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IndustrialIndustrialBuyingBuying

andand

BuyingBuyingBehaviour Behaviour

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Buying Center or DecisionMaking Unit (DMU)

Buying Center or Decision

Making Unit ( DMU )Consists of Those Peoplein the Organization who

are Directly or IndirectlyInvolved in the DecisionMaking Process

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Buying Center or DecisionMaking Unit (DMU)

Concept of Group DecisionMaking

Vertical InvolvementLateral InvolvementTask DifferentiationIntegrative ComplexityCentrality of DMU

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Communicating BenefitsCommunicating Benefits

Customer BenefitCustomer BenefitCompetitive PriceCompetitive Price

High QualityHigh Quality

JIT DeliveryJIT DeliveryWillingness for ChangesWillingness for Changes

Factory at 4 LocationsFactory at 4 Locations

EE-- CommerceCommerceCustomized ManufactureCustomized Manufacture

24/7 Response24/7 Response

SellerSeller

Buying CenterBuying CenterC F OC F O

F M/P M / ForemanF M/P M / Foreman

C E OC E OPurchase ManagerPurchase Manager

Marketing ManagerMarketing Manager

Logistics OfficerLogistics OfficerWarehouse ManagerWarehouse Manager

Maintenance Mgr.Maintenance Mgr.

BuyerBuyer

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W ebster and W ind Modelof Organizational Buying

Behaviour - A very Comprehensive Model

- Identifies many Key VariablesW hile Developing MarketingStrategies

Major Far-reaching Decisions are:1. Choice of Suppliers2. Make, Lease or Buy Decisions

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E nvironmental Variables

1. Physical

2. Technological

3. E conomic

4. Political

5. Legal6. Cultural

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E nvironmental Variables

7. Labour Unions

8. Cultural

9. Customer Demands

10. Competition

11. Supplier Information

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Organizational Variables

1. Organizational Objectives2. Organizational Goals3. Organizational Structure4. Purchasing Policies

and Procedures5. Degree of Centralization

in Purchasing6. E valuation and Reward

Systems

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E SI / E PI Programme

E arly Suppliers / PurchasingInvolvement Programme

a. Suppliers Involvement inDeveloping Design or Specification

b. Cross FunctionalDevelopment Teams

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E SI / E PI Programme

c. Selecting Right Suppliers asPartners

d. Recommending Alternativeson Sourcing / Training

e. Identifying Core Competenciesof the Company

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Buying Decision Process( Buy phases )

7. Selection of an Order Routine- Order Placement

- Frequency- Delivery- Payment Terms

8. Performance Feedback andPost Purchase E valuation

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W ho are Buyers

Business units:-1. Industrial distributors

2. OriginalE

quipmentManufacturer (O E M)3. User

Institutional unitsGovernmental unitsCooperative Societies

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Business units

1. Manufacturers2. Construction Firms3. Commercial establishments4. Transportation companies5. Service companies (hotels,

laundries and Recreationalenterprises)

6. Professional group

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Institutional Units

HospitalsE ducational Institutions,

Schools, Colleges,Universities

Research Stations

Prisons, W elfare Homes

Air Ports, Sea Ports

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Governmental units

Units of government may bedivided into

Departments of Central, stateand local governmentsAdministrative units

Armed Forces, Para MilitaryUnitsAid to Friendly Countries

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Buying Orientation

1. Lowest Price

2. Gain Power in the Market in

terms of USP and Product

Features3. Minimizing Risk

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Procurement Orientation

Collaborative Relationship

W orking Closely with other

functional areas

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Supply Chain Management

Deliver value to end user.

Outsource Non-core activities.

Support Collaborative

Relationship.

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Major Consideration for Purchase Decision

1. Consistency of Quality

2. Lowest price3. Time Saving

4. Assurance of Supply5. Suppliers Relationship

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Major Consideration for Purchase Decision

5. Service- Prompt and Accurate

Information from theSupplier - Application or Technical

Assistance- Spare Parts Availability- Repairs and Maintenance

Capability- Training, if Required

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Major Consideration for Purchase Decision

6. Personal Objectives- Job Security

- Salary, Increments- Social Considerations

* Friendship

* Personal Favour * Mutually Beneficial

Relationship