Industrial Buying Behaviour

Factors Influencing Industrial Buying Behaviour

Table of Contents:-

There are four broad categories of factors that influence industrial buying behaviour:

1) Environmental Factors

Seven environmental factors influence organisational buyers:

i) Physical

The physical environment includes such factors as the climate and geographical location of the organisation and can affect the behaviour of organisational members and determine the constraints and options for the buying organisation. A supplier’s geographical location, for example, is an important consideration in whether it is chosen or not. Many companies prefer local suppliers and in the international sphere, many shoppers prefer to use domestic suppliers where possible.

ii) Technological

The level of technological development defines what types of goods and services are available to the organisational buyer.

iii) Economic

The economic environment for the buying organisation is affected by price and wage conditions, money and credit availability, consumer demand, and levels of inventory in key organisational sectors, these sorts of factors will determine the availability of goods and services, the ability of buyers to finance purchases, and what price will be paid.

iv) Political

The political influence could include such factors as country trade agreements, tariff barriers, lobbying activities, defence spending, government assistance to certain organisational or companies, and government attitude toward business generally.

Local, state, and federal legal and regulatory environments influence buying activities which take place. Government regulation sets standards for what must be bought to be included in products (for example, auto and lawnmower safety equipment). Terms of sale and conditions of competition are also enforced by legal means on all the organisational buyers.

vi) Ethical

The ethical environment is of major importance in the buyer-salesperson relationship. Shoppers and salespeople must exhibit ethical behaviour if they are to be accepted as professionals. Thus, each group needs to know what is considered to be ethical and unethical behaviour.

vii) Cultural

Culture establishes values that are shared by members and which influence their buying behaviour. Large organisations, too, have developed their own corporate culture, which differs in its values, norms, habits, traditions, and customs. The nature of these differing values, styles, and behaviours may be evident in the organisation’s buying behaviour.

2) Organisational Factors

Because organisational buying occurs within the framework of a formal organisation, the organisation’s objectives, policies, procedures, structure, and systems of rewards, authority, status, and communication will all have a significant influence on every factor of the buying decision process.

i) Tasks

The buying task is performed by the organisation to accomplish its objectives. These tasks may be classified in different ways such as by purpose, level of expenditure, type of good or service purchased, the extent to which the process is routine or not, and the extent to which responsibility for purchasing is centralised or decentralised.

ii) Structure

The buying structure of the organisation affects the purchasing process. Organisations have a formal and informal organisation structure. The organisational chart illustrates the formal relationships between people in the organisation. Informal relationships and communication patterns may be entirely different, however, from the formal structure. Marketers must understand both the formal and informal organisation to effectively sell to a buyer.

iii) Technology

Technology may influence not only what is bought but also the buying decision process itself. While manual systems for directing and controlling the buying process are widespread in the industry. computerisation is rapidly taking over. Marketing success requires an understanding of the organisation’s technology so that any new product or service fits into the system which is already in place.

iv) People

The people in the organisation who are involved in the purchasing situation will be a major determinant of the organisational buying process. These people are interdependent and interact with each other to influence fellows’ buying behaviour. The marketer’s task is to identify those within the organisation with responsibility and authority for buying decisions to persuade them to purchase.

3) Interpersonal Factors

The interaction between only two people or a larger number is a significant influence on organisational buying decisions. The influence of one person on another is what is meant by interpersonal influence.

i) The Buying Centre and its Roles

The buying centre is comprised of those people in the organisation who interact during the buying decision process. The buying centre usually involves several people with different formal authority, status and persuasiveness. The marketer needs to know who exerts the maximum authority and ability to persuade others to agree with his viewpoint. Knowledge of group dynamics helps the marketer evolve his strategy for selling to the buying centre.

ii) Power Relationships

The marketer must be careful to accurately assess the role and power relationships that may exist in a buying centre. Purchasing agents perceive themselves to have a higher level of involvement in buying decisions than other executives. Thus, the true locus of power in an organisational buying decision must be understood by the vendor.

4) Individual Factors

Participants in the organisational buying process bring to the situation their thoughts, feelings, and actions. These psychological factors are very relevant.

i) Motivation

Motivations of buying-centre members are difficult to assess accurately. They have generally been categorised into task-related and no task-related motives. Task-related motives include such needs as product quality, price, service, and delivery, or getting the “right” product for the “right” price at the “right” time from the “right” source. These pertain to the problems leading to the buying decisions.

No task-related motives include such variables as the potential for promotion, salary increases, more job security, and so forth. Generally, these pertain to the individual’s advancement, recognition, and desire to reduce uncertainty or risk.

ii) Perception

Individuals receive and interpret stimuli and organise them into a coherent picture of their world. Organisational buying-centre members’ perceptions are important to marketers’ development of effective strategies. Two dimensions of the element are significant: perceptions of the selling company’s products and people, and perceptions of their role in the buying centre decision process.

iii) Learning

Learning is another variable strongly influencing the individual in the organisational buying process. Learning occurs as customers make decisions that are satisfactory and this reinforcement increases their tendency to make the same decision in future similar situations. The continual reinforcement of a decision leads to a habit, which is a fairly automatic response.

By Arya