This tutorial Introduction to Business/Organisational Buyer Behaviour consists of meaning, roles and responsibility of buying centres, buying motives of business buyers, business buying decision process, types of organisational buying situations, factors affecting business buying behaviour.
Table of Contents
- 1 What is Business buyer behaviour?
- 2 Roles and Responsibility of Buying Centres
- 3 Buying Motives of Business Buyers
- 4 Business Buying Decision Process
- 5 Type of Organisational Buying Situations
- 6 Factors affecting business buying behaviour
Organisations buy products and services for their corporate use and also use them in their production process to build a final product or service for end consumers. Organisational buying is also called institutional buying and when the products are used in their own production process, the buying process is called industrial buying.
Organisational buying is, in a few ways, similar to individual consumer buying because it is not the organisation making the buying decisions but people at different levels of the organisation are involved in the buying process.
What is Business buyer behaviour?
Business buyer behaviour refers to the buying behaviour of organizations that buy goods and services for use in the production of other products and services that are sold, rented or supplied to others.
Organisational buying or Institutional buying or Business-to-business (B2B) buying is defined as a process by which a company or organisation establishes a need for purchasing products, collects information and evaluates product and services among competing brands and suppliers to take a final purchase decision.
Roles and Responsibility of Buying Centres
Industrial marketer task is to identify those individuals who are involved in purchasing decision process.
Buying centre: All the individuals and units that play a role in the purchase decision-making process.
- Initiators: People who request for something to be acquired or purchased.
- Users: They use the products thus, initiating the purchase process.
- Influencers: Individuals in the organisation, influence the decision-making process by providing information on criteria for buying e.g. Research and Development specialists.
- Deciders: Member in the organisation who have the decision-making power about the purchase. e.g. engineers deciding specifications or vice-president (finance).
- Gatekeepers: Organisation member who have the power to prevent sellers or information from reaching the members of buying centres e.g. purchasing agents, receptionist, secretaries and telephone operators.
- Approvers: Member in the organisation who authorise the purchase.
- Buyers: People in the organisation who have formal authority to select the suppliers and arrange the purchase terms.
Buying Motives of Business Buyers
- Efficiency: In performance, practicability and increased capacity
- Economy: In money, in use or in time
- Good Quality: In materials and workmanship
- Simplicity: In construction, operation and application
- Saleability: In increasing saleability of the user’s product
- Ease of operation: In easier handling, greater convenience, handiness
- Space saving: In compactness, ease for storage and holding
- Obsolescence: In which it needs improvement, replacement or additions
- Safety: In providing safety to employees, clients and customers
- Cleanliness: In a plant, user’s product, or for the workmen
Business Buying Decision Process
Business buying is best viewed as a decision process, the steps that make up the process differ across companies and products.
Organisational purchasing starts with the identification or recognising a need that can be met by acquiring a good or service.
General need description
The stage in the business buying process in which a buyer determining product specifications like general characteristics and quantity of a needed item.
The stage of the business buying process in which the buyer tries to Identifying best suppliers/vendors.
Information Search and Supplier Evaluation
A buying centre may have to evaluate several product types for a particular use before suppliers can be selected.
Negotiation of Purchase Orders
An organisational buyer may negotiate a contractual agreement with a supplier. An agreement of this kind can cover a single purchase of a product or repurchase of the product over a period of time.
Evaluation of Supplier Performance
Organisational buyers usually assess the performance of the supplier and how well they comply with the purchase agreement. Thus, an important part of organisational purchasing is the evaluation of suppliers after purchase.
Type of Organisational Buying Situations
There are three major types of buying situations.
A business buying situation is found when there is repetitive or routine order processing which is given by buyers to long-term suppliers.
A business buying situation occurs when buyer wants to modify any purchase, i.e., improvement in product specification, price reduction, change in terms and conditions.
A business buying situation when a buyer purchases a product or service for the first time.
Factors affecting business buying behaviour
Organisational purchase decisions are influenced by the firm’s external and internal variables. There are four major variables influencing business buyer’s decisions namely, environmental variables, organisational variables, interpersonal variables and individual variables.
Among the various environmental variables, the influence of the state of the economy and other economic factors including government policy is the most important variable in organisational buyer behaviour.
Internal variables like culture and environment of an enterprise affect buying decisions. Every organisation follows systems and procedures for business buying. These systems and procedures have developed over a period of time reflecting the culture, policies and practices, processes, structures and objectives of the enterprise.
The marketer needs to know who exerts the maximum authority and who would be able to persuade others to agree with his viewpoint. Knowledge of group dynamics helps the marketer evolve his strategy on selling to the buying centre. Buying centre is a collection of different kinds of participants with different attitude levels and power dynamics among each other.
People carry their motivations, perceptions, market knowledge and preferences while making purchase decisions. Decision-making is also influenced by demographic variables like age, income, occupation, position in the company, and perception of risk involved in decision-making. These factors have a direct bearing on organisational buyer’s decisions.