Ch. 3: Organizational Buying and Buying Behavior

Consumer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior

The Buying Center External Factors Customer needs and buying behavior Internal Factors Technology Accounting Management Marketing Legal Production/Mfg. Finance Service External Factors Customer needs and buying behavior Government agencies Independent standards-setting organizations Various Publics Stakeholders in each discipline within the buying organization contribute expertise such that internal and external factors are accommodated.

Organization Buying Vs. Consumer Buying Involves more Buyers Stakeholders in Buying Center driven by professional responsibilities Different decisions occurring simultaneously within the Buying Center

“Traditional” B2B Buying Decision Process 1. Problem recognition 2. General need description 3. Product specification 4. Supplier/Source search 5. Proposal Solicitation 6. Selection 7. Make the transaction routine 8. Evaluate performance

Factors of the Buying Decision Process Interaction is fluid and broad based Process is simultaneous not sequential The “Track-Record” determines if supplier is included in evoked set Relationships build loyalty

The Buying Center: Members must meet 3 needs in the decision process: Organizations Needs Benefits of the product or service Individual Needs Based on professional activities and functions of the job Individual’s Personal Needs Career, Quality of life, Recognition

Process Flow Model of Buying Decision Process Process Flow Stages Buying Decision Process - Steps Definition Stage Problem recognition General need description Product specification Selection Stage Supplier/Source Search Proposal Solicitation Contract for supplier(s) Deliver Selection Stage Make the transaction routine End Game Stage Evaluate performance Resell the job

Process Flow Model of Buying Decision Process: Definition Stage The first attempt at describing a solution The intricacy of the solution and the number of organizational units to be involved (size of the buying center) is determined. Successful suppliers are involved, often in the development of the Product Specification

Process Flow Model of Buying Decision Process: Selection Stage Selection may have occurred in the Definition Stage. If a new buy, members of the buying center may have a “favorite” supplier. A modified or straight rebuy will likely include the existing suppliers.

Process Flow Model of Buying Decision Process: Deliver Solution Stage Development activities customize the solution to the specific technical and other needs of the customer – the Total Offering. Meet the customer’s “way of buying” process – integration of supply logistics with consumption logistics.

Process Flow Model of Buying Decision Process: End Game Stage Reinforce customer decisions made in the selection process. Not the end of the process, but the beginning of the next opportunity for the supplier to serve the customer.

Typical Re-Buy Situation Straight Re-Buy Buying situation that is routine Established solutions Modified Re-Buy Situation from New-Task Situation Limit exposure from competitive forces

Typical New Task Situation A need not yet faced by Organization New offering with new technology Seek many sources of information and assistance Utilize complete buying process to investigate alternatives

New Task to Straight Rebuy Yes. Then next purchase New Task Definition No. Then next purchase Rebuy Definition Selection Solution Delivery End Game Selection Is the buyer satisfied? Solution Delivery End Game

Define changes to process Satisfied, No differences Complex Rebuy Modified Rebuy Straight Rebuy Definition Selection Solution Delivery End Game Definition Define changes to process Satisfied, No differences Selection Dissatisfied Solution Delivery Small Difference yes no Is the buyer satisfied? How different is the next situation? End Game Evaluation in End Game Large Difference To New Task Ch3Exhibit6.ppt 2/23/01

Value Image It is the total of all impressions that a customer has of the firm (whether relevant to the buying situation). Value image is similar to product positioning that occurs with consumer goods. Need to maximize the value image of the offering in the “mind” of the buyer.