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Understanding
Organizational
Buying
Behaviour
Consumer or Organizational Products
Why was the product purchased ?
 For use in the operation of a
business or organization.
 To manufacture other products
 For resale to others
ORGANIZATIONAL
PRODUCT
 For personal or household
use
CONSUMER
PRODUCT
Some Examples of Organizational Buying
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Paper cups by McDonald's
Computer chips by Toshiba
Concrete by Local Authorities
Oil by Electricity Generators
Fertiliser by Farmers
Accountancy services by Ltd. Companies
TV’s by Comet or Dixons
Characteristics of Organizational Buying
Nature and size
of customers
Complexity
of buying
Economic
and technical choice
criteria
Buying to specific
requirements
Organizational
Purchases
Risks
Reciprocal
buying
Derived demand
Negotiations
Decision-making Unit
Initiator
Buyer
Gatekeeper
Decider
(Decision
Maker)
User
Influencer
Decision-making Unit
Buyers
Have the authority
to execute the contractual
arrangements
Initiators
begin the purchase
Process.
Deciders
(Decision Makers)
have the authority
to approve
the purchase.
Users
actually use the
product. They may
be the one who initiates
the purchase process
and may develop the
product
specification.
Gatekeepers
control the flow
of information to the
buying centre. Purchasing
department Staff frequently
fill the role but it could be
any member
of the
organization.
Influencers
supply information
and advice. Outsiders
such as consultants
sometimes perform
the role.
Decision-making Unit
Implications.
1. Need to identify key actors in buying
decisions.
2. Composition and roles played in the
decision-making unit have implications for
communications – target audience and
message.
Buy phases: the organizational decision-making
process
Recognition of a problem (need)
Determination of specification and quantity of needed item
Search for and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and selection of supplier(s)
Selection of an order routine
Performance feedback and evaluation
Microsoft
Microsoft creates
awareness of its
capability
to keep employees
in touch
with one another.
Organizational Decision-making Process
Implications.
Marketing advantage can be gained by:
1. Influencing need recognition.
2. Involvement in the determination of the
characteristics of the needed product.
Choice Criteria
Types.
 Economic.
e.g. price, return on investment.
 Technical.
e.g. reliability, delivery.
 Social (Organizational).
e.g. status, office politics.
 Personal.
e.g. personal risk reduction, liking/disliking.
In all cases PERCEPTION is critical.
Choice Criteria
Implications.
1. Marketing and sales appeals may need to
be modified to different members of the
decision-making unit.
2. Choice criteria may change over time as
circumstances change. Suppliers may need to
change their offerings and communications as
a result.
Mercedes
Mercedes reduces perceived risk in this
advertisement for its trucks.
© Daimler AG. Kindly reproduced with the permission of Mercedes–Benz UK Ltd.
Influences on organizational purchasing
behaviour
Buy class
Product type
straight
re-buy
modified
re-buy
new task
• product



Organizational
buyer
•
•
Importance
of purchase
constituents
product
facilities
MROs
Time taken for decision
Buy Class
New
Task
Modified
Rebuy
Straight
Rebuy
No. of people involved in buying centre
New Task Buying
The organization makes an initial purchase of an item
to be used to perform a new job or to solve a new
problem. Often this involves development of
specifications for products and suppliers as well as
procedures for future purchases. High information
requirement from many suppliers.
Example: new IT facility.
Modified Rebuy
When a new task purchase is changed on repeat
purchases. The buyer may require faster delivery, lower
prices or modified specifications. Regular suppliers
become more competitive and new suppliers may be
included in the selection. Moderate amounts of
information are required.
Example: upgrading office software.
Straight Rebuy
The buyer purchases the same products again
routinely under approximately the same terms of sale.
Suppliers are familiar, have provided satisfactory
service in the past and may even have set up
automatic re-ordering systems. Little information is
required.
Example: re-ordering photocopying paper.
Buy Class
Implications.
1. New Task.
- big gains for those suppliers involved in the decisionmaking process at the start.
- many people are involved and the process is long –
suppliers need to invest heavily in time to influence all of
them.
2. Straight Rebuy.
- current suppliers need to build a strong defensible position
and maintain it.
- potential suppliers need to reduce risk of change for
purchaser.
Developments in Purchasing Practice
1. Just-in-time purchasing
2. Centralised purchasing
3. Online purchasing
4. Reverse marketing
5. Leasing
6. System purchasing
Reverse marketing
Supplier sells by taking initiative
Traditional marketing
Supplier
Buyer
Reverse marketing
Buyer takes initiative to persuade supplier to provide
Relationship Marketing
Definition.
The process of creating, maintaining and enhancing
strong relationships with customers and other
stakeholders.
Development of buyer–seller relationships in
Industrial Markets
Pre-relationship stage
Evaluation of a new potential supplier
Early stage
Negotiation of a trial
Development stage
Contract signed or delivery built up
Long term stage
Several major purchases or large-scale deliveries have been made
Final stage
Established patterns of trading in long-term stable markets
Core Reading
Core reading to
support this topic
can be found in
Chapter 5 of your
recommended
text