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Understanding the Organizational Buying Process

This document discusses organizational buying processes. It describes how organizations establish needs, identify and evaluate alternatives, and select suppliers for goods and services. Key aspects of organizational buying include larger order sizes than consumer buying, fewer potential buyers, and objectives of reducing costs or increasing revenues. Organizations consider factors like price, quality, delivery, capabilities, policies, and past performance. Relationships are usually long-term and may involve reciprocity between buyers and sellers. The roles within organizational buying centers include users, influencers, buyers, deciders, and gatekeepers. Purchasing situations can include straight rebuys, modified rebuys, or new buys.

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7 views2 pages

Understanding the Organizational Buying Process

This document discusses organizational buying processes. It describes how organizations establish needs, identify and evaluate alternatives, and select suppliers for goods and services. Key aspects of organizational buying include larger order sizes than consumer buying, fewer potential buyers, and objectives of reducing costs or increasing revenues. Organizations consider factors like price, quality, delivery, capabilities, policies, and past performance. Relationships are usually long-term and may involve reciprocity between buyers and sellers. The roles within organizational buying centers include users, influencers, buyers, deciders, and gatekeepers. Purchasing situations can include straight rebuys, modified rebuys, or new buys.

Uploaded by

aarushchaudhary20
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

UNIT 2

ORGANIZATIONAL BUYING PROCESS


Organizational buying behavior- Buy goods and services for their own use or for resale. Its a Decision-making process that
organizations use
 to establish the need for products and services
 to and identify, evaluate, and choose among alternative brands and suppliers.

Organizational Buyer
 Manufacturers
 Wholesalers
 Retailers
 Government agencies

Derived demand- Demand for industrial products and services is driven by, or derived from, demand for consumer
products and services.

Size of the Order or Purchase- much larger than that in consumer buying.

Number of Potential Buyers Firm- far fewer buyers.

Organizational Buying Objective- For business firms, the buying objective is usually to increase profits by reducing costs
or increasing revenues. For nonprofit firms and government agencies the objectives are usually to meet the needs of the
groups they serve.

Organizational Buying Criteria-

 Price
 Ability to meet the quality specifications required for the item.
 Ability to meet required delivery schedules.
 Technical capability.
 Warranties and claim policies in the event of poor performance.
 Past performance on previous contracts.
 Production facilities and capacity.

Reverse marketing- Transforming and communicating buying criteria into specific requirements Building relationships
that shape suppliers to fit a buyer's needs and those of its customers.

1
PRERNA GARG
DEPT OF MGMT STUDIES
UNIT 2

Relationships- Usually long-term relationships between industrial buyers and sellers. Sometimes these relationships lead to
reciprocal arrangements

Reciprocity- Two organizations agree to purchase each other's products and services. The U.S. Justice Department frowns
on reciprocal buying because it restricts the normal operation of the free market

Supply partnership- Buyer and its supplier adopt mutually beneficial

o objectives,
o policies, and
o procedures
 for the purpose of
o lowering the cost and/or
o increasing the value
 of products and services delivered to the ultimate consumer.

ORGANIZATIONAL ROLES AS A BUYER


As a buyer, an organization plays several roles like the following:
Users  people in the organization who actually use the product or service.

Influencers  affect the buying decision,


 usually by helping define the specifications for what is bought.

Buyers  have the formal authority and responsibility to select the supplier and
negotiate the terms of the contract.

Deciders  have the formal or informal power to select or approve the supplier that
receives the contract.

Gatekeepers  control the flow of information to other members of the buying center.

Apart from these the organization is indulged in:


Straight Rebuy  Buyer reorders an existing product or service from the list of acceptable suppliers.

Modified  Users, influencers, or deciders in the buying center want to change the product
Rebuy specifications, price, delivery schedule, or supplier.

New Buy  Organization is a first-time buyer of the product or service. This involves greater
risks, so the buying center is enlarged to include all who have a stake in the new
buy.

2
PRERNA GARG
DEPT OF MGMT STUDIES

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