Factor Determining Organizational Buying Decision | Buying 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. 

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Several factors affect organizational buying decision. They can be grouped in environmental, organizational, interpersonal and personal factors. They are shown as follows:

Factors Affecting Organizational Buying Behavior

I. Environmental Factors           

Environment factors affect organizational buying behavior. This includes economic, technological, political-legal, social responsibility and competition.

1. Economic Factors

Economic factors affect organizational buying behavior. This includes level of demand and economic health. The level of demand includes capacity and desire for buying goods. This is affected by income distribution and price of product. Prosperity, recession and recovery are included in economic health. The prosperity condition is economically good condition. Recession is economically bad condition.

2. Technological Factors

Technological factors also affect organizational behavior. This includes level of technology, pace of technology, technology transfer etc. E-commerce as well as information technology has got revolutionary change. It has directly affected organizational buying behavior.

3. Political and Legal Factors

Political and legal factors also affect organizational buying process directly. Political factors include political system, political situation, and political thought, government policies etc. whereas constitution, laws, rules and regulations etc. are included in legal factors.

4. Social Responsibility

A business organization should consider social responsibility while buying any goods or services. Indigenous goods should be given preference in buying and interest of society should be protected. Interest of different pressure group of the society also should be considered while buying goods or services.

5. Competition

Competition also affects buying behavior. This competition includes pure competition, monopolistic competition and oligopoly competition.

II. Organizational Factors            

Organizational factors also affect organizational buying behavior. This includes objectives, policies, procedures, organizational structure and system.

1. Objectives

Buying objective is determined according to organizational goal. Goods should be purchased according to organizational objective. As goods or services need to be purchased according to organizational goal, buying is affected by objective.

2. Policies

Purchasing or buying policy also effects organizational buying behavior. Goods should be purchased according to buying policy of the organization. If the organization has the policy of buying indigenous goods, the buyer cannot buy foreign goods. If the purchasing policy is silent in this matter, whichever goods, foreign or indigenous, can be purchased as desired.

3. Procedures

The methods and process adopted by an organization to buy goods or services is called procedure. Goods or services can be purchased directly through agreement, or through tender, demanding catalog etc. Any of the method can be adopted to buy goods or services. Whichever procedure the organization has adopted, the buyer should follow it.

4. Organizational Structure

Organizational structure defines authority and relations which directly affects buying behavior. In some organizations, goods or services are purchased by direct order of chief executive while in some other organizations, goods or services are bought through purchase department. So, buying behavior is affected by organizational structure.

5. System

Purchasing system also directly affects buying behavior. An organization can adopt any one or more such as centralized system, decentralized system, huge quantity purchase system and others.

III. Interpersonal Factors            

Interpersonal factors also affect buying behavior. This includes authority, status, interest etc.

1. Authority

The personnel whom the organizational structure gives authority to order for purchase, no goods can be purchased without his order. Buying decision of such authority plays an important role in buying.

2. Status

The persons to purchase goods or services and to give order for purchase may be different in an organization. As much the behavior of the person issuing purchase order affects behavior of the buyer. If the status or level of the buyer is high, his buying decision becomes rational and quick. His/her behavior becomes mature.

3. Interest

Users, influencers, buyers, decider and gate keeper are involved in organizational buying process. Their interest affects organizational buying process. As their interest becomes different, buying process may be complicated.

IV. Personal Factors             

Personal factors also affect buying behavior. This includes age of person, education, level of job, personality etc.

1. Age

Age of person also affects selection and priority. Younger persons make buying decision and supplier selection quicker than older aged persons. Similarly, the younger persons try to find new suppliers whereas older persons try to give continuation to the same who is supplying. So this also affects buying process.

2. Education

Education makes person able to analyze good or bad. So, an educated person takes buying decision rationally whereas uneducated person makes buying decision at hit and miss or hunch. Educated person selects goods or services carefully. So, buyer’s education also affects organizational buying behavior.

3. Job Position

Job position also shows a person’s status. Buyer’s position or status also affects his buying behavior. Buyer’s status may be low or high.

4. Personality

Personality of person working in an organization may be different. Personality affects selection of quality, brand, price etc. So, buyer’s personality also affects organizational buying behavior.

5. Risk Attitude

Risk bearing capacity of men becomes different. Some can bear more risk and others like to take less risk. Similarly, some like to avoid risk and some others like to face. The capacity and attitude to bear risk also affect buying behavior. The buyers having the capacity to take high risk become aggressive. But those having less risk bearing capacity and having no risk bearing capacity do not do so.

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