Nature of Industrial Buying: Industrial Marketing

Nature of Industrial Buying: Industrial Marketing Buy Phase in Industrial Buying * Buying is an organizational decision making process There are 8 Phases in Buying Decision Process * In Industrial market the buying decision making process observable sequential stages, understanding these phase helps developing appropriate selling strategy The Buying Decision of organization is influence by environmental factors, organizational factors, interpersonal factors and personal factors: Personal – e. g. Age, Education, Income, Personality, Risk Attitude, Culture . Inter-Personal – e. g. Interest, Authority, Status, Empathy, Persuasiveness * Organization – e. g.

Objective, Policies, Procedures, Organization Systems and Structure .Environment – e. g. Level of Demand, Economic Viewpoint, Technology Change, Political Development, Social Responsibility 8 Phases in Industrial Buying .Identify the problem – industrial marketers identify problems in buying organization and suggest how problem is? General need Description – once the problem is recognized next is to resolve the problem. For technical products, the technical.  Product Specification – developed a precise statement of the product or service, selecting right suppliers recommend. Suppliers Research – search of potential suppliers from vertical hubs, functional hubs, direct extra link to major suppliers ,trade Analyze Suppliers Proposal – once the qualified suppliers decided, the buying organization obtains the request for proposals.

Suppliers Selection – Evaluation of proposals of competing suppliers and select suppliers .Selection of Order And Routine – placing orders w/ selected suppliers, frequency of the order placement, levels of inventory follows. Performance Review – performance feedback of the suppliers take place and post purchase evaluation Organizational Purchase Situation. New Task – a Situation that the company is buying the item for the first time. The buying organization will typically have had little experience with the product or service. The risk involved is more, decisions may take longer time and top management is involved. Modified Re- Buy – This situation occurs when the organization is not satisfied with the performance of the existing suppliers.

Search information about alternative source of supply. The change I supplier is likely to include several representatives, including mid level management and evaluative criteria are analyzed.  Straight Re-Buy – Buying products or services continuously and purchases that are made in the past. Repeat orders with the supplier. The reordering process may be completely automated or done routinely by clerical personnel. Purchases are often handled under a contract and price or consistently the dominant evaluative criteria. Participants in the Business Buying Process

Participants in the organizational buying process play as many as seven different roles, namely those of initiator, influencer, approver, user, decider, buyer and gatekeeper Initiators – Recognize a problem or a need. The Initiator can be any individual in buying firm. * Influencers – Individuals influence the buying decision. Technical people such as quality control engineers, design engineers have considerable influence on purchase decision. Deciders – The actual buying decisions are made by the deciders. They are one or more individuals involved in the buying decision.

Senior executives may become deciders. Buyers – Buyers obtain quotations from suppliers, evaluate, negotiate, process purchase, orders, advance delivers and implement purchase policies.  Users – Users also play a role of initiators Individuals who use products or services Define specifications of needed products . Approvers – Approver endorse and agree to the purchase and also play a role of deciders * Gatekeeper – Gatekeepers control the flow of information regarding products and services and control the buying center Assistants or junior person of purchase managers

Key Members of Buying Center

• Top Management Executives
• Managing Director, Presidents, Vice President or General managers
• Approve purchase, decide guidelines and purchase policy
• Technical People
• Technical people are design engineers, production, quality control, R& D managers
• Specify products, technical evaluation, feedback on product supplied, negotiate with suppliers
• Purchase/Material Department Senior executives, junior levels, purchaser officers or assistants
• Coordinate with technical people, top management, accounts as well the suppliers or vendors
• Accounts/Finance for finalizing the financial approvals, mode of payment and insurance of bank guarantees
• Marketing Are the influencers in the buying process

Summary

The industrial marketing need to understand the purchasing objectives and purchasing activities of the industrial buyers. The industrial buyers are influenced by both purchasing objective of the firm and personal objectives. The industrial buyers are influenced by many factors, the major factors like environmental factors, organizational factors, interpersonal factors and personal factors.

There are 3 common types of buying situations including new task, modified re-buy and straight re-buy.  There are 8 phases of buying decision making process include Initiator, Influencer, Approver, User, Decider, Buyer and Gatekeeper. The industrial markets should identify the key members of buying centre in each buying decision.