By:
CHANDRAPRABHA .G .V
ASSISTANT PROFESSOR OF COMMERCE
Government First Grade College Magadi.
Content:
•
•
•
•
•
•
•
Organisational Buying and Buying Behaviour.
Organisational Buying Decision Process;
Buying Situations; Buy grid Frame Work;
Buying Centre Roles;
Key Members of Buying Centre.
Models of organizational Buying Behaviour;
The Webster and Wind Model;
The Sheth Model
2
chandraprabha .G .V
Organisational Buying and Buying Behaviour
• Organizational Buying Behaviour is a complex decision-making and
communication process involving selection and procurement of product and
services by organizational buyers.
• Organizational behavior refers to the buying behavior of organizations that
buy products for business use, resell or to make other products.
Organizations consist of business, industries, retailers, government, and nongovernment organizations
chandraprabha .G .V
3
Characteristics of Organizational Buying
1. Timing Complexity. ...
2. Technical Complexity. ...
3. Organizational Complexity. ...
4. Individual Factors. ...
5. Organizational Factors. ...
6. Business Environment.
chandraprabha .G .V
4
Organizational Buying Decision Process:
Organizational buying behavior refers to the
process of how companies or organizations buy
goods and services. Organizational Buying is not
an easy activity as most people think of it.
chandraprabha .G .V
5
Stages of organisational buying process
Stage-1 – Problem Recognition:
The first stage of the business buying process in which someone
in the company recognizes a problem or need that can be met by
acquiring a good or a service.
Stage-2 – General Need Description:
At this stage of business buying Process Company describes the
general characteristics and quantity of a needed item.
chandraprabha .G .V
6
Stage-3 – Product Specification:
At this stage of the business buying process buying organization decide on
the product and specifies the best technical product characteristics for a
needed item.
Stage-4 – Value Analysis:
An approach to cost reduction, in which components are studied carefully
to determine if they can be redesigned, standardized or made by less costly
methods of production.
Stage-5 – Supplier Search:
At this stage of the business buying process buyer tries to find the best
vendors.
chandraprabha .G .V
7
Stage-6 – Proposal Solicitation:
The stage of the business buying process in which the buyer invites qualified
suppliers to submit proposals.
Stage-7 – Supplier Selection:
The stage of the business buying process in which the buyer reviews proposal
and selects a supplier or suppliers.
Stage-8 – Order-Routine Specification:
The stage of the business buying process in which the buyer writes the final
order with the chosen suppliers, listing the technical specifications, quantity
needed, expected time of delivery, return policies and warranties.
Stage-9 – Performance Review:
The stage of the business buying process in which the buyer rates its
satisfaction with suppliers, deciding whether to continue, modifies or drops
them.
chandraprabha .G .V
8
Buying Situations:
A buying situation relates to the circumstances surrounding a purchase that can
be defined by the quality of information and experience that the buyer has
concerning the products and vendors available, as well as the effort it will take
to make the purchase decision.
Straight rebuy is the situation under which the buyers are engaging in the
routine purchase of standard products from a familiar supplier where you
don’t make any modifications from the most recent order.
A perfect example is ordering some boxes of copier paper, pens and pencils
from your office supplier. It doesn’t take much effort except to confirm the
sales order has been satisfied.
9
chandraprabha .G .V
Buy Grid Frame Work:
In 1967, the Canadian, American and Israeli marketing
researchers, Robinson, Faris and Wind, introduced the buy grid
framework as a generic conceptual model for buying processes of
organisations.
They saw industrial buying not as single events, but as
organizational decision¬ making processes where multiple
individuals decide on a purchase. Their framework consists of a
matrix of buyclasses and buyphases.
chandraprabha .G .V
10
Models of organizational Buying
Behaviour;
The Webster and Wind Model;
The Sheth Model.
chandraprabha .G .V
11
The Webster and Wind Model;
The Webster and Wind Model of organizational buying
behavior is quite a comprehensive model. It considers four sets
of variables which affect the buying-decision making process in
a firm. These are environmental, organizational, buying center,
and individual.
This framework identifies four categories of variables that have
an influence on organizational buying decisions .
chandraprabha .G .V
12
Environmental :Any aspect of the external environment that may affect the
organization buying behaviour is embraced under this heading. This includes
political, economic, cultural, legal, technological and physical environments.
Competitors’ marketing actions are also deemed to be in the external environment.
Organizational :There are several organizational factors that affect behaviour. The
company’s goals and objectives set parameters on activity. The organization’s
structure and resources act as constraints on its culture in terms of the type of
policies and procedures that are followed. These all affect buying behaviour.
Interpersonal :The relationships between the individuals in the buying centre are
an important determinant of how decisions are reached. How coalitions are
formed and where loyalties lie within an organization will be dependent on these
relationships
chandraprabha .G .V
13
Individual :Attitude to risk, creativity, competitiveness, style of
problem solving and locus of control will all be unique in each
individual. The individual’s personal goals, past experience and training
will inform their way of operating. Each individual will influence the
DMU’s decisions to a greater or lesser extent. Each of these categories
has two subcategories of task and non-task related variables. Task
related variables are directly related to the buying decision being
undertaken; non-task related variables are not directly concerned with
the buying decision but nevertheless affect the decisions made (see
Figure below).
chandraprabha .G .V
14
chandraprabha .G .V
15
chandraprabha .G .V
16
The Sheth Model.
Definition: The Howard Sheth Model is an approach for analyzing the
combined impact of the social, psychological and marketing factors on
the buying behaviour or preference of the consumers and the industrial
buyers into a logical order of information processing.
John Howard and Jagadish Sheth introduced the Howard Sheth Model
in the year 1969. The concept was published in their book ‘The Theory
of Buyer Behaviour’.
Three Levels of Decision-Making in Howard Sheth Model:
The model has described the three significant stages of the buyer’s
decision-making or selection of a particular brand. Let us now discuss
each of these in details below
chandraprabha .G .V
17
Extensive Problem Solving
This is the initial stage of decision-making, where the buyer is new to the
market. He/she has no or little information about the brands and has no
preference for a particular product or service.
Thus, a consumer is an information seeker at this level, who check out
different brands available in the market, before making a buying decision.
Limited Problem Solving
At this level, the buyer has inadequate or incomplete information about the
product, market or the brands operating in it. Sometimes the buyer is
confused among the various alternatives.
therefore, to make a buying decision, he/she look for a comparative study
of the different brands and the products available in the market.
chandraprabha .G .V
18
Routinized Response Behaviour
The habitual response behaviour stage is where the buyer is entirely
aware of the products offered by different brands and the features,
pros and cons of each product.
He/she is capable of evaluating and comparing the multiple options
available in the market.
Here, the buyer decides in advance, which product is to be
purchased.
To understand the Howard Sheth Model, we must have an idea of
its arrangement. So, let us have a look at the design of this model
chandraprabha .G .V
19
20
chandraprabha .G .V
Thank you
21
chandraprabha .G .V