Concepts and Cases

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

BUSINESS MARKETING

Chapter 2

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

UNDERSTANDING THE
ORGANISATIONAL CUSTOMER
AND BUYING BEHAVIOUR

LEARNING OBJECTIVES

The organisational buying situations

The process of organisational buying
The concept of buying centre

How organisations take buying decisions

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

Key differences between organisational

and household buying

LEARNING OBJECTIVES

Models of organisational buying

The administrative arrangements to buy
products and services
Some newer developments especially the
use of IT in organisational buying

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

Factors influencing their buying decisions

CHARACTERISTICS OF
ORGANISATIONAL BUYING
Buying on Behalf Versus for Self
Organisational Buying is Purposive
The Techno Commercial Need of the Buyer
Must be Met
Buying is More Rational as Compared to
the Household Customers
Buyer is More Knowledgeable and Buying
is a Professional Activity

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

BEHAVIOUR

THREE BUYING SITUATIONS

NEW BUY
SITUATION

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MODIFIED
RE-BUY
SITUATION
STRAIGHT
RE-BUY
SITUATION

HOW ORGANISATIONS BUY?

THE BUYING PROCESS
Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

Identification and
statement of the
'Buying Problems

Identification of
Alternatives to
Solve the Problems
Search for
information

Buying decision
7

BUY GRID MODEL

BUYING SITUATIONS
Adopted from the original model of Webster and Wind

New Buy

Mod.
Re-buy

Straight
Re-buy

Problem Identification

Yes

Yes

No

General Need Description

Yes

Yes

No

Product Specifications

Yes

Yes

No

Suppliers Search

Yes

Yes/May be

No/May be

Proposal Solicitation

Yes

Yes

No/May be

Supplier Selection

Yes

Yes

No/May be

Order Routine Schedule

Yes

Yes

Yes

Performance Review

Yes

Yes

No

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BUY PHASES

THE CONCEPT OF THE

BUYING CENTRE

Influencers
Deciders
Users
Buyers
Gatekeepers
Specifiers
Indenters or Initiators
Approvers
Fixers

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THE MEMBERS AND THEIR ROLES

BUYING CRITERIA
INTANGIBLE/NON RATIONAL
FACTORS

QUALITY

REPUTATION OF SUPPLIER

PERFORMANCE

RELIABILITY

DELIVERY FULFILLMENT

BRAND

AFTER SALES SERVICE

RELATIONSHIP WITH SUPPLIERS

PRICE

AVALIBILITY

EASE OF MAINTENANCE

EASE OF OPERATION

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

TANGIBLE/RATIONAL
FACTORS

10

SUPPLIERS EVALUATION
Rating Scale
BUYING
CRITERIA

IN ORDER OF
IMPORTANCE %

PRODUCT
QUALITY

30

SUPPLIER
REPUTATION

20

PRICE

20

SERVICE
SUPPORT

15

PAYMENT
EXECUTION

15

POOR

FAIR

GOOD

EXCELLENT

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

S.NO.

11

INFLUENCES ON THE

BUYING DECISIONS
-

Internal Organisational Factors

- Ownership Pattern like Govt.,
Professional, Family Owned
- Organisational Purchasing
- Organisational Culture
- Organisation Size

Interest Rates
Physical Infrastructure
Fiscal Policies
Vendor Base and its Location

ORGANISATIONAL
BUYING
BEHAVIOURS AND
DECSION

Group Dynamics
- Members of the Buying Centre (BC)
- Relationship Formal
- Informal amongst the Buying
Centre Members
- Background of the Members of the
BC

Individuals Characteristics
-

Educational Background
Experience in the Job
Personality and Attitude
Risk Taking Abilities

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

External FactorsSocial,
Economic, Political ,
Environmental

12

INFLUENCES ON THE

BUYING DECISIONS

The Organisational Factors

The Group Factors
The Individual Factors

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

The Environmental Factors

13

LOCATING THE
LOCII OF INFLUENCES
Fishers Organisational Buying Behaviour Model

TECHNOLOGIST
EMPHASIS

(Simple products like stationary,

vegetable)

(Technically difficult to understand

products like motor starter,
electronics control system, which are
not high priced)

POLICY MAKER

TOTAL
INVOLVEMENT

(Simple to understand products like

steel, coal, aluminum, which become
high value raw material)

(Technically Complex and High Value

Products like ERP SOFTWARE, Blast
furnace)

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BUYER EMPHASIS

14

HOW ORGANISATIONS BUY

THE EIGHT STEPS PROCESS

2. General Need Description

3. Product Specification
4. Suppliers Search
5. Proposal Solicitation
6. Supplier Selection
7. Order Routine Schedule

Copyright 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

1. Problem Identification

8. Performance Review
15

ORGANISATIONAL
BUYING BEHAVIOR

FOUR TYPICAL CHARACTERISTICS

The Buying Decision Process and Final Act

of Buying Decision Involves Many Persons
Lag Between Marketing Efforts and
Results

Mix of Rational and Non Rational Factors

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All Organisational Buying is Procedural

16