Business Buying Behaviour_cb

8/2/2019 Business Buying Behaviour_cb

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Organizational Buying

Behavior

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Conceptual Framework

Payer

UserBuyer

UNDERSTANDING

CUSTOMER

BEHAVIOR Families and Households

Family Decision Making Process

Conflict in Family Decisions

Household Buying Behavior

Components of the Business Buying

Process

Business Buying Behavior

Government Buying Procedures

Future of the Government asCustomer

Government Buying Behavior

INSTITUTION

CUSTOMERDECISION MAKING


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A business is a licensed entity engaged in

the activity of making, buying, or selling

products and services for profit or

nonprofit objectives


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Business MarketsMarket Structure and Demand

Fewer and larger buyers

Geographic concentration

Derived demand

Inelastic demand

Fluctuating demand

Buyer and seller dependency


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Business buyer behavior refers to thebuying behavior of the organizations that

buy goods and services for use inproduction of other products andservices that are sold, rented, or suppliedto others. Also included are retailing and

wholesaling firms that acquire goods toresell or rent to others for profit.

Business buying process is the processwhere business buyers determine whichproducts and services are needed topurchase, and then find, evaluate, and

choose among alternative brands


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Business Buyer Behavior

Straight re buy is a routine purchase decisionsuch as reorder without any modification

Modified re buy is a purchase decision thatrequires some research where the buyer wantsto modify the product specification, price,

terms, or suppliers

New task is a purchase decision that requiresthorough research such as a new product

Major Types of Buying Situations


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Buying center is all of the individuals andunits that participate in the businessdecision-making process

Users

Influencers

Buyers

Deciders

Gatekeepers

Participants in the Business BuyingProcess


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Buying center provides a major

challengeWho participates in the process

Their relative authority

What evaluation criteria each participantuses

Informal participants

Participants in the Business BuyingProcess


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Business Buyer BehaviorUsers are those that will use the product or

service

Influencers help define specifications and

provide information for evaluating alternatives

Buyers have formal authority to select thesupplier and arrange terms of purchase

Deciders have formal or informal power toselect and approve final suppliers

Gatekeepers control the flow of information

Participants in the Business Buying

Process


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Business Buyer BehaviorMajor Influences on Business Buyers

Economic

Factors

Price

Service

Personal

Factors

Emotion


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Business Buyer BehaviorMajor Influences on Business Buyers

Environmental Factors

Demand for

product

Economic

outlook

Cost of

money

Resourceavailability

Technology Culture

Politics Competition


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Objectives

Policies

Procedures

Structure

Systems

Major Influences on Business Buyers

Organizational Factors


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Motives Perceptions Preferences

Age Income Education

Attitudetoward risk

Major Influences on Business BuyersInterpersonal Factors


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Organizational Characteristics

Four organizational characteristics of

the customer firm affect buyingbehavior:

Size

Structure Purchase resources

Purchase orientation


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Decision Process

Business buying decisions comprise

the following stages: Need assessment

Developing choice criteria

Request for proposals (RFPs)

Supplier evaluation

Supplier selection

Fulfillment and monitoring


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Problem recognition occurs when

someone in the company recognizes aproblem or need

Internal stimuli

Need for new product or productionequipment

External stimuli

Idea from a trade show or advertising

The Buying Process


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Business Buyer BehaviorGeneral need description describes the

characteristics and quantity of the needed item

Product specification describes the technicalcriteria

Value analysis is an approach to cost reductionwhere components are studied to determine ifthey can be redesigned, standardized, or madewith less costly methods of production

The Buying Process


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Supplier search involves compiling a list of

qualified suppliers

Proposal solicitation is the process ofrequesting proposals from qualified suppliers

The Buying Process


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Supplier selection is the process when thebuying center creates a list of desired

supplier attributes and negotiates withpreferred suppliers for favorable terms andconditions

Order-routine specifications is the final

order with the chosen supplier and lists all ofthe specifications and terms of the purchase

The Buying Process


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Performance review involves a critiqueof supplier performance to the purchaseterms

The Buying Process


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Perceived Risk

Perceived risk refers to the expected

probability that the purchase may notproduce a satisfactory outcome

It is a product of two factors: The degree of uncertainty that a choice

may be wrong

The amount at stake should a wrongchoice occur


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Importance

The importance of purchase is a

combination of the amount at stakeand the extent to which the productplays a strategic role in the

organization The higher the amount at stake, and the

more strategic the products role, the

more important the purchase


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Complexity

Complexity refers to the extensiveness

of effort it takes to comprehend andmanage the product during itsacquisition

Complexity has two dimensions: The number of performance dimensions

The technical and specialist knowledge

required to understand those dimensions


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Time Pressure

Time pressure refers to how urgently

the item is neededWhen the item is needed urgently thepurchase decision will:

Short-circuit the usual process Make the process less deliberative

Give more direct role to the

user/requisitioner


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Psychology of Decision

Makers

The decision-making process is

primarily driven by two psychologicalprocesses occurring in the decisionmakers:

Their expectations Their perceptual distortions


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Conflict and Its Resolution

Problem solving

PersuasionBargaining

Politicking


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A Comprehensive Model of Organizational

Customer Behavior

Organization Characteristics

Size Centralization Purchase Orientation Rules and Procedures

Information Sources

Salespersons

Advertisements

Product literature

Syndicated researchreports

Trade/professional

journals

Trade associations

Word-of-mouth Vendor referrals

Decision Process

Need Identification

Vendor Search

Evaluation Criteria

Conflict

Resolution

Problem

solving

Persuasion

Bargaining

Politicking

Vendor Evaluation

Decision

Buying Task

Straight Rebuy

Modified Rebuy New task

Perceived risk

Importance

Complexity

Time pressure

Nature of Purchase


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THANKS.

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Documents

Business Buying Behaviour_cb