Organizational Buyer Behavior and Buyer-Seller Relationships Essay Example for Free

Organizational Buyer Behavior and Buyer-Seller Relationships EssayBusiness to line of reasoning merchandise also known as Industrial marketing is the marketing of goods operate to organizations including commercial enterprises, government and other profit non-profit institutions for use in the goods serves they in turn produce for resale to other customers or to facilitate the operation of their enterprise (Reeder, Brierty, 2002).Business to worry market is characterized by few customers who buy in genuinely large quantities and argon geographically concentrated. The customers argon professional and rational in their leveraging approach. The nature of demand is derived demand, which is usually customized. The channels of distribution atomic number 18 shorter and there is more emphasis on personal face-to-face communication. In this era of globalization the origin environment is characterized by intense competition.To sustain and call forth in such a competitive ec onomic environment, business organizations are under tremendous pressure to manufacture a product or bid a dish out that is of optimum quality, is customized to individual customer requirements and is delivered on prison term at minimum possible price. The role of the suppliers is crucial in helping the business organizations to achieve this objective. To succeed and grow in such business to business markets business marketers need to chance upon the Business Buyer Behavior and evolve close, put up and long-term relationships. Business Buyer BehaviorUnderstanding the dynamics of business buy conduct including the organizational acquire work out, the types of purchasing situations, forces influencing the organization purchaser behavior, the study of the get center and the motives and the roles vie by from each one member of the buying center is crucial for business marketers to identify profitable market segments, locate the mingled buying influences within these segm ents and reaching these buyers efficiently and effectively with product or service offerings that satisfy their of necessity. The Organizational Buying ProcessThe organizational buying behavior is a process rather than an isolated program. It involves comprehensive phases or stages. The process begins with the recognition of a need for a product or service by someone in the comp all. Broad parameters for the desired product/service are then worked out. Detailed specifications and description for the desired product or service are unquestionable. Once the company has defined the product /service it involve then the search for potential suppliers who can meet the needs begins, alternative suppliers are identified, asked to try their proposals and the proposals analyzed.The short-listed suppliers are invited for negotiations and the final suppliers are selected. The order is then placed with the selected suppliers on the agreed terms. Finally the performance of the firms supplying t he required products/ services is reviewed periodically. The buying process stage of the potential buyer for the marketers product or service allow guide a study implication on the marketing approach to be adopted by the seller. Types of Buying Situations There are basically three study types of buying situations, namely the straight rebuy, modified rebuy and new-task buy.In a straight rebuy situation the buyer reorders a product or service without any modifications on a routine basis through the purchase department. In a modified rebuy situation the buyer may wish a modification in product/service specifications, prices, terms of supply and so on This situation usually involves more number of participants in the buying decision process. In a new task buying situation the company is buying a product or service for the first time. In such a situation the organization buying process is more complex and involves numerous more number of participants from different departments in the organization.The buying company also needs to decide on the product/service specifications, prices, delivery terms, order quantities, service terms etc. Forces Influencing Business Buying Behavior The organization buying behavior is influenced by environmental forces like changes in the domestic and global parsimony and changes in the technologies. The rapid strides made in information technology especially Internet technology has had a major influence in the way businesses buy. For representative most of the small and large business organizations buy computer systems from Dell through its well developed website www. ell. com. Organization buying behavior is also influenced by the organizational forces like centralization and decentralization of purchase and strategic role and priorities of purchase prevalent in the given organization. The group forces influencing behavior include the composition, motives and the roles played by each member of the buying center. Buying Center I t is the decision-making unit of a buying organization and comprises of all members of the organization who are bear on in the buying decision process.The members of the buying center will change depending on the product/service universe purchased and the buying situation in which it is being purchased. The buying center members may play any one or a combination of the five roles namely, users, influencers, buyers, deciders and gatekeepers. Users are the members who will actually use the product being offered. Influencers are members who influence the purchase. Buyers are members who have the formal authority to make the purchase.Deciders are members who have formal or informal power to select/ O.K. the final suppliers. Gatekeepers are members who control the flow of information from the seller to other members of the buying center. The buying motives/objectives of each member of the buying center through which the members appreciate potential suppliers may differ. The motives ma y include task oriented objectives such as price, quality, service and Return on Investment and non-task oriented objectives such as recognition, promotion, increments and job security.Companies involved in business to business marketing need to all the way identify the buying situation, the stage or the phase in the buying decision making process for the product being offered, the various forces influencing the buying organizations behavior, the composition of the buying center, the role played by each member of the buying center and the criteria on which they evaluate the suppliers for each individual customer. Based on such an understanding they should evolve suitable marketing strategies for success.For example Unilever the British FMCG major may need new high-speed packaging equipment for its innovation in detergent small mighty. Companies in the business of packaging equipment need to understand that it is a new task buy situation for Unilever. And the company may be in the need identification stage of the buying process. They need to have closer relationship with the members from different functional areas like operations, engineering, design, finance and purchase who may comprise the buying center, understand the motives of purchase and the role played by each member.This is crucial because each of this buyer behavior characteristic will have an implication on the buying decision process at Unilever. This will help the supplier to evolve suitable marketing strategies to be the favoured supplier of Unilever. Relationship emphasis in Business to Business Marketing In the super competitive environment that is prevalent today, suppliers have evolved into business partners. There is a major emphasis on close and long-term relationships in the business to business markets. To conserve the relationships, business markets must develop an intimate knowledge of the customers and add value to it.Relationship marketing centers on all marketing activities direc ted towards establishing, ontogeny and maintaining successful exchanges with customers (Morgan, Hunt, 1994). A strong relationship between the buyer and the seller is a win-win situation for both. The seller will have a competitive reward over his competition and the buyer will have effective business solutions to his problem. The relationships between the buyer and the seller in the business to business setup are positioned on a spectrum with transactional exchanges on one end and collaborative exchanges at the other extreme with value-added exchanges in the middle.Transactional Exchanges cerebrate on timely exchange of a product/service for a competitive price. Economy and necessity are the main motivational factors of such exchanges with little interest on the part of the buyer or the seller to extend the relationship. Such types of exchanges may be preferred by the buying organization when the purchase decision is not complex, the purchase is considered to be less significan t to the achievement of its objectives, many suppliers are available and the supply market is stable. Here the business marketer need not make any specialized investment in building relationships.For example the supply of office stationery and cleaning services may call for a transactional relationship. Value added exchanges focus on complete understanding of the present and future needs of the customer and meeting those needs better than the competitor by customizing the firms offerings to the needs of individual customers. For example Intel Corporation, a leading player in the semiconductor industry has understood the changing computer server needs of it corporate clients and has developed and introduced a new chip that lowers electricity consumption to a very great extent.This has drastically reduced the huge electricity bills of its customers like Google Corporation that maintain thousands of servers world wide (Edwards, 2006) Collaborative Exchanges focus on building a strong s ocial, economic, service and technical ties over a long period of time for mutual benefit through reduced costs and increased value. Such exchanges are very crucial when the market is very dynamic, the complexity of purchase is very high and the product/service being purchased is very crucial for the performance of the end product of the buying organization.In such situations the switching costs involved in changing a supplier are also very high for the buying organization. For example Asin is the sole supplier to the Japanese car manufacturing major Toyota Motors for p-valve, a critical brake part used in all Toyota vehicles worldwide. Aisin works in very close collaboration with Toyota Motors and is highly involved in the product development process at Toyota Motors to keep pace with the innovations being made in the Toyota vehicles and meet the JIT production requirements of Toyota (Liker, 2004).Business Marketers have some tractableness in deciding where to participate along th e relationship continuum. It basically depends on the characteristics of the market, the type and price of product/service being offered and the significance of product/service being offered to the buying organization. However rival companies are continuously working towards taking away the best accounts and so also the requirements, expectations and the preferences of the individual customers keeps changing continuously.To meet these challenges business marketers must develop mutually beneficial relationships with individual customers by developing a deep understanding of their needs. Information should be openly shared to benefit both the buyer and the seller. The systems, procedures, and routines of the buyer and seller should be connected to facilitate operations. There should be very good cooperation between the buyer and seller and both should treat the buying situations as joint responsibilities.Both the buyer and seller should invest in processes and procedures that are nec essary to meet the specific needs of the exchange partners. Such mutually beneficial relationships between the buyer and the seller will result in better service to the business customer as the seller will be able to provide customized product/service solutions that precisely meet the individual customer needs. Conclusion Business to business markets are growing in volume as compared to consumer markets.The characteristics of the Business to business markets call for closer buyer seller relationships. Companies operating in the Business to business markets should clearly study the organizational buyer behavior with respect to the product or service they offer. They should decide on the type of relationship, ranging from transactional exchange to collaborative exchange, which they should adopt with each customer to gain competitive advantage in the intensively competitive business environment.