Organizational Buying Behaviour

ORGANIZATIONAL BUYING BEHAVIOUR

CHAPTER SUMMARY

This chapter introduces the basic theory of organizational buying, an understanding of which is fundamental to business-to-business marketing. It begins by looking at the organizational buying process and a number of models of the process. It then investigates the theory of risk and uncertainty and identifies the key factors that influence behavior. It concludes with a discussion of the role of purchasing which is seen as a key area in the competitiveness of the modern industrial firm.

Point 1 -Introduction.

The need for an understanding of the organizational buying process has grown in recent years due to the many competitive challenges presented in business-to-business markets. Since 1980 there have been a number of key changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importance

given to developing partnerships with suppliers.

Point 2 - The organizational buying behavior process.

The organizational buying behavior process is well documented with many models depicting the various phases, the members involved, and the decisions made in each phase. The basic five phase model can be extended to eight; purchase initiation; evaluations criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; supplier’s choice; and choice implementation (Matbuy, 1986).

Point 3 - The buying centre.

The buying centre consists of those people in the organizational who are involved directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper to who the role of �initiator’ has also been added. The buyers in the process are subject to a wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages marketers to focus their efforts on who is making what

decisions based on which criteria.

Point 4 - Risk and uncertainty - the driving forces of organizational buying behavior.

This is concerned with the role of risk or uncertainty on buying behavior. The level of risk depends upon the characteristics of the buying situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause certain desired behavioral reactions by the use of information and the implementation of certain actions. The risks perceived by the customer can result from a combination of the characteristics of various factors: the transaction involved, the relationship with the supplier, and his position vis-Ð" -vis the supply