Organizational Buying Behaviour Introduction

Organizational Buying Behaviour Introduction

Organizational Buying Behaviour is a complex decision-making and communication process involving selection and procurement of product and services by organizational buyers.

Individuals, organizations or government agencies that make a purchase decision regarding raw materials, products and services, components or finished goods are known as organization buyers.

Consumers – Purchase products for personal consumption

Industrial Buyers – Purchase products on behalf of their business or organization

Since the organizational buyers or industrial buyers are motivated or influenced more by profit objectives and less by personal motives, therefore it is empirical to understand the buying behaviour of organizational buyers and formulate marketing strategies for organization buyers that are different from strategies for regular consumers.

Usually the buying decisions in an organization are taken by the Buying centre which may consist of the top management or the members of the procurement committee or any other department. 

Nature / Characteristics of organizational buying behaviour 

  • Every organization is unique – As different organizations have different organization structures, organization cultures, values, objectives and resources. Therefore they also have a unique set of needs, demands and exhibit unique buying behaviour.
  • There is a long time lag between efforts and results – In the process of individual buying, the time taken between a purchase decision and sales transaction is shorter than industrial buying. This is due to the extra formalities and procedures that are to be followed in organizational buying process. For e.g. asking quotations, evaluating tenders, preparing bulk orders etc.
  • It is a rational as well as emotional activity – Due to presence of human beings in the purchase process, it gives rise to emotional element involved in buying. An industrial buyer may select the quantity and quality of a product on the basis of specified organization norms but may choose a dealer on the basis of his personal or political affiliation or past experience with the dealer.
  • It is a formal activity – Organization buying involves a formal contract between the buyer and seller. It is an formal activity which requires the buyer to follow rules and procedures laid down by the organization regarding the type, quality, quantity, terms of payment, delivery time etc. while making a purchase decision.
  • It is a multi-person activity – Buying decisions in an organization are generally taken by a team of qualified personnel also referred to as buying centre where each individual plays different buying roles.
  • Other characteristics of organization buying:
  • There are few industrial buyers and many individual buyers
  • Organization buyers usually buy in bulk
  • Role of middlemen is reduced as the buyers buy directly in bulk from manufacturers
  • Organizations generally have an inelastic demand

Factors influencing organizational buying behaviour

External EnvironmentOrganizational FactorsInter-personal FactorsIndividual Factors
Economic Environment

Social Environment

Political Environment

Legal Environment

Infra-structural Environment

Competition in market

Goals & Objectives

Policies & Procedures

Organization Structure

Organization Culture

Financial Position

Status and Authority

Involvement

Persuasiveness

Negotiation

Buying Role

Education

Expertise

Experience

Job position

Attitude towards risk

 

NEXT: Buying Centre/Buying Situation, Organizational Buying Process

 

 

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