“Knowledge of the Process That Organisational Buyers Follow in Making Purchasing Decisions Is Fundamental to Responsive Business Marketing Strategy.”
“Knowledge of the process that organisational buyers follow in making purchasing decisions is fundamental to responsive business marketing strategy. ” INTRODUCTION In today’s globalised and forever changing world of business, different organisations around the world are finding it very difficult not only to compete but also to be managed efficiently and effectively by management. The world of business is very volatile and forever unpredictable and this is caused by changing and difficult forces, both within the organisations and surrounding the organisations either directly or indirectly .
These rapidly changing forces affects organisations as well as the organisational buying process. The organisational buying process explains the time at which a need arises for product or service to the final purchase decision of acquiring the product or service. Wind & Thomas (2001, p. 239) suggested that the organisational buying process and the composition of the buying center tend to vary depending on two sets of factors: the buying situation (whether the purchase is a new task, a modified re buy, or straight re buys) and the idiosyncratic personal, interpersonal, organisational and environmental conditions.
“Knowledge of the Process That Organisational Buyers Follow in Making Purchasing Decisions Is Fundamental to Responsive Business Marketing Strategy.” Essay Example
Marketing teacher. com suggested that complex forces that encircle the organisational buying process are environmental forces, organisational forces, group forces and individual forces. Knowledge of the process that organisational buyers follow in making purchasing decisions is fundamental to responsive business marketing strategy because as marketers come up with relevant and appropriate strategies they must first understand a certain process which very vital and it is called the organizational buying process and it consists of 8 major steps which will be discussed fully shortly.
According to (Wind & Thomas, 2001) the first step is recognizing the need which is normally from within the organization and it is a step where by a problem is identified for example if the company wants to buy new and better technology to enhance their performance. The second step is the general description of need and in this stage the organization will determine the standard of quality they want and also performance specifications which will be followed by development of detailed specifications, in this step the organization will carefully do a systematic ppraisal of the design, quality and performance requirement, they will also set the buying criteria of that particular technology they want. The fourth stage would then be a search for a qualified supplier which involves selecting the names of the vendors and normally vendor analysis is performed in terms of costs, reliability and JIT operations (just in time operations). The fifth step is acquisition and analysis of proposals which is all about requests for specific proposals made to qualified vendors e. the organization will now consider giving different suppliers a chance to submit their proposals on how much they demand and the type of technology they would deliver. The sixth stage is the evaluation of proposals and selection of suppliers and in this step various proposals will be weighed and analyzed before negations can be held on prices, delivery and long term commitment of the two parties. The seventh step involves selection of an order procedure which is all about an agreement between sellers and buyers and then orders will be forwarded to the agreed vendor.
Then last step is performance, feedback and evaluation, this step involves a determination by the user department as to whether the purchase item has solved the original problem for example after the vendor supplies the requested technology equipment the organization will asses if it has improved the productivity level in the organization. Then they would evaluate if the problem has been solved which was identified in the first step, if not then this would mean that the organization will have to re design the strategies again.
Organizational purchases demand more or less attention according to their nature. The purchasing approach for each type of product can vary according to the buying situation. The three major types of organizational buying situations include the new task, straight re-buy and modified re-buy. ENVIRONMENTAL FORCES The environmental forces that encircle the organisational buying process include economic factors, political factors, technological factors as well as cultural factors. Economic factors are macroeconomic issues which includes rising interest rates, inflation and sky rocking fuel prices (Palmer, A. 000). This is by far the most recent unpredictable force that encircles all organisations, because all organisations operate in these economic conditions both nationally and internationally. Rising and unpredictable inflation and interest rates around the world have created major uncertainty about future transactions. This have major influence on the organisational buying process which is responsible for buying products or services for future use, the buying center is uncertain about the cost of products or services.
For example the department of South African Defense Force might what to buy new war plane from Boating corporation, this will take a lot of time because they are many people involved in the decision making process. This decision can take maximum of up to three years and during this time the rate of inflation and rising interest rates will make the plane to costs much more. Technological forces The world today is fast developing and technology is one factor that is forever growing and its importance to the success of an organisation is proving to be very vital to its long term profitability.
However keeping up with technology is not an easy thing for any organisations because for starters it is very expensive and time consuming. Technology is rapidly changing and this has lead to shorter life production system (Palmer, A. 2000). For example a technology innovation regarding production of wheat will cause wheat farmers around the world to leave their current way of producing wheat and adapt to the new technological way of producing wheat, because this will help farmers to compete in the international markets.
Political forces Political instability especially in West African countries is also one factor that has major influence on the organisational buying process. Organisational management is uncertain about the future and this makes decisions about whether to buy investments assets for example land and buildings very difficult. Legal and Trade forces Legal and trade forces includes all rules and regulations that an organization has to follow that includes trading, manufacturing and competition policies.
Trade barriers like import taxes also have major influence on the organisational buying process especially on a multinational organisation. These legal and trade forces are very complex because there are different from country to country and involves lot of paper work. GROUP FORCES Group forces are critical in organizational buying decision and the degree of involvement of group members in the organizational buying process varies from routine rebuys to complex new task buying situations. Spekman& Grouhaug (2003, p. 2) suggested that the buying center take on life as a purposeful, informal, cross-departmental decision unit in which the primary objective is the acquisition, importation and processing of relevant purchasing related information. The members of the buying center which are influencers, deciders, gatekeepers, buyers and users. For example the Finance manager influence when purchasing of new machinery will be more influential on price of the machinery and the technical manager will be more influential on which type of machinery to purchase (the technical aspects of machinery).
INDIVIDUAL FORCES Wind & Thomas (2001, p. 239) suggested that this includes individual differences such as job responsibility, background and response to risk in buying situations. Individuals, not organisations make buying decisions and each member of the buying center has a unique personality, a particular set of experience, a specific organisational function, and a perception of how best to achieve both personal and organisational goals. Individuals within the buying center are very different from one another because they possess information differently.
Individuals are exposed to different stimulus, attain to different stimulus, perceive and retain to different stimulus. Individuals within the buying center also have different buying motives, for example the finance manager will want price competitive machinery that will help the firm to effectively produce, but the technical manager on the other hand might want machinery that matches his technical requirements and will last longer. This clearly shows how difficult it is to understanding the needs of all members of the buying center and that their influential composition to the organizational buying process is different.
CONCLUSION Unraveling the complex forces that encircle the organisational buying behavior is indeed difficult; this is because organisations are operating in an unpredictable and volatile environment which is dynamic in nature due to increased globalisation. Unpredictable macro- economic forces such as interest rates, inflation and fuel prices have major influence on the organisational buying process because they create major uncertainty about future cost prices of goods and services.
Technology is forever changing and this also have major influence on the organisational buying process because adopting new technology can be quiet expensive for most organisations. Political instability also creates uncertainty about the future investment of organisations. Organisatioal buying process involves multiple participants and little is known about the composition of the buying center, the determinants of the specific buying center composition and changes in it, and the nature of influence patterns among its members and this is what makes understanding the buying centre very complex.
In a nutshell unraveling these complex forces that encircle the organisational buying process is very complicated because these forces are dynamic (changing) and management has to anticipate them to make decisions and anticipating these forces is also complicated task REFERENCING Cronhaug, K. , Venkatesh, A. (2000). Needs and Need Recognition in Organisational Buying, 25 (2), 2-3.
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