Buying process in the business organizations


Who buys the trillions of dollars’ worth of goods and services needed by business organizations? Purchasing agents are influential in straight re-buy and modified re-buy situations whereas other department personnel are more influential in new-buy situations. Engineering personnel usually have a major influence in selecting product components, and purchasing agents dominate in selecting suppliers.

The Buying Center:

Webster and Wind call the decision-making unit of a buying organization the ‘buying center’. It is composed of all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decision. The buying center includes all members of the organization who play any of the seven roles in the purchase decision process.

1. Initiators: Those who request that something to be purchased. They may be users or others in the organization.

2. Users: Those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements.

3. Influencers: People who influence the buying decision. They often help define specifications and also provide information for evaluating alternatives. Technical personnel are particularly important influencers.

4. Deciders: People who decide on product requirements or on suppliers.

5. Approvers: People who authorize the proposed actions of deciders or buyers.

6. Buyers: People who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. In more complex purchase, the buyers might include high-level managers.

7. Gatekeepers: People who have the power to prevent sellers or information from reaching members of the buying center. For example, purchasing agents, receptionists and telephone operators may prevent salespersons from contacting users or deciders.

Several individuals can occupy a given role (e.g. there may be many users or influencers), and an individual may occupy multiple roles. A purchasing manager, for example, often occupies the roles of buyer, influencer, and gatekeeper simultaneously. He or she can determine which sales reps can call on other people in the organization; what budget and other constraints to place on the purchase; and which firm will actually get the business, even though deciders might select two or more potential vendors who can meet the company’s requirements.

The typical buying center has a minimum of five or six members and often has dozens. The buying center may include people outside the target customer organization, such as government officials, consultants, technical advisors, and other members of the marketing channel.

Buying Center Influences:

Buying centers usually include several participants with differing interest, authority, status, and persuasiveness. Each member of the buying center is likely to give priority to very different decision criteria. For example, engineering personnel may be concerned primarily with maximizing the actual performance of the product; production personnel may be concerned mainly with ease of use and reliability of supply; financial personnel may focus on the economies of the purchase; purchasing may be concerned with operating and replacement costs; union officials may emphasize safety issues, and so on.

Business buyers also respond to many influences when they make their decisions. Each buyer has personal motivations, perceptions, and preferences, which are influenced by the buyer’s age, income, education, job position, personality, attitudes towards risk, and culture. Buyers definitely exhibit different styles. There are “keep it simple� buyers, “own expert� buyers “want-the-best� buyers and “want-everything-done� buyers. Some younger, highly educated buyers are computer experts who conduct rigorous analyses of competitive proposals before choosing a supplier. Other buyers are “toughies� from the old school and pit the competing sellers against one another.

Webster cautions that ultimately, individuals, not organizations, make purchasing decision. Individuals are motivated by their own needs and perceptions in attempting to maximize the rewards (pay, advancement, recognition, and feelings of achievement) offered by the organization. Personal needs “motivate� the behavior of individuals but organizational needs “legitimate� the buying decision process and its outcomes.

People are not buying “products�. They are buying solutions to two problems: the organization’s economic and strategic problem and their own personal “problem� of obtaining individual achievement and reward. In this sense, industrial buying decision are both “rational� and “emotional,� as they serve both the organization and the individual needs.