B2B MARKETING BUYERS

Organisational Buying Behaviour

The business buyers may be a; 1. Commercial Enterprises; a. Manufacturers manufacturing units producing industrial / consumer products, may be classified as OEMs, e.g. Maruti using tyres from MRF. The other products may be raw materials, machines and other equipments to these units for use in production activities e.g. drill machine, steel and other raw materials used for production b. Industrial distributors and dealers representing a firm for its products or services

B2B MARKETING

Organisational Buying Behaviour

c) Service buyer a firm buying services (like the outsourcing of various services by a firm). It may be security service, AMCs for its various equipments etc d) System buyer a firm buying systems where the supplier is a specialist in the field e.g. quality systems, ISO systems, ecofriendly systems, energy systems etc 2. Government the largest purchasers in the country, such as Railways, telecoms departments, defence, STUs, state electricity boards, central and state government departments etc.

B2B MARKETING

Organisational Buying Behaviour

3. Institutions both public and private institutions, such as hospitals, schools, banks, universities and even NGOs etc.

4. Co-operative Societies may be a manufacturing or trading unit or involved in other activities

B2B MARKETING

Organisational Buying Behaviour

The buying may be under three circumstances 1. A new task when the product developed requires new raw materials, components etc or the changes made in the existing product require something new for the first time. In such cases a thorough study of suppliers is made and sampling and testing is done, which sometimes takes few weeks or more before the product is finalised. In many cases it may involve the R & D as well as the user department

B2B MARKETING

Organisational Buying Behaviour

2. Modified re-buy from time to time technical and or design specifications change. These may occur due to improved requirements of the customers, developments in the products by the company, cost reduction, quality improvements etc. 3. Straight re-buy the most common buying situation when there is continuous production. The buyer only needs to study the requirements and the inventory norms of the company and place orders on the supplier. In this case, however, he needs to keep a watch on the pricing and negotiate where ever necessary

B2B MARKETING

Organisational Buying Behaviour

To understand the buying behaviour of the organisation (the buyers), the above buying situations are studied with different buying phases. This grid used for this study is known as BUYGRID MODEL We also discuss appropriate marketing strategies over various Buying Situations and Phases

B2B MARKETING

Organisational Buying Behaviour

BUY GRID MODEL Buy Phases

New Task 1.Anticipation or recognition of the problem (NEED) 2.Determination of characteristics and quantity of needed item 3.Description of characteristics and quantity of needed item 4.Search for and qualification of potential sources 5.Acquisition and analysis of proposals 6.Evaluation of proposals and selection of suppliers 7.Selection of an order routine 8.Performance feedback and evaluation 7

Buy Classes
Modified Re-buy Straight Re-buy

B2B MARKETING

Organisational Buying Behaviour

OBJECTIVES IN ORG. BUYING Task Oriented Objectives 1. Profit making a must 2. Must buy at lowest prices while not compromising on; a. Technical service

b. Product quality
c. Assured delivery 3. In some organisations, the buyers may be constrained due to budgetary allocation and may be forced to buy only at lowest prices till it meets the minimum requirements.

B2B MARKETING

Organisational Buying Behaviour

4. RECIPROCITY When the buyers and sellers agree on some long term relationship.

Non-task Objectives
1. When the purchasing decisions are influenced by social considerations such as friendship, reputation and mutually beneficial interactions 2. The buyers take pride, a personal objective, in making correct buying decision and simultaneously accomplishing the goals of the organisation

B2B MARKETING Buying Centers

Organisational Buying Behaviour

It is very important for a marketing man to know 1. What are the buying centers

2. Who are buyers

3. Who are the groups of people influencing the buying decisions Buying decisions are influenced by various department / functional heads e.g. 1. Marketing 2. Manufacturing

3. R & D
4. Engineering 5. Quality control and of course

6. Purchasing

B2B MARKETING Buying Centers Role Two roles basically 1. Primary Deciders Influencers 2. Secondary Users Buyers Gatekeepers

Organisational Buying Behaviour

B2B MARKETING

Organisational Buying Behaviour

Influence by Buying centers

Phases Need identification New Task
R&D Engineering Production Purchasing R&D Engineering Production Purchasing

Modified Re-buy
Engineering Production Purchasing R&D Engineering Production Purchasing Quality Control Engineering Production Purchasing

Straight Re-buy
Production Purchasing

Establishing of specifications

Engineering Production Purchasing

Modification/Evalua R & D Engineering tion of alternative Purchasing sources Supplier selection

R&D Engineering Purchasing Quality Control

Engineering Production Purchasing

Engineering Production Purchasing

Engineering Production Purchasing 12

SALES MANAGEMENT

Organisational Buying Behaviour

A salesman and the prospective buyer when interact are an example of buyer-seller dyad. THE DICTIONERY MEANING OF DYAD IS A PAIR OF UNITS TREATED AS ONE.

Salesman-customer

Role characteristics

Personal characteristics Personal affiliation

Needs and expectations

Adjustments

Choice of Strategy

Negotiation

Adapt

Exchange Experiences forming good or bad notions giving repeat sales Or no orders for future

B2B MARKETING

Organisational Buying Behaviour

Another most important activity to be studied by the marketer is to find out 1. Organisational structure How does the organisation structure affects the buying decisions Who are the decision makers

Authority of the persons dealing with the buyers etc

Centralised or individualised buying New techniques in buying e.g. JIT, zero inventory or use of third party logistics.

B2B MARKETING

Organisational Buying Behaviour

2. Interaction of buying centers Involvement of buying centers Joint decision making approach The various buying centers interaction with each other and the effect on the supplier. 3. Approach of buying by individual or groups Every individual at his position looks to the buying decision from his angle which may be individual view or functional view The individual looks from the information and knowledge that he has or he is exposed to

B2B MARKETING

Organisational Buying Behaviour

The perceived risk that he is taking on a decision The marketer therefore must view from all above as also ensuring that he is not creating a conflict between the various individuals of the group Also to understand if any buying committee is formed or the individuals are involved. 4. Process of evaluating the suppliers A very important process to understand by the supplier
Cnntd.

B2B MARKETING

Organisational Buying Behaviour

The expectations of a buyer from a supplier a. Timely supplies b. Meeting quality standards and supply of products with minimum defects c. Have complete knowledge about the commodity dealing in d. Ability to understand the process of manufacturing and upgrading from time to time e. Meet cost control standards f. Timely response to buyers
Contd.

B2B MARKETING

Organisational Buying Behaviour

e. Meet emergencies f. Keep buyers informed of the developments Based on these the above expectations, a weighted point method is adopted for evaluating the supplier

B2B MARKETING

Organisational Buying Behaviour

The four major factors that are considered by the buyers for evaluating the suppliers are;

1. Delivery
2. Quality 3. Price/Cost reducing suggestions and implementations (Pricing Index) 4. Response speed

B2B MARKETING

Organisational Buying Behaviour

Strategic alliances of suppliers with buyer organisation are useful to organisation Success in business-to-business marketing depends on understanding and development of relationship between buyers and suppliers. Understanding industrial buyer behavior is instrumental to an appreciation of the relationship development process. Four important factors in developing relationship are; 1. Duration of a buyer-supplier relationship 2. Importance of a relationship to a supplier 3. Size of a buying firm and 4. Prior experience of an individual buyer.

B2B MARKETING

Organisational Buying Behaviour

Firms enter into relationships to achieve some joint objective that might be either too difficult or too costly to tackle alone

Collaborative, long-term buyer-supplier relationships develop only when both partners exchange benefit from the relationship
In todays business environment, when the competition is increasing, alliances is not option but necessity. It is therefore very important to develop alliances not only with customers but also with suppliers as well. Some of the reasons are; 1. Fill gaps to access markets and technology 2. Achieve economies of scale in marketing, manufacturing or R&D activities

B2B MARKETING

Organisational Buying Behaviour

3. Reduce risks and entry costs into new markets

4. Less time in introducing new products

5. Overcome trade barriers where ever possible However for successful alliances, some important factors are; 1. Trust between the partners 2. Very high level of communication between the partners 3. Agreement on goals and strategies

B2B MARKETING

Organisational Buying Behaviour

And to achieve this, the firms must; 1. Choose partners carefully by evaluating their strengths and strategic fits in terms of the reputation, capabilities, culture, resources and relationship 2. Creating conditions for mutually beneficial relationships by flexible approach

3. Focusing on long term gains