E.ANAND, LECTURER, BIET-MBA, DAVANGERE

BUYING CENTRE CONCEPT

BUYING CENTRE ROLESBuying centre consists of people in the organization who are involved either consciously or unconsciously in the buying process.Roles of Buying CentreInitiatorUserDeciderInfluencerBuyerGatekeeper

INITIATOR - Initiator is a person who recognizes that the company has a problem or requirement. Internal or External. External initiator is the salesperson or the selling company. Internal initiator can be many like users.

USERS - The users inside the company mostly initiate the buying process and will act, mostly, as DECIDERS

DECIDERS - These people exert pressure in deciding a specific supplier

INFLUENCER - These are people who are affected by purchaser in their own way and accordingly influence a particular supplier

BUYER - These are usually purchasing people. These are the people whose formal task is to select a supplier and arrange the terms of a deal

GATEKEEPER - These are the people who have control over the information regarding purchase. Usually Purchasing Manager is the first point of contact for a any business salesperson. All the information has to be given to this person and thus he is the Gatekeeper.

CREEPING COMMITMENT - Situation where decision making process “involves a sequence of incremental choices, each of which eliminates certain alternative solutions (or vendors) for further consideration”

Sewing m/c purchaseINFLUENCER

Requirement Top Mgmt

Tailor Supervisor Maintenance Mgr Buyer

Price ✔ ✔

Speed & Technology

✔ ✔ ✔

Output/day ✔ ✔ ✔

Ease of Maintenance

✔ ✔

Set-up time ✔ ✔

Ease of Operation

✔ ✔ ✔

FLOWCHART FOR BUYCLASSES

BUYING CENTRE INTERACTION PATTERNS

VERTICAL INVOLVEMENT - No. of levels in hierarchy involved

LATERAL INVOLVEMENT - No. of departments involved

EXTENSIVITY - No. of people in buying centre

CONNECTEDNESS - Communication amongst buying centre members

BUYING CENTRE INTERACTION PATTERNS

VERTICAL INVOLVEMENT - No. of levels in hierarchy involved

LATERAL INVOLVEMENT - No. of departments involved

EXTENSIVITY - No. of people in buying centre

CONNECTEDNESS - Communication amongst buying centre members

FACTORS AFFECTING BUYING DECISIONS

Environmental Factors

Physical, Economic, Technological, Legal, Political, Cultural

Organizational Factors

Technology, Goals & Tasks, Actors, Structure

Buying Centre Factors

Roles, Resources

Individual Factors Status, Politics and ethics

ENVIRONMENTAL FACTORS

PHYSICAL ENVIRONMENT - Geographical spread of firm’s suppliers and customers will affect the buying behavior

ECONOMIC ENVIRONMENT - It is the general situation of economy - growth or recession?, interest rates, tax cuts...

TECHNOLOGICAL ENVIRONMENT - It is the current technological advancements happening in particular industry and also the rate of technological change

LEGAL & POLITICAL ENVIRONMENT - The way in which government regulations affect certain purchasing activities

CULTURAL ENVIRONMENT - The way in which cultural differences affect buying decision

ORGANIZATIONAL FACTORS

TECHNOLOGY - The buying depends on whether the supplier has the capability to produce the product/service as per their needs. “Make To Print” - Blueprint will be given to supplier and supplier just has to manufacture. Whether to “make or buy” will depend on the companies willingness to share the information with supplier as well as the cost attached to it.

GOALS & TASKS - Frequently changing suppliers ie.short term commitment (American style) or long term commitment with suppliers (Japanese style)

ACTORS - How motivated are employees of buying company towards particular purchase activity or towards fulfilling the organizational goals.

ORGANIZATIONAL FACTORS

ACTORS - How motivated are employees of buying company towards particular purchase activity or towards fulfilling the organizational goals.

STRUCTURE - Whether purchasing is decentralized or centralized activity? Salesman has to plan his visits accordingly.

INDIVIDUAL FACTORS

BUYER’S STATUS - Where is purchasing officer or buyer placed in hierarchy of the organization?. Buyers are just like consumers because they know less technically about a purchase of certain technological product and in that way sometimes it becomes beneficial to the org. and the buyer.

ORGANIZATIONAL POLITICS - In exerting their influence. “Bend the rules” to show their power or to return a favor. Salemen can take advantage of some of these situations.

ETHICS - The individual motivations of buyer also sometimes/many times affect a particular purchase.

PSYCHOLOGICAL FACTORS INFLUENCING INDIVIDUAL DECISION MAKINGDIFFERENCES IN ROLE ORIENTATION - Whether the purchase is influenced by Buyer or the Design Engineer

DIFFERENCES IN INFORMATION EXPOSURE - Buyer is definitely exposed to vast knowledge about some purchase than an engineer who is biased due to cognition process of SELECTIVE DISTORTION AND RETENTION.

PERCEIVED RISK IN VENDOR SELECTION PROCESS -

• NEED UNCERTAINTY

• MARKET UNCERTAINTY

• TRANSACTION UNCERTAINTY

PURCHASING’S INFLUENCE ON BUYER BEHAVIOR

60% of total spend is on purchasing materials, capital assets or services

MRP or SAP

JIT

Buyer Technology

Centralized Purchasing

CONFLICT RESOLUTION

Compromising

Collaborating

Accommodating

Competing

Avoiding Party’s attempt to satisfy other’s concern

Par

ty’s

att

empt

to s

atis

fy

own

conc

ern

POWER IN CONFLICT RESOLUTION

Reward Power - Do this and you will get this (usually monetary)

Coercive Power - Usually physical threats or sanctions or punishment or strikes etc..

Legitimate Power - This they get due to their position or authority

Referent Power - This is the power of being treated like celebrity

Expert Power - This is power due to one’s skill or knowledge