Industrial Buying Behaviour

Topics: Customer relationship management, Marketing, Decision making Pages: 21 (7071 words) Published: October 28, 2012

A model is very often referred to as an abstract representation of a process or relationship. In this chapter we are going to deal with the industrial buying process with the help of the Sheth model of Industrial buying.

• Perceived risk: When the decision involves risk, more
members of the DMU will be involved.

• Type of purchase :If the type of problem is an extensive problem, then more members of

After studying this lesson you should be able to

• the decision making unit (DMU) will be required unlike a simple repeat purchase, where a single individual can be asked to carry out the decision. Company Specific Factors (2b) are: • Organizational orientation ;-Is the firm sales and marketing oriented? Or is it technology

• Understand the industrial buying process • Explain the Sheth model of Industrial buying Behaviour This model concentrates on the purchasing process and highlights the importance of four main factors: (a) The expectations of the individuals making up the decision making unit (b)The characteristics of both the product and the organisation (c) The nature of the decision making process (d)The situation variables These factors are discussed more in detail: 1. Expectations within the organisation These elements are mentioned under (1). According to Sheth, every person in the DMU brings with them, their unique set of attitudes and orientations. Their expectations will be conditioned by the individual background (1a) education (general or professional), role orientation (accountant, production manager, engineer etc.,) life style. Their expectation will all be influenced by: • The various sources of information (1 b) - (sales persons, exhibition and trade shows, direct mail, press releases, journal advertising, professional and technical conferences, trade news, world of mouth) and the process through which they have obtained the information.

• dominated one etc., Depending on how the organisation
sees itself will determine the internal power balance and influence in the DMU.

• Organization size: - Depending on the size of the
organisation, will determine the group decision-making. If the organisation size is small, it is more likely that a single buyer will possess all the relevant information. But if the organisation is a large one, it is more likely that there will be group decision making.

• Degree of centralization: - Decentralized organisation involve a lot more people in the decision making than centralized organisations, which have a centralized buying function. 3. Nature of the Decision-making Process In the model, the elements are coded (3) Sheth has differentiated between autonomous decisions and those taken jointly by the DMU. When a decision is taken autonomously, it is usually (relatively) straightforward. However, when a group is involved in decision-making, conflict is likely to arise because of the different goals and orientations with the people within the group. The model also devotes a section (3) on how to solve the conflict:

• Perceptual distortion (1 d) (could be as a result of the form of communication).

• The person’s previous experience (1 e), which will mediate the incoming information.

• • • •

Problem solving Persuasion Bargaining Politicking

• The active search (1 c) can be carried out by anyone listed in the DMU - purchasing agents, engineers, users, others. 2. Characteristics of the Product and the Buying Organisation In the figure 14.2 of the model these elements are coded (2). In this Sheth talks of the actual buying process and contends that it is affected by: The Product Specific Factors (2a) are: • Time pressure: Group decision will take longer time as compared to individual ones.

4. Situational Variables These elements are coded (4) in the model. Here Sheth has referred to unforeseen factors, those that fall outside the control of the...
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