Chapter 6

Organization Markets &

Organizational Buying
Behavior
 Objectives of this session

 The concept of organizational buying

 Difference between consumer

markets and organizational markets

 Organizational markets in India

Organizational buying behavior
 Organizational buying is entirely
different from that of consumer
buying
 It involves a through & deep
analysis
 Organizations purchase products
ranging from high complex
machinery, small components,
bought on regular basis & those
 Differences between organizational &
consumer markets
Consumers market Organizational
Market
Less time spent on More time spent in
purchasing process purchasing process

Large number of Organizational buyers

consumers buyer are few in number

Quantity of purchase Quantity of purchase

is comparatively low is more

Segmentation on Segmentation on
geographic, Purchasing approach,
demographic and situational factors,
psychographic factors personal characteristics
 Organizational buying
situation
 New task

 Straight rebuy

 Modified rebuy
 System buying: a process in which an
organization selects only one
supplier for all its raw material
requirements

 System selling: a process in which a

seller himself sells all the raw
materials needed by a customer
 Organizational markets in
India
 Industrial markets in India can be
divided into three sectors

 Chemical and pharmaceutical

companies
 Energy and natural resources
 Industrial and automotive sector
 Chemical and
Pharmaceutical
Products are produced in bulk quantities &
are conventionally sold to organizational
customers

Opportunity for growth in specialty

chemicals segments i.e. chemicals

Pharmaceutical companies are set to have a

very high growth rate with most global
companies making strategic moves such as
mergers or acquisitions.
 Energy and natural
resources
 Due to population growth and increasing
urbanization natural resources are depleted
 Dependence upon conventional sources for
energy
 Search for alternative source for energy
 Further sub segments: oil& gas, coal &
lignite, forests & timber, precious metals
 Industrial and automotive
 Success of companies directly linked to
financial & economical status of the
country
 Over the years has changed into highly
competitive industry
 Large number of competitors (related to
infrastructure)
 Sub segments: cars two/three wheelers,
heavy vehicles, electrical, electronics,
 Participants In Organizational
Buying
 Initiators
 Influencers
 Users
 Deciders
 Approvers
 Buyers
 Gatekeepers
 Stages Of Buying
 Problem Recognition
 General Need Recognition
 Product Specification
 Searching for potential Suppliers
 Value Analysis
 Vendor Analysis
 Order-Routine Specification
 Multiple Sourcing
 Performance Review