The Nature of Industrial Buying and Buying Behaviour

Purchasing Objectives

Generally, the purchase/materials management objective is defined as buying the right items in the right quantity, at the right price, for the delivery at the right time and place. It is the management’s problem to define what is “right” for each dimension. The objectives of the purchasing function are briefly stated as follows:

ü Delivery/Availability

ü Product/Quality

ü Lowest Price

ü Services

ü Supplier Relationship

Buyphases in the Industrial Buying-decision process

Buying is an organisational-decision making process. There are eight phases (or stages) in the buying-decision process, indicating the logical sequence of activities.

In consumer markets, consumers make buying decisions based on certain mental stages such as problem (or need) recognition, information search, evaluation, purchase decision, and post-purchase behaviour. However, in industrial markets the buying decision making process includes observable sequential stages (or phases) involving many people in the buying organisation. Understanding the various phases of buying decision making is useful to an industrial marketer as it helps in developing appropriate selling strategy.

MODELS OF ORGANISATIONAL BUYING BEHAVIOUR

Industrial (or business) buyers are influenced by many factors when they make buying decisions. Generally, business buyers are influenced by organisational factors or task-oriented objectives (like best product quality, or dependable delivery, or lowest price) and personal factors or non-task objectives (like promotion, increments, job security, personal treatment, or favour). When the suppliers’ proposal are substantialy similar, organisational buyers can satisfy organisational objectives with any supplier, and hence personal factors become more important. When suppliers’ offer differ substantially, industrial buyers pay more attention to organisational factors in order to satisfy the organisational objectives.

THE WBSTER AND WIND MODEL OF ORGANISATIONAL BUYING BEHAVIOUR

This is quite a comprehensive model. It consider four sets of variables which affect the buying-decision making process in a firm. These are: environmental, organisational, buying center and individual.

The environmental variables includes (a) physical, (b) technological, (c) economic, (d) political, (e) legal, (f) labour unions, (g) cultural, (h) customer demands, (i) competition, and (j) supplier information. For example, in a recessionary economic condition, industrial firms minimise the quantity of item purchased. The environmental factors influence the buying decisions of individual organisations.

The organisational variables include (a) objectives, (b) goals, (c) organisation structure, (d) purchasing policies and procedures, (e) degree of centralisation in purchasing, and (f) evaluation and reward system. These variables particularly influence the composition and functioning af the buying centre, and also, the degree of centralisation or decentralisation in the purchasing function in the buying organisation.

The functioning of buying centre is influenced by the organisational variables, the environmental variables, and the individual variables. The output of the group decision-making process of the buying centre includes solution to the buying problems of the organisations and also the satisfaction of personal goals of individual members of the buying centre.

The strengths of the model, developed in 1972, are that it is comprehensive, generally appicable, analytical, and that it identifies many key variables which could be considered while developing marketing strategies by industrial marketers. However, the model is weak in explaining the spesifiec influence of the key variables.

BUYER AND SALES REPRESENTATIVES INTERACTION

The most important part of buyer-seller relationship is the interaction between a representative of the buying organisation (buyer) and a representative of the selling organisation (sales representative or sales rep). There are many other persons from both the organisations involved in the relationship, but the basic building bolck of the relationship is based on buyer and sales rep’ interactions.
When the buyer and the sales rep meet, the nature of their interactions depend upon their roles, behaviour, and perceptions.
Buyer’s Perception of Sales Representative
There are two major perceptions held by buyers of sales representatives. One is the stereotypical description of the sales reps, as “talkative”, easy going”,”manipulative”, “competitive”,optimistic”,and “excitable”. An industrial buyer, who does not have previous experience with a particular sales representative, may respond of the sales representative in terms of the stereotype which he has of sales reps in the general. The second major perception of the buyer depends on the reputation of the company which a sales representative represents. Generally, the sales representative of a company with better reputation always gets a more favourable initial response from the industrial purchasers. For example, a sales engineer working with a reputed company like Larsen & Toubro (L&T), often got a positive response from the industrial customers. However, when the same sales engineer change the job to a less reputed company, as a sales executive, the response was not encouraging, as he had to wait for along time before he was called in for discussions.
The Role Played by Industrial Buyer
An analysis of industrial buyer behaviour indicates that personal needs, interaction in the buying centre, an organisational objectives (or needs) determine the response of a buyer to the selling efforts by a sales rep. for example, an industrial buyer may be motivated by a personal need for salary increment and promotion in his job, and also by a social or organisational need to satistfy the user department. A buying decision may allow the buyer to satisfy both the sets of needs. The specific personal and social needs will decide: (i) whether the buyer meets with a sales rep, (ii) which parts of sales rep’s presentation he listens; (iii) the influence of sales presentation on his decision to buy.