INDUSTRIAL BUYING BEHAVIOUR Meaning, Characteristics, Buying Centres

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Industrial Buying Behaviour

The business buyers (also referred to as the producer/ manufacturer/ organisational /industrial buyers) consist of all the individuals or organisations who acquire goods and services that enter into the production of other products or services that are rented, sold, or supplied to others.

Industrial Buying Behaviour Meaning

Industrial buying can be defined as the decision making process by which formal organisations establish the need to purchase products and services and identify, evaluate, and choose among alternative brands and suppliers. Although no two companies buy in the same way, the seller hopes to identify clusters of business firms that buy in similar ways to permit marketing targets and strategies.

Developing effective marketing strategies to reach organisational buyers rests on the organisational marketers working towards understanding the nature of organisational buying. This entails knowledge of the different types of buying situations that organisations encounter, the process that organisational buyers go through in reaching purchasing decisions, and how those decisions are affected by different members of the firm & the criteria they apply in making purchasing decisions. 

In making decisions, purchasing managermust coordinate with numerous people with diverse organisational responsibilities who apply different criteria to purchasing decisions.

Organisational marketing is characterised by complex interaction processes both within the marketing and purchasing companies and between these companies. Financial and technological dependencies are generally more pronounced in organisational buyer-seller relations than in consumer markets. 

This tends to increase both the time dimension and involvement of the exchange process. The understanding of this typically multi-phased and multi-objective process is essential for effective purchase planning, and supplier negotiations, as well as for designing organisational marketing programs.

The organisational buyers have a derived demand and a homogenous mix as compared to consumers, divided on the geographical area and are more complex to deal with since there is more than one decision-maker involved.

Characteristics of Industrial Buying

The characteristics of industrial buying behaviour are as follows :

1) Multiperson Buying Activity: A large number of buying situations in industries or organisations (manufacturing, government, hospitals, and educational institutions) would involve many persons. These persons may be from different functions (production, purchase, design, maintenance), and may have different levels within buying organisation (Managing Director, General Manager, Material Manager). 

Further, persons in a buying concept appear to play different roles over the entire buying decision exercise. The concept of the buying centre is the grand conceptualisation of various roles of different members.

2) Formal Activity: Irrespective of the rupee value of technical complexities of products and services, buying activities have to conform to the formal process and procedures of an organisation. Even for emergencies, a typical organisation would have a set of policies, and the suppliers must be aware of these. Additionally, all buying decisions are finally converted into formal contracts between buyers and suppliers.

3) Longer Time Lag between Efforts and Results: Due to multiperson and a formal activity, the organisation’s buying decisions take typically longer time. This leads to greater time lags between the application of the market effort and obtaining the buying response. A marketer may design unrealistic plans if he is not aware of the response time of his customer for various buying situations.

4) Rational but also Emotional Activity: Despite a formal activity following rational criteria of evaluation, organisational buying cannot be devoid of the emotional (or irrational) aspects. This is because it involves human beings in buying decisions. These human considerations are likely to play a vital role in situations of almost similar alternatives like buying commodities, raw materials, standard products and components.

5) Uniqueness of Organisations: Despite the above common characteristics, no two organisations would be similar in their buying behaviour and decisions. These differences would be due to the nature of buying problems, resources, objectives,  capabilities and so on. It is therefore important to consider each organisation as a separate segment at the level of selling.

Buying Centers

A buying centre includes all those persons in an organisation who become involved in the purchase decision. Membership and influence differ from company to company. 

For example, in engineering-dominated firms like Bell Helicopter, the buying centre may consist almost entirely of engineers. In marketing-oriented companies like Toyota and IBM, marketing and engineering have almost equal authority. 

In consumer goods, firms like Procter & Gamble, product managers and other marketing decision-makers may dominate the buying centre. In a small manufacturing organisation, almost everyone may be a member.

A buying centre of an organisation has the following seven members  who play these roles:

1) Initiators: Usually, the need for a product or item and in turn, a supplier arises from the users. But there can be occasions when the maintenance, top management, engineering department or any such recognise, feel the need. Individuals who “initiate” or start the buying process are called initiators.

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2) Users: Under this category, users of various products come. If they are technically strong like the R&D, engineering can also communicate well. They play an important role in the buying process. They also work as initiators.

3) Buyers: They are individuals who have formal authority to select the supplier and arrange the purchase terms. They play a very important role in selecting vendors, negotiating and sometimes helping to shape product specifications. The major roles or responsibilities of buyers are obtaining proposals or quotes, evaluating and selecting the supplier, negotiating the terms and conditions, issuing purchase orders, follow-up and keeping track of deliveries.

4) Influencers: Technical personnel, experts, consultants and qualified engineers play the role of influencers by drawing specifications of products.

5) Deciders: Among the members, the marketing person must be aware of the deciders in the organisation, try to reach them and maintain contact with them. People who decide on product requirements,  specifications and suppliers are deciders.

6) Approvers: Individuals who authorise the proposed actions of deciders or buyers are approvers. They can also be personnel from top management or the finance department or the users. 

7) Gatekeepers: A gatekeeper is like a filter of information. He controls the flow of information from the marketer to the decision-maker.

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