BUYING BEHAVIOR CONSUMER vs ORGANIZATION
Dec 25, 2015
BUYING BEHAVIOR
CONSUMER vs ORGANIZATION
Organisational / CorporationOrganisational / Corporation Consumer / RetailConsumer / Retail
Fewer Much more
Close, Long-term relationship Far, Short-term relationship
More rational More emotional
Specific Requirement General Requirement
Reciprocal buying One Way Buying
More risky Not risky
More Complex Simple
Negotiation (professional) Bargain
Differences Between Organizational & Consumer Buying Behavior
Fewer organisational buyers
• Generally, a company marketing industrial products will have fewer potential buyers than a marketing in consumer markets.
• This means that one customer in the industrial marketer is far importance than the consumer buyer.
Close, long-term relationships between organisational buyers and sellers
• Because of the importance of large customers it makes sense for suppliers to invest in long-term relationships with them.
• The nature of relationships is:– customers and manufacturers rarely meet,– and brand switching is common.
Organisational buyers are more rational
• Although the people on organisational buyers are affected by emotional factors, e.g. like or dislike, the colour of office equipment, etc., it is true that on the whole organisational buying is more rational.
• Often decisions will be made on economic criteria, because industrial buyers have to justify their decisions to other members of their organisation.
• Base on that, Caterpillar tractor salespeople design their sales presentation on the fact that, although the initial purchase price of their tractors was higher than the competition, over the life of the tractor costs were significantly lower.
Organisational buying may be to specific requirements
• It is common in industrial marketing for buyers to determine product specifications and for sellers to tailor their product offerings to meet them.
• This is feasible because of the large potential revenue of such products, e.g. railway engines.
Reciprocal buying is important in organisational buying
• An industrial buyer have a powerful negotiating position with a seller, it may be possible to demand concessions in return for placing the order.
• In some situations the buyer may demand that the seller buys some of the buyer's products in return for securing the order.
• For example :– A buyer of tyres for a car manufacturer may demand
that, in return for the contract, the tyre producer buys its company cars from the car manufacturer.
Organisational selling/buying may be more risky
• Industrial markets are sometimes characterised by a contract being agreed before the product is made.
• The product itself may be highly technical and the seller may be faced with unforeseen problems once work has started.
• For example : – Monetary Crisis
Organisational buying is more complex
• Many industrial purchases, notably those which involve large sums of money and which are new to the company, involve many people at different levels of the organisation.
• The managing director, product engineers, production managers, purchasing manager and operatives may influence the decision of which expensive machine to purchase.
• The sales task may be to influence as many of these people as possible and may involve multi-level selling by means of a sales team, rather than an individual salesperson.
Negotiation is often important in organisational buying
• Negotiation is often important in organisational buying because of the presence of professional buyers and sellers, and the size and complexity of organisational buying.
• The supplier's list price may be regarded as the starting point for negotiation, but the price actually paid will depend on the negotiation skills and power bases of buyers and sellers.
Decision Making Unit
CONSUMER BUYER CONSUMER BUYER BEHAVIORBEHAVIOR
Who Buys ?Who Buys ?
User
Initiator
Influencer
Decider
Buyer
Information Gathering
Evaluation of alternative solution (product)
Selection of an appropriate solution
Need Identification / Problem Identification
Post Purchase Evaluation of Decision
Decision Making ProcessDecision Making Process
Evaluative Criteria
Beliefs
Attitudes
CONSUMER BUYER CONSUMER BUYER BEHAVIORBEHAVIOR
Affecting factors on Decision Affecting factors on Decision MakingMaking
1. Buying situation
2. Personal Influences
3. Life Style4. Social Influences
Lev
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f In
volv
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Automatic Limited Extensive
Organisational Buyer Behavior
• Structure– (Who participate in the decision making)
• Process– (How to process the decision making)
• Content– (Which criterion to use at different stages)
Organisational Buyer Behavior
• Structure (Who participate in the decision making)– Initiator - Users– Deciders - Influencers– Buyers - Gatekeepers
• Content(Which criterion to use at different stages)
• Price - Delivery• Life cycle cost - Reliability• Durability - Safety• etc
Search potential sources
Acquisition & analysis Proposal
Evaluation proposal & selection suplier
Recognition of a problem
Selection of an order routine
Determine Specification
Performance feedback & Evaluation
Decision Making ProcessDecision Making Process
BUY CLASS :
- Straight re-buy
- Modified re buy
- New task
PRODUCT TYPE :
- Product Constituents
- Product Facilities
- MROs
IMPORTANCE OF PURCHASE
Affecting Factorson Organisational Buyer
BuyerSupplier
Reserve marketing
Traditional marketing
Development in Purchasing Practice
• Just in time Purchase– Minimalise stock by organising a supply material– Increasing Efficiency / cost reduction
• Centralised Purchasing– Huge organisation – Bulk buying of common requirement– Negosiation power of cost
• Reserve Marketing – Initiative come from the buyer
Development In Purchasing Practice (cont’d)
• Leasing– Adalah semacam kontrak sewa shg tidak perlu bisa membeli
produk /jasa, terlindung dr keusangan produk, terhindar dari urusan ganti spare parts, terkadang ada keuntungan pajak, terkadang bisa juga terhindar dari biaya perawatan (tergantung type leasing)
• Financial Lease / full payment– Long term, fully amortised, total biaya lease biasanya > harga
produk, perjanjian tergantung konvensi dan situasi kompetisi, terkadang leaser setuju membiayai perawatan selama leasing. Contoh : photocopy.
• Operating Lease / rental agreement– Short term (dipilih agar terhindar dari “idle time” dibandingkan jk
membeli), cancellable, not completely amortised, biayanya > dari financial lease (krn short time). Misal : buldozer, tractor, dll
Relationship Management (organizational customer)
• Merupakan pengembangan dari close & long term relationship yang reciprocal.
• How to build the Relationship ?– Technical Support : research & development
cooperation, etc– Expertise : design and engineering consultancies, etc– Resources Support : extending credit facilities, low
interest loans, etc– Service Level : offering service level improvement;
set up, complaint handling– Risk Reduction : free new demo product, product &
delivery guarantee, etc