Slide 1The Consumer Buying Decision ProcessOrganizational BuyingThe Buying CenterMajor Differences, Organization Buying vs. Consumer BuyingSteps in the Buying Decision ProcessIntricacies of the Buying Decision ProcessStages in the Process Flow Model of the Buying Decision Process: Definition StageStages in the Process Flow Model of the Buying Decision Process: Selection StageStages in the Process Flow Model of the Buying Decision Process: Deliver Solution StageStages in the Process Flow Model of the Buying Decision Process: End Game StageStage 1: Problem RecognitionStage 2: Vendor SelectionStage 3: Solution DeliveryStage 4: End GameOrganization and Individuals Needs in the Buying Decision ProcessBuying Decision EvolutionMore Buying Decision EvolutionVariability of Rational BuyingSlide 20Value ImageIntroductionAlternative Channels of DistributionSlide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35The E-ChannelSlide 37Slide 38Slide 39Slide 4012002 EditionVitale and GiglieranoChapter 3Organizational Buying and Buyer BehaviorPrepared by John T. Drea, Western Illinois University2The Consumer Buying Decision ProcessNeed RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase BehaviorInvolvement influences whether some steps are de-emphasized or extended.This is more of a simultaneous than a sequential process.3Organizational Buying•Organizational buying involves many inputs from professional specialists within the organization.•The organization relies on inputs from decision makers and influencers (“stakeholders”) to satisfy the diverse set of needs within the organization.•This requires communication among stakeholders in the buying organization.4The Buying Center Internal FactorsTechnology AccountingManagement MarketingLegal Production/Mfg.Finance ServiceExternal FactorsCustomer needs and buying behaviorGovernment agenciesIndependent standards-setting organizationsVarious Publics5Major Differences, Organization Buying vs. Consumer Buying•Organizational buying involves more buyers – more decision makers or contributors to portions of the decisions.•Participants (stakeholders) in the buying center are driven by the specific needs of their professional responsibilities.•Different types of decisions are often occurring simultaneously in the process, spread throughout the buying organization.6Steps in the Buying Decision Process1. Problem recognition2. General need description3. Product specification4. Supplier/Source search8. Evaluate performance7. Make the transaction routine6. Selection5. Proposal Solicitation7Intricacies of the Buying Decision ProcessIndividual roles and personal needsInteraction createsfluidity (people w/inthe buying centerinteract)The buying process is simultaneous, notsequentialRelationshipsand loyaltyThree kinds of needs:1. Need for product benefits2. Individual needs w/in buying center3. Buying center member’s personal needsCluster of stakeholders’ values8Stages in the Process Flow Model of the Buying Decision Process: Definition Stage•Process Flow Stages–Problem definition–Solution definition–Problem specification•Buying Decision Process Steps–Problem recognition–General need description–Problem specification9Stages in the Process Flow Model of the Buying Decision Process: Selection Stage•Process Flow Stages–Solution provider search–Acquire solution provider(s)•Buying Decision Process Steps–Supplier/Source search–Proposal solicitation–Contract for supplier(s)10Stages in the Process Flow Model of the Buying Decision Process: Deliver Solution Stage•Process Flow Stages–Customize as needed–Install/Test/Train•Buying Decision Process Steps–Make the transaction routine11Stages in the Process Flow Model of the Buying Decision Process: End Game Stage•Process Flow Stages–Operate solution–Reach end result–Evaluate outcomes–Determine next set of needs•Buying Decision Process Steps–Evaluate outcomes–Resell the job12Stage 1: Problem RecognitionNew TaskNew TaskA buying situation that has not been previously faced by the organization.•Significantly steep learning curve, organization seeks many sources of information.ModifiedRebuyModifiedRebuyStraightRebuyStraightRebuyA routine buying situation with established solutions.•Abbreviated steps in the process, fewer people in the buying center, less time to completion.A buying situation that is somewhat similar to past problems/solutions•Examines alternatives within a limited scope, involves fewer people than a new task situation and more than a straight rebuy.13Stage 2: Vendor Selection•RFQ = Request for Quotation–Usually associated with that which can be thoroughly and quantitatively defined•RFP = Request for Proposal–Usually defined by a set of specifications that have more flexibility regarding the final form of the offering•For government purchases, RFP/RFQ are often published in a specified outlet.14Stage 3: Solution Delivery•Often takes longer than definition and selection combined.•Stage ends when delivery is complete and approved by the buyer.•Involves merging the logistics of the buyer with the logistics of the customer.15Stage 4: End Game•Buying organizations frequently formally evaluate purchase outcomes in terms of areas like–Market share–Position–Market ownership–Profitability•Individual buying center members also may evaluate the purchase, the purchase process, and the supplier.16Organization and Individuals Needs in the Buying Decision ProcessSteps in FlowDefine problemDefine solutionAcquire providerDevelop solutionInstall, test, trainOperate solutionEnd resultEvaluation outcomesOrganizational NeedsClear, concise, tractableAppropriate, affordableChoice, speed,Speed, easy useEase of integration, speedUser friendlyEffective, low costInformationIndividual NeedsInformation & timeDesign assistanceInformation, assuranceExecution helpKnowledge, comfortEasy to maintainRecognitionCommunication, reward17Buying Decision Evolution18More Buying Decision Evolution19Variability of Rational BuyingHuman FactorsHuman Factors•Objective means are used to narrow choices.•Suppliers who recognize cultural/relationship needs of the organization become the “in” supplier.•A review of facts is often done because it is culturally acceptable.•Facts can be arranged to justify the decisions that individuals want to make•People seek