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2002 Edition

Vitale and Giglierano

Chapter 3Organizational Buying and Buyer Behavior

Prepared by John T. Drea, Western Illinois University

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The Consumer Buying Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior

Involvement influences whether some steps are de-emphasized or extended.

This is more of a simultaneous than a sequential process.

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Organizational Buying

• Organizational buying involves many inputs from professional specialists within the organization.

• The organization relies on inputs from decision makers and influencers (“stakeholders”) to satisfy the diverse set of needs within the organization.

• This requires communication among stakeholders in the buying organization.

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The Buying Center

Internal FactorsTechnology AccountingManagement MarketingLegal Production/Mfg.Finance Service

External Factors

Customer needs

and buying

behavior

Government

agencies

Independent standards-setting organizations

Various Publics

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Major Differences, Organization Buying vs. Consumer Buying

• Organizational buying involves more buyers – more decision makers or contributors to portions of the decisions.

• Participants (stakeholders) in the buying center are driven by the specific needs of their professional responsibilities.

• Different types of decisions are often occurring simultaneously in the process, spread throughout the buying organization.

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Steps in the Buying Decision Process

1. Problem recognition

2. General need description

3. Product specification

4. Supplier/Source search

8. Evaluate performance

7. Make the transaction routine

6. Selection

5. Proposal Solicitation

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Intricacies of the Buying Decision Process

Individual roles and personal needs

Interaction createsfluidity (people w/inthe buying centerinteract)

The buying process is simultaneous, notsequential

Relationshipsand loyalty

Three kinds of needs:1. Need for product

benefits2. Individual needs

w/in buying center3. Buying center

member’s personal needs

Cluster of stakeholders’ values

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Stages in the Process Flow Model of the Buying Decision Process: Definition Stage

• Process Flow Stages– Problem definition– Solution definition– Problem

specification

• Buying Decision Process Steps– Problem recognition– General need

description– Problem

specification

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Stages in the Process Flow Model of the Buying Decision Process: Selection Stage

• Process Flow Stages– Solution provider

search– Acquire solution

provider(s)

• Buying Decision Process Steps– Supplier/Source

search– Proposal solicitation– Contract for

supplier(s)

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Stages in the Process Flow Model of the Buying Decision Process: Deliver Solution Stage

• Process Flow Stages– Customize as

needed– Install/Test/Train

• Buying Decision Process Steps– Make the transaction

routine

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Stages in the Process Flow Model of the Buying Decision Process: End Game Stage

• Process Flow Stages– Operate solution– Reach end result– Evaluate outcomes– Determine next set

of needs

• Buying Decision Process Steps– Evaluate outcomes– Resell the job

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Stage 1: Problem Recognition

New TaskNew Task

A buying situation that has not been previously faced by the organization.•Significantly steep learning curve, organization seeks many sources of information.

ModifiedRebuy

ModifiedRebuy

StraightRebuyStraightRebuy

A routine buying situation with established solutions.•Abbreviated steps in the process, fewer people in the buying center, less time to completion.

A buying situation that is somewhat similar to past problems/solutions•Examines alternatives within a limited scope, involves fewer people than a new task situation and more than a straight rebuy.

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Stage 2: Vendor Selection

• RFQ = Request for Quotation– Usually associated with that which can be

thoroughly and quantitatively defined

• RFP = Request for Proposal– Usually defined by a set of specifications that have

more flexibility regarding the final form of the offering

• For government purchases, RFP/RFQ are often published in a specified outlet.

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Stage 3: Solution Delivery

• Often takes longer than definition and selection combined.

• Stage ends when delivery is complete and approved by the buyer.

• Involves merging the logistics of the buyer with the logistics of the customer.

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Stage 4: End Game

• Buying organizations frequently formally evaluate purchase outcomes in terms of areas like– Market share– Position– Market ownership– Profitability

• Individual buying center members also may evaluate the purchase, the purchase process, and the supplier.

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Organization and Individuals Needs in the Buying Decision Process

Steps in Flow

Define problemDefine solution

Acquire providerDevelop solutionInstall, test, trainOperate solution

End resultEvaluation outcomes

Organizational Needs

Clear, concise, tractableAppropriate, affordable

Choice, speed,Speed, easy use

Ease of integration, speedUser friendly

Effective, low costInformation

Individual Needs

Information & timeDesign assistance

Information, assuranceExecution help

Knowledge, comfortEasy to maintain

RecognitionCommunication, reward

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Buying Decision Evolution

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More Buying Decision Evolution

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Variability of Rational Buying

Human FactorsHuman Factors

•Objective means are used to narrow choices.•Suppliers who recognize cultural/relationship needs of the organization become the “in” supplier.•A review of facts is often done because it is culturally acceptable.•Facts can be arranged to justify the decisions that individuals want to make•People seek reinforcement for their beliefs in every factor presented to them

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Variability of Rational Buying

Mutual Dependence and Customer LoyaltyMutual Dependence and Customer Loyalty

•Long-term commitment increase both risk and rewards for both parties involved.•When both vendor and customer share financial interests that favor cooperation, there is greater motivation to continue the relationship through difficult times.

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Value Image

• Value Image– It is the total of all impressions that a

customer has of the firm (whether relevant to the buying situation).

– Value image is similar to product positioning that occurs with consumer goods.

– Need to maximize the value image of the offering in the “mind” of the buyer.