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Articles on Management Subjects with practice perspective by Dr. Narayana Rao, Professor,
NITIE. Many articles were migrated from Google Knol.
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December 3, 2011
Organizational Buying Processes and Buying Behavior
Marketing Management Article Series
Organization buying is the decision-making process by w hich formal organizations establish the need
for purchased products and services and identify, evaluate, and choose among alternative brands and
suppliers.
____________________________________________________________________
Organization buying is the decision-making process by which formal organizations establish the need for purchased
products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and
Wind)
Some of the characteristics of organizational buyers are:
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.
Straight rebuy
In this buying situation, only purchasing department is involved. Thet 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.
The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers" have to make efforts to
get their name list in the approved vendors' list and for this purpose they have to offer something new or find out
any issues of dissatisfaction with current suppliers and promise to provide better service.
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
Organizational Buying Situations
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looking for additional suppliers or is ready to modify the approved vendors list based on the technical capabilities and
delivery capabilities.
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 fullsystem. 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.
Participants in the Business Buying Process
Webster and Wind in the model they proposed to describe organizational buying process, identified the
organizational buying process as a team process and called the team or the buying decision-making unit of the
organization as buying center. The buying center consists of all persons of the organizations who are involved in the
buying process playing one or the other seven roles: Initiators, Users, Influencers, Deciders, Approvers, Buyers, and
Gatekeepers.
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.
BuyersThey 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
approve.
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.
Buying Center Concept
Major Influences on Business Buyers
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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 have to understand the reactions of buyers.
Steps in the Process
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routine specification
Supplier performance review
References
Philip Kotler, Marketing Management, 9th Edition
Marketing Management Online Text Book by Tanner and Raymond - Principles of Marketing
Webster Frederick E. Jr. and Yoram Wind, "A General Model for Understanding Organizational Buying Behavior"
Journal of Marketing, Vol. 36, April 1972, Pp.12-19.
http://marketing.wharton.upenn.edu/documents/research/7215_A_General_Model_for_Understanding.pdf
Wind, Yoram and Frederick Webster Jr., " On the Study of Industrial Buying Behavior: Current Practices and
Future Trends", Industrial Marketing Management, 4(1972), Pp. 411-416
http://marketing.wharton.upenn.edu/documents/research/7202_On_the_Study_of_Industrial.pdf
Sheth, Jagdish, "Organizational Buying Behavior: Past Performance and future expectations", Journal of Business
and Industrial Marketing, Vol.11, No.3/4, Vol.11, Pp.7-24
Download link for the paper
http://www.jagsheth.net/docs/Organizational%20Buying%20Behavior%20-
%20Past%20Performance%20and%20Future%20Expectations.pdf
IGNOU India course chapter of Consumer behavior
Organizational Buying Behavior: Some Typical Characteristics
http://www.egyankosh.ac.in/bitstream/123456789/35420/1/Unit-3.pdf
London International course materialChapter on Consumer and Industrial buying behavior
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Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-
differentiating-and.html
Organizational Buying/Purchasing/Procurement Process
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