Org Buying

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Organisational BuyingOrganisational Buying

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CharacteristicsCharacteristics

Derived demand Negotiations

RisksReciprocal

buying

Nature and size

of customersComplexity

of buying

Economic

& technical choice

criteria

Buying to

specific

requirements

Organisational

Purchases

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B2B & B2C Market DifferencesB2B & B2C Market Differences

Demand CharacteristicsDemand Characteristics

Derived demandDerived demand Market DemographicsMarket Demographics

Buyer-Seller RelationshipsBuyer-Seller Relationships

Decision ProcessDecision Process

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Dimensions of B2B BehaviourDimensions of B2B Behaviour

1.1. Who is involved?Who is involved?

2.2. How do they go about choosing?How do they go about choosing?3.3. What criteria do they use?What criteria do they use?

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The Buying CentreThe Buying Centre

Buyer

Decider(Decision

Maker)

Gatekeeper

Users

- may initiate

the purchase process

and develop the

product

specification.

Gatekeeperscontrol the flow of

information to buying

centre. Purchasing dept.

staff may fill the role but

it can be anyorganisational

member

Buyers

choose suppliers

& negotiate purchase

terms often reducing

the actual purchase

to a clerical task.

Deciders

(Decision Makers)have the authority

to approve

the purchase.

Deciders

(Decision Makers)have the authority

to approve

the purchase.Influencers

supply information

& advice. Outsiders

e.g. consultants

sometimes perform

the role.

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Simple Step Processes for B2B BuyingSimple Step Processes for B2B Buying

Recognition of a problem (need)

Determine specification & quantity of needed item

Search for & vetting of potential sources

Acquire & analyse proposals

Evaluate proposals & select supplier(s)

Select order routines

Performance feedback & evaluation

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Influences on Buying ProcessInfluences on Buying Process

1.1. The nature of the purchaseThe nature of the purchase straight re-buystraight re-buy

modified re-buymodified re-buy new task buynew task buy

2.2. Complexity of the productComplexity of the product

3.3. Supply market structureSupply market structure4.4. Competition in the buyers marketCompetition in the buyers market

5.5. Management styleManagement style

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Ireland TravelIreland Travel

Raising awarenessRaising awareness

of Ireland as aof Ireland as aconference venue forconference venue for

organisationsorganisations

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VodaphoneVodaphone

the importance ofthe importance of

economic choiceeconomic choicecriteria incriteria in

organisational buyerorganisational buyer

behaviourbehaviour

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Influences on organizationalInfluences on organizationalpurchasing behaviourpurchasing behaviour

q straight

re-buy

q modified

re-buy

q new task

Buy class

Organizational

buyer

q product

constituents

q product

facilities

q MROs

Product type

Importance

of purchase

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The BuyclassThe Buyclass

a surrogate for experiencea surrogate for experience

Straight re-buy (order routine followed; used forStraight re-buy (order routine followed; used forroutine types of product, office supplies,routine types of product, office supplies,

manufacturing ancillaries)manufacturing ancillaries)Modified re-buy (more complex purchase, mayModified re-buy (more complex purchase, mayinvolve re-negotiation of a contract, but the productinvolve re-negotiation of a contract, but the productclass or type is still known to the purchaser)class or type is still known to the purchaser)

New buy (a purchase not made before, usuallyNew buy (a purchase not made before, usuallyrequiring a learning experience on the part of therequiring a learning experience on the part of thebuyer)buyer)

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The BuygridThe Buygrid

Buy Classes

NewTask

ModifiedRe-Buy

StraightRe-Buy

1. Anticipation/Recognition of Need and GeneralSolution

2. Determination of Characteristics and Quantityof Needed Item

3. Description of Characteristics and Quantity ofNeeded Item

4. Search for and Qualification of PotentialSources

5. Aquisition and Analysis of Proposals

6. Evaluation of Proposals and Selection ofSuppliers

7. Selection of an Order Routine

8. Performance Feedback and Evaluation

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SiemensSiemens

Siemens buildsSiemens builds

relationships withrelationships withcompanies around thecompanies around the

worldworld

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Developing relationships in long-term stable marketsDeveloping relationships in long-term stable markets

Pre-relationship stageEvaluation of a new potential supplier

Early stage

Negotiation of a trial delivery

Development stage

Contract signed or delivery built up

Long term stageSeveral major purchases or large-scale deliveries have been made

Final stage

Established patterns of trading in long-term stable markets

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For next sessionFor next session

Read Jobber chapter 6, on marketingRead Jobber chapter 6, on marketing

research and information systemsresearch and information systems