Organizational buying behavior

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Organizational buying behavior

• B2B Marketing

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Organizational buying behavior

• Consumer vs. Organizational buying behavior
• Main types of buying situations in
• B2B
• Stages of decision in B2B
• Roles in B2B procurement
• Influences on organizational behavior
• Buying centres in summary

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Consumer vs. Organizational buying behavior

• Decisions made by consumers are quite simple
• Organizational buying processes are more
  complicated, there are several phases and steps
• Different buying behavior for different products
  and target groups
• Simple consumer goods like food and beverages are
  bought very spontaneously influenced by
  advertising and product presentation
• For premium consumer goods (expensive clothes,
  computers) buying behavior is getting more
  rational comparison
• Private investment goods price bargaining

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B2B products organizational procurement starts

• More than one person involved
• Buying process follows certain rules
• Price comparison, standardisation, tenders
  Ausschreibungen)

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B2B systems

• involve more capabilities and greater workloads
• From the buyers and the suppliers side decision
  has more extensive consequences

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B2B facilities

• Industrial plants
• Manufacturing installations
• Office buildings

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Main types of buying situations in B2B

• Straigtht rebuy routine decision, repetitive
  process (energy, office supplies, raw materials,
  wood, cigarettes), component suppliers for the
  automotive industry little or no new
  information
• Modified rebuy more complicated but less
  sophisticated cars, trucks, computers,
  consulting modified rebuys are often treated
  too uncautious
• New task calls for thorough research
  industrial plant highest level of uncertainty.
  Strategic new tasks are of extreme strategic and
  financial importance (aircrafts, military
  equipment, infrastructure) re-evaluation of
  alternatives and search for new information and
  new alternatives

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Buying phases

• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification
• Performance review

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Stages of decision in B2B procurement

• Backhaus developed a widely usable model to
  distinguish between 5 phases of procurement
• Preliminary application (initiation phase)
• Tender proposal
• Negotiation
• Processing of order
• Warranty and services

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Preliminary application

• Recognition of a problem (need) and a general
  solution
• Released by top management operating
  department or external consultants
• Result ? request for an offer addressed to a
  number of potential suppliers

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Tender preparation phase

• Determination of characteristics and quantity of
  needed items
• Search for and qualification of potential sources
• Supplier has to provide an offer
• Tries to be incomparable with his competitors
• Customer tries to make the offer best comparable

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Negotiation phase

• core selling process
• Comprises acquisition and analysis of proposals,
  evaluation of proposals and selection of suppliers

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Processing phase/warranty/ service phase

• Contains selection of an order routine
• Realisation of the transaction along with the
  fixation of after sales service tasks

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Roles in B2B procurement buying center concept

• Group of people involved in the buying process
  buying center
• Webster/Wind model shows 5 different roles not
  institutionalised
• This causes probleme in identifying and targeting
  the right people within the decision process

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Buying center

• Role keepers have different tasks not mandatory
• Buyer
• User
• Initiator
• Gatekeeper
• Influencer

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Buyer

• Formal authority to sign contracts
• Member of purchasing department
• Influences the vendor selection
• Not in technical details
• Main criteria price terms and conditions of
  the contract

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User

• Person working with the product
• Interested in benefits and unobstructed function
  of the product to buy
• Large knowhow and preconceived opinion

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Influencer

• A person with high technical knowledge and
  practical experience
• ? definition of minimum requirements on
  technical or company standards

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Gatekeeper

• Controls the flow of information within the
  buying center
• Assistant of decision maker
• Influence by preparing the decision and the
  relevant documents
• (Scriptum p 33-34 summary)

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Decider

• Right to say yes or no
• Mightiest person

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Initiator

• Person who brings new ideas and solutions into
  the company

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Specific marketing considerations in the
industrial facilities business

• Long decision taking process
• High risk
• Complex buying center
• The specific competitive situation

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Product policy

• Focuses on innovation
• Has to care for high flexibility in research and
  development
• And manufacturing and assembling

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Price

• Strict bid and tender rules
• High transparency
• Add value with service offering to achieve a
  differentiating position
• Another aspect financing and sourcing models

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Distribution policy

• Focus on negotiation phase
• Provide excellent people in the selling center
• High technical knowledge

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Communication

• Problem solver!
• Proving success with comparable tasks
• Reference projects!