Organizational buying behavior

1. GROUP NO. 4

2. INDEX
 Meaning of Organizational Buying Behavior
 Definition
 Characteristics Of Organizational Buying
Behavior
 Organizational Buying Situations
 Major Influences on Business Buyers
 Organizational buying process
 Participants in organizational Buying Behavior

3. MEANING
Organization buying is the decision-making
processby which formal organizations establish
the need for purchased products and services
and identify, evaluate, and choose among
alternative brands and suppliers.

4. CHARACTERISTICS
 1. Consumer market is a huge market in millions of consumers
where organizational buyers are limited in number for most of
the products.
 2. The purchases are in large quantities.
 3. Close relationships and service are required.
 4. Demand is derived from the production and sales of buyers.
 5. Demand fluctuations are high as purchases from business
buyers magnify fluctuation in demand for their products.
 6. The organizational buyers are trained professionals in
purchasing.
 7. Several persons in organization influence purchase.
 8. Lot of buying occurs in direct dealing with manufacturers.

5. ORGANIZATIONAL BUYING
SITUATIONS
Straight
rebuy
Modified
rebuy
New
task buy
Systems
buy

6. Straight rebuy:-
In this buying situation, only purchasing
department is involved. That get an information from
inventory control department or section to reorder the
material or item and they seek quotations from vendors in
an approved list.
Modified rebuy:-
In this buying situation, there is a
modification to the specifications of the product or
specifications related to delivery. Executives apart from the
purchasing department are involved in the buying
decisions. The company is looking for additional suppliers
or is ready to modify the approved vendors list based on the
BUYING SITUATIONS
(continue…)

7. New task buy:-
In this situation, the buyer is buying the product for the
first time. As the cost of the product or consumption value becomes
higher, more number of executives are involved in the process. The
stages of awareness, interest, evaluation, trial, and adoption will be
there for the products of each potential supplier. Only the products
which pass all the stages will be on the approved list and price
competition will follow subsequently.
Systems buy:-
Systems buying is a process in which the organization
gives a single order to a single organization for supplying a full
system. The buying organization knows that no single party is
producing all the units in the system. But it wants the system seller to
engineer the system, procure the units from various vendors and
assemble, fabricate or construct the system.
ORGANIZATIONAL BUYING
SITUATIONS (continue…)

8. MAJOR INFLUENCES ON
BUSINESS BUYERS
Environmental
factors
Organiza
tional
factors
Interpersonal
factors
Individua
l factors

9. Environmental factors:-
Expected demand for the
product that the buying organization is selling, expected
shortages for the item, expected changes in technology
related to the item etc. are the environmental factors that
will have an effect.
Organizational factors:-
Changes in purchasing
department organization like centralized purchasing,
decentralized purchasing and changes in purchasing
practices like long-term contracts, relationship
purchasing, zero-based pricing, vendor-performance
evaluation are the organization factors of importance to
marketers.
MAJOR INFLUENCES ON
BUSINESS BUYERS
(continue…)

10. Interpersonal factors:-
These factors are the
relationship between buyers and sales
representatives of various competitor
companies.
Individual factors:-
These factors related to the
buyer. What sort of ways of interacting and
service are appreciated by the buyers and what
ways are considered as irritants? Marketers
MAJOR INFLUENCES ON
BUSINESS BUYERS (continue…)

12. Problem recognition:
The first stage of the business buying process in
which someone in the company recognizes a problem
or need that can be met by acquiring a good or a
service.
General need description:
At this stage of business buying process
company describes the general characteristics and
quantity of a needed item.
Product specification:
At this stage of the business buying process
buying organization decide on the product and
specifies the best technical product characteristics for
ORGANIZATIONAL BUYING
PROCESS (continue..)

13. Value analysis:
An approach to cost reduction, in which
components are studied carefully to determine if they
can be redesigned, standardized or made by less costly
methods of production.
Supplier search:
At this stage of the business buying process
buyer tries to find the best vendors.
Proposal solicitation:
The stage of the business buying process in
which the buyer invites qualified suppliers to submit
proposals.
ORGANIZATIONAL BUYING PROCESS
( continue…)

14. Supplier Selection:
The stage of the business buying process in
which the buyer reviews proposal & selects a
supplier or suppliers
Order-routine specification:
The stage of the business buying process in
which the buyer writes the final order with the
chosen supplier(s), listing the technical
specifications, quantity needed, expected time of
delivery, return policies, & warranties.
Performance review:
The stage of the business buying process in
which the buyer rates its satisfaction with suppliers,
ORGANIZATIONAL BUYING PROCESS
(continue…)

15. PARTICIPANTS IN
ORGANIZATIONAL BUYING
BEHAVIOR
Buying center
is all of the
individuals and
units that
participate in
the business
decision-
making process
Users
Influencers
Deciders
Approvers
Buyers

16. Users:-
The persons who use the item. Say for safety gloves the
operators.
Initiators:-
The persons who request the purchase. The safety
officer may initiate the request for the purchase.
Influencers:-
Persons who held define specifications. In this case of
safety gloves, the safety officer may himself define
specifications. If an industrial engineer is in the organization, he
may also be consulted. There can a different gloves for different
working situations and industrial engineer may be more aware of
specific requirements due to his special nature of work - human
effort engineering.
PARTICIPANTS IN ORGANIZATIONAL
BUYING BEHAVIOR ( continue….)

17. Buyers:-
They are the person who actually do the buying
transaction.
Gatekeepers:-
They control access to personnel in a company.
The receptionist, the secretaries etc.
Deciders:-
People who decide on product requireements and
suppliers. It is the final approval for product specfications and
suppliers' list.
Approvers:-
Persons who approve the purchase. In the case of
safety gloves, the personal manager may have the power to
PARTICIPANTS IN ORGANIZATIONAL
BUYING BEHAVIOUR (continue….)

18. Conclusion
As we all know that buying process in
an organizational play an very vital role.
Therefore the organization goes
through many process and research so
that it would not effect the pricing policy
of the organization.
Therefore organization buying behavior
is important for every organizational