A large share of the market for goods as well as services is accredited to organisational buyers as opposed to individual consumers. Organisational buyers include wholesalers, retailers, producers and institutions. They play key role in stimulating demand in the production chain (Palmer, 1999). However, organistional buyers who are charged with the responsibility of making buying decisions for their organisations, tend to be a bit sophisticated as compared to ordinary consumers.
They risk taking on a new, probably better supplier in terms of quality and prices, whose product or services has not been proven and could turn out to be risky (Palmer, 1999). The fear of running at a loss is what makes them more complicated as the risk could be greater compared to the possible benefits. They have to make decisions on what and whether to buy, as well as, the specifications to buy.
They also have to decide the quantity to buy and from which vendor or producer. Therefore, knowledge of the dynamics of organisational buyers is essential in identifying potential profitable market segments, as well as, locating buying influences which are very important in developing marketing strategies. These are important for reaching organisational buyers effectively through offering response to their needs.
Organisational buying process begins with problem identification. At this stage, managers recognize the need to buy a (new) product or to adopt a new technology to support the operations of the firm.
General description of the need then follows. Department managers work closely with the purchasing manager to establish the characteristics of the product or service needed in the organisation. An experienced manager/staff or the technical team helps the department manager undertake product specification by developing a detailed description of the required product or service.
The purchasing manager, department manager or both then identify several alternative suppliers who can provide the defined standards. In some cases, this would involve advertisement for tender or internet search for the available alternatives. In effect, alternative suppliers or proposals are reviewed and evaluated by the purchasing manager and other members of the decision-making unit.
The team identifies the most appropriate supplier in terms of quality and cost-effectiveness, as well as, other benefits. They therefore negotiate with the 2-3 finalists and a supplier is chosen. Thereafter, a delivery date is set up. The final stage involves reviewing the performance of the product as well as the support offered by the supplier. These stages form the basis for marketing a firm’s product.
This means that in order to achieve successful marketing of a firm’s product, the business marketer has to participate actively in the early stages of the potential buying company’s procurement process. The firm’s marketer/marketing department has to collect information on the problems that the buying organisation faces, identify specific requirements of the company, and present proposals to meet these requirements.
It is also important to understand organisational buyers’ motivation for buying merchandise or products. This means that marketers have to use end-chain means to achieve their marketing goals. It is essential to take into consideration a logical progression of outcome of the product adoption or use that could lead to the organisational buyers desired end benefit. In advertising, a marketer or firm has to explain the presumed desired end-states.
This could influence the perception of institutional buyers, producers, wholesalers, as well as, retailers. Palmer (1999) says that organisational buyers also think like individual consumers especially when making decision to purchase consumer goods. The business marketer or supplier has to understand the organisation’s strategies and its position of purchasing so as to succeed in developing business relationship with the firm.
Due to the nature of business-to-business markets, buying decisions is the role of an organisation’s decision-making unit. This unit is generally composed of several participants. According to Palmer (1999) buying processes have to be formalised to cover issues like quality specifications, payment terms, as well as, delivery schedules. It is therefore important to understand the various participants involved in the buying decision-making and how this could affect their purchasing decisions.
One major group is the managers or the authorisers. This group includes senior managers who are also the policy makers in the organisation. They make decisions on the type of product needed in the organisation. They also sign off the final decision.
This means that marketers or the firm has to make timely marketing of its product to this group or its influencers before they make their final decision. This is because once this is done, then it becomes almost impossible to sell competitor products to the firm. Influencers are those who have direct or indirect role in the buying decision-making process.
They include advisers and consultants. This implies that marketers or the supplier/vendor has to provide records of previous satisfied users of their product(s) or services, reference sites, as well as, case studies of where their product(s) or services have been previously used or adopted. This can possibly influence both the influencers and the other members of the decision making unit.
Organisations with proven track record usually have an advantage since their previous success evidence help reduce perceived risks. Another group that determines the direction of the buying decision-making is the specifiers. This group is responsible for making specifications on the type of product needed to achieve the desired goal. In other words, they are the technical experts in the company/department who are capable of translating the needs of the final user of the product into detailed specifications.
Since business-to-business marketing involves face-to-face communication, marketers or firms have to ensure that their personnel have technical understanding of their products. Marketing presentations have to be taken seriously since they can influence the decision of the technical specialists, managers and influencers. Marketers and firms can only be successful if their products meet the quality standards as defined by the technical team in the decision-making unit (Glazer, 1999).
Marketers also have to adopt strategies that enable them influence organisational purchasers and product users. Users may influence the decision-making process since they usually have first hand involvement as well as experience with the product. Advertisements targeted at creating awareness to users should also make them understand how appropriate the product is to their needs or consumption.
Advertisements should provide all the details and benefits of the product so as to influence the target audience, who are the users, to recommend the choice to organisational purchasers (McDonalds Corporation, 2008), who are also the organisational buyers.
According to Hutt and Speh (2009) buying decision makers may have well-defined specifications and criteria of what they require, but they may not be aware of suppliers or vendors who can best suit their needs.
This can result from limited information on the available alternatives as well as search engine capabilities. This implies that it is also important to advertise the supplier firm’s website and enhance the searching capabilities of potential customers.
It is worthy for marketers or firms to note that purchasers are not entirely responsible for buying the product. Although they may also influence buying decisions, they are majorly responsible for ordering products from suppliers as well as implementing the organisation’s buying policy (Webster & Wind, 1972).
Understanding organisational buying processes enables the business marketer to know that organisations’ purchasers will always handle straight rebuy from routinely selected list of approved vendors. This means that the marketer has to design strategies that reinforce buyer-seller relationship so as to meet the expectations of the buying organisation and be among the approved vendors. In addition, the marketer/supplier will only achieve straight rebuy by the buying organisation if it is responsive to the firms changing needs.
As an “out” supplier, the marketer has to understand the basic buying needs of the company (Hutt & Speh, 2009). This means that the selling organisation, especially its marketing department has to investing in market research. It has to convince the buying organisation’s purchasers/purchasing manager or the entire organisational buyers that their requirements need to be interpreted differently or that they need to change their purchasing requirements.
Thus, understanding organisational buying processes enables the marketer adopt strategies which help persuade the buying decision-making unit to re-examine alternative solutions/products, and as a result, revise their preferred list to include them as their new supplier.
Understanding organisational buying process helps maintain business relationship between the organisational buyer and the marketer/supplier. It allows the business marketer/marketing department to carefully monitor the changing trends and needs of organisations (Webster & Wind, 1972).
This makes the business marketer to be prepared to offer products or services required by new-task buyers. Monitoring the performance of the previously sold products to different organisations enables the business marketers to provide necessary support services which make it possible for them to achieve business relationship with the buying organisations. As a result, organisational buyers will make them their choice in their purchasing decision during routine problem solving.
The business marketer also develops other strategies of maintaining the relationship. Such strategies may include providing continuous update of what is available in the market and latest developments and trends in the market. By monitoring and adopting strategies that ensure repeat buys and encourage straight buy from the supplier, the business marketer has to ensure that no new technical advancements escape his or her knowledge (Webster & Wind, 1972).
The supplier or marketer has to provide the latest technologies available in the market to always keep the buying organisations satisfied. This helps make the marketer relevant to the company even when it is considering modifying its rebuy activities since it provides valuable additional information which they require while making alternative solutions.
The business marketer is able to adopt continuous market research to ensure that no new marketer offers better benefits than itself. Buying organisation may decide to modify its rebuy situation if another marketer offers better cost, quality, as well as, service improvements than the present supplier (Webster & Wind, 1972). Consequently, it is important to research on both the changing trends in the market, and that of the buying organisations.
Continuous monitoring and information gathering also helps the supplier or business marketer understand the expected changes in business processes/operations of organisations. Such information is crucial in offering product(s) or services which meet the organisational buying plans. According to Hutt and Speh (2009) political, legal, economic and technological changes could influence organisational buying behavior.
Therefore marketers have to be sensitive to selective economic shifts and how such factors affect buying behavior. Understanding the organisational buying behavior motivates the marketer to monitor signs of technological shifts in the organisations and in the market. This makes the marketer better prepared to adjust his/her marketing strategy which address the technological shift.
Understanding organisational buying processes, decision makers in the buying process as well as factors which influence organisational buying behavior is very important. It makes the marketer/supplier better prepared to meet the requirements of organisational buyers. It also helps develop buyer-seller relationship which is essential in achieving continuous supplying contract and market expansion.
Reference List
Glazer, R. (1999). Winning in smart markets. MIT Sloan Management Review, 40: 56-69.
Hutt, M. D, & Speh, T. W. (2009). Business marketing management: B2B. Mason, OH: Cengage Learning.
McDonalds Corporation. (2008). Marketing at McDonalds. Web.
Palmer, R. (1999). Understanding customers: The organisation. Management Quarterly, Part 4: 13-16.
Webster, F. E, & Wind, Y. (1972). Organisational buying behavior. Englewood Cliffs, New Jersey: Prentice Hall.