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Industrial Marketing

Organizational buying behavior


Business buying behavior

1. Should fit the product


2. Should fit the customer profile
3. Should fit the situation
At Ford, purchasing manager has to
understand the needs of Ford motor company
In turn,
Business Marketing Manager should
understand the industrial buying behavior
Organizational buying behavior is a process
and not just a behavior
This process has several stages , each stage
expected to yield a decision.
Need Problem
Problem Recognition
Recognition –int/ext/comp
–int/ext/comp
Recognition
General
General Need
Need Description-VA
Description-VA

Info Product
Product Specification
Specification
Search/ Supplier
Supplier Search
Search
Eval
Proposal
Proposal Solicitation
Solicitation

Purchase Supplier
Supplier Selection
Selection

Order
Order Routine
Routine Specification
Specification
Post
Performance
Performance Review
Review
Purchase
1.Problem recognition Internal ,External – Euro II norms.Competitor
VA

2.General description Production manager work with purchasing manager on characteristics of


of need equipment( Move from Blurred to clear vision)

3.Product Experienced production managers assist procurement manager in developing


Specifications detailed specs. They will refer some literature of course.

4.Supplier Search Identify a set of possible sources to supply this HS (High speed) equipment

5.Acquisition and Obtain offers and analyze. Use vendor analysis technique
analysis of proposals It may be necessary to evaluate Make/Buy

6.Supplier selection Negotiation with two finalists at least

7.Selection of order Job is over only on delivery. Follow purchasing guidelines, delivery, payment
routine terms etc

8.Performance ReviewBad – could lead to modified rebuy. Good – would lead to straight rebuy
Organizations with significant experience in
buying will approach the problem quite
differently.
They will separate the situation in to three
distinct categories:
1 New Task
(also strategic new task)
2 Straight rebuy
Approach 1 – Causal
Approach –2 Look at others also to make sure
that rebuy is not obsolete
3 Modified rebuy
Simple modified rebuy
Complex modified rebuy
Custom furniture
Installed components
Buildings
New
New Task
Task Buying
Buying Weapon systems

New vehicles
Involved Decision Making

Elec. Equip
Consultants
Modified Computer equip.
Modified Rebuy
Rebuy

Utilities
Office Supplies
Bulk chemicals Straight
Straight Rebuy
Rebuy
New Task
1. Need considerably new ( accounting – to
computers)
2. No past experience
3. Extensive problem solving activity
Guidelines :
1.Try & Participate from stage 1
2. Buyer uncertain appropriateness of technology
3. Relationship is vital
4. Buyer more willing to entertain a good
technical solution over low price & assured
delivery
5. Buyer will respect a Techie at this stage
Straight rebuy
Effect of Technology :
1. Buy-side requisition process
2. Employees can indent online while company
retains control over Procurement
3. software is useful
4. Intranet & web based commerce plays a vital
role
Strategy Guidelines:
Price and Delivery
Communicate also to employees
Online enabling
Modified rebuy

When would the buyer modify ?


 Displeased with the existing supplier
 Trifle change in the requirement /
technology / product. Strategy Guidelines:
: Know the factors that led to modifications.
Address these if you can.
Buying Grid
New Modifie Straig
d ht
Problem
Recognition
General need
description
Product
specification
Supplier search
Proposal
solicitation
Supplier selection
One of the memorable case studies – Japanese
Management
A prof began his class by holding up a glass with some water
in it. He held it up for all to see and asked the students How
much do you think this glass weighs?
50 100 125 gms . Students answered.
I wouldn’t know unless I weigh it . Said the professor
But my question now is , what will happen if I keep it for 2
minutes – nothing said a student
one hour ? – hands will pain
one day – Numb , paralysis, Hospitalization perhaps
Did the weight of water change? No. Then why this change
Students were puzzled. Put the glass down said a student.
Exactly that is the solution . Said the prof
Don’t keep the problem for too long. Dispense it.
Life is all about this