1/2/2017
Chapter 3 Organizational Buying & Buying Behavior
www.dinhtienminh.net
DINH Tien Minh (Ph.D.) University of Economics HCMC
Objectives
Understand organizational buying objectives.
Gain knowledge organisational buying process
including the types of buying situation.
Identify the members of decision making unit.
Understand some of models of organizational
buying behavior.
2
Outline
3.1 Purchasing Objectives
3.2 Organisational Buying Process
3.3 Types of Purchase or Buying Situations
3.4 The Buying Center
3.5 Models of Organisational Buying Behavior
3.6 Questions and Homework
3
1
1/2/2017
3.1. Purchasing Objectives
Buying the right item in the right quantity, at the right price, for delivery at the right time and place.
What’s right for each dimension?
Delivery/ Availability Product quality Lowest price Services Supplier relationship
4
3.1. Purchasing Objectives (cont’)
The Firm and Personal objectives.
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
5
3.2. Organisational Buying Process
More complex than the consumer decision process and takes place within formal organization’s budget, cost, and profit considerations.
Source: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition.
6 6
2
1/2/2017
3.2. Organisational Buying Process (cont’)
Stage 1: Anticipate a problem/need and a
general solution Need to provide employees with a good cup of coffee
to enhance productivity.
Stage 2: Determine the characteristics and
quantity of a needed good or service Offering a coffee system that brews one cup of coffee at a time according to each employee’s preference.
7 7
3.2. Organisational Buying Process (cont’)
Stage 3: Describe characteristics and the
quantity of a needed good or service Firms
a
system
simple of
good are
cup easily
coffee; correlated
for quantity the to
need brewing a requirements number of coffee drinkers.
Stage 4: Search for and qualify potential
sources Choice of supplier.
8 8
3.2. Organisational Buying Process (cont’)
Stage 5: Acquire and Analyze proposals
May involve competitive bidding, especially if the
buyer is the government or a public agency.
Stage 6: Evaluate proposals and Select
suppliers Buyers choose proposal best suited to their needs. Final choice may involve trade-offs between feature such as price, reliability, quality, and order accuracy.
9 9
3
1/2/2017
3.2. Organisational Buying Process (cont’)
Method: A Supplier Evaluation System
Supplier Performance* 0.8 0.4 0.6 0.6 0.2
Attribute (or Factor) Quality Delivery Price Service Flexibility Total
Weight (Important) 30 25 15 20 10 100
Supplier Rating (or Score) 30 x 0.8 = 24 25 x 0.4 = 10 15 x 0.6 = 09 20 x 0.6 = 12 10 x 0.2 = 02 57
* The information on the existing supplier’s performance is obtained from departments.
Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p42.
10 10
3.2. Organisational Buying Process (cont’)
Method 2: Use the concept of Balanced Scorecard (BSC) to evaluate Suppliers’ performance
Translate a company’s mission and strategy into a set of performance measurements, in which the Internal-business-process is relevant for evaluating supplier performance.
Find additional measurements (timely delivery) that create superior value beside the traditional factors (price, quality).
11 11
3.2. Organisational Buying Process (cont’)
The Balanced Scorecard (BSC) Framework Financial
To success financially, Company should focus on financial objectives that will satisfy shareholders.
Customer
Internal-Business- Process
Mission & Strategy
Which customer value company should focus on, to achieve its mission
To satisfy shareholders and customers, what business process company must excel at?
Learning and Growth
How can company improve and change to achieve its mission
Robert S. Kaplan & David P. Norton, The Balanced Scorecard, Harvard Business School Press, 1996.
12 12
4
1/2/2017
3.2. Organisational Buying Process (cont’)
Internal-Business-Process
Operations Processes
Innovation Processes
Satisfy Customer Needs
Market Product/ Service
Make/ Buy Product/ Service
Design, Develop Product/ Service
Identify Customer needs and Market
Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p43.
13 13
3.2. Organisational Buying Process (cont’)
Stage 7: Select an order routine
Buyer and Vendor work out best way to process
future purchases.
Stage 8: Obtain feedback and Evaluate
performance Buyers measure vendors’ performance. Larger firms are more likely to use formal evaluation
procedures.
Some firms rely on outside organizations to gather
quality feedback and summarize results.
14 14
3.3. Types of Purchase or Buying Situations
Source: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition.
18 18
5
1/2/2017
3.3. Types of Purchase or Buying Situations
Source: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition.
19 19
3.3. Types of Purchase or Buying Situations
Classifying buying situations: The buying behavior involves degree of effort involved in the decision and the levels within the organization in which these decisions are made. 1. Straight Rebuying
A recurring purchase decision in which a customer
reorders a product that has satisfied needs in the past.
Marketers maintaining good relationships with customers can go a long way toward ensuring straight re-buy (High- quality products, superior service, prompt delivery).
20 20
3.3. Types of Purchase or Buying Situations
2. Modified Rebuying
May occur if supplier has let a rebuy circumstance delivery
because
service
poor
or
of
deteriorate performance. 3. New-Task Buying
First-time or unique purchase situations that
require
considerable effort by the decision makers.
Often requires purchaser to consider alternative offerings
and vendors.
21 21
6
1/2/2017
3.3. Types of Purchase or Buying Situations
The Buygrid Framework for Organisational Buying Situations
Buy phases (Phases in Buying Process)
1. Problem recognition 2. Characteristics and quantity of needed item 3. Description or specification of needed item 4. Search for and qualifications of potential suppliers 5. Obtaining and analyzing supplier proposals 6. Evaluation of proposals and selection of suppliers
Buying Situations Modified Rebuy Maybe Maybe Maybe Yes Yes Yes
Straight Rebuy No No No No Maybe No
New Task Yes Yes Yes Yes Yes Yes
7. Selection of an order routine 8. Performance feedback and evaluation
Yes Yes
Yes Yes
Maybe Yes
Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p46.
22 22
3.4. The Buying Center
2323
3.4. The Buying Center (cont’)
The
organizational
buying
is
process typically influenced by many individuals. The degree of involvement of individuals
varies for different buying situations.
24 24
7
1/2/2017
3.4. The Buying Center (cont’)
If the industrial salespeople can answer the following questions correctly, he has a high probability of getting business: What type of buying situation the customer is in? Which individuals are involved in the purchase decision process and who are the key influencers? What criteria would be used by the decision- making-unit, and if this is not decided, then what criteria are important to each member?
25 25
3.5. Models of Organisational Buying Behavior
Nguồn: Adapted from F.E. Webster, Jr and Y. Wind, “A General Model of Organisational Buying Behaviour”, Journal of Marketing, 36, 2 (April, 1972), 12-19.
26 26
3.5. Models of Organisational Buying Behavior
Nguồn: Adapted from Jagdish N. Sheth, “A Model of Industrial Buying Behaviour”, Journal of Marketing, 37, Oct, 1973, 50-56.
27 27
8
1/2/2017
3.5. Models of Organisational Buying Behavior
Nguồn: Jean Mary Choffray & Gary L. Lilien, “Assessimg response to Industrial Marketing strategy”, Journal of Marketing, 42, April 1978, 22.
28 28
3.6. Questions and Homework
2.
1. At what phase(s) of the industrial buying process the business marketer should get involved and why? Is the organizational buying process for services the same as that for physical products? Explain.
3. Describe any one of
the techniques used by customer organizations for evaluating performances of suppliers? Why is it importance for the sales person or the supplier firm to understand clearly the supplier evaluation system followed by the customer organization?
29 29
