Organizational Buying Behaviour: Buying Process and Influencing Factors

Organizational Buying Behavior

When an organization needs a good or service for its operations, it makes a rational decision to purchase it. This is known as an organizational buying behavior. The chosen goods and services are located, assessed, and selected from a variety of sources and brands. There aren't many significant contrasts between the purchasing behavior of businesses and that of consumers. Businesses purchase goods and services to further their own goals, such as producing and providing goods and services to employees, clients, or the public. The straight rebuy, the modified rebuy, and the new task are the three categories of buying circumstances that have been identified.

• The straight rebuy: It is the purchasing circumstance where consumers regularly purchase the product. For the company, purchasing those things will be a typical job.
• The modified rebuy: A requirement for corporate purchases where the customer wants to alter the product's specifications, price, terms, or suppliers.
• The new task: A new task occurs when an organization makes its first purchase of any goods or services. More people will participate in the decision-making process in these situations, and there will also be more attempts made to gather information, the higher the cost. More opportunities and difficulties are created by the new task environment.
• Participants in the business buying process: When deciding what items to acquire for the business, the buying center, which actually takes part in purchasing the goods and services, will play a vital role.
• Users: The customers who make use of the goods or services. Users frequently begin with a purchase proposition and contribute to the definition of the product specification.
• Influencers: Influencers are those who have a say in how a company makes purchases. They support specification definition and offer data for assessing alternatives.
• Buyers: The individual who makes the actual purchases of the goods and services is referred to as the buyer in an organizational buying center.
• Deciders: Deciders in an organizational buying center are those with formal or unofficial authority to choose or approve the final supplier.
• Gatekeepers: In organizational purchasing, the individual who manages the flow of information to others is referred to as the gatekeeper.

Major Influence on Business Buyers

When making purchases, business purchasers are influenced by a variety of factors. Some marketers believe that economic factors are the main ones. Business purchasers do, however, react to both personal and economic concerns.

• Environmental Factors: When making decisions, business purchasers are mostly influenced by the state's and the world's present and future economies. The degree of primary demand, the economic outlook, and the cost of money make up the economic environment. The environment's technological, political, and competitive developments also have an impact on them.
• Organizational factors: The key organizational elements, such as goals, policies, procedures, structures, and systems, must be thoroughly understood.
• Interpersonal factors: Interpersonal skills are important in the company purchasing process because there are numerous parties who have an impact on one another. Implementing such interpersonal aspects and group dynamics will be challenging, though.
• Individual factors: Personal reasons, views, and preferences are brought into the process by those who take part in company purchasing decisions. Individual traits like age, income, education, professional identification, personality, and attitudes toward risk all have an impact on these individual components.

The Business Buying Process

There are a total of eight stages, and by moving through them, an organization can arrive at an informed choice. The procedures will be continued until they achieve the desired outcome or until the goals and objectives are met, whichever comes first.

• Problem Recognition: the initial phase of the company purchasing process, during which individuals determine the organizational need that will be satisfied by the purchase of any goods or services. Recognition of a problem may be triggered by internal or external factors. The business may decide internally to introduce a new product that needs new manufacturing tools and materials. Or a device can malfunction and require a fresh component. Externally, the buyer encounters some fresh concepts at a trade fair, sees an advertisement, or gets a call from a vendor offering the greatest goods at a competitive price.
• General Need Description: Following the identification of the demand, the buyers create a generic need description that lists the item's qualities as well as the quantity required by the company. When it comes to conventional things, this procedure poses very few issues, but when it comes to complex issues, the buyer must collaborate with other engineers, users, and consultants to describe the item.
• Product Specification: The purchasing organization chooses and specifies the technical product features for the required item at this stage. The method of studying the components in the product value analysis helps to lower the cost. After careful consideration, they can be modified, standardized, or produced using lower-cost techniques. The team will choose the best product characteristics and specify them as such.
• Supplier Search: The buyer searches suppliers throughout this phase to identify the top sellers. The buyer can compile a list of qualified suppliers by looking through trade directories, conducting online searches, or asking other businesses for letters of recommendation.
• Proposal Solicitation: Proposal solicitation is the phase of commercial procurement where the buyer requests proposals from qualified suppliers. Following, this provider will only send a salesman or a catalog. However, if the product is complicated or expensive, the buyer will need formal presentations or written detailed proposals from each potential provider.
• Supplier Selection: The buyer evaluates bids during this phase before selecting a provider or vendors. The buying center frequently compiles a list of desirable supplier characteristics along with their relative weights prior to supplier selection. A few examples of such characteristics are reputation, timely delivery, moral corporate conduct, open communication, and affordable costs for goods and services.
• Order- Routine Specification: In this phase of the purchasing process, the buyer selects the ultimate supplier by outlining a number of factors, including technical requirements, the required quantity, the anticipated delivery date, return policies, and warranties.
• Performance Review: The stage of the purchasing process where the buyer evaluates the performance of the supplier using several criteria and determines whether to keep, change, or end the agreement. To ensure that the seller is providing the desired satisfaction, it is the seller's responsibility to watch and assess the same elements employed by the buyer.

Reference

Kotler, P., & Armstrong, G. (2013). Principles of Marketing. Chennai: Pearson India Education Services Pvt Ltd.