TOPIC 2 Business Buying Behavior. Course Learning Outcomes (CLO) :. CLO 1 : Describe Business Marketing, Business Buying Behaviour And Business Marketing Mix In Planning Marketing Strategy. (C2). 2.1 THE BUYING OBJECTIVES FOR BUSINESS MARKETING. INTRODUCTION.
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CLO 1 :
Describe Business Marketing, Business Buying Behaviour And Business Marketing Mix In Planning Marketing Strategy. (C2)
v) Supplier Relationship
vi) Personal objectives
The purchase/materials management objective is defined as buying the right items in the right quantity, at the right price, for delivery at the time and place. It is the management’s problem to define what is ‘right’ for each dimension.
The objective of purchasing function are briefly stated as follow :
Robinson, Faris and Wind develpoedeight phases of buying decision process in industrial market in 1967 and called the process Buyphases.
Buying is an organisational- decision making process. There are eight phases or stages in the buying decision process, indicating the logical sequence of activities.
There are three common types of buying situations, called buyclasses;
Example :When a machine is not working properly and downtime becomes unaceptable, the plant manager may write a memorandum to the chief executive officer or finance director asking for funds to purchase a new machine.The plant manager is playing the role of initiator.
Business marketers, after understanding the roles of the buying-center members, must identify the individuals and groups who are the members of buying center.
The emphasis in the buying center is on the organisational groups, that is, the functional areas, which participate in the buying decision process. These areas are explained in the following section.
1. For the following scenarios, comment on the buying situations and suggest appropriate strategies for these situations.
2.Identify the model of the organizational buying behavior that the company use.
Susan is a senior marketing manager of a five star hotel in Singapore. The hotel has a contract with an important Japanese customer which provides for suites for for the latter’s guests. One early morning (2 a.m) a guest of the Japanese company arrives at the hotel but was turned away by the front desk. All the suites were taken that morning. The Japanese guest had to carry his luggage himself to a neighbouring hotel to get a suite. A senior manager from the Japanese company called later that day to express outrage. They had booked a suite that day, but a hotel staff forgot to record the booking. They threatened to terminate the contract.
What should Susan do?
For example, in a recessionary economic condition, business firms minimise the quantity of item purchased. The environment factors influence the buying decisions of individual organisations.
The organisational variables include;
purchasing policies and procedures
degree of centralisation in purchasing
evaluation and reward system.
These variables particulary influence the composition and functioning of the buying centre, and also, the degree of centralisation or decentralisation in the purchasing function in the buying organisation.
The functioning of buying centre is influenced by the organisational variables, the environmental variables, and the individual variables. The output of the group decision making process of the buying centre includes solutions to the buying problems of the organisation and also the satisfaction of personal goals of individual members of the buying centre.
The strengths of the model, develop in 1972, are that it is comprehensive, generally applicable, analytical, and that it identifies many key variables which could be considered while developing marketing strategies by industrial marketers. However, the models is weak in explaining the specific of the variables.
Variables that determine if the buying decision is autonomous or joint.
-Type of purchase
(B) Company specific factors, including;
-degree of centralisation
Methods used for conflict resolution in joint-decision making process;
THE SETH MODEL OF INDUSTRIAL BUYING BEHAVIOR
ProfesorJagdish N Sheth developed the Sheth model in 1973. This model, emphasises the joint decision-making by two or more individuals, and the psychological aspects of the decision making individuals in the business buying behavior.
The model includes three components and situational factors, which determine the choice of a supplier ar a band in the buying decision making process in a organisation. The difference among the individual buyers expectations (Component 1) are caused by the factors;
The background of individuals
their information sources
satisfaction with past purchase
The background of individuals depend upon their education, role in the organisation, and life style. The factor perceptual distortion means the extent to which each individual participant modifies information to make it consitent with his existing belief and previous experience. It is difficult to measure perceptual distortion, although techniques such as factor analysis and perceptual mapping are available for this purpose.
In Component (3), in the model indicates the methods used for conflict resolution in joint-decision making process. Problem-solving and persuasion methods are used when there is an agreement about the organisational objective. If there is no such agreement, bargining takes places. Conflict about the style of decision making is resolved by politicking.
In Situation factors, can be varied like economic conditions, labour disputes, mergers and acquisitions.
The model does not explain their influence on the buying process.