business marketing depends on

an understanding of the organisational buying
process
Organisational buying is…
 “the decision-making process by which
organisations establish the need for
purchased products and services, and
identify, evaluate and choose among
alternative brands and suppliers”
Webster and Wind (1972)
Key questions
 Is buying behaviour different in business
markets?
 Is there an organisational buying decision
sequence?
 Who are the participants in the process?
 Who determines evaluative criteria?
 How are competitive offerings evaluated?
 What key relationships exist?
Organizational buying behaviour and
the marketer
 Development of effective marketing strategy in
B2B markets depends on an understanding of the
organizational buying process and organizational
buying behaviour
 Increasing importance of professional
procurement and its impact on profitability eg shift
to component purchase
 Increasing importance of partnerships in supply
chain
Supply chain: a context for
organisational buying
Out of stock is a B2B failing that
reduces customer PV
The marketing and logistics
interface
 Competitive advantage means delivering
more customer value than competitors

 Perception of value= PB/PC

 A significant cost penalty is incurred by both

manufacturers and retailers when a stock-out
(37% shop elsewhere, 9% do not buy
Corsten and Gruen 2004)
Efficient Supply Chain drives on shelf availability
 The marketing and logistics
interface
1 2 3 4

CONSUMER CUSTOMER SUPPLY

MARKETING
FRANCHISE X FRANCHISE X CHAIN =
EFFECTIVENESS
• Brand values • Service EFFICIENCY
• Partnership • Market share
• Corporate image • Flexibility • Customer retention
• Availability • Quick response •Reduced asset • Superior ROI
base
• low cost supplier

1 = traditional view of retail marketing effectiveness

1 + 2 + 3 = current view of retail marketing effectiveness

Adversarial and competitive
supply chain activity
 Traditional adversarial or win-lose relationship
between retailer and producer
 Each member of the chain tries to optimise it’s own
position
 Costs can be pushed up or down stream
 In sub-optimal supply chain consumers pay for
inefficiencies
 Development of co-operative supply chain
partnerships based on shared information and
reduced costs to improve customer service level
Collaborative supply chains and
customer satisfaction
Retail’s customer-driven
supply chain
 Reconfiguring supply chains around customers is a
huge challenge for retailers. It needs new thinking,
innovative processes – and ultimately, perhaps
infrastructure change
 Consumers themselves will no longer be strangers.
Far from it, they will be an integral and crucial value
adding link in the supply chain
 Distinguish between actions necessary to create
value that customers want, and actions which just
add cost – from raw material to end consumer
 Yesterday’s supply chains worked to the logic of
“better centralised and distant.” Tomorrow’s
watchwords will be “fresher, simpler and closer”.
Determinants and definition of
organisational buying

Environment Organisation Buying centre

•Government regulations •Structure and style
•Group decisions
•Economic climate •Politics
•Product use
•Individual behaviour
•Technological change
•Gatekeeper
•Derived demand
•Conflict resolution

ORGANISATIONAL BUYING
“the decision making process by which formal organisations
establish the need for purchased products and services and
identify evaluate and choose among alternative brands and
suppliers” Webster and Wind 1972
Composition of the buying centre

Webster and Wind 1972

Klass 1961
•Users
•Contributors(supervisors, sales managers
•Influencers
•Participants(engineers, R&D)
•Deciders
•Responsibles(purchasing department)
•Gatekeepers
•Deciders (chief executives, directors)

Hill 1972
•Control unit – responsible for policy making which influences buying
•Information unit – providing information relating to purchase
•Buying unit – formally responsible for negotiating contracts
•User unit – users of product or service
•DMU – all those who arrive at buying decision
Suggested organizational buying roles
 Policy makers – general corporate policies dictate purchase
decisions
 Purchasers – person with formal authority for ordering
 Users – of product or service – most concerned with
performance and ease of use
 Technologists – specialist knowledge allows objective
differentiation of product performance
 Influencers – anyone not in any of other categories inside or
outside organisation
 Gatekeeper – opinion leader – may have another role
 Deciders – formal authority for approving purchase
Buying centre influences
 Market factors – characteristics which differentiate organizational
buying markets from consumer markets (bulk, value, demand,
geographical concentration, reciprocal trading arrangements)
 Company factors – size, specialisation, orientation
 Buying situation – new buy, modified rebuy, straight rebuy
 Product factors – essentiality, technical complexity, value, consequence
of failure, novelty, frequency
 Stage in the buying process
A taxonomy of buying situations
and patterns (Bunn 1993)
 Casual purchase
 Routine low priority
 Simple modified re-buy
 Judgemental new task
 Complex modified re-buy
 Strategic new task
 The buygrid model (Robinson et
al 1967) Buyclasses
Buyphase New task Modified re-buy Straight re-buy
Need identification X X X
Determine requirement X
Specify requirement X
Search for possible X
sources
Source evaluation X
Select source X X X
Establish order routine X X
Evaluate performance X X X
feedback
Models of organisational
buying
 THE SHETH MODEL
 The psychological world of the
decision maker
 Product and company
variables
 Structure and methods for
problem solving
 Situational factors
 “organisational buying
decisions are often determined
by ad hoc situational factors
and not by any systematic
decision making process”
 THE WEBSTER AND WIND
MODEL
 The firm’s environment
 The organisation
 The buying team
(interpersonal influences)
 The individual
 “the individual as the real
decision maker in the
organisation ….motivation,
personality, perception,
learning and experience are all
vital to the decision process”
Sheth’s model of organisational buying
The interaction approach
(Turnbull and Cunningham, Hakansson)
 Buyers and sellers are in dynamic interaction
exerting mutual influence
 Buyer/seller relationships are long term and can
exist for long periods without exchange
 Complex patterns of relationships at
interdepartmental levels evolve
 Marketer activity may focus on developing these
relationships
 Buyer/seller links can become institutionalised
Elements of the interaction
approach
 The interactive process
 The participants
 The environment
 The atmosphere
 Relationship management and networks
The interaction approach in
practice
Suggested organisational
CDP
 Need recognition
 Agree specifications/objectives
 Agree buying situation
 Information search
 Pre-purchase/implementation evaluation
 Consumption
 Post purchase/implementation evaluation
 Feedback
 Divestment
Summary
 The organisational CDP is complex
 A range of complex models provide a framework for
understanding the organisational buying process
 Marketers cannot assume buyer/seller loyalty and must
further their understanding of the organisational consumer to
inform the development of effective marketing strategies
 An understanding of the dynamics of organisational buying
behaviour is essential to the development of effective
marketing mixes
 Business to business marketing is characterised by complex
relationships within and between companies