Business Buyer Behaviour: Introduction

Business buyer behaviour is the intent and behaviour shown by companies and
employees into making purchases for the organization. Business buying behaviour is the
concept of understanding the needs and wants of a business and making appropriate
purchases, which ultimately help a company get profits.

Companies have specific roles allotted to employees, who responsible for making
business purchases. This role is often known as business buyer. Business buyer
behaviour can be understood on the basis of the business buying process, which helps
companies to get the best raw material & goods, which can be processed to get
maximum output and returns.

Business Buying Process

Types of Buying Situations

Broadly there are three types of buying situations in a company

1. New Task– extensive problem solving stage; focus on product; 2 types-

judgemental and strategic
2. Modified Rebuy– limited problem solving; focus on product & vendor; 2 types-
simple and compile
3. Straight Rebuy– routine problem solving; focus on vendor; 2 types- casual and
routine

Hence, this concludes the definition of Business Buyer Behaviour along with its
overview.

Business Buying Behaviour Factors

There are certain factors which influence the buying decision of an organization. Some
of them are:

1. Environmental forces
2. Organizational forces- Technical and price related specifications
3. Group forces- preferences of buying centre group
4. Individual forces- individual preferences
5. Factors like supplier of choice, order quantity, delivery, service, payment terms
etc

 1 COMMENT
Business markets are defined as all organizations that procure products or services that are
consequently used in manufacturing other goods and facilitating service for other consumers.
Wholesalers and retailers are also considered as business markets since they also deal in the
acquisition and sale of goods and services for further selling and renting.

Business markets and consumer markets tend to be similar to some extent. For instance, in
both cases, people are involved in the process of evaluating the necessity of goods and
products and at the same time carry out different roles in ensuring that they attain satisfaction
of such needs. However, it should be noted that some factors define the characteristics of
business markets, which also distinguishes it from consumer market and they include the
following;

1. Market Structure and Demand

Typically, there are few but relatively large types of business buyer deals that organizations
often engage in that are related to the business market. It should also be noted that these
customers are much focused geographically. There are various instances when the business
markets had to deal with inelastic demand that is not necessarily influenced by the changes in
the price of products or service, especially within a short run.

It should also be noted that demand for the business markets and business products also tends
to fluctuate, which only implies that the demand for business market products can change
relatively quickly than the demand for consumer goods or services.

2. Nature of Buying Unit

This is the other characteristic that distinguishes the difference between consumer markets
and business markets. Participants in the business purchase tend to buy more and there are
more participants, and the process also tends to be relatively professional. On the other hand,
participants in the consumer purchase are often less, and efforts put towards the same is also
little. The people involved in consumer purchasing lack the knowledge and experience when
comparing them to those who are involved in business buying.

The business market also incorporates a committee of experts that participate in ensuring that
all purchasing decisions are collectively arrived at. The organizations involved in the
business market also ensure that they train their personnel occasionally in matters to deal with
business purchasing hence making it possible for them to make sure that the process is
efficient and effective.

3. Decisions and Decision Process

Ordinarily, the decisions revolving around the business market are somewhat complex than
decisions made by the consumer markets. This is primarily because business market requires
an intensive process that involves technical and economic considerations, a considerable
amount of money and interactions among different professionals holding different ranks in
their respective trades.

The business purchase process also tend to take longer than the consumer purchase process
since fine details have to be put into consideration in ensuring that every piece is accounted
for. This explains why the business market tends to appear more formalised than the
consumer purchase.

For instance, organizations dealing with business market happen to exert specification of the
detailed product, capture the purchase order, carefully identifying suppliers and also
formalise approval of the suppliers and payment.

However, it should also be noted with a significant concern that both sellers and buyers
depend on each other for their success in the business buying process. The customers in the
consumer market are often present at a distance in comparison to the organizations in the
enterprise market, which often tend to be carefully present with one another and ensure that
the customers provide any help necessary at every given step of the purchasing process.

They are always available in ensuring that all problems are defined and addressed
appropriately and supporting all the operations that are within their reach. It should also be
noted that they customise their offerings to suit the needs of the clients and create a close
rapport for the sake of future businesses. These characteristics explained in this article
provide a clear distinction between these two markets.

 1 COMMENT

Buying behavior varies greatly between consumers and businesses. That’s because while
consumers purchase goods and services for personal use, businesses buy these things either to
manufacture other goods or to resell them to other businesses or consumers. The participants,
characteristics, influences and the buying process are different for both groups.

The Number of Participants

Consumer buying is usually limited to one or two participants, including the final user of the
product. For example, one person is usually involved in buying groceries and basic home
supplies. Business buying usually involves multiple participants, such as the final users of
the product, influencers who establish the need for certain products, gatekeepers who screen
potential suppliers and purchasing managers and senior management who approve the funds
for the purchases.

Differing Behavioral Characteristics

The consumer market consists of thousands of customers located in different geographies

and with different buying habits. However, their needs are usually the same for a particular
product — for example, everybody uses washing machines in the same way. The business
market usually consists of a few large buyers who are often concentrated in specific
 geographic markets. Businesses generally form close and long-term relationships with their
suppliers. Different businesses might use the same product differently. For example, a retail
business might install computers to track its inventory, while a technology company might
use them for product research.

Influencing Factors and Motivations

The influences on consumer buying behavior include basic needs, membership in groups,

family requirements, occupation, age, economic situation and lifestyle choices. The
psychological influences include perception of certain products and brands, beliefs and
attitudes. Influences on business buying behavior include environmental and organizational
factors. Competitive pressures, technological evolution and changing macroeconomic
conditions are some of the environmental influences, while corporate objectives, policies and
procedures are some of the organizational factors.

The Buying Process

The consumer buying process consists of five stages: need recognition, information search,
evaluation of alternatives, purchase decision and post-purchase outcomes. Marketing stimuli
can generate need, which leads to a search for information from different sources. Consumers
evaluate alternative products based on brand name, features, quality and price. Possible post-
purchase outcomes include delight, satisfaction and dissatisfaction. Critical success factors in
the consumer market include quality, value and customer service.

The business buying process also starts with need recognition, followed by development of
product specifications. The company prepares a request for proposal to elicit expressions of
interest or bids from potential suppliers. It selects one or more suppliers, issues purchase
orders and monitors the quality of the products supplied. Critical success factors in the
business market include customization capabilities, quality, performance, ease of use and
personal relationships.

Buying Situations in the Industrial Marketing

There are three common types of buying situations in industrial market, which are
discussed as follows:

1. New Purchase

The industrial buyers buy the item for the first time in this situation. The need for a new
purchase may be due to internal or external factors. For example, when a firm decides to
diversify into new purchase situations the buyers have limited knowledge and lack of
previous experience. Therefore, they have to obtain a variety of information about the
product, the suppliers, the prices and so on. The risks are more, decisions may take
longer time, and more people are involved in decision making in the new purchase
decisions.

2. Change in Supplier

This situation occurs when the organization is not satisfied with the performance of the
existing suppliers, or the need arises for cost reduction or quality improvement. The
 change in supplier may also be necessary if technical people in the buying organization
ask for changes in the product specification, or marketing department asks for
redesigning the product to gain some competitive advantage. As a result, search for
information about alternative sources of supply becomes necessary. Even though,
certain attributes or factors can be used to evaluate the suppliers. There may be
uncertainty regarding the supplier who can best meet the needs of the buying firm.
Therefore, the modified re-buy situation occurs mostly when the buying firms are not
satisfied with the performance of the existing suppliers.

3. Repeat Purchase

If the buying organization requires certain products or services continuously and

products/services had been purchased in the past then the situation of repeat purchase
occurs. In such a situation, the buying organization reorders/places repeat orders with
the suppliers who are currently supplying such items. This means that the product, the
price, the delivery period, and the payment terms remain the same in the reorder, as per
the original purchase order. This is a routine decision with low risk and less information
needs, taken by a junior executive in the purchase department. Generally, the buying
firms do not change the existing suppliers if their performance is satisfactory.

Buying Roles

The decision making unit of a buying organization is called its buying center – all the
individuals and units that play a role in the business purchase decision making process.
This group includes the actual users of the product or service , those who make the
buying decision, those who influence the buying decision , those who do the actual
buying and those who control buying information.

Kinds of Buying Roles

 Initiator
 Users
 Influencer
 Deciders
 Approvers
 Buyers
 Gatekeepers

Initiators – Those who request that something be purchased. They may be users or

others in the organization. For example- for office equipment’s, the initiative may be
taken by administrative department.

Users – Those who will use the product or services .In many cases the users initiate the
buying proposal and help define the product requirements.

Influencers – People who influence the buying decision . They often help define
specification and also provide information for evaluating alternatives. Technical persons
are generally important influencers.
Deciders – People who decide on product requirements or on suppliers and those who
have authority to select the suppliers. For major purchase , the final decision will be
taken by top management.

Approvers –People who authorize the proposed action of deciders and buyers.

Buyers – People who have formal authority to select the supplier and arrange the
purchase terms. Buyers paly their major role in selecting vendors and negotiating. In
more complexes the buyers might include high level managers.

Gatekeepers- People who have the power to prevent sellers or information from

reaching members of the buying center. For example –purchasing agents , receptionists
may prevent salespersons from contacting users or deciders.

Business buyers are subject to many influences when they make their buying decisions.
Economy is one of the major influences in some marketers’ perception. They think
buyers will favor the supplier who offers the lowest price rate or the best product or the
most service. They focus on offering strong economic benefits to buyers. However,
business buyers actually respond to both economic and personal factors.

Today, most B-to-B marketers recognize that emotions play a vital role in business
buying decisions. For example, you might expect that an advertisement promoting large
trucks to corporate fleet buyers would stress objective performance, technical, and
economic factors. Though, an ad for Volvo heavy-duty trucks shows two drivers arm-
wrestling and claims, “it solves all your fleet problems, except who gets to drive.”

There are many factors which actually influence on business buyers:

(1) ENVIRONMENTAL FACTORS

Business buyers are influenced heavily by factors in the current and expected economic
environment, such as the level of primary demand, the economic outlook, and the cost of
the money. When economic uncertainty rises, business buyers cut back their new
investment and attempt to utilize their inventories. There are many other factors includes
in environment factors, these are economic development, supply conditions,
technological changes, political and regulatory developments, competitive development
and culture and customs. These have impact on business market directly or indirectly.

(2) ORGANIZATIONAL FACTORS

All buying organizations have their own objectives, policies, procedures, structures, and
systems. The business marketers must understand all these factors well because so
many queries are connected to these factors. Like how many people are involved in
buying decisions? Who they are? What are the evaluation criteria? What are the
company’s policies and limitation for their buyers?

(3) INTERPERSONAL FACTORS

Usually buying center includes many participants, who influence each other. So,
interpersonal factors also influence the business buying process. Though, it is quite
difficult to assess such interpersonal factors and group dynamics. Managers do not wear
labels that differentiate them as important or unimportant buying participants, and
powerful influencers are often buried behind the scene. Interpersonal factors may
include authority, status, empathy, and persuasiveness of participants in business
buying process.

(4) INDIVIDUAL FACTORS

Individual has a vital role in business buying process. Each participant in the business
buying-decision process brings in personal motives, preferences, and perceptions. But
these individual factors are affected by personal characteristics of each person, such as,
age, education, income, professional identification, their job status, personality, and
attitudes towards risk. All buyers have different buying style.

So these are all the factors that influence business buyers. Marketers have to keep all
these factors in their mind while making marketing plans or products or services.

The business buying process involves five distinct stages. At each stage, different
decision makers may be involved, depending on the cost and strategic importance of the
purchase. To navigate the buying decision process successfully, you need to provide the
right type of information and ensure that your sales representatives are contacting the
right decision makers. You can also strengthen your position by offering customers
advice and guidance at each stage – a process known as consultative selling.

Five Stages of the Business Buying Process

(i) Awareness and Recognition

The process begins when a company identifies a need for a purchase. It may want to
replace an existing item, replenish stocks or buy a new product that is just available on
the market. You can also stimulate a need that the company may not be aware of by
advising them of issues and challenges that other companies in their industry face. The
buying team next works with the requesting department to firm up on the requirement.
Your sales team can provide advice and guidance at this stage by offering discussion
papers or inviting decision makers to workshops or seminars on the topic.

(ii) Specification and Research

When the buying team has agreed requirements, it prepares a detailed specification that
sets out quantities, performance and technical requirements for a product. Your sales
team can support this stage by advising the buying team on best practice or
collaborating with the buying team to develop the specification. Buying teams then use
the specification to search for potential suppliers. They may search the internet to find
products or companies that provide a match to their specification, so it is important that
your website features keywords that match your customers’ product or service needs.

(iii) Request for Proposals

When the buying team has identified potential suppliers, it asks for detailed proposals
from the suppliers. The team may issue a formal document known as a request for
proposal, or it may outline requirements and invite potential suppliers to make a
presentation or submit a quotation. If the product or service has a precise specification,
the buying team may simply ask for price quotations. If the product is more complex, it
may ask for proposals on how a supplier would meet the need.

(iv) Evaluation of Proposals

The buying team evaluates suppliers’ proposals against criteria such as price,
performance and value for money. As well as evaluating the product, they assess the
supplier on factors such as corporate reputation, financial stability, technical reputation
and reliability. You can influence decisions at this stage by providing company
information, case studies and independent reports that review your company and
products.

(v) Order and Review Process

Before the buying team places an order with the chosen supplier, they negotiate price,
discount, finance arrangements and payment terms, as well as confirming delivery dates
and any other contractual matters. When the order is complete and delivered, the buying
team may add a further stage by reviewing the performance of the product and the
supplier. This stage may include imposition of penalty charges if the product fails to meet
the agreed specification.