1. Dynamics of industrial
buying behavior
Presented By-
Rajnish Kumar
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

2. Industrial buying behavior
 Consumer vs. Industrial buying
behavior
 Main types of buying situations in
B2B
 Stages of decision in B2B
 Roles in B2B procurement
 Influences on organizational behavior
 Buying centres in summary
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

3. Consumer vs. Industrial buying
behavior
 Decisions made by consumers are quite simple
 Industrial buying processes are more complicated,
there are several phases and steps
 Different buying behavior for different products and
target groups
 Simple consumer goods like food and beverages are
bought very spontaneously – influenced by advertising
and product presentation
 For premium consumer goods (expensive clothes,
computers) – buying behavior is getting more rational
– comparison
 Private investment goods – price bargaining
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

4. B2B products –Industrial
procurement starts
 More than one person involved
 Buying process follows certain rules
 Price comparison, standardisation,
tenders = Ausschreibungen)
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

5. B2B systems
 involve more capabilities and greater
workloads
 From the buyer‘s and the supplier‘s
side decision has more extensive
consequences
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

6. B2B facilities
 Industrial plants
 Manufacturing installations
 Office buildings
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

7. Main types of buying
situations in B2B
 Straigtht rebuy – routine decision, repetitive process
(energy, office supplies, raw materials, wood,
cigarettes), component suppliers for the automotive
industry – little or no new information
 Modified rebuy – more complicated but less
sophisticated: cars, trucks, computers, consulting –
modified rebuys are often treated too uncautious
 New task – calls for thorough research – industrial
plant – highest level of uncertainty. Strategic new
tasks are of extreme strategic and financial importance
(aircrafts, military equipment, infrastructure) – re-
evaluation of alternatives and search for new
information and new alternatives
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

8. Buying phases
 Problem recognition
 General need description
 Product specification
 Supplier search
 Proposal solicitation
 Supplier selection
 Order routine specification
 Performance review
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

9. Stages of decision in B2B
procurement
 Backhaus developed a widely usable model
to distinguish between 5 phases of
procurement
 Preliminary application (initiation phase)
 Tender proposal
 Negotiation
 Processing of order
 Warranty and services
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

10. Preliminary application
 Recognition of a problem (need) and
a general solution
 Released by top management =
operating department or external
consultants
 Result  request for an offer
addressed to a number of potential
suppliers
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

11. Tender preparation phase
 Determination of characteristics and
quantity of needed items
 Search for and qualification of potential
sources
 Supplier has to provide an offer
 Tries to be incomparable with his
competitors
 Customer tries to make the offer best
comparable
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

12. Negotiation phase
 = core selling process
 Comprises acquisition and analysis of
proposals, evaluation of proposals
and selection of suppliers
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

13. Processing phase/warranty/
service phase
 Contains selection of an order routine
 Realisation of the transaction along
with the fixation of after sales service
tasks
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

14. Roles in B2B procurement –
buying center concept
 Group of people involved in the
buying process – buying center
 Webster/Wind model shows 5
different roles – not institutionalised
 This causes probleme in identifying
and targeting the right people within
the decision process
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

15. Buying center
 Role keepers have different tasks –
not mandatory
 Buyer
 User
 Initiator
 Gatekeeper
 Influencer
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

16. Buyer
 Formal authority to sign contracts
 Member of purchasing department
 Influences the vendor selection
 Not in technical details
 Main criteria: price + terms and
conditions of the contract
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

17. User
 Person working with the product
 Interested in benefits and
unobstructed function of the product
to buy
 Large knowhow and preconceived
opinion
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

18. Influencer
 A person with high technical
knowledge and practical experience
 definition of minimum requirements
on technical or company standards
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

19. Gatekeeper
 Controls the flow of information within
the buying center
 Assistant of decision maker
 Influence by preparing the decision
and the relevant documents
(Scriptum p 33-34 + summary)
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

20. Decider
 Right to say yes or no
 Mightiest person
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

21. Initiator
 Person who brings new ideas and
solutions into the company
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

22. Specific marketing
considerations in the industrial
facilities business
 Long decision taking process
 High risk
 Complex buying center
 The specific competitive situation
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

23. Product policy
 Focuses on innovation
 Has to care for high flexibility in
research and development
 And manufacturing and assembling
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

24. Price
 Strict bid and tender rules
 High transparency
 Add value with service offering to
achieve a differentiating position
 Another aspect: financing and
sourcing models
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

25. Distribution policy
 Focus on negotiation phase
 Provide excellent people in the selling
center
 High technical knowledge
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

26. Communication
 Problem solver!
 Proving success with comparable
tasks
 Reference projects!
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)

27. THANK YOU
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)