Industrial buying behaviour

Introduction• Increase in economy results into creation of Demand for

industrial goods & services, new entrant in market , rise in competition

• Industrial buying different from consumer buying• Involves buying like machinery, packaging material &

services such as insurance, consultation & transportation • Commercial Buyers i.e buy to either produce something

new or resell or use for organizational purpose• refers to the buying activities of organizations that

purchase products and services for end-use purpose.• derived demand and not for direct consumption.• Few buyer of industrial goods• a lengthy process & decision of complex nature • Each organization evolves its own procedure for making

purchase decision• Greater risk & cost. also large participants in decision

making

Three important buying decision are 1.Authority to purchase2.Determine the product specification3.Choice of supplier Three types of industrial Buying situations:1.Straight Rebuy: Buying on routine basis Eg: stationery2.Modified Rebuy: Modify products specification, price, Eg: Spare parts, technology3.New Task: buying for the first time for a new task Eg: Plant, building, e

• Industrial products involves:1.Raw material2.Fabrication parts & material3.Installation of machinery4.Accessories equipment's5.Operating Suppliers

• Exchange process involves Products/ servicesInformationFinancial

Participants in buying process • Initiators: One who request that something is to

be purchased • Users: one who uses the product or service• Influencers: People who influence buying decision • Gatekeepers: People who have power to prevent

sellers or information from reaching members of buying centers.

Decision making process / Industrial buying decision process:

Recognition of need

Determining product specification / determining quality and quantity characteristics

Search for suppliers

Analysis of proposals

Selection of suppliers

Selection of an order routine

Post purchase evaluation

Decision-Making Units (DMUs) • What is a DMU?

• The decision making power in industrial buying is shared by few persons

jointly/ collectively and not by one individual.

• There exists multiple buying patterns and the decision makers are also large

in number. Joint authority or buying center is useful. Hence it results in

making wise decision and also protecting the interest of industrial

organization such authority is known as DMU.

• In industrial buying the decision making power is shared by people

collectively. DMU may be defined as all the individuals or groups who are

involved in the process of making a decision to purchase. Such individuals

are the participants who jointly results in making wise decision and protects

the interest of industrial organization.

•  

Participants Of DMU:• Actual users: The one who uses the product. He could be a foreman or

labour or the end user help define the product specifications.

• Influencer: May or may not be an end user but whose opinion would

influence the end users choice. Eg- consultant, technical personnel,

Provides information for evaluation of alternatives.

• Buyers: Buyer who makes actual purchase on behalf of the

organization. They have the formal authority to select the suppliers

and finalized terms of purchase. Selection of vendors and negotiating

transactions.

• Deciders: Actual decision to buy, considering economic and technical

factors while making a decision to buy. He finalizes i.e. from

purchasing agent or top management personnel.

• Gatekeeper: Individuals in the organization who keep a check on the

information flow within the organization that is shared. Eg- purchases

agents who don’t share information with sales personnel about the

decider

Factors influencing purchase decisions buying decisions• Individual factors

• Age • Income• Edu & job• Personality• Attitude• Interpersonal

Factors• Authority• Status• Empathy• Persuasiveness

• Economic Environment

• Level of demand• Economic outlook• Competition

• Organizational factors

• Obj /goals• Policies• Procedures• Systems• Structures

Different between Industrial & consumer Buying behavior BASIS Consumer Market Industrial markets

Market structure Geographical Dispense Geographical concentration

Buyers & seller Many Seller & many buyer

Few buyer & few seller

CompeStiton