Organizational

Buying Behaviour2

Characteristics
Organizational buying Behaviour is a multi-person buying
activity.

Participants in the Business Buying Process

Users
The persons who use the item. Say for safety gloves the operators.

Initiators
The persons who request the purchase. The safety officer may initiate the request for the purchase.
Influencers
Persons who held define specifications. In this case of safety gloves, the safety officer may
himself define specifications. If an industrial engineer is in the organization, he may also be
consulted. There can a different gloves for different working situations and industrial engineer
may be more aware of specific requirements due to his special nature of work - human effort
engineering.

Participants in the Business Buying Process

Buyers
They are the person who actually do the buying transaction.
Gatekeepers
They control access to personnel in a company. The receptionist, the secretaries
etc.
Deciders
People who decide on product requirements and suppliers. It is the final
approval for product specifications and suppliers' list.
Approvers
Persons who approve the purchase. In the case of safety gloves, the personal
manager may have the power to approve.

Who are the Organizational

Consumers

Mining and Extractive Industries

Material Processing Industries
Manufacturing of Parts and Assembly
Final Assembly
Distributors

Source: R.E. Webster, Jr and Y Wind, journal of Marketing,

36, pp 12-17, April, 1972

The Sheth Model

Organizational Buying Situations

Straight re-buy
In this buying situation, only purchasing department is involved. They get an
information from inventory control department or section to reorder the
material or item and they seek quotations from vendors in an approved list.
The "in-suppliers" make efforts to maintain product and service quality. The
"out-suppliers" have to make efforts to get their name list in the approved
vendors' list and for this purpose they have to offer something new or find out
any issues of dissatisfaction with current suppliers and promise to provide
better service.

 Modified re-buy
In this buying situation, there is a modification to the specifications of
the product or specifications related to delivery. Executives apart from
the purchasing department are involved in the buying decisions. The
company is looking for additional suppliers or is ready to modify the
approved vendors list based on the technical capabilities and delivery
capabilities.

 New task buy

In this situation, the buyer is buying the product for the first time. As the
cost of the product or consumption value becomes higher, more number of
executives are involved in the process. The stages of awareness, interest,
evaluation, trial, and adoption will be there for the products of each
potential supplier. Only the products which pass all the stages will be on the
approved list and price competition will follow subsequently.

Categories of Organizational Buying Decision

based on Situation
Buying
Situation

Level of effort

Risk

Buyers
Involved

Straight re-buy

Nominal
Decision
Making

Low

Automatic
recorder

Modified re-buy

Limited
Decision
Making

Low to moderate One or Few

New Task

Extended
Decision
Making

High

Many

Product Life Cycle Stages and The Size of DMU

Product Life
Cycle Stage

Type of
Purchase
Decision
Situation

Size of DMU

Key Functions
Affecting the
Purchase
Decision

Introduction

New Task

Large

Engineering
and R & D

Growth

Modified re-buy

Medium

Production and
top
Management

Maturity

Straight re-buy

Small

Purchase
Function

Selection of A Supplier

Reliability of delivery dates promised

Price
Suppliers flexibility
Consistency in dealing of the supplier
Rejection rates
Kind of Manufacturing facility
Efficient follow-up of the order
Quality of service
Prompt attention to the enquires
Supplier overall reputation.

Thanks