Organizational buying behavior

1. Organizational buying behavior Presentation created by Mag. Maria Peer based on the lecture BBM1 – Marketing Mag. Andreas Zehetner FH Steyr

2. 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 Mag. Maria Peer

3. 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 Mag. Maria Peer

4. B2B products – organizational procurement starts • More than one person involved • Buying process follows certain rules • Price comparison, standardisation, tenders = Ausschreibungen) Mag. Maria Peer

5. B2B systems • involve more capabilities and greater workloads • From the buyer‘s and the supplier‘s side decision has more extensive consequences Mag. Maria Peer

6. B2B facilities • Industrial plants • Manufacturing installations • Office buildings Mag. Maria Peer

7. 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 Mag. Maria Peer

8. Buying phases • Problem recognition • General need description • Product specification • Supplier search • Proposal solicitation • Supplier selection • Order routine specification • Performance review Mag. Maria Peer

9. 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 Mag. Maria Peer

10. 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 Mag. Maria Peer

11. 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 Mag. Maria Peer

12. Negotiation phase • = core selling process • Comprises acquisition and analysis of proposals, evaluation of proposals and selection of suppliers Mag. Maria Peer

13. Processing phase/warranty/ service phase • Contains selection of an order routine • Realisation of the transaction along with the fixation of after sales service tasks Mag. Maria Peer

14. 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 Mag. Maria Peer

15. Buying center • Role keepers have different tasks – not mandatory • Buyer • User • Influencer • Gatekeeper • Decider • Initiator

16. 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 Mag. Maria Peer

17. User • Person working with the product • Interested in benefits and unobstructed function of the product to buy • Large knowhow and preconceived opinion Mag. Maria Peer

18. Influencer • A person with high technical knowledge and practical experience  definition of minimum requirements on technical or company standards Mag. Maria Peer

19. 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) Mag. Maria Peer

20. Decider • Right to say yes or no • Mightiest person Mag. Maria Peer

21. Initiator • Person who brings new ideas and solutions into the company Mag. Maria Peer

22. Specific marketing considerations in the industrial facilities business • Long decision taking process • High risk • Complex buying center • The specific competitive situation Mag. Maria Peer

23. Product policy • Focuses on innovation • Has to care for high flexibility in research and development • And manufacturing and assembling Mag. Maria Peer

24. Price • Strict bid and tender rules • High transparency • Add value with service offering to achieve a differentiating position • Another aspect: financing and sourcing models Mag. Maria Peer

25. Distribution policy • Focus on negotiation phase • Provide excellent people in the selling center • High technical knowledge Mag. Maria Peer

26. Communication • Problem solver! • Proving success with comparable tasks • Reference projects! Mag. Maria Peer