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Organizational Buying Behavior

Organizational Buying Behavior refers to the decision making

process through which on organization decides what type of products and services it
should buy to conduct its operation. The output of any organization largely depends
on the inputs, the organization utilizes. Therefore, the study of organizational buying
behavior is very important. Organizational buying behavior includes realization of
need of purchase, identifying available product alternatives, evaluating those
alternatives and finally deciding which product or services is to be purchased.

According to Webster and wind Organizational buying is the

decision making process by which formal organizations establish the need for
purchased products and services and identify, evaluate and choose among
alternative brands and suppliers.

Thus, organizational buying behavior is the decision carried out by

the organization for choosing the best product to purchase in order to produce the
best output.

Features Of Organizational Buying Behavior

(a) Few large buyers.

Unlike consumer market, organizational market consists less
volume of buyers. However, organizations generally purchase the product the
products in high amount.

(b) Relationship Marketing.

Usually, the organization needs frequent supply of products and
services, organizations get chance to maintain and customers.

(C) Customized Marketing

Organization considers marketing mix while making decision

against buying products. This helps organization to meet the buyers requirement i.e.,
organization will be able to produce those outputs that give its consumers maximum
utilities.

(d) Derived and fluctuating demand

Demand in consumer market creates demand in organizational
market. In other words, organizational demand is totally dependent on consumer's
demand. Therefore, change in consumer's demand changes organizational demand.
The fluctuation of organization of organizational demand is connected with that of
consumers.
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(e) Inelastic Demand

A large part of the demand for organizational products and services

are inelastic. There is very little impact of the changes in price on the quantity
demanded for products and services.

(f) Professional buying

Organizational buying is mostly technical. Organization usually

have buying contract with same party i.e, there is short channels of distribution of
organizational products. Direct advertising and personal selling become relevant in
organizational marketing.

(g) Group Buying

Organization is an association of number of people. Hence, it

involves various individuals in buying process. In other words, there exists group
buying activity.

(h) Buying situations

Organization mainly consists three types of buying situations. Some

products are frequently or routinely bought, some products are bought with
modification on price, delivery terms and product specification and sometimes
organization have to purchase new products and services.

(i) Systems buying

Various organizational buyers such as: hotels, educational
institutions, etc tries to find out such supplies who can supply all the requirements of
the organization.

Organizational buying Process.

Need/ Problem Product Search for Proposal Supplier Selection &

Recognition Specification Suppliers Solicitation Purchase .

Fig : Organizational Buying Process.

1. Need/ Problem Recognition.

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This is the first step in organizational buying process. In this step,

need of buying or problem that can be solved through buying certain products &
services, is identified. The need or problem may be created due to decreasing
inventory levels of row materials, break-down in current operations, new product
developments, expansion of organizational operations, etc.

2. Product Specification.

After recognition of need or problem of the organization, the detail

product specification is done. Here, actually what product is to be purchased is
specified. Generally, such specifications are prepared by technical committee.

3. Search for suppliers.

In this step, the potential suppliers are searched in order to
purchase specified products. Usually, regularly, purchased items are purchased
from a regular supplier. In case of new product or unusual products the committee
may search in organizational market.

4. Proposal Solicitation.
The purchase manager solicits proposals from potential suppliers of
the product or service. The proposal is required to quote price, quality, delivery and
other terms and conditions of supply. Government and social institutional purchases
are based on formal bidding process, while business purchases are mostly based on
technical proposals.

5. Supplier Selection and Purchase.

In organizational market, we can find various suppliers. Among

various available potential suppliers, the purchase committee has to select the best
supplier. The suppliers are evaluated on the basic of product price, delivery
capability, quality and other technical capabilities. After selecting the supplier, based
on the agreed terms and conditions, the organization places purchase order for the
product or service.