Conceptual aspects of organisational buying behaviour

S. Ramesh Kumar

Selling strategies that target the organisational customer and use the concept of the buying
centre, buying situations and the buying stages will result in unique strategies for different
customer groups, thus making business-to-business marketing more e ffective.

Business-to-business marketing is an area which is gaining an identity of its own in the

Indian context. Marketers can benefit from the conceptual aspects associated with
organisational buying behaviour. This article attempts to explore some dimensions a
ssociated with business-to-business marketing situations.

Applying the buying centre concept

The decision-making unit in a buying organisation consists of the buying centre. This is
made up of the decider who gives the `yes' or `no' decision, the initiator or the user who
initiates the need for the product, the influencer who exerts influence on the buying
process, the user who gives feedback on the product, the purchasers or the buyers who
formalise the purchasing process and the gatekeepers (such as secretaries and clerks) who
control the flow of information in an organisation.

The basic aspects to be noted about the buying centre are that:

--The influences across the centre can vary from one product category to another.

--The composition itself can vary from one product to another.

--Monitoring the buying centre should be a dynamic process; personnel may enter and leave
an organisation and hence constant monitoring is required.

--Informal power equations in an organisation can affect a buying centre.

--In a smaller organisation, the same employee (as a participant in the buying centre) can
play several roles involved in the buying centre. For example, in a small-scale industry, the
managing director who monitors the stock levels of various requiremen ts may initiate the
purchase of drill bits and also select the brand during the purchasing process.

--The composition of the buying centre will vary across the different phases of industrial
buying. This means that the buying centre which faces the marketer during the pre-sale
phase can be different from the one which deals with the same marketer after the sale of
the product is over. An organisation marketing computers will face financial executives,
corporate planning and perhaps the departmental heads of respective departments where
the computer is intended to be used during the pre-sale phase. The same organisation may
have to work with the training department of the buyer organisation after the sale is over.

John R. Devincentis and Neil Rackham in their article Breadth of a Salesman (The McKinsey
Quarterly 1998, No 4 issue) highlight the importance of the changing sales function.
There can be three kinds of customers. One group can comprise the price-sensitive ones
called the transactional ones. In India this segment exists in most product categories
ranging from consumables to projects.

The second group of customers require `consultative selling'. This will require the marketing
organisation to have analytical and intimate knowledge of the customer's requirements and
provide a consultative edge to the total offering.

The third group of customers are the ones who require the `enterprise sales effort' by which
they may have a strategic association with the marketer. This approach should enable the
marketer to bring in marketing efforts which may require inputs from sev eral functional
areas of the marketing and buying organisation. This eventually results in offering the
customer a strategic product. This approach leads to continuous improvement between the
customer and the marketer. The `Docutech' model of digital cop ier which was developed by
Xerox for Boeing is a good example of this approach.

These customer groups add a new dimension to business-to-business marketing. The

`three-value philosophy' of buying organisations can also help a marketer categorise buying
centres according to the value expected by the organisation. There has been a rad ical shift
of the value concept in business-to-business marketing -- from the price-performance
equation to the three kinds of expectations based on the type of customers.

The implications of the shift in the value-orientation of buying organisations are that a
marketing manager should be able to develop parameters for classifying buying
organisations and train the sales force to cater to the three kinds of customer groups .
There is a need to break away from the `products-benefits-brand' sales pitch which is
generally the approach in business-to-business marketing.

While the ideal approach may be the `enterprise sales effort', this may not suit every
customer. A marketing organisation may have to deal with all the three types of customer
organisations and the respective buying centres. There is a need to evolve sel ling strategies
for all the customer groups and define value for each of them.

The three buying situations

There is a need to discuss the three kinds of buying situations before they can be applied to
the buying centre and the different stages involved in the organisational buying process.

The first kind of buying situation is the `new buy' situation in which a company buys a
product for the first time and does not have any experience with the vendors or the product
it is attempting to buy. This situation is very important, especially for a project situation in
which consultative selling efforts are involved. A company attempting to market an ERP
package to an organisation has to obtain the precise customised requirements of the buying
organisation before formulating a solution. For insta nce, lifts for a commercial complex can
be classified under a new buy situation.

The second type of buying situation is a `straight re-buy' situation in which a buying
organisation records or repeats the previous order without changes; hospital consumables
and office stationery may be examples. In this situation, the organisation whi ch is currently
the supplier, the `in-supplier', will have to ensure that it is able to sustain its offerings and
service so that competitors do not enter the scene. These competitors are `out-suppliers'
who would like to enter the buying organisation.

The third kind of situation is the `modified re-buy' situation in which the buying
organisation brings in changes in its requirements. An automobile company may prefer to
use an updated version of bearings. A company working on updating its offerings can create
a modified re-buy situation by working with the influences of the buying centre in the
organisation. A company marketing x-ray equipment can introduce an updated offering for
the replacement market -- hospitals which had procured the earlier vers ion. In such
equipment, new product introductions always create a modified re-buy situation and hence
a company should introduce new products to stay ahead of the competition.

Even in consumables, there is scope to create a modified re-buy situation with new
products; self-stick pads from 3M and waterproof medicated plasters from Johnson and
Johnson are examples. A modified re-buy situation can also be created through services
such as the consultative sales efforts discussed earlier or through better product delivery
promises.

Stages in organisational buying

There are three areas of operation in industrial buying.

The initiation stage: This is a stage in which a problem or a need is recognised by the
organisation. For example, because of the changing environmental trends, a manufacturer
of pharmaceutical products may want to introduce certain kinds of medicinal fo rmulations
in the form of capsules. This may require specific kinds of raw materials and changes in the
production process. Special kinds of industrial automation or instrumentation may be
required.

The recognition of a need can be from the environment, from the move made by
competitors or it may be a move made by a buying organisation to pre-empt competition.
While the buying organisation itself may be monitoring its direct competition, a supplier can
initiate the process of change and create a `new buy' situation by highlighting the need for
a specific product or service. Grill-type of lifts have been banned in the country from the
next millennium and hence a lift manufacturer can create a new bu y situation for
sophisticated lifts in high-rise buildings. The same lift company can also create a modified
re-buy situation by offering a lift which is not sophisticated.

By pioneering consultative selling, a company has an early entry into the buying
organisation in spite of the fact that the buying organisation can make use of a consultant in
a complex new buy situation. Apart from problem recognition, the initiation st age also deals
with the determination and description of the characteristics of the required product and
service. There may be a need for an advanced industrial instrumentation system in a power
plant and this calls for the firming up of characteristics of several kinds of instruments which
are likely to be used in the instrumentation system.

Search stage: This stage consists of information search regarding vendors, their credibility,
their compatibility with the requirements of the buying organisation, an analysis of the
offerings of different companies and the selection of a supplier. Compa nies that have
pioneered the consultative selling approach in the early new buy phase will have a
reasonable edge over other companies in the search stage.
Though it may not be possible to state that firms entering the initiation stage will end up
with the order, there is a likelihood that these companies may be considered more
favourably than companies which enter only during the search stage. In complex n ew buy
situations such as electrical projects, the company, which may have entered the initiation
stage, might have even formulated the broad specifications of the project.

The search stage is equally important for organisations that are currently not in business
with buying organisations. In industrial automation where there are frequent changes in
hardware and software, the buying organisation and the respective buying ce ntres need to
be apprised of the latest in the field. An `out-supplier' taking this approach, especially
where the `in-supplier' is not active on this front, will benefit when the buying organisation
formulates an extension programme.

In certain cases the buying organisation may have different plants at different locations and
an `out-supplier' may be able to dislodge the `in-supplier' for a new bid in a specific
location. This also means that the `in-supplier' has to be associated wi th the search stage,
by providing current information, even after the product is sold or project is executed. The
`in-supplier' has to maintain a preferred position every time the buyer organisation gets
involved in the analysis of proposals to cater to an emerging need such as expansion,
updated offerings and so on.

The feedback stage: This stage is concerned with the establishment of order routine,
performance feedback and so on, and hence the focus shifts to the user. Product
management of the marketing organisation can play a vital role in scheduling of delivery,
complaint redressal, providing inputs for new product development and generally ensuring
that the buying organisation is satisfied after the sale is over. Service departments also
become important in this stage.

Formulating selling strategies using the buying centre, buying situations and the buying
stages will result in unique strategies for respective customer groups. This is marketing
orientation in practice.