Organizational Buying Behaviour

16th March 2023 1 By indiafreenotes

Organizational buying behavior refers to the process by which organizations make purchasing decisions. It involves a series of stages, starting from problem identification, followed by information search, evaluation of alternatives, purchase decision, and post-purchase evaluation. Understanding organizational buying behavior is essential for businesses that market products and services to other businesses, as it allows them to develop effective marketing strategies and tailor their offerings to meet the specific needs of their target customers.

Elements of organizational buying behavior include:

  • Decision-making units: Organizational buying behavior typically involves a group of decision-makers, rather than a single individual. This group may include people from different departments or functional areas of the organization, and each person may have a different role or influence in the decision-making process.
  • Buying center: The group of decision-makers involved in organizational buying behavior is often referred to as the buying center. The buying center may include initiators (who identify the need for the product or service), users (who will use the product or service), influencers (who have an impact on the decision), and decision-makers (who make the final decision).
  • Rational decision-making: Organizational buying behavior is often based on a rational decision-making process. This means that decision-makers will typically consider a range of factors, such as cost, quality, delivery time, and after-sales service, in order to make an informed decision.
  • Relationship building: Relationship building is often an important part of organizational buying behavior. This involves developing long-term relationships with suppliers and vendors in order to secure favorable pricing, terms, and conditions, as well as ongoing support and service.
  • Supplier evaluation: Organizations will often evaluate potential suppliers based on a range of criteria, including price, quality, delivery times, and after-sales service. This evaluation process is often rigorous and may involve requests for proposals (RFPs), supplier audits, and other types of assessments.
  • Negotiation: Negotiation is often an important part of the organizational buying process. This may involve negotiating on price, terms and conditions, or other aspects of the agreement. Effective negotiation requires a good understanding of the needs and preferences of both parties, as well as the ability to build trust and find mutually beneficial solutions.

Organizational Buying Behaviour steps

Organizational buying behavior typically involves several steps, which can be summarized as follows:

  • Problem Recognition: The first step in the organizational buying process is recognizing a problem or need. This may arise from internal factors, such as a need to replace or upgrade existing equipment, or external factors, such as changes in the market or regulatory environment.
  • Information Search: Once a problem has been identified, the next step is to gather information about potential solutions. This may involve searching for information internally, such as consulting with colleagues or reviewing existing data, or externally, such as conducting research online, attending trade shows or conferences, or consulting with vendors or suppliers.
  • Evaluation of Alternatives: After gathering information, the buying center will evaluate different alternatives. This may involve developing a list of potential suppliers or vendors, and then assessing each option based on criteria such as price, quality, delivery times, after-sales service, and other factors that are important to the organization.
  • Purchase Decision: Once the evaluation of alternatives is complete, the buying center will make a purchase decision. This may involve negotiating with suppliers or vendors on price and other terms and conditions, as well as obtaining approval from higher-level executives or stakeholders.
  • Post-Purchase Evaluation: After the purchase is made, the buying center will evaluate the performance of the product or service, as well as the performance of the supplier or vendor. This may involve assessing factors such as delivery times, quality, after-sales service, and overall satisfaction with the purchase.