Organizational buyer behavior refers to how organizations purchase goods and services for use in production or resale. It differs from consumer behavior in several ways. Organizational buying involves multiple people in a buying center and a complex decision process. This process typically begins with problem recognition, develops product specifications, searches for suppliers, solicits proposals, selects suppliers through negotiation, finalizes orders, and reviews performance. Understanding organizational buyer behavior is important for marketing to business customers.

1. BUSINESS MARKETS
AND ORGANIZATIONAL
BUYER
BEHAVIOUR
N E E RA J M A N D H AN
R O L L N O - 4 5
I M S - K U K

2. DEFINITION
• Business Buyer Behavior:
The buying behavior of organizations that buy goods and services for use in the
production of other products and services that are sold, rented, or supplied to others.
Also included are retailing and wholesaling firms that acquire goods for the purpose of
reselling or renting them to others at a profit.

3. CHARACTERISTICS OF BUSINESS
MARKETS.
• Sales in the business market far exceed sales in consumer markets.
• Business markets differ from consumer markets in many ways.
• Marketing structure and demand
• Nature of the buying unit
• Types of decisions and the decision process

4. INDUSTRIAL MARKETING: 6 IMPORTANT
DEMANDS FOR INDUSTRIAL MARKETING
1.Derived demand:
• The demand for Industrial goods is ultimately derived from the demand of consumer
goods. Thus animal hides are purchased because consumers want to buy shoes,
and other leather goods. If the demand for the consumer goods slackens so will the
demand for all Industrial goods entering to their production. For this reason the
industries must closely monitor the buying pattern of ultimate consumers.
2. Stimulating industrial demand:
• Because of the nature of industrial demand the influence of final consumer is well
recognised. One way which industrial marketers attempt to increase sales is by
stimulating increases in demand of ultimate consumers.

5. 3. Joint Demand:
• Joint demand occurs when one product requires the existence of others to be careful
while exceptions may be found. Most products require several components, parts or
ingredients. Example; A bakery require flour, salt, preservatives, yeast in the
of bread. If one of the ingredients cannot be obtained other purchases will be
or discontinued. Joint demand situations can also be affected by changes in product
specifications.
4. Fluctuating Demand:
• The demand for business goods and services tends to be more volatile than the
demand for consumer goods and services. This is especially true of the demand for
new plant and equipment. A given percentage increase in consumer demand can
to much larger percentage increase in the demand for plant and equipment
to produce the additional output.

6. 5. Inelastic demand:
• The total demand for many Industrial goods and services is inelastic that is not much
affected by price changes. Shoe manufacturers are not going to buy much less
if the price of leather rises unless they can find satisfactory leather substitutes.
is especially inelastic in the short run because producers cannot make quick changes
their production methods. Demand is also inelastic for Industrial products that
represent a small per cent of the total cost of the item.
6. Cross elasticity of demand:
• Cross elasticity of demand is the responsiveness of the sales of one product to a price
change in another. It can have a dramatic impact on the marketing strategy of an
Industrial firm.

7. TYPES OF BUSINESS MARKETS
Consumers
• In the business-to-consumer market, known as B2C, companies sell their products to
individual consumers through retail outlets or online stores. Consumers buy products
such as food, clothing, electrical goods, magazines and cars for personal use and pay
for them at the point of sale. Businesses aim to influence consumers by advertising or
sales promotions at the point of sale, such as discounts or special deals.
Other Businesses
• Companies that sell products to other businesses operate in the business-to-business
market, or B2B. They may sell materials or components that other companies use to
manufacture their own products, or they might sell finished goods, such as office
equipment or machine tools.

8. Government Agencies
• Government agencies represent an important business market. In the business-to-
government, or B2G, sector, companies typically bid for contracts to supply products
to local, state or federal agencies. Government agencies deal with approved suppliers
who must meet standards, such as quality accreditation, and go through a complex
process. Companies market their products to government agencies through a direct
sales force or by creating dedicated government pages on their websites.
Intermediaries
• Companies that sell to both consumers and other businesses may market their
products through intermediaries, such as retailers, wholesalers or distributors. To
business through these channels, companies operate a marketing program focused
intermediaries. They must encourage intermediaries to stock their products through
incentive programs and support them with marketing collateral, such as
templates or point-of-sale display material.

9. Services Market
• Companies that offer services also market them to consumers, other businesses and
government agencies. However, marketing services requires different skills and
strategies and therefore represents a different business market. Companies offer
consumers services, such as plumbing, hairdressing or landscaping. They may also
provide professional services, such as management consultancy, accountancy or
property maintenance, to other businesses or government agencies.

10. ORGANIZATIONAL BUYER BEHAVIOUR
• Individual consumers are not the only buyers in a market. Companies and other
organizations also need goods and services to operate, run their businesses, and
produce the offerings they provide to one another and to consumers. These
organizations, which include producers, resellers, government and nonprofit groups,
buy a huge variety of products including equipment, raw materials, finished goods,
labor, and other services. Some organizations sell exclusively to other organizations
and never come into contact with consumer buyers.

11. NATURE OF ORGANIZATIONAL BUYER
BEHAVIOUR
• 1. A separate field of study - Organizational Behavior is a separate field of study. Many
researches and analysis have been done in this field. But it is not still accepted as a science.
There is no foundation of basic concepts that may guide its development as a science.
Therefore, it will be appropriate to call it a field of study rather than discipline.
• 2. It is an applied science - The aim of OB it to solve problems of organizations related with
human behavior aspect. Therefore, applied researches are concentrated, in place of
fundamental researches. Though many of the researches may be carried in laboratory, but
the Behaviour of an individual can not be analyzed so. Therefore, Organizational Behaviour
is both science as well as art.
• 3. Goal Oriented - Since OB is applied science it is oriented towards organizational goals.
Sometimes there may be conflict of organizational goals with individual goals. In that case,
both the objectives are achieved simultaneously.

12. • 4. Inter disciplinary Approach - Organizational Behaviour is interdisciplinary in nature.
It is based on behavioural and social sciences that contributes to the subject. It applies
from this disciplines ideas that will improve the relationships between people and
organization.
• 5. Focus Attention On people - OB focus the attention on people. It is based on the
concept that need and motivation of the people should be given priority. if the people
are given proper environment and working condition, they are creative, independent
and capable of achieving organizational objectives.
• 6. Normative Science - OB is a normative science. It just not only define the cause and
effect relationship but also suggests, how the results of various researches can be
applied to get organizational results. what acceptable by society is not defines positive
science, but it is done by normative science.

13. ORGANIZATIONAL BUYER BEHAVIOR

14. • Problem recognition occurs when someone in the company recognizes a problem or
need • Internal stimuli – Need for new product or production equipment • External
stimuli – Idea from a trade show or advertising.
• General need description describes the characteristics and quantity of the needed
item.
• Product specification describes the technical criteria.
• Value analysis is an approach to cost reduction where components are studied to
determine if they can be redesigned, standardized, or made with less costly methods
of production.
• Supplier search involves compiling a list of qualified suppliers.
• Proposal solicitation is the process of requesting proposals from qualified suppliers.
• Supplier selection is the process when the buying center creates a list of desired
supplier attributes and negotiates with preferred suppliers for favorable terms and
conditions.
• Order-routine specifications is the final order with the chosen supplier and lists all of
the specifications and terms of the purchase.
• Performance review involves a critique of supplier performance to the purchase terms.