This document discusses dynamics of industrial buying behavior. It compares consumer and industrial buying processes, noting industrial buying is more complicated with multiple phases and decision makers involved. The main types of industrial buying situations are described as straight rebuy, modified rebuy, and new tasks. Stages of industrial procurement decision making are outlined as preliminary application, tender proposal, negotiation, order processing, and warranty/services. Roles in industrial buying centers, including buyer, user, influencer, gatekeeper, and decider are also summarized.

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)