INFLUENCES ON BUYING DECISIONS
Most organizational purchase decisions are influenced by the firmâ€™s external and internal variables. For example, the fiscal policy of the government has a direct influence on the organizational customerâ€™s decision to buy a product. The recent policy announcement of the government of India to reduce excise duty on consumer goods and the emergence of a strong middle class market in the country sent all companies either shopping for collaborations with major brands in the world market or diversifying or expanding their existing capacity. In either situation, demand for basic commodities like steel is going to increase in the future. Further, industrial buying will change, depending on whether the economy is going a boom or a recessionary phase.
There are four major variables influencing buyer decisions:
3. Interpersonal and
A very important determinant of organizational purchases is the environmental factor. This includes, besides economy and government policy, factors like competitive developments in the industry, rate of technological change and the value of money. For example, if the buyer perceives that the government is likely to increase taxation, which will increase the price of a crucial input, the buyer may resort to buying more material and holding its stock. Likewise, if the buyer anticipates new competition with better technology, he may not repeat his entire purchase order with the existing suppliers. To avoid such problems, both buyer and seller often end up with short-term or long-term buying arrangements.
The internal variables like culture and environment of an enterprise affects buying decisions. For example most of Indian family-owned firms have a centralized structure where purchase decisions often required the familyâ€™s consent. This can (and often does) delay purchases and sometimes even affect the firmâ€™s capability to compete in the market. As opposed to this, a decentralized structure allows for quicker decision. Further, even the purchases may be either centralized or decentralized at the departmental level. Policies like inventory holding policy is going to affect buying decision. Procedures like payment procedure or bidding procedure also influence buyerâ€™s decisions.
The buying centre usually involves several individuals with different formal authority, status and persuasiveness . The marketer needs to know who exerts the maximum authority and is able to persuade others to agree with his viewpoint. A knowledge of group dynamics helps the marketer evolve his strategy on selling to the buying centre.
Even though there are several individuals, organizational factors and environmental variables affecting buyersâ€™ decisions, at the end , it is a human decision involving the individual that matters. It is important that the marketer has the complete details of all individuals who are involved in the decision process. For personal factors like age, income, education, job position, etc. are likely to affect individual perception, motivation and preference.