ORGANIZATIONAL BUYING BEHAVIOUR
This is the decision- making process by which formal organization establish the needs for
purchasing products and services and identify, evaluate and choose
alternative brands and suppliers.
The kinds of markers in which organizational buyers operate are as follows.
o This consists of individual and business organization that purchase products and
or services for the purpose pf making a profit by using them to make other
o They included buyers of raw materials, components, semi-finished and finished
These are marketing intermediaries such as wholesalers and retailers, who buy finished goods for
resale at a profit.
This comprises of national and local governments, seeking to provide the public with education,
water, energy, national defense roads systems and health care.
o Organizations that seek to achieve charitable, educational, community or other
non-business goals make up institutional markets.
o They include churches, hospitals, museums, libraries, universities and charitable
2. DIFFERENCES BETWEEN ORGANIZATIONAL AND PERSONAL BUYING.
These can be compared on the unique characteristic or organizational buying.
a) Business markets have fewer buyers than consumers markets
b) In business markets, there are a few large buyers
c) There is close supplier-customers relationship in business market due to
o Smaller customer base
o Contracts go to suppliers who co-operate with the buyers on technical
specification and delivery requirements
o Suppliers are expected to attend special seminars organized by buyers so as to
be familiar with the buyers’ quality specifications.
d) Geographically concentrated buyers
e) Derived demand
The demand for business goods is ultimately delivered from the demand for consumer goods
f) Inelastic demand
The total demands for industrials goods is not much affected by the changes in the environment.
g) Fluctuating demand
Demand for organizational goods tends to be more volatile than the demand for consumers’
o This is especially true for the demand of new plant and equipment
o A given percentage increase in consumers demand can; lead to a larger
percentage increase in the demand for plant and equipment necessary for
h) Professional purchasing
Business goods are purchased by trained purchasing agents, who must follow the organization’s,
o Purchasing policies
i) Several buying influences
o More people typically influence business buying decisions then in consumers
o Buying committees consisting if the technical experts and even senior
management are common in the purchase of major goods.
j). Direct purchasing
Business buyers often buy from manufactures rather through intermediaries, especially those
items that are technically complex and or expensive.
Business buyers normally buy from suppliers who buy from them.
o Many industrial buyers lease their equipments instead of buying it.
- Conserves capital
- Gets sellers latest products
- Receives better services
- Gains some tax advantages.
3. BUYING SITUATIONS OR TYPES OF BUYING DECISIONS
Three types of buying situations have been identified;
a) Straight Rebuy
The purchasing department orders on a routine basic e.g. office suppliers
The buyers chooses from the suppliers on its approved lists, giving weight
to past satisfaction with the various suppliers
b) Modified Rebuy
The buyer wants to modify the:
- product specification
- delivery requirements and
- other terms.
This usually involves additional discussion and more participants on both the buyer and the
c) New task Rebuy
A product is being bought for the first time.
The greater the cost and / or risk, the lager will be the number of decision
participant and the greater their information gathering. The time taken to
make a decision also increases.
This situation offers the markers the greatest opportunity and challenge.
The marketer tries to reach as many key buying influences as possible and
provides helpful information and assistance.
Because if the complicated nature of selling, many companies are using
missionary sales force consisting of their best sales people.
4. BUYING ROLES/APRTICIPANTS IN THE ORGANIZATIONA BUYING.
(i.e. the decision making unit (DMU) or buying centre.)
a) What is the buying center?
It is composed of all those individual and groups who participate in the purchase decision
process. It includes members of the organization who play any of the following roles in the
b) Buying roles
- Those who suggest that an item be purchased
- They may be users of other organizations.
- those who will use the product
- In most cases, they initiate the buying, write proposals and help defines
product specifications / requirements.
- Are persons who influence the buying decisions
- They help define products specification and provide information for
- Technical personal are important as influencers.
- are the persons who have the power to decide on product requirements
and /or suppliers.
- are the persons who must authorize the proposed actions of deciders or
Are persons with formal authority for selecting the suppliers and arranging terms of purchase.
vii. Gate – keepers
Are persons who have the power to prevent information from reaching members of the buying
- Purchasing agents
- Receptionist and
- Telephone operators.
They may prevent sales personal from talking to users or deciders.
5. BUYING DECISION PROCESS
Marketers have identified eight stages in the buying decision process. These are described as:-
i. Problem recognition
The buying decision process starts when someone in the company recognizes a problem or need.
This may arise from,
Internal stimuli e.g.
o The company decided to develop a new product and needs new
o There may be a machine breakdown, which may require
replacement or new parts.
o Purchased materials may turn out to be unsatisfactory and the
company needs another suppliers
External stimuli e.g.
o New ideas from trade shows
ii. General need description
Buyer determines the general characteristics and quality of the needs item.
He may not be aware of different product characteristics
The marketer should help the company to define its needs.
iii. Products specifications
At this stage, item’s technical specifications are developed. The decision makers may use of
product value analysis. They may ask such questions as:
o Does the use of the item contribute value?
o Is its cost proportionate to its usefulness?
o Can it be found elsewhere?
iv. Suppliers search
Sources of suppliers may include
Word of mouth
v. Proposal solicitation
In this stage, the buyer invites qualified suppliers to submit proposals.
vi. Supplier selections
In selection suppliers, decision makers, may use of vendor analysis.
The following attributes, may be used:
- Delivery capability
- Repair services
- Technical capability
- Performance history
- Financial position
vii. Order routine specifications
Buyer now writes final order with the chosen suppliers, listing.
- Technical specification
- Quantity needed
- Expected time of delivery
- Return policies etc.
viii. Performance review
Buyer reviews performance of a particular supplier(s)
The buyer can contact end users and ask for their evaluation and then rate suppliers on several
The review may lead the buyer to;
- modify or
- Drop the supplier.
6. FACTORS INFLUENCING ORGANIZATIONAL BUYING DECISIONS
a) Environmental factors
- Level of primary demand
- Cost of money
- Political / legal force
- Competitive development
b) Organizational factors
- Organization structures etc.
o How many people are involved in purchasing decision
o Who are they?
o What are their evaluation criteria?
o What are the company policies?
c) Interpersonal factors
Participants in their buying center have different statues, authority persuasiveness etc.
d) Individual factors
Each individual in the buying centre has
- Personal motivators
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