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Industrial buying-behavior
1. Dynamics of industrial
buying behavior
Presented By-
Rajnish Kumar
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
2. Industrial buying behavior
Consumer vs. Industrial buying
behavior
Main types of buying situations in
B2B
Stages of decision in B2B
Roles in B2B procurement
Influences on organizational behavior
Buying centres in summary
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
3. Consumer vs. Industrial buying
behavior
Decisions made by consumers are quite simple
Industrial buying processes are more complicated,
there are several phases and steps
Different buying behavior for different products and
target groups
Simple consumer goods like food and beverages are
bought very spontaneously – influenced by advertising
and product presentation
For premium consumer goods (expensive clothes,
computers) – buying behavior is getting more rational
– comparison
Private investment goods – price bargaining
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
4. B2B products –Industrial
procurement starts
More than one person involved
Buying process follows certain rules
Price comparison, standardisation,
tenders = Ausschreibungen)
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
5. B2B systems
involve more capabilities and greater
workloads
From the buyer‘s and the supplier‘s
side decision has more extensive
consequences
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
6. B2B facilities
Industrial plants
Manufacturing installations
Office buildings
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
7. Main types of buying
situations in B2B
Straigtht rebuy – routine decision, repetitive process
(energy, office supplies, raw materials, wood,
cigarettes), component suppliers for the automotive
industry – little or no new information
Modified rebuy – more complicated but less
sophisticated: cars, trucks, computers, consulting –
modified rebuys are often treated too uncautious
New task – calls for thorough research – industrial
plant – highest level of uncertainty. Strategic new
tasks are of extreme strategic and financial importance
(aircrafts, military equipment, infrastructure) – re-
evaluation of alternatives and search for new
information and new alternatives
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
8. Buying phases
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routine specification
Performance review
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
9. Stages of decision in B2B
procurement
Backhaus developed a widely usable model
to distinguish between 5 phases of
procurement
Preliminary application (initiation phase)
Tender proposal
Negotiation
Processing of order
Warranty and services
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
10. Preliminary application
Recognition of a problem (need) and
a general solution
Released by top management =
operating department or external
consultants
Result request for an offer
addressed to a number of potential
suppliers
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
11. Tender preparation phase
Determination of characteristics and
quantity of needed items
Search for and qualification of potential
sources
Supplier has to provide an offer
Tries to be incomparable with his
competitors
Customer tries to make the offer best
comparable
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
12. Negotiation phase
= core selling process
Comprises acquisition and analysis of
proposals, evaluation of proposals
and selection of suppliers
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
13. Processing phase/warranty/
service phase
Contains selection of an order routine
Realisation of the transaction along
with the fixation of after sales service
tasks
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
14. Roles in B2B procurement –
buying center concept
Group of people involved in the
buying process – buying center
Webster/Wind model shows 5
different roles – not institutionalised
This causes probleme in identifying
and targeting the right people within
the decision process
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
15. Buying center
Role keepers have different tasks –
not mandatory
Buyer
User
Initiator
Gatekeeper
Influencer
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
16. Buyer
Formal authority to sign contracts
Member of purchasing department
Influences the vendor selection
Not in technical details
Main criteria: price + terms and
conditions of the contract
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
17. User
Person working with the product
Interested in benefits and
unobstructed function of the product
to buy
Large knowhow and preconceived
opinion
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
18. Influencer
A person with high technical
knowledge and practical experience
definition of minimum requirements
on technical or company standards
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
19. Gatekeeper
Controls the flow of information within
the buying center
Assistant of decision maker
Influence by preparing the decision
and the relevant documents
(Scriptum p 33-34 + summary)
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
20. Decider
Right to say yes or no
Mightiest person
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
21. Initiator
Person who brings new ideas and
solutions into the company
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
22. Specific marketing
considerations in the industrial
facilities business
Long decision taking process
High risk
Complex buying center
The specific competitive situation
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
23. Product policy
Focuses on innovation
Has to care for high flexibility in
research and development
And manufacturing and assembling
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
24. Price
Strict bid and tender rules
High transparency
Add value with service offering to
achieve a differentiating position
Another aspect: financing and
sourcing models
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
25. Distribution policy
Focus on negotiation phase
Provide excellent people in the selling
center
High technical knowledge
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
26. Communication
Problem solver!
Proving success with comparable
tasks
Reference projects!
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
27. THANK YOU
Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)