Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)
This situation is similar to repeat buying situations of consumer/household buying; in this buying situation, only purchasing department is involved. They get information from inventory control department or section to reorder the material or item and they seek quotations from vendors in an approved list. In this the buyer keeps on placing the order on routine basis without changing any product specifications
The “in-suppliers” make efforts to maintain product and service quality. The “out-suppliers” have to make efforts to get their name list in the approved vendors’ list and for this purpose they have to offer something new or find out any issues of dissatisfaction with current suppliers and promise to provide better service.
Some typical characteristics of the routine buying situations are:
- Routine purchasing procedures exist,
- The buying alternatives are known, but a formal or informal list of `approved’ suppliers are available.
- A supplier, not on list, is not considered.
- Decision on each separate transaction is made by the purchasing department.
- Buyers have relevant buying experience and require little new information
In a modified re-buy situation, a buyer may change the product specifications or may even change to a substitute product for economic and performance considerations. Executives apart from the purchasing department are involved in the buying decisions. The company is looking for additional suppliers or is ready to modify the approved vendors list based on the technical capabilities and delivery capabilities.
In this situation, some familiarity with either product or its performance expectations does exist. Some characteristics of the modified re-buy situations are:
- A regular requirement for the type of product exists.
- The buying alternatives are known, but sufficient change has occurred to require some alteration to the normal supply procedure.
- Change may be stimulated by external events, e.g. inputs from supplying companies.
- Change may be stimulated by internal events, e.g., new buying influences, value analysis, reorganization
New task buy
In this situation, the buyer is buying the product for the first time. As the cost of the product or consumption value becomes higher, more number of executives are involved in the process. The stages of awareness, interest, evaluation, trial, and adoption will be there for the products of each potential supplier. Only the products which pass all the stages will be on the approved list and price competition will follow subsequently.
Some of the characteristics, for `new task’ situations are:
- Need for the product has not arisen previously.
- Little or no past buying experience is available to assist in the purchasing decision.
- Members of the buying unit require a great deal of information.
- Alternative ways of meeting the need are likely to be under review.
- The situation occurs infrequently, but the decisions taken may set a pattern for more routine purchases subsequently.
- Opportunities exist at an early stage in the decision process for external (marketing) inputs to have an influence on the final decision made.
A system buying is a process in which the organization gives a single order to a single organization for supplying a full system. The buying organization knows that no single party is producing all the units in the system. But it wants the system seller to engineer the system, procure the units from various vendors and assemble, fabricate or construct the system.