assistant professor of commerce government first grade … · organisational buying and buying...

By:

CHANDRAPRABHA .G .V

ASSISTANT PROFESSOR OF COMMERCE

Government First Grade College Magadi.

Content:

Organisational Buying and Buying Behaviour.

• Organisational Buying Decision Process;

• Buying Situations; Buy grid Frame Work;

• Buying Centre Roles;

• Key Members of Buying Centre.

• Models of organizational Buying Behaviour;

• The Webster and Wind Model;

• The Sheth Model

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Organisational Buying and Buying Behaviour

• Organizational Buying Behaviour is a complex decision-making and

communication process involving selection and procurement of product and

services by organizational buyers.

• Organizational behavior refers to the buying behavior of organizations that

buy products for business use, resell or to make other products.

Organizations consist of business, industries, retailers, government, and non-

government organizations

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Characteristics of Organizational Buying

1. Timing Complexity. ...

2. Technical Complexity. ...

3. Organizational Complexity. ...

4. Individual Factors. ...

5. Organizational Factors. ...

6. Business Environment.


Organizational Buying Decision Process:

Organizational buying behavior refers to the

process of how companies or organizations buy

goods and services. Organizational Buying is not

an easy activity as most people think of it.


Stages of organisational buying process

Stage-1 – Problem Recognition:

The first stage of the business buying process in which someone

in the company recognizes a problem or need that can be met by

acquiring a good or a service.

Stage-2 – General Need Description:

At this stage of business buying Process Company describes the

general characteristics and quantity of a needed item.chandraprabha .G .V 6

Stage-3 – Product Specification:

At this stage of the business buying process buying organization decide on

the product and specifies the best technical product characteristics for a

needed item.

Stage-4 – Value Analysis:

An approach to cost reduction, in which components are studied carefully

to determine if they can be redesigned, standardized or made by less costly

methods of production.

Stage-5 – Supplier Search:

At this stage of the business buying process buyer tries to find the best

vendors.chandraprabha .G .V 7

Stage-6 – Proposal Solicitation:

The stage of the business buying process in which the buyer invites qualified

suppliers to submit proposals.

Stage-7 – Supplier Selection:

The stage of the business buying process in which the buyer reviews proposal

and selects a supplier or suppliers.

Stage-8 – Order-Routine Specification:

The stage of the business buying process in which the buyer writes the final

order with the chosen suppliers, listing the technical specifications, quantity

needed, expected time of delivery, return policies and warranties.

Stage-9 – Performance Review:

The stage of the business buying process in which the buyer rates its

satisfaction with suppliers, deciding whether to continue, modifies or drops

them.


Buying Situations:

A buying situation relates to the circumstances surrounding a purchase that can

be defined by the quality of information and experience that the buyer has

concerning the products and vendors available, as well as the effort it will take

to make the purchase decision.

Straight rebuy is the situation under which the buyers are engaging in the

routine purchase of standard products from a familiar supplier where you

don’t make any modifications from the most recent order.

A perfect example is ordering some boxes of copier paper, pens and pencils

from your office supplier. It doesn’t take much effort except to confirm the

sales order has been satisfied.

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Buy Grid Frame Work:

In 1967, the Canadian, American and Israeli marketing

researchers, Robinson, Faris and Wind, introduced the buy grid

framework as a generic conceptual model for buying processes of

organisations.

They saw industrial buying not as single events, but as

organizational decision¬ making processes where multiple

individuals decide on a purchase. Their framework consists of a

matrix of buyclasses and buyphases.


Models of organizational Buying

Behaviour;

The Webster and Wind Model;

The Sheth Model.

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The Webster and Wind Model;

The Webster and Wind Model of organizational buying

behavior is quite a comprehensive model. It considers four sets

of variables which affect the buying-decision making process in

a firm. These are environmental, organizational, buying center,

and individual.

This framework identifies four categories of variables that have

an influence on organizational buying decisions .


Environmental :Any aspect of the external environment that may affect the

organization buying behaviour is embraced under this heading. This includes

political, economic, cultural, legal, technological and physical environments.

Competitors’ marketing actions are also deemed to be in the external environment.

Organizational :There are several organizational factors that affect behaviour. The

company’s goals and objectives set parameters on activity. The organization’s

structure and resources act as constraints on its culture in terms of the type of

policies and procedures that are followed. These all affect buying behaviour.

Interpersonal :The relationships between the individuals in the buying centre are

an important determinant of how decisions are reached. How coalitions are

formed and where loyalties lie within an organization will be dependent on these

relationships


Individual :Attitude to risk, creativity, competitiveness, style of

problem solving and locus of control will all be unique in each

individual. The individual’s personal goals, past experience and training

will inform their way of operating. Each individual will influence the

DMU’s decisions to a greater or lesser extent. Each of these categories

has two subcategories of task and non-task related variables. Task

related variables are directly related to the buying decision being

undertaken; non-task related variables are not directly concerned with

the buying decision but nevertheless affect the decisions made (see

Figure below).


The Sheth Model.

Definition: The Howard Sheth Model is an approach for analyzing the

combined impact of the social, psychological and marketing factors on

the buying behaviour or preference of the consumers and the industrial

buyers into a logical order of information processing.

John Howard and Jagadish Sheth introduced the Howard Sheth Model

in the year 1969. The concept was published in their book ‘The Theory

of Buyer Behaviour’.

Three Levels of Decision-Making in Howard Sheth Model:

The model has described the three significant stages of the buyer’s

decision-making or selection of a particular brand. Let us now discuss

each of these in details below


Extensive Problem Solving

This is the initial stage of decision-making, where the buyer is new to the

market. He/she has no or little information about the brands and has no

preference for a particular product or service.

Thus, a consumer is an information seeker at this level, who check out

different brands available in the market, before making a buying decision.

Limited Problem Solving

At this level, the buyer has inadequate or incomplete information about the

product, market or the brands operating in it. Sometimes the buyer is

confused among the various alternatives.

therefore, to make a buying decision, he/she look for a comparative study

of the different brands and the products available in the market.chandraprabha .G .V 18

Routinized Response Behaviour

The habitual response behaviour stage is where the buyer is entirely

aware of the products offered by different brands and the features,

pros and cons of each product.

He/she is capable of evaluating and comparing the multiple options

available in the market.

Here, the buyer decides in advance, which product is to be

purchased.

To understand the Howard Sheth Model, we must have an idea of

its arrangement. So, let us have a look at the design of this model


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Thank you

assistant professor of commerce government first grade … · organisational buying and buying...

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