Organizational Buying Behavior: Meaning and Features

Meaning of Organizational Behavior

The behavior of an organization shown in buying goods or services is called organizational buying behavior. The organizations buy goods or services for business use, resale, produce other goods or provide services. Business and industrial organizations buy goods to use in business or produce other goods. Resellers buy goods for reselling them at profitable price. Similarly, government bodies buy goods for office and conducting development program. Non-governmental organizations, hospitals, educational institutes, social organizations, religious organizations etc. buy goods to provide services to their followers or customers.

Users, influencers, buyers, deciders and gate keepers take part in organizational buying process. Users who are the members of organization use bought goods or services. They prepare buying proposal and help in preparing product specification. They also help in preparing special report and analyzing alternatives. Influencers influence buying decision. They help in preparing products specification and analyzing alternatives. Those who buy goods or services are called buyers. Buyers select suppliers and make buying terms and conditions. The person who makes the last decision to buy goods or services from the selected supplier is called decider. Goods are purchased from the supplier selected by the decider. Gatekeeper controls follow of information and other things. Technical staff and personal assistant work as gate keeper.

Organizational buying behavior is influenced by marketing stimuli and other stimuli. Marketing stimuli includes product, price, place and promotion and other stimuli includes economic, technological, political, cultural and competition. These motivators bring changes in the buyers’ behavior after they enter in an organization.
Or these stimuli influence selection of goods or service, selection of suppliers, order, quantities, delivery time, terms and conditions of goods or services etc.

According to Pette D. Bennett, “Organizational buying behavior is the decision making process by which a buying group establishes the needs for goods and services and identifies, evaluate, and chooses among alternative brand and suppliers.”
According to W. M. Pride and O. C. Ferrel, “Organizational buying behavior refers to the purchase behavior of producers, government units, institutions and resellers.”
In conclusion, the behavior shown by an organization while buying goods or services is called organizational buying behavior. User, influencer, buyer, decider and gate keeper are involved in organizational buying process. Organizational buying behavior is influenced by marketing stimuli and other stimuli. Generally, these stimuli influence selection of goods or services, selection of suppliers, buying quantity, terms of delivery, terms of service and terms of payment.

The model of organizational buying behavior can be shown in the following figure:-
The Model of Organizational Buying Behavior

Features of Organizational Buying Behavior

Few buyers, close relationship between buyers and suppliers, rational buyers, direct channel, adaptation of certain purchase policy made by business organization etc. are the main features of organizational buying behavior.

1. Few buyers

As organization itself become buyer, organizational buyers are few in number. But they buy in huge quantity. Organization buyers live scattered in different places.

2. Close relationship

Organizational buyers and suppliers have close relations. It may be long lasting. Such relation has positive effect on future buying. Generally all organizational buyer and suppliers have close relation.

3. Rational buyers

Buyer becomes rational in organizational buying. Professional and trained buyers are involved in buying. So, buying decision becomes rational.

4. Direct channel

As organizational buyers buy a huge quantity, they buy goods directly from producer. So, marketing channel becomes direct. But some organizations buy goods through intermediaries or agencies.

5. Purchase policy

The buying method of organization and persons become different. An organization makes certain policy for buying and buys goods according to the policy. Buying through quotation, buying through tender, buying through contract etc. are the major buying policies of organizations.

Organizational Buying Process

Organizational buying has certain process. The following figure shows organizational buying process. There are eight stages. An organization may go through all of these stages as following or it may change some of them. This depends on buying quantity, buying price, nature of goods, buying frequency etc.
Stages of Organizational Buying Process

1. Need recognition

Organizational buying process starts from need recognition. In an organization, a certain person recognizes need of certain goods and after buying the needed goods, need is fulfilled. Needs in organization can be recognized in two ways. They are: external stimuli and internal stimuli. If a company decides to produce new goods, it is internal stimuli. It needs to buy new goods and equipments. Similarly, when a buyer observes trade exhibition, s/he may make his/her idea to buy new goods. Such idea is external stimuli, because this idea is made from outer environment and materials should be purchased for this.

2. Need description

After the need is recognized, the buyers should describe need. This task is completed in the second stage of organizational buying process. While describing need, features of needed goods and needed quantity should be described. If the goods have standard, this task becomes easy; if otherwise, it becomes complicated. Help of engineers, users and consultants should be taken for complex goods.

3. Product specification

The task of preparing specific description of goods is the third stage of organizational buying process. In this stage, description performance of goods is prepared to solve the problems. Technician’s help should be taken for this task. In this stage, the value of goods is analyzed.

4. Supplier search

At this stage of organizational buying process, the buyer searches proper suppliers or sellers. Buyer prepares a list of suppliers to select good and proper suppliers. This list is prepared by looking at trade directory, searching in Internet, asking other companies for suggestions etc. If the goods to be bought are new, complicated and costly, it needs long time to search suppliers.

5. Proposal solicitation

Proposal solicitation is the fifth stage of organizational buying process. At this stage, buyer calls best suppliers for submitting proposal. As the reaction, some send catalog or sellers to the organization. If the product is costly and complicated, the buyer demands detailed proposal, and if the product is technical, business organization calls for presenting the product itself.

6. Supplier selection

At the sixth stage of organizational buying process, buyers assess the proposal and select one or more suppliers. For selecting the suppliers, a list is prepared and rating is made on the basis of their attribute and importance. Then the best supplier is selected. Analysis of the suppliers is done in the following ways.
Supplier attribute
Rating
Very poor
(1)
Poor
(2)
Fair
(3)
Good
(4)
Excellent
(5)
Price competitiveness
x


Product quality, reliability
x
Service and repair capabilities
x
On-time delivery

x
Quality of sales representatives
x
Overall responsiveness to
customer needs
x
Overall reputation Average
Score = 4.29

x

7. Order routine specification

After the best suppliers have been selected, the buyer prepares final order. In this order, all the matters such as attribute of goods, quantity, specification, time for supply, warranty, method of payment, service after sale etc. should be clearly mentioned.

8. Performance review

This is the last process of organizational buying. At this stage, the buyer reviews suppliers’ performance. This type of review helps to take decision whether to continue relation with the supplier or change or end the relation. If the performance of the supplier is satisfactory, the relation can be continued; if it is somewhat defective, if partial correction is made and the relation is maintained. But if the performance is disagreeable, it is broken.
Stages of the buying process
Buying situations
New
task
Modified
rebuy
Straight
rebuy
1. Problem recognition
Yes
May be
No
2. General need description
Yes
May be
No
3. Product specification
Yes
Yes
Yes
4. Supplier search
Yes
May be
No
5. Proposal solicitation
Yes
May be
No
6. Supplier selection
Yes
May be
No
7. Order-routine specification
Yes
May be
No
8. Performance review
Yes
Yes
Yes

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