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Chapter 3

Organizational Buying & Buying Behavior

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DINH Tien Minh (Ph.D.)

University of Economics HCMC

Objectives

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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.

Outline

3.1 Purchasing Objectives

3.2 Organisational Buying Process

3.3 Types of Purchase or Buying Situations

3.4 The Buying Center

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3.5 Models of Organisational Buying Behavior

3.6 Questions and Homework

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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

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3.1. Purchasing Objectives (cont’)

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Firm and Personal objectives.

More complex than the consumer decision process

and takes place within formal organization’s budget,

cost, and profit considerations.

3.2. Organisational Buying Process

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Source: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition.

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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.

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3.2. Organisational Buying Process (cont’)

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Stage 3: Describe characteristics and the

quantity of a needed good or service

Firms need a simple system for

brewing a good cup of coffee; quantity

requirements are easily correlated to the

number of coffee drinkers.

Stage 4: Search for and qualify potential

sources

Choice of supplier.

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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.

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Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p42.

Method: A Supplier Evaluation System


Attribute

(or Factor)

Weight

(Important)

Supplier

Performance*

Supplier Rating

(or Score)

Quality 30 0.8 30 x 0.8 = 24

Delivery 25 0.4 25 x 0.4 = 10

Price 15 0.6 15 x 0.6 = 09

Service 20 0.6 20 x 0.6 = 12

Flexibility 10 0.2 10 x 0.2 = 02

Total 100 57

* The information on the existing supplier’s performance is obtained from departments.

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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).


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The Balanced Scorecard (BSC) Framework


Robert S. Kaplan & David P. Norton, The Balanced Scorecard, Harvard Business School Press, 1996.

Financial

To success financially,

Company should focus on

financial objectives that will

satisfy shareholders.

Customer

Which customer value

company should focus on,

to achieve its mission

Internal-Business-

Process

To satisfy shareholders

and customers, what

business process company

must excel at?

Mission

&

Strategy

Learning and Growth

How can company improve

and change to achieve its

mission

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Internal-Business-Process



Identify

Customer

needs and

Market

Design,

Develop

Product/

Service

Make/

Buy

Product/

Service

Market

Product/

Service

Satisfy

Customer

Needs

Innovation

Processes

Operations

Processes

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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.

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3.3. Types of Purchase or Buying Situations


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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).

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2. Modified Rebuying

May occur if supplier has let a rebuy circumstance

deteriorate because of poor service or delivery

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.

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The Buygrid Framework for Organisational

Buying Situations



Buy phases (Phases in Buying Process)

Buying Situations

New

Task

Modified

Rebuy

Straight

Rebuy

1. Problem recognition Yes Maybe No

2. Characteristics and quantity of needed item Yes Maybe No

3. Description or specification of needed item Yes Maybe No

4. Search for and qualifications of potential suppliers Yes Yes No

5. Obtaining and analyzing supplier proposals Yes Yes Maybe

6. Evaluation of proposals and selection of suppliers Yes Yes No

7. Selection of an order routine Yes Yes Maybe

8. Performance feedback and evaluation Yes Yes Yes

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3.4. The Buying Center

2323

The organizational buying process is

typically influenced by many individuals.

The degree of involvement of individuals

varies for different buying situations.

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3.4. The Buying Center (cont’)

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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?

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3.4. The Buying Center (cont’)

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3.5. Models of Organisational Buying Behavior

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Nguồn: Adapted from F.E. Webster, Jr and Y. Wind, “AGeneral Model of Organisational Buying Behaviour”,

Journal of Marketing, 36, 2 (April, 1972), 12-19.

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Nguồn: Adapted from Jagdish N. Sheth, “A Model of Industrial Buying Behaviour”, Journal of Marketing, 37,

Oct, 1973, 50-56.


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Nguồn: Jean Mary Choffray & Gary L. Lilien, “Assessimg response to Industrial Marketing strategy”, Journal

of Marketing, 42, April 1978, 22.


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3.6. Questions and Homework

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1. At what phase(s) of the industrial buying process the

business marketer should get involved and why?

2. 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?

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