According to Pride and Ferrell –“Organizational buying behavior refers to purchase behavior of producers, government units, institutions and resellers.”
According to Bennett, Webster and Wind –“Organizational buying behavior is the decision-making process by which a buying group establishes the need for goods and services and identifies, evaluates, and chooses among alternative brands and suppliers.”
Organizational Buying Process
- Problem recognition: The buying starts with problem recognition. In this stage, one or more individuals in the organization recognize that a problem or a need exists. Problem recognition may arise under several circumstances, such as when a new product is being introduced or an existing product is being modified or when a machine break down occurs. Individuals in the buying center, such as users, influencers and buyers may be involved in the problem recognition stage.
- Developing product specifications: This stage consists of determining what will be required to solve the specific problem. In this stage, several individuals in the organization, such as technical personnel, users, deciders and buyers participate jointly in developing specifications about the product needs of the organization.
- Search for products and suppliers: The third stage involves searching for possible products to solve the problem and locating possible suppliers of the product. Search activities may involve looking into company files and trade directories, contacting suppliers for information, inviting proposals for supply and so forth.
- Evaluation: The fourth stage consists of evaluation of the products and the suppliers on the basis of price, service, quality, reliability and consistency of supply factors.
- Selection: The fifth stage involves selecting of the product to be purchased and the supplier from whom to buy it. Specific details regarding terms credit arrangement, delivery dates and methods are worked out in this stage.
- Evaluation of product and supplier performance: The final stage in the organizational buying process involves the product’s performance and also the performance of the supplier. This stage helps organization to take corrective actions. The results of such an evaluation are used as important feedback for further purchase decisions.