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unit 5 organisation behav

The document discusses Organizational Buying Behavior, highlighting its differences from consumer buying, characteristics of industrial goods, and the decision-making process involved in organizational purchases. It outlines the types of purchase situations, including straight rebuy, modified rebuy, and new task, and emphasizes the roles of individuals within the Decision Making Unit (DMU). Additionally, it provides examples of organizational buying and the influences on purchasing behavior.

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rishu jain
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3 views

unit 5 organisation behav

The document discusses Organizational Buying Behavior, highlighting its differences from consumer buying, characteristics of industrial goods, and the decision-making process involved in organizational purchases. It outlines the types of purchase situations, including straight rebuy, modified rebuy, and new task, and emphasizes the roles of individuals within the Decision Making Unit (DMU). Additionally, it provides examples of organizational buying and the influences on purchasing behavior.

Uploaded by

rishu jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Unit-5

Organizational Buying
Behavior

By: Dr. Rishu Jain


Learning Objectives:
 What is Organizational Buying Behavior?

 Difference between Consumer Vs. Organizational products .

 Examples of Organizational Buying

 Characteristics of Organizational Buying

 Decision making Unit

 Purchase Situation

 Organizational buying process

 Influences on organizational purchasing behavior


What is Organizational Buying Behavior?
 Individual consumers are not the only buyers in a market. Companies and
other organizations also need goods and services to operate, run their
businesses, and produce the offerings they provide to one another and to
consumers. These organizations, which include producers, resellers,
government and nonprofit groups, buy a huge variety of products including
equipment, raw materials, finished goods, labor, and other services.

 Some organizations sell exclusively to other organizations and never


come into contact with consumer buyers.(For eg: Auto ancilliaries)
 B2B markets have their own patterns of behavior and decision-making
dynamics that are important to understand for two major reasons. First,
when you are a member of an organization, it’s helpful to appreciate how
and why organization buying decisions are different from the decisions you
make as an individual consumer.
 Second, many marketing roles focus on B2B rather than B2C marketing,
or they may be a combination of the two.
Model of Organization Buying Behavior
Diff. B/W Consumer and Organization product
Bases Consumer product Organization
product
Purpose of buying Products are purchased for
ultimate use or satisfying their
Products are purchased for their
business needs. The buying purpose of
needs. The buying purpose of such them is to earn profit by using and
consumers is not to earn profit by reselling the goods and services.
reselling the goods and services.

Quantity The quantity of goods purchased is


small. They buy only the necessary
The quantity of goods purchased in
bulk so that to have inventories in
quantity of goods, which they need for stock. Secondly, it is cheaper and more
regular use. efficient to make large-volume
purchases.

Purchase decision Consumer buying takes decision by


consumers themselves. Sometimes
Organizational purchasing is a
rational process which is done with
they can consult with family members the sole aim of distribution &
and friends. production.

Market Knowledge The educated customers may be


aware and have knowledge about
Organizational buyers have to usually
choose from fewer brands than do
market and goods. individuals, and their purchases must
be evaluated on the basis of criteria
that are specific to the overall needs of
the organization.

Types of goods Consumer products are finished goods


sold for the consumption and use by
Industrial products are materials used in
the production of other goods and are
consumer . bought industrial and business use.

Buyers Consumer goods have a large pool of


buyers
Buyers of industrial goods are
generally limited because there are
Some example of Organizational Buying

•Paper cups by McDonald's

•Computer chips by Toshiba

•Fertilizers by farmers

•Oil by Electricity generators

•In India Tata and Maruti Suzuki cars get


their engines from Fiat. These two major
brands sources the engine's​ from Fiat
and make the modifications according to
their brand standards.

• purchasing of train bogies through


tender by Indian Railways.
Characteristics of industrial goods

 Rational buying power: The decision and drive to buy


industrial goods is rational compared to consumer goods,
which are primarily purchased because of an emotional need.
 Complex product lines: Industrial goods are usually
complex in nature because they can be highly technical.
Those who use them must be highly skilled.
 Higher purchase value: Industrial goods typically come with
a higher price tag because of their complex nature and limited
target market.
 High level of investment: Those who need to will often
invest a lot of money to purchase industrial goods.
Decision Making Unit(DMU)
 Decision making unit (DMU) are the individuals within an
organization who participate in making a given purchase decision.
These often function as buying centers.

 These often consists of individuals from various areas of firm,


such as accounting, engineering, manufacturing, and
marketing, who meet specifically to make a purchase decision.

 Members of DMU play various roles such as Information


gatherers, key influencers, decision makers, purchaser or user.

 A plant manager could play all five roles while corporate


engineers may simply be a source of information.
Purchase situation
 The buying process is influenced by the importance of
the purchase and the complexity and difficulty of choice.
 Simple or low risk ,routine decisions are generally made
by an individual by less extensive effort.

There are three purchase situations:


a) Straight Rebuy

b) Modified Rebuy

c) New Task
Straight Rebuy
 The buyer purchases the same products again routinely under
approximately the same terms of sale. Suppliers are familiar, have
provided satisfactory service in the past and may even have set up
automatic re-ordering systems. Little information is required.
 Example: re-ordering photocopying paper.

 This situation occurs when purchase is of minor importance and is


not complex and is completely automated or done by clerical
personnel.

 Price or reliability tend to be the dominant evaluative criteria .


Modified Rebuy
 When a new task purchase is changed on repeat purchases. The
buyer may require faster delivery lower prices or modified
specifications. Regular suppliers become more competitive and new
suppliers may be included in the selection. Moderate amounts of
information are required.
 Example: new IT facility.

 Purchase is moderately important to the firm or choice is more


complex and generally is done when firms need is changed.

 The DMU is likely to include several representatives.

 More information is gathered and more evaluative criteria are


analyzed.
New Task
 The organization makes an initial purchase of an item to be used to
perform a new job or to solve a new problem. Often this involves
development of specifications for products and suppliers as well as
procedures for future purchases. High information requirement from
many suppliers.
 Example: new advertising agency.

 Buying decision is very important and the choice is quite complex .

 The DMU is likely to be large and evolve over time. Top


management is involve in decisions.
Recognition of a Problem(need)

Organizational decision making


Determination of specification and quantity of needed item
process
Search for and qualification of potential sources

Acquisition and analysis of proposals

Evaluation of proposals and selection of supplier(s)

Selection of an order routine

Performance feedback and evaluation


Influences on organizational

Modified re-buy
Straight re-buy
Buy Class

New task
purchasing behavior
Product type
product constituents
Product facilities
Organization MROs
buyer

Importance of
purchase
Product lifecycle
THANK YOU

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