The Purchasing Decision

Learning Objectives of this Session

• The Decision Making Unit (DMU)

• The Decision Making Process (DMP)

• Factors affecting the Purchasing Decision

• B2C and B2B Purchasing Decisions

1: The Decision Making Unit (DMU) Model

The elements of the DMU are:

The Gatekeeper

The Initiator

The Decider

The Buyer

The User

The Financier

Other Influencers

The Gatekeeper

• Controls access to the DMU

• Controls information input into DMU

• Could be an individual (Secretary / PA)

• Could be a department (Customer Service, Sales, Procurement)

The Initiator

• The person who recognises a problem / need to be addressed

• May or may not be part of ‘formal’ DMU

• Often associated with ‘The User’

The Decider

• The person with the authority to make the decision to buy

• May or may not be the person who makes the final choice

• Level of seniority depends on importance of purchase / budget / company culture

The Buyer

• The person tasked to make the actual purchase

• Degree of choice / power depends on organisation structure

• May be part of a formal ‘Buying Department’

The User

• The person/s who actually use or consume the product / service

• Degree of influence on DMU depends on company culture

• Importance of feedback / satisfaction depends on company culture

The Financier

• The person or department which authorises expenditure

• Degree of influence / authority depends on company culture / budget involved

Influencers

Anyone outside of the DMU which has an influence on its members:

• Formal ‘consultants’• Informal personal

contacts / WoM• Recognised ‘experts’,

role models, personalities and endorsees

The Decision Making Unit:B2B B2C

• Roles tend to be more formal

• Roles tend to be by job title – but some multi-role play

• Degree of influence may still be affected by strength of personality

• Roles tend to be more informal

• Many roles played by one person

• DMU sometimes associated with members of Family

• Recognises influence of children / non wage earners

2: The Decision Making Process (DMP) Model

The stages of the DMP are:

Recognition of need

Developing product specification

Search for information / supplier

Evaluation of alternatives

Select product / supplier

Decision to buy / Determining terms of contract

Fulfilment of contract

Evaluation

1: Recognition of need

• Many purchases are made to meet a perceived problem

• Customers are interested in ‘benefits’ (solutions) rather than ‘features’

• Problems may be ‘real’ or ‘imagined’• High priority vs low priority problem solving• New technology may create its own ‘need’ eg

Walkman, GPS, iPhone

2: Product specification

• May be complex formal B2B process

• Also B2C – especially for major purchases

• Budget

3: Search for information

• Previous purchasing experience• Intensity of search depends on: New Buy / Re-

Buy / Modified Re-buy (Extended, Limited and Routine Problem Solving)

• Advertising and sales literature• Internet• Sales representatives• Store visits• Recommendation from friends and other users

4: Evaluating alternatives

Factors compared:

• Performance (Capable of meeting need)

• Availability

• Price

• Value for money

• Brand?

5: Selection of product / supplier

• Shortlisting

• Request for tenders

• Prioritising choices

6: Decision to buy / Terms of contract

• To buy or not to buy

• Buy now or buy later (re-evaluation of priorities)

• Negotiating terms– Price / Payment– ‘Added value’ benefits

7: Fulfilment of contract

• Delivery

• Fitting

• Schedules

• Specifications

8: Evaluation

Has need been met?Problem areas:• Was product / service misrepresented?• Were specifications correctly determined?• Were expectations raised unrealistically?

(overselling)• Customer ‘satisfaction’ or ‘delight’?• Post-purchase dissonance?• Repeat purchase?

Conclusions:

• Need to identify customers’ decision making processes

• Need to identify members of DMU and their relative influence on the DMP

• What are the customers’ buying criteria• Need to understand buyer behaviour at each

stage of the DMP• Need to adapt customer communications for

each of the above