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CB/U5 Topic 7 Organizational Buying situations & buying processes

Organizational Buying Decision Process:

Organizational buying behavior refers to the process of how companies or organizations buy goods and services. Organizational Buying is not an easy activity as most people think of it.

Following are the stages in the Organizational Buying process:

Stage 1 – Problem Recognition

The first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.

Stage 2 – General Need Description

At this stage of business buying Process Company describes the general characteristics and quantity of a needed item.

Stage 3 – Product Specification

At this stage of the business buying process buying organization decide on the product and specifies the best technical product characteristics for a needed item.

Stage 4 – Value Analysis

An approach to cost reduction, in which components are studied carefully to determine if they can be redesigned, standardized or made by less costly methods of production.

Stage 5 – Supplier Search

At this stage of the business buying process buyer tries to find the best vendors.

Stage 6 – Proposal Solicitation

The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.

Stage 7 – Supplier Selection

The stage of the business buying process in which the buyer reviews proposal and selects a supplier or suppliers.

Stage 8 – Order-Routine Specification

The stage of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.

Stage 9 – Performance Review

The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modifies or drops them.

Buying Situations

A buying situation relates to the circumstances surrounding a purchase that can be defined by the quality of information and experience that the buyer has concerning the products and vendors available, as well as the effort it will take to make the purchase decision.

Straight rebuy is the situation under which the buyers are engaging in the routine purchase of standard products from a familiar supplier where you don’t make any modifications from the most recent order.

A perfect example is ordering some boxes of copier paper, pens and pencils from your office supplier. It doesn’t take much effort except to confirm the sales order has been satisfied.

Modified rebuy is the situation where the purchaser is going to buy a similar product but there is a significant difference in the purchase from the previous purchase. The difference may include a change in the product specifications or a new supplier.

An example may be switching to a different type of software provided by a different vendor. This buying situation involves more effort because you are going to have to research product specifications and evaluate vendors, as well as possibly negotiate new contracts.

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