Organizational buying behavior Presentation created by Mag. Maria Peer based on the lecture BBM1 – Marketing Mag. Andreas Zehetner FH Steyr

Mag. Maria Peer 2 Organizational buying behavior Consumer vs. Organizational buying behavior Main types of buying situations in B2B Stages of decision in B2B Roles in B2B procurement Influences on organizational behavior Buying centres in summary

Mag. Maria Peer 3 Consumer vs. Organizational buying behavior Decisions made by consumers are quite simple Organizational buying processes are more complicated, there are several phases and steps Different buying behavior for different products and target groups Simple consumer goods like food and beverages are bought very spontaneously – influenced by advertising and product presentation For premium consumer goods (expensive clothes, computers) – buying behavior is getting more rational – comparison Private investment goods – price bargaining

Mag. Maria Peer 4 B2B products – organizational procurement starts More than one person involved Buying process follows certain rules Price comparison, standardisation, tenders = Ausschreibungen)

Mag. Maria Peer 5 B2B systems involve more capabilities and greater workloads From the buyer‘s and the supplier‘s side decision has more extensive consequences

Mag. Maria Peer 6 B2B facilities Industrial plants Manufacturing installations Office buildings

Mag. Maria Peer 7 Main types of buying situations in B2B Straigtht rebuy – routine decision, repetitive process (energy, office supplies, raw materials, wood, cigarettes), component suppliers for the automotive industry – little or no new information Modified rebuy – more complicated but less sophisticated: cars, trucks, computers, consulting – modified rebuys are often treated too uncautious New task – calls for thorough research – industrial plant – highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, military equipment, infrastructure) – re- evaluation of alternatives and search for new information and new alternatives

Mag. Maria Peer 8 Buying phases Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Performance review

Mag. Maria Peer 9 Stages of decision in B2B procurement Backhaus developed a widely usable model to distinguish between 5 phases of procurement Preliminary application (initiation phase) Tender proposal Negotiation Processing of order Warranty and services

Mag. Maria Peer 10 Preliminary application Recognition of a problem (need) and a general solution Released by top management = operating department or external consultants Result  request for an offer addressed to a number of potential suppliers

Mag. Maria Peer 11 Tender preparation phase Determination of characteristics and quantity of needed items Search for and qualification of potential sources Supplier has to provide an offer Tries to be incomparable with his competitors Customer tries to make the offer best comparable

Mag. Maria Peer 12 Negotiation phase = core selling process Comprises acquisition and analysis of proposals, evaluation of proposals and selection of suppliers

Mag. Maria Peer 13 Processing phase/warranty/ service phase Contains selection of an order routine Realisation of the transaction along with the fixation of after sales service tasks

Mag. Maria Peer 14 Roles in B2B procurement – buying center concept Group of people involved in the buying process – buying center Webster/Wind model shows 5 different roles – not institutionalised This causes probleme in identifying and targeting the right people within the decision process

15 Buying center Role keepers have different tasks – not mandatory Buyer User Influencer Gatekeeper Decider Initiator

Mag. Maria Peer 16 Buyer Formal authority to sign contracts Member of purchasing department Influences the vendor selection Not in technical details Main criteria: price + terms and conditions of the contract

Mag. Maria Peer 17 User Person working with the product Interested in benefits and unobstructed function of the product to buy Large knowhow and preconceived opinion

Mag. Maria Peer 18 Influencer A person with high technical knowledge and practical experience  definition of minimum requirements on technical or company standards

Mag. Maria Peer 19 Gatekeeper Controls the flow of information within the buying center Assistant of decision maker Influence by preparing the decision and the relevant documents (Scriptum p summary)

Mag. Maria Peer 20 Decider Right to say yes or no Mightiest person

Mag. Maria Peer 21 Initiator Person who brings new ideas and solutions into the company

Mag. Maria Peer 22 Specific marketing considerations in the industrial facilities business Long decision taking process High risk Complex buying center The specific competitive situation

Mag. Maria Peer 23 Product policy Focuses on innovation Has to care for high flexibility in research and development And manufacturing and assembling

Mag. Maria Peer 24 Price Strict bid and tender rules High transparency Add value with service offering to achieve a differentiating position Another aspect: financing and sourcing models

Mag. Maria Peer 25 Distribution policy Focus on negotiation phase Provide excellent people in the selling center High technical knowledge

Mag. Maria Peer 26 Communication Problem solver! Proving success with comparable tasks Reference projects!