Buying Centre and Buying Situation in OBB

Organizational Buying Centre

A buying centre consists of all those individuals and groups that participate in the organizational decision making process while making a purchase for the organization. It is essential for a marketer to identify various individual and groups that are involved in the buying centre and understand various buying roles and influences that exist in an organization.

Organizational Customers

Institutions – Schools, hospitals, research institutes, agricultural institutes etc.
Government agencies – Municipal corporations, Public works department, police department etc.
Public Sector organizations – g. (INDIA) Air India, BHEL, ONGC, BSNL
Private Sector organizations –g. (INDIA) Tata Industries, Reliance industries, General Electric Company
Wholesalers, Distributers, Retailers – g. (INDIA) Wal-Mart, Big Bazaar, Spencer, Shoppers stop

Buying Roles of Buying Centre members

Initiators – The people who initiate the buying process. It may be the workers, top management or any technical, managerial or administrative department
Users – The actual user or users of the product. For e.g. workers using computers, printer, machines, production department, technical personnel
Influencers – Officials like purchase officer, production manager, engineer who influence the purchase decision
Specifiers – Consultants, technicians or designers who state product specifications.
Deciders – The committee, department or individual who makes the final selection of product
Approvers – The person or group that approves the proposed action or decision. It may be the top management, Managing director or any departmental head
Buyers – The person who has the formal authority to make a purchase on the behalf of the organization. He may also be the decider.
Gate Keepers – People who control the flow of information within an organization. They disseminate or restrict information according to their own opinion in the organization. They may be at any level in an organization from a mail man to a member of the board of directors.

Buying Influences and Buying Centre

Selection of a Supplier

Factors that are considered by a buying centre while selecting a supplier are:

Cost of product
Reliability of delivery
Quality of the product and after sale services
Supplier`s reputation in the market
Sample provided by the supplier
Ability of the supplier to provide the product regularly
Flexibility in dealing
Credit policies
Rejection Rate/No. of defects
Relationship with the supplier

All the suppliers are evaluated against criteria based on the above factors and the most qualified supplier is selected.

Organizational Buying Situation

An organization demands a wide variety of products and services for its business operations such as:

Raw Material – Agricultural products, Mineral Products, Livestock, Forest Products, Marine Products
Machinery and equipment
Small Components, Tools and Spare parts
Power – fuel, water, electricity
Services – Technical, Financial, Legal and Administrative Services

According to Robinson, Fari`s and Wind, there are three types of buying situations that organizations face. They are:

(1) Straight Rebuy Situation – It includes routine orders placed daily, weekly, monthly, quarterly or yearly with known suppliers for products and services such as raw materials, office supplies, financial services etc.

It involves buying for a recurring need
It requires little or no new information
Buyers & sellers operate in a routine manner
Need recognition and purchase are the only steps in the buying process

(2) Modified Rebuy Situation – As all business activities are affected by seasonal and cyclic fluctuations and changing demand and preference for its products which in turn affects its buying patterns. Industrial buyers modify their orders or completely change the order according to such internal and external environment changes.

It involves re-evaluation of order, price or sellers in order to derive benefits or cope up with environmental changes
It emphasizes on search and evaluation of suppliers
Buyers go through a limited problem solving process
Buyers have detailed information about product alternatives and develop a well-defined criteria for product selection

(3) New Buy or New task – When an item is bought for the first time, it is a new buying situation. The organizational buyers go again through the decision making process as the product has never been bought in the past.

The problem or need is completely different from previous needs in case of a new task
Buyers require a significant amount of information
It emphasis on problem definition and development of product specifications
Buyers go through an extensive problem solving process

Fisher identified two factors that affect buying situations i.e. product complexity, and commercial uncertainty and gave various characteristics of each factor –

On the basis of the above model he suggested four buying situations and gave the basis of purchase decision by industrial buyers under each situation: