Thursday, September 11, 2008

Organization buying

Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)


Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products.

2. The purchases are in large quantities.

3. Close relationships and service are required.

4. Demand is derived from the production and sales of buyers.

5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products.

6. The organizational buyers are trained professionals in purchasing.

7. Several persons in organization influence purchase.

8. Lot of buying occurs in direct dealing with manufacturers.


Organizational Buying Situations



Straight rebuy

Modified rebuy

New task buy

Systems buy


Participants in the Business Buying Process

Users
Initiators
Influencers
Buyers
Gatekeepers
Deciders
Approvers


Major Influencers on Business Buyers



Environmental factors

Organizational factors

Interpersonal factors

Individual factors



Organizational Buying/Purchasing/Procurement Process



Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order routine specification



Supplier performance review



For Further Reading



Philip Kotler, Marketing Management

The issues in organizational buyer behavior are applicable when securities market intermediary are trying to sell their services to institutional clients.

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