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Sunday, 30 September 2018

Characteristics of Organizational Buying Decision



In consideration the characteristics of organisational buying decision ,we will discuss the following:

1) Types of decision.

2) Vendor versus product selection.

3) Individual versus group decision.

4) Influence on the buying decision.

TYPES OF DECISION
  Organisational buying decisions are likely to differ by complexity. Organisational buying decisions are frequently classified into three types;

1) The Straight Re-buy; This is a recurring g purchasing requirement that can be handled on a routine basis. Little information search is required and vendors are selected from a pre specified list. This type of decision parallel to routinised purchase in final consumer behaviour.

2) The Modified Re-buy; This is also a recurring purchasing situation,but either the vendor alternative or product specifications have change,requiring some information search. Vendors who are on the buyer's supplier list,will try to change a straight re-buy to a modified re-buy. This type of decision is parallel to limited decision making.

3) The New Task; This a buying decision that has not occurs before. Since there is little past experience,extensive information search is required to identify alternative suppliers and develop proper product specifications. New task decisions are important because they may set the pattern for future re buy decisions. Particularly important  in this respect is the adoption of new products and innovations by the organisation. This type of decision parallel to complex decision making.

VENDOR VERSUS PRODUCT SELECTION

Industrial or organisational buying behaviour involves a decision regarding alternative supplier and a decision regarding product adoption. Frequently, the two are inter twined, by different criteria are used to select vendors (delivery, sales personnel, reliability) than to select products (price,quality,engineering specifications). The rational model of economic utility suggests that product specifications should determine vendor selection, most often,it is other way round vendor loyalty determines product choice. One study found that buyer narrow the choice to a few qualified vendors using criteria such as dependability and reliability. Product choice then takes place within this approved vendor list.

INDIVIDUAL VERSUS GROUP DECISIONS

Most decision involving selection of new suppliers or products are made by buying centers. Some may be made by individual purchasing agents, although individual decisions are more likely in a straight or modified re buy situation. Decision making by buying centers ,requires considering the different roles of members of the buying centers, different interpretation of objectives, interpersonal influences, relative power and need for some resolution of possible conflicts among members of the buying group. These factors are not as relevant as individual decisions.

INFLUENCES ON BUYING DECISIONS

There are four influences in any organisational buying decision.
1) The environment.
2) The organisation itself.
3) The buying group
4) The individual buyer.

(1) Environmental Factors; Industrial buyers are heavily influenced by factors in the current and expected economic environment, such as the level of demand for their product,the economic out look and the interest rate. In the recession economy,for instance, organisational buyers reduce their investment in plant equipments and inventories. I this case,marketers of industrial products can do little to stimulate total demand in this environment. They can only fight harder to increase their chance of demand.

Organisational buyers are also affected by technological, political,regulatory and competitive development in the environment. The industrial goods marketer has to monitor all of these forces, determine how they will affect buyers, and try to turn problems into opportunities.

(2) Organisational Factors; Each buying decision has specific objectives,policies,procedures,organisational structure and systems. The marketer should be particularly aware of the following organisational trends in the purchasing area, purchasing department,upgrading centralized purchasing, long term contracts, purchasing performance evaluation and buyers professional development.

(3) Interpersonal Factors; The buying center usually include several participants with different interests,authority, status empathy,and persuasiveness. The industrial marketers not likely to know what kind of group dynamics take place during the buying decision process although what ever information he can discover about the personalities and interpersonal factors would be useful.

(4) Individual Factors; Each participant in the buying process has personal motivations, perceptions and preferences. These are influenced by participant's age, income,job position,personality attitude towards risk and culture. Buyers definitely exhibit different styles.