Organizational Buying Centre
A buying centre consists of all those individuals and groups that participate in the organizational decision making process while making a purchase for the organization. It is essential for a marketer to identify various individual and groups that are involved in the buying centre and understand various buying roles and influences that exist in an organization.
- Institutions – Schools, hospitals, research institutes, agricultural institutes etc.
- Government agencies – Municipal corporations, Public works department, police department etc.
- Public Sector organizations – g. (INDIA) Air India, BHEL, ONGC, BSNL
- Private Sector organizations –g. (INDIA) Tata Industries, Reliance industries, General Electric Company
- Wholesalers, Distributers, Retailers – g. (INDIA) Wal-Mart, Big Bazaar, Spencer, Shoppers stop
Buying Roles of Buying Centre members
- Initiators – The people who initiate the buying process. It may be the workers, top management or any technical, managerial or administrative department
- Users – The actual user or users of the product. For e.g. workers using computers, printer, machines, production department, technical personnel
- Influencers – Officials like purchase officer, production manager, engineer who influence the purchase decision
- Specifiers – Consultants, technicians or designers who state product specifications.
- Deciders – The committee, department or individual who makes the final selection of product
- Approvers – The person or group that approves the proposed action or decision. It may be the top management, Managing director or any departmental head
- Buyers – The person who has the formal authority to make a purchase on the behalf of the organization. He may also be the decider.
- Gate Keepers – People who control the flow of information within an organization. They disseminate or restrict information according to their own opinion in the organization. They may be at any level in an organization from a mail man to a member of the board of directors.
Buying Influences and Buying Centre
Selection of a Supplier
Factors that are considered by a buying centre while selecting a supplier are:
- Cost of product
- Reliability of delivery
- Quality of the product and after sale services
- Supplier`s reputation in the market
- Sample provided by the supplier
- Ability of the supplier to provide the product regularly
- Flexibility in dealing
- Credit policies
- Rejection Rate/No. of defects
- Relationship with the supplier
All the suppliers are evaluated against criteria based on the above factors and the most qualified supplier is selected.
Organizational Buying Situation
An organization demands a wide variety of products and services for its business operations such as:
- Raw Material – Agricultural products, Mineral Products, Livestock, Forest Products, Marine Products
- Machinery and equipment
- Small Components, Tools and Spare parts
- Power – fuel, water, electricity
- Services – Technical, Financial, Legal and Administrative Services
According to Robinson, Fari`s and Wind, there are three types of buying situations that organizations face. They are:
(1) Straight Rebuy Situation – It includes routine orders placed daily, weekly, monthly, quarterly or yearly with known suppliers for products and services such as raw materials, office supplies, financial services etc.
- It involves buying for a recurring need
- It requires little or no new information
- Buyers & sellers operate in a routine manner
- Need recognition and purchase are the only steps in the buying process
(2) Modified Rebuy Situation – As all business activities are affected by seasonal and cyclic fluctuations and changing demand and preference for its products which in turn affects its buying patterns. Industrial buyers modify their orders or completely change the order according to such internal and external environment changes.
- It involves re-evaluation of order, price or sellers in order to derive benefits or cope up with environmental changes
- It emphasizes on search and evaluation of suppliers
- Buyers go through a limited problem solving process
- Buyers have detailed information about product alternatives and develop a well-defined criteria for product selection
(3) New Buy or New task – When an item is bought for the first time, it is a new buying situation. The organizational buyers go again through the decision making process as the product has never been bought in the past.
- The problem or need is completely different from previous needs in case of a new task
- Buyers require a significant amount of information
- It emphasis on problem definition and development of product specifications
- Buyers go through an extensive problem solving process
Fisher identified two factors that affect buying situations i.e. product complexity, and commercial uncertainty and gave various characteristics of each factor –
On the basis of the above model he suggested four buying situations and gave the basis of purchase decision by industrial buyers under each situation: