ORGANISATIONAL BUYING BEHAVIOUR

1. ORGANISATIONAL BUYING BEHAVIOUR Organizational Buying Process

2. What is organisational buying Behaviour? (OBB) • “…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, F.E. and Wind, Y. (1972), Organizational Buying Behavior, Prentice-hall

3. Decision making unit’ (DMU) • Webster and Wind coined the term ‘decision making unit’ (DMU) • Members of DMU s may have different roles

4. Different roles • Users • The individuals who are most likely to use the product often initiate the buying process by signaling a need for it and outlining its specifications • Influencers • Others in an organisation may have an influence on the specifications and also provide information on alternatives • Decision-makers • Decision-makers ultimately have the power to reach conclusions on the product, product specifications and/or suppliers

5. Approvers There could be some person with authority to sanction the purchase specified by the decision-maker. • Buyers • Buyers have the formal responsibility for choosing suppliers and agreeing the terms and conditions attached to the contract of sale. • Gatekeepers • Access to members of the DMU may be controlled by secretaries, switchboard operators, personal assistants and the like.

6. Differs from consumer Buying • ‘Industrial’ or ‘Business to Business’ Marketing • Typically involves many individuals • More deliberate and rational • Involves more explicit procedures and criteria • Involves more personal selling

7. Differs from consumer Buying • More Reciprocity arrangements • Limited product lines • Employ professionally trained buyers.

8. The tasks of industrial buyers can be categorized as • Straight re buys, • Modified re buys and • New tasks

9. Straight rebuys • Routinely reorders an item. • The buyer will either reorder from the same supplier as last time or • From an approved list of past suppliers. • Entry for a new supplier is difficult • Will be achieved if a potential supplier can either innovate in the form of new products or marketing systems • Or can offer terms and conditions which are substantially better Unlikely to make a switch to achieve marginal gains.

10. Modified rebuy • The buyer will want to modify the product specifications • And/or the terms and conditions attached to a sale contract. • New suppliers may be able to offer product specifications or terms that existing suppliers cannot match. • Differences must be significant or • Buying organisations may not be sufficiently well motivated to accept the risks inherent in switching suppliers.

11. New buy task • Buying a product for the first time. • Information search will certainly be more extensive. • Likely to consult more widely with his/her colleagues and other advisers. • Potential new suppliers, who are genuinely able to offer a better service, products and/or terms and conditions will find it easiest to gain access

12. The buy gridModel • Robinson ,Faris and Wind • Eight stage model of the procurement process

13. Eight Stage Decision Process • Anticipation or recognition of a problem (need) and a general solution • Determination of characteristics and quantity of needed item • Description of characteristics and quantity of needed item • Search for and qualification of potential sources

14. Acquisition and analysis of potential sources • Evaluation of proposals and selection of supplier (s) • Selection of an order routine • Performance feedback and evaluation