Organizational Buying Behaviour

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ORGANIZATIONAL BUYING BEHAVIOR

1. MEANING:
This is the decision-making process by which formal organizations establish the needs for purchasing products and services and o Identify,
o Evaluate and
o Choose
Alternative brands and suppliers.
The kinds of markets in which organizational buyers operate are as follows. ➢ Producer markets
o This consists of individuals and business organizations that purchase products and/or services for the purpose of making a profit by using them to make other products. o They include buyers of raw materials, components, semi-finished and finished goods. ➢ Reseller markets

These are marketing intermediaries such as wholesalers and retailers who buy finished goods for resale at a profit. ➢ Government markets
This comprises of national and local governments, seeking to provide the public with education, water, energy, national defense, road systems and health care. ➢ Institutional markets
o Organizations that seek to achieve charitable, educational, community or other non-business goals make up institutional markets. o They include churches, hospitals, museums, libraries, universities and charitable organizations.

2. DIFFERENCES BETWEEN ORGANIZATIONAL AND PERSONAL BUYING.
These can be compared on the unique characteristics of organizational buying. a) Business markets have fewer buyers than consumer markets. b) In business markets, there are a few large buyers

c) There is close supplier-customer relationship in business market due to o Smaller customer base
o Contracts go to suppliers who co-operate with the buyers on technical specifications and delivery requirements o Suppliers are expected to attend special seminars organized by buyers so as to be familiar with the buyers’ quality specifications. d) Geographically concentrated buyers

e) Derived demand
The demand for business goods is ultimately delivered from the demand for consumer goods f) Inelastic demand
The total demands for industrial goods are not much affected by the changes in the environment. g) Fluctuating demand
Demand for organizational goods tend to be more volatile than the demand for consumer products. o This is especially true for the demand of new plant and equipment o A given percentage increase in consumer demand can lead to a larger percentage increase in the demand for plant and equipment necessary for additional output. h) Professional purchasing

Business goods are purchased by trained purchasing agents, who must follow the organizations, o Purchasing policies
o Constraints
o Requirements.
i) Several buying influences
o More people typically influence business buying decisions than in consumer buying decisions. o Buying committees consisting of technical experts and even senior managers are common in the purchase of major goods. j) Direct purchasing

Business buyers often buy from manufacturers rather through intermediaries, especially those items that are technically complex and/or expensive. k) Reciprocity
Business buyers normally buy from suppliers who buy from them. l) Leasing.
o Many industrial buyers lease their equipment instead of buying it. o Advantages
- Conserves capital
- Gets sellers latest products
- Receives better services
- Gains some tax advantages.

3. BUYING SITUATIONS OR TYPES OF BUYING DECISIONS.
Three types of buying situations have been identified;
a) Straight Rebuy
➢ The purchasing department orders on a routine basis e.g. office suppliers. ➢ The buyer chooses from the suppliers on its approved list, giving weight to past satisfaction with the various suppliers. b)...
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