Marketing - Lesson 5

Organizational Buying is the decision making process by which formal organizations establishes the need for purchased products and services and identifies, evaluate and choose between alternative brands and suppliers.

Characteristics of Business Markets:-

•          Few customers

•          Larger buyers

•          Many Buying Influences

•          Close Buyer-Seller Relationship

•          Few Intermediaries

Buying Situations:-

1. Straight Rebuy - Reorder on routine basis

2. Modified Rebuy - Modification in product specifications, prices, delivery requirements or other terms.

3. New task - Buying for first time

Buying Roles in Buying Center:-

•          Initiators - Users or others.

•          Users - Users may initiate & help define product requirements.

•          Influencers - help define specifications & provide information for evaluating alternatives technical personnel.

•          Decider - decide on product requirements & suppliers.

•          Approver - authorize actions of decider buyer.

•          Buyer - formal authority to select suppliers, negotiate.

•          Gatekeeper - Prevent sellers or info reaching buying center.     

Purchasing / Procurement Process (Buy Phases)               :-

•          Problem recognition - as a result of internal or external stimuli

•          General need description - items general characteristics, attributes & quantity.

•          Product specification- Technical specifications.

•          Supplier search - buyer can examine trade directories, computer search, trade shows, advertisements, recommendations of others.

•          Proposal solicitation - Buyer invites qualified suppliers to submit proposal, make presentations.

•          Supplier selection - based on important factors e.g. product reliability, technical service, price, supplier flexibility, reputation.

•          Routine order specification - Trend especially in MRO items is blanket contract/ stockless purchase plan.

• Performance review