Organizational Buying Behaviour Essay

These are grocery storeing intermediaries such as wholesalers and retailers who demoralize finished goods for resale at a profit. ? Government markets This comprises of national and local governments, seek to provide the public with education, water, energy, national defense, road systems and health care. ? Institutional markets o Organizations that seek to achieve charitable, educational, community or other non-business goals make up institutional markets. o They include churches, hospitals, museums, libraries, universities and charitable organizations. 2. DIFFERENCES BETWEEN organizational AND private purchase.These can be compared on the unique characteristics of organizational buy. a) Business markets devote a few(prenominal)er buyers than consumer markets. b) In business markets, there are a few large buyers c) There is close supplier-customer relationship in business market due to o Smaller customer base o Contracts go to suppliers who co-operate with the buyers on tec hnical specifications and delivery requirements o Suppliers are expected to refer special seminars organized by buyers so as to be long-familiar with the buyers quality specifications. d) Geographically concentrated buyers ) Derived demand The demand for business goods is finally delivered from the demand for consumer goods f) Inelastic demand The total demands for industrial goods are not much affected by the changes in the environment. g) Fluctuating demand ask for organizational goods tend to be more volatile than the demand for consumer products. o This is especially true for the demand of new kit and caboodle and equipment o A given percentage increase in consumer demand can track to a larger percentage increase in the demand for plant and equipment necessary for additional output. h) Professional purchasingBusiness goods are purchased by trained purchasing agents, who must follow the organizations, o Purchasing policies o Constraints o Requirements. i) Several acquire influences o More people typically influence business buying conclusions than in consumer buying decisivenesss. o purchase committees consisting of technical experts and even senior managers are common in the purchase of major goods. j) Direct purchasing Business buyers often buy from manufacturers sooner through intermediaries, especially those stages that are technically complex and/or expensive. k) reciprocity Business buyers normally buy from suppliers who buy from them. ) Leasing. o Many industrial buyers lease their equipment instead of buying it. o Advantages Conserves capital Gets sellers modish products Receives better overhauls Gains some tax advantages. 3. BUYING SITUATIONS OR TYPES OF BUYING DECISIONS. Three types of buying situations have been identifieda) Straight Rebuy ? The purchasing segment orders on a routine basis e. g. office suppliers. ? The buyer chooses from the suppliers on its approved list, giving weight to past satisfaction with the various sup pliers. b) change Rebuy The buyer wants to modify the Product specification, Prices, Delivery requirements and Other terms This unremarkably involves additional discussions and more participants on both the buyer and the sellers side. c) New task Rebuy ? A product is being bought for the first cartridge clip. ? The great the cost and/or risks, the lager will be the number of finality participants and the greater their information gathering. The time take to make a decision also increases. ? This situation offers the trafficker the greatest opportunity and challenge. ? The marketer tries to lay down as many key buying influencers as possible and provides subservient information and assistance. Because of the complicated nature of selling, many companies are using missionary sales force consisting of their best sales people. 4. BUYING ROLES/PARTICIPANTS IN THE ORGANIZATIONAL BUYING. I. e. the decision making unit (DMU) or buying centre. a) What is the buying meaning? It i s composed of all those individuals and groups who participate in the purchase-decision process. It includes members of the organizations who play any of the next roles in the purchase-decision process. b) Buying roles i) Initiators Those who suggest that an item be purchased They whitethorn be users or other organizations. i) Users Those who will use the product. In most cases, they come out the buying, write proposals and help define product specifications/requirements. iii) Influencers ar persons who influence the buying decisions They help define product specifications and provide information for evaluating alternatives. Technical effect are important as influencers. iv) Deciders Are the persons who have the power to nail down on product requirements and/or suppliers. v) Approvers Are the persons who must authorize the proposed actions of deciders or buyers. vi) BuyersAre persons with formal authority for selecting the supplier and arranging terms of purchase. vii) G ate-keepers Are persons who have the power to prevent information from reaching members of the buying snapper e. g. Purchasing agents Receptionists and Telephone operators. They may prevent sales persons from talking to users or deciders. 5. BUYING DECISION PROCESS Eight stages in the buying decision process have been identified by marketers. These are described as- i) Problem recognition The buying decision process starts when someone in the keep company recognizes a problem or need. This may arise from, ? inbred stimuli e. g. o The company decides to develop a new product and inescapably new equipment o There may be a railcar break-down which may require replacement or new parts o Purchased material may turn out to be unsatisfactory and the company needs another supplier. ? External stimuli e. g. o New ideas from trade shows. ii) normal need description ? Buyer determines the general characteristics and quality of the needed item. ? He may not be aware of different product characteristics ? The marketer should help the company to define its needs. iii) Product specificationsAt this stage, items technical specifications are developed. The decision makers may use of product apprize analysis. They may ask such questions as o Does the use of the item contribute value? o Is its cost proportionate to its usefulness? o Can it be found elsewhere? iv) Supplier search Sources of suppliers may include ? Trade directories ? Business directories ? Word of mouth ? Experience. v) Proposal collection In this stage, the buyer invites qualified suppliers to submit proposals. vi) Supplier selection In selecting suppliers, decision makers, may use of vendor analysis.The following attributes, may be used Delivery capability Quality PriceRepair serviceTechnical capabilityPerformance historyReputationFinancial position. vii) holy order routine specification Buyer now writes final order with the chosen suppliers, listing Technical specification Quantity needed Expect ed time of delivery Return policies, e. t. c. viii) Performance review Buyer reviews performance of a particular supplier(s) The buyer can contact end users and ask for their military rank and then rate suppliers on several criteria. The review may strain the buyer to Continue, Modify or Drop the supplier. 6. FACTORS INFLUENCING ORGANIZATIONAL BUYING DECISIONS. a) environmental factors E. g. Level of primary demand Cost of money Technology political/legal forces Competitive developments Organizational factors Objectives, Policies, Procedures Organization structure, e. t. c. b) Interpersonal factors Participants in their buying center have different statuses, authority, persuasiveness, e. t. c. c) Individual factors Each individual in the buying centre has Personal motivators Perceptions Education Personality, e. t. c.