organizational buying process essay

Module 7: Consumer Behavior

Reading: the organizational buying process, making b2b buying decisions.

The organizational buying process contains eight stages, which are listed in the figure below. Although these stages parallel those of the consumer buying process, there are important differences that have a direct bearing on the marketing strategy. The complete process occurs only in the case of a new task. In virtually all situations, the organizational buying process is more formal than the consumer buying process.

It is also worth noting that B2B buying decisions tend to be more information-intensive than consumer buying decisions. As the marketing opportunity progresses, buyers seek detailed information to guide their choices. It is unlikely that a B2B buyer—in contrast to a consumer—would ever make a final buying decision based solely on the information they see in a standard advertisement.

The organization buying process stages are described below.

Problem Recognition

The process begins when someone in the organization recognizes a problem or need that can be met by acquiring a good or service. Problem recognition can occur as a result of internal or external stimuli. Internal stimuli can be a business problem or need that surfaces through internal operations or the actions of managers or employees. External stimuli can be a presentation by a salesperson, an ad, information picked up at a trade show, or a new competitive development.

General N eed D escription

Once they recognize that a need exists, the buyers must describe it thoroughly to make sure that everyone understands both the need and the nature of solution the organization should seek. Working with engineers, users, purchasing agents, and others, the buyer identifies and prioritizes important product characteristics. Armed with knowledge, this buyer understands virtually all the product-related concerns of a typical customer.

From a marketing strategy perspective, there is opportunity to influence purchasing decisions at this stage by providing information about the nature of the solution you can provide to address the the organization’s problems. Trade advertising can help potential customers become aware of what you offer. Web sites, content marketing, and direct marketing techniques like toll-free numbers and online sales support are all useful ways to build awareness and help potential customers understand what you offer and why it is worth exploring. Public relations may play a significant role by placing stories about your successful customers and innovative achievements in various trade journals. (Note that the AirCanada video you just watched is an example of this. The video was created by IBM and is offered as one of many “IBM client stories.”)

Product Specification

Technical specifications come next in the process. This is usually the responsibility of the engineering department. Engineers design several alternatives, with detailed specifications about what the organization requires. These specifications align with the priority list established earlier.

Supplier Search

Six of the mirror segments for NASA’s James Webb Space Telescope. The mirrors were built by Ball Aerospace & Technologies Corp., Boulder, Colorado

The buyer now tries to identify the most appropriate supplier (also called the vendor). The buyer conducts a standard search to identify which providers offer what they need, and which ones have a reputation for good quality, good partnership, and good value for the money. This step virtually always involves using the Internet to research providers and sift through product and company reviews. Buyers may consult trade directories and publications, look at published case studies (written or video), seek out guidance from opinion leaders, and contact peers or colleagues from other companies for recommendations.

Marketers can participate in this stage by maintaining well-designed Web sites with useful information and case studies, working with opinion leaders to make advantageous information available, using content marketing strategies to make credible information available in sources the buyer is likely to consult, and publishing case studies about customers using your products successfully. Consultative selling (also called personal selling ) plays a major role as marketers or sales personnel learn more about the organization’s goals, priorities, and product specifications and provide helpful information to the buyer about the offerings under consideration.

Proposal S olicitation

During the next stage of the process, qualified suppliers are invited to submit proposals. Depending on the nature of the purchase, some suppliers send only a catalog or a sales representative. More complex purchases typically require submission of a detailed proposal outlining what the provider can offer to address the buyer’s needs, along with product specifications, timing, and pricing. Proposal development requires extensive research, skilled writing, and presentation. For very large, complex purchasing decisions, such as the solution sale described above, the delivery of a proposal could be comparable to a complete marketing strategy targeting an individual customer. Organizations that respond to many proposals typically have a dedicated proposal-writing team working closely with sales and marketing personnel to deliver compelling, well-crafted proposals.

Supplier Selection

At this stage, the buyer screens the proposals and makes a choice. A significant part of this selection involves evaluating the vendors under consideration. The selection process involves thorough review of the proposals submitted, as well as consideration of vendor capabilities, reputation, customer references, warranties, and so on. Proposals may be scored by different decision makers using a common set of criteria. Often the selection process narrows down vendors to a short list of highest-scoring proposals. Then the short-listed vendors are invited to meet with the buyer(s) virtually or in person to discuss the proposal and address any questions, concerns, or gaps. At this stage, the buy may attempt to negotiate final, advantageous terms with each of the short-listed vendors. Negotiation points may cover product quantity, specifications, pricing, timing, delivery, and other terms of sale. Ultimately the decision makers finalize their selection and communicate it internally and to the vendors who submitted proposals.

Consultative selling and related marketing support are important during this stage. While there may be procurement rules limiting contact with buyers during the selection process, it can be helpful to check in periodically with key contacts and offer any additional information that may be helpful during the selection process. This phase is an opportunity for companies to demonstrate their responsiveness to buyers and their needs. Being attentive during this stage can set a positive tone for how you will conduct future business.

Order-Routine Specification

The buyer now writes the final order with the chosen supplier, listing the technical specifications, the quantity needed, the warranty, and so on. At this stage, the supplier typically works closely with the buyer to manage inventories and deliver on agreement terms.

Performance Review

In this final stage, the buyer reviews the supplier’s performance and provides feedback. This may be a very simple or a very complex process, and it may be initiated by either party, or both. The performance review may lead to changes in how the organizations work together to improve efficiency, quality, customer satisfaction, or other aspects of the relationship.

From a marketing perspective this stage provides essential information about how well the product is meeting customer needs and how to improve delivery in order to strengthen customer satisfaction and brand loyalty. Happy, successful customers may be great candidates for published case studies, testimonials, and references for future customers. Dissatisfied customers provide an excellent opportunity to learn what isn’t working, demonstrate your responsiveness, and improve.

Procurement Processes for Routine Purchases

As noted above, the complete eight-stage buying process describe here applies to new tasks, which typically require more complex, involved purchasing decisions. For rebuys and routine purchases, organizations use abridged versions of the process. Some stages may be bypassed completely when a supplier has already been selected.

Organizations may also use e-procurement processes, in which an approved supplier has been selected to provide a variety of standard goods at pre-negotiated prices. For example, an organization may negotiate an e-procurement agreement with Staples that allows employees to order office supplies directly from the company using an approval workflow in the ordering system. These systems help simplify the buying process for routine purchases, while still allowing appropriate levels of approvals and cost controls for the buyer.

Check Your Understanding

Answer the question(s) below to see how well you understand the topics covered in this outcome. This short quiz does  not  count toward your grade in the class, and you can retake it an unlimited number of times.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.

• Revision and Adaptation . Authored by : Lumen Learning. License : CC BY: Attribution
• Chapter 4: Understanding Buyer Behavior, from Introducing Marketing. Authored by : John Burnett. Provided by : Global Text. Located at : http://solr.bccampus.ca:8001/bcc/file/ddbe3343-9796-4801-a0cb-7af7b02e3191/1/Core%20Concepts%20of%20Marketing.pdf . License : CC BY: Attribution
• Primary Mirror Segment Cryogenic Testing. Authored by : NASA's James Webb Space Telescope. Located at : https://www.flickr.com/photos/nasawebbtelescope/5637974497/ . License : CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

132 Reading: The Organizational Buying Process

Making b2b buying decisions.

The organizational buying process contains eight stages, which are listed in the figure below. Although these stages parallel those of the consumer buying process, there are important differences that have a direct bearing on the marketing strategy. The complete process occurs only in the case of a new task. In virtually all situations, the organizational buying process is more formal than the consumer buying process.

It is also worth noting that B2B buying decisions tend to be more information-intensive than consumer buying decisions. As the marketing opportunity progresses, buyers seek detailed information to guide their choices. It is unlikely that a B2B buyer—in contrast to a consumer—would ever make a final buying decision based solely on the information they see in a standard advertisement.

Problem Recognition

The process begins when someone in the organization recognizes a problem or need that can be met by acquiring a good or service. Problem recognition can occur as a result of internal or external stimuli. Internal stimuli can be a business problem or need that surfaces through internal operations or the actions of managers or employees. External stimuli can be a presentation by a salesperson, an ad, information picked up at a trade show, or a new competitive development.

General Need Description

Once they recognize that a need exists, the buyers must describe it thoroughly to make sure that everyone understands both the need and the nature of solution the organization should seek. Working with engineers, users, purchasing agents, and others, the buyer identifies and prioritizes important product characteristics. Armed with knowledge, this buyer understands virtually all the product-related concerns of a typical customer.

From a marketing strategy perspective, there is opportunity to influence purchasing decisions at this stage by providing information about the nature of the solution you can provide to address the organization’s problems. Trade advertising can help potential customers become aware of what you offer. Web sites, content marketing, and direct marketing techniques like toll-free numbers and online sales support are all useful ways to build awareness and help potential customers understand what you offer and why it is worth exploring. Public relations may play a significant role by placing stories about your successful customers and innovative achievements in various trade journals. (Note that the AirCanada video you just watched is an example of this. The video was created by IBM and is offered as one of many “IBM client stories.”)

Product Specification

Technical specifications come next in the process. This is usually the responsibility of the engineering department. Engineers design several alternatives, with detailed specifications about what the organization requires. These specifications align with the priority list established earlier.

Supplier Search

The buyer now tries to identify the most appropriate supplier (also called the vendor). The buyer conducts a standard search to identify which providers offer what they need, and which ones have a reputation for good quality, good partnership, and good value for the money. This step virtually always involves using the Internet to research providers and sift through product and company reviews. Buyers may consult trade directories and publications, look at published case studies (written or video), seek out guidance from opinion leaders, and contact peers or colleagues from other companies for recommendations.

Marketers can participate in this stage by maintaining well-designed Web sites with useful information and case studies, working with opinion leaders to make advantageous information available, using content marketing strategies to make credible information available in sources the buyer is likely to consult, and publishing case studies about customers using your products successfully. Consultative selling (also called personal selling ) plays a major role as marketers or sales personnel learn more about the organization’s goals, priorities, and product specifications and provide helpful information to the buyer about the offerings under consideration.

Proposal S olicitation

During the next stage of the process, qualified suppliers are invited to submit proposals. Depending on the nature of the purchase, some suppliers send only a catalog or a sales representative. More complex purchases typically require submission of a detailed proposal outlining what the provider can offer to address the buyer’s needs, along with product specifications, timing, and pricing. Proposal development requires extensive research, skilled writing, and presentation. For very large, complex purchasing decisions, such as the solution sale described above, the delivery of a proposal could be comparable to a complete marketing strategy targeting an individual customer. Organizations that respond to many proposals typically have a dedicated proposal-writing team working closely with sales and marketing personnel to deliver compelling, well-crafted proposals.

Supplier Selection

At this stage, the buyer screens the proposals and makes a choice. A significant part of this selection involves evaluating the vendors under consideration. The selection process involves thorough review of the proposals submitted, as well as consideration of vendor capabilities, reputation, customer references, warranties, and so on. Proposals may be scored by different decision-makers using a common set of criteria. Often the selection process narrows down vendors to a shortlist of highest-scoring proposals. Then the short-listed vendors are invited to meet with the buyer(s) virtually or in-person to discuss the proposal and address any questions, concerns, or gaps. At this stage, the buyer may attempt to negotiate final, advantageous terms with each of the short-listed vendors. Negotiation points may cover product quantity, specifications, pricing, timing, delivery, and other terms of sale. Ultimately the decision-makers finalize their selection and communicate it internally and to the vendors who submitted proposals.

Consultative selling and related marketing support are important during this stage. While there may be procurement rules limiting contact with buyers during the selection process, it can be helpful to check in periodically with key contacts and offer any additional information that may be helpful during the selection process. This phase is an opportunity for companies to demonstrate their responsiveness to buyers and their needs. Being attentive during this stage can set a positive tone for how you will conduct future business.

Order-Routine Specification

The buyer now writes the final order with the chosen supplier, listing the technical specifications, the quantity needed, the warranty, and so on. At this stage, the supplier typically works closely with the buyer to manage inventories and deliver on agreement terms.

Performance Review

In this final stage, the buyer reviews the supplier’s performance and provides feedback. This may be a very simple or a very complex process, and it may be initiated by either party, or both. The performance review may lead to changes in how the organizations work together to improve efficiency, quality, customer satisfaction, or other aspects of the relationship.

From a marketing perspective this stage provides essential information about how well the product is meeting customer needs and how to improve delivery in order to strengthen customer satisfaction and brand loyalty. Happy, successful customers may be great candidates for published case studies, testimonials, and references for future customers. Dissatisfied customers provide an excellent opportunity to learn what isn’t working, demonstrate your responsiveness, and improve.

Procurement Processes for Routine Purchases

As noted above, the complete eight-stage buying process described here applies to new tasks, which typically require more complex, involved purchasing decisions. For rebuys and routine purchases, organizations use abridged versions of the process. Some stages may be bypassed completely when a supplier has already been selected.

Organizations may also use e-procurement processes, in which an approved supplier has been selected to provide a variety of standard goods at pre-negotiated prices. For example, an organization may negotiate an e-procurement agreement with Staples that allows employees to order office supplies directly from the company using an approval workflow in the ordering system. These systems help simplify the buying process for routine purchases, while still allowing appropriate levels of approvals and cost controls for the buyer.

Introduction to Marketing - MKTG 3433 Copyright © 2022 by WCOB Marketing Faculty is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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7.12: Reading- The Organizational Buying Process

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• Lumen Learning

Making B2B Buying Decisions

The organizational buying process contains eight stages, which are listed in the figure below. Although these stages parallel those of the consumer buying process, there are important differences that have a direct bearing on the marketing strategy. The complete process occurs only in the case of a new task. In virtually all situations, the organizational buying process is more formal than the consumer buying process.

It is also worth noting that B2B buying decisions tend to be more information-intensive than consumer buying decisions. As the marketing opportunity progresses, buyers seek detailed information to guide their choices. It is unlikely that a B2B buyer—in contrast to a consumer—would ever make a final buying decision based solely on the information they see in a standard advertisement.

The organization buying process stages are described below.

Problem Recognition

The process begins when someone in the organization recognizes a problem or need that can be met by acquiring a good or service. Problem recognition can occur as a result of internal or external stimuli. Internal stimuli can be a business problem or need that surfaces through internal operations or the actions of managers or employees. External stimuli can be a presentation by a salesperson, an ad, information picked up at a trade show, or a new competitive development.

General N eed D escription

Once they recognize that a need exists, the buyers must describe it thoroughly to make sure that everyone understands both the need and the nature of solution the organization should seek. Working with engineers, users, purchasing agents, and others, the buyer identifies and prioritizes important product characteristics. Armed with knowledge, this buyer understands virtually all the product-related concerns of a typical customer.

From a marketing strategy perspective, there is opportunity to influence purchasing decisions at this stage by providing information about the nature of the solution you can provide to address the the organization’s problems. Trade advertising can help potential customers become aware of what you offer. Web sites, content marketing, and direct marketing techniques like toll-free numbers and online sales support are all useful ways to build awareness and help potential customers understand what you offer and why it is worth exploring. Public relations may play a significant role by placing stories about your successful customers and innovative achievements in various trade journals. (Note that the AirCanada video you just watched is an example of this. The video was created by IBM and is offered as one of many “IBM client stories.”)

Product Specification

Technical specifications come next in the process. This is usually the responsibility of the engineering department. Engineers design several alternatives, with detailed specifications about what the organization requires. These specifications align with the priority list established earlier.

Supplier Search

The buyer now tries to identify the most appropriate supplier (also called the vendor). The buyer conducts a standard search to identify which providers offer what they need, and which ones have a reputation for good quality, good partnership, and good value for the money. This step virtually always involves using the Internet to research providers and sift through product and company reviews. Buyers may consult trade directories and publications, look at published case studies (written or video), seek out guidance from opinion leaders, and contact peers or colleagues from other companies for recommendations.

Marketers can participate in this stage by maintaining well-designed Web sites with useful information and case studies, working with opinion leaders to make advantageous information available, using content marketing strategies to make credible information available in sources the buyer is likely to consult, and publishing case studies about customers using your products successfully. Consultative selling (also called personal selling ) plays a major role as marketers or sales personnel learn more about the organization’s goals, priorities, and product specifications and provide helpful information to the buyer about the offerings under consideration.

Proposal S olicitation

During the next stage of the process, qualified suppliers are invited to submit proposals. Depending on the nature of the purchase, some suppliers send only a catalog or a sales representative. More complex purchases typically require submission of a detailed proposal outlining what the provider can offer to address the buyer’s needs, along with product specifications, timing, and pricing. Proposal development requires extensive research, skilled writing, and presentation. For very large, complex purchasing decisions, such as the solution sale described above, the delivery of a proposal could be comparable to a complete marketing strategy targeting an individual customer. Organizations that respond to many proposals typically have a dedicated proposal-writing team working closely with sales and marketing personnel to deliver compelling, well-crafted proposals.

Supplier Selection

At this stage, the buyer screens the proposals and makes a choice. A significant part of this selection involves evaluating the vendors under consideration. The selection process involves thorough review of the proposals submitted, as well as consideration of vendor capabilities, reputation, customer references, warranties, and so on. Proposals may be scored by different decision makers using a common set of criteria. Often the selection process narrows down vendors to a short list of highest-scoring proposals. Then the short-listed vendors are invited to meet with the buyer(s) virtually or in person to discuss the proposal and address any questions, concerns, or gaps. At this stage, the buy may attempt to negotiate final, advantageous terms with each of the short-listed vendors. Negotiation points may cover product quantity, specifications, pricing, timing, delivery, and other terms of sale. Ultimately the decision makers finalize their selection and communicate it internally and to the vendors who submitted proposals.

Consultative selling and related marketing support are important during this stage. While there may be procurement rules limiting contact with buyers during the selection process, it can be helpful to check in periodically with key contacts and offer any additional information that may be helpful during the selection process. This phase is an opportunity for companies to demonstrate their responsiveness to buyers and their needs. Being attentive during this stage can set a positive tone for how you will conduct future business.

Order-Routine Specification

The buyer now writes the final order with the chosen supplier, listing the technical specifications, the quantity needed, the warranty, and so on. At this stage, the supplier typically works closely with the buyer to manage inventories and deliver on agreement terms.

Performance Review

In this final stage, the buyer reviews the supplier’s performance and provides feedback. This may be a very simple or a very complex process, and it may be initiated by either party, or both. The performance review may lead to changes in how the organizations work together to improve efficiency, quality, customer satisfaction, or other aspects of the relationship.

From a marketing perspective this stage provides essential information about how well the product is meeting customer needs and how to improve delivery in order to strengthen customer satisfaction and brand loyalty. Happy, successful customers may be great candidates for published case studies, testimonials, and references for future customers. Dissatisfied customers provide an excellent opportunity to learn what isn’t working, demonstrate your responsiveness, and improve.

Procurement Processes for Routine Purchases

As noted above, the complete eight-stage buying process describe here applies to new tasks, which typically require more complex, involved purchasing decisions. For rebuys and routine purchases, organizations use abridged versions of the process. Some stages may be bypassed completely when a supplier has already been selected.

Organizations may also use e-procurement processes, in which an approved supplier has been selected to provide a variety of standard goods at pre-negotiated prices. For example, an organization may negotiate an e-procurement agreement with Staples that allows employees to order office supplies directly from the company using an approval workflow in the ordering system. These systems help simplify the buying process for routine purchases, while still allowing appropriate levels of approvals and cost controls for the buyer.

Contributors and Attributions

• Revision and Adaptation . Authored by : Lumen Learning. License : CC BY: Attribution
• Chapter 4: Understanding Buyer Behavior, from Introducing Marketing. Authored by : John Burnett. Provided by : Global Text. Located at : http://solr.bccampus.ca:8001/bcc/file/ddbe3343-9796-4801-a0cb-7af7b02e3191/1/Core%20Concepts%20of%20Marketing.pdf . License : CC BY: Attribution
• Primary Mirror Segment Cryogenic Testing. Authored by : NASA's James Webb Space Telescope. Located at : https://www.flickr.com/photos/nasawebbtelescope/5637974497/ . License : CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

Reading: The Organizational Buying Process

Making b2b buying decisions.

The organizational buying process contains eight stages, which are listed in the figure below. Although these stages parallel those of the consumer buying process, there are important differences that have a direct bearing on the marketing strategy. The complete process occurs only in the case of a new task. In virtually all situations, the organizational buying process is more formal than the consumer buying process.

It is also worth noting that B2B buying decisions tend to be more information-intensive than consumer buying decisions. As the marketing opportunity progresses, buyers seek detailed information to guide their choices. It is unlikely that a B2B buyer—in contrast to a consumer—would ever make a final buying decision based solely on the information they see in a standard advertisement.

Problem Recognition

The process begins when someone in the organization recognizes a problem or need that can be met by acquiring a good or service. Problem recognition can occur as a result of internal or external stimuli. Internal stimuli can be a business problem or need that surfaces through internal operations or the actions of managers or employees. External stimuli can be a presentation by a salesperson, an ad, information picked up at a trade show, or a new competitive development.

General Need Description

Once they recognize that a need exists, the buyers must describe it thoroughly to make sure that everyone understands both the need and the nature of solution the organization should seek. Working with engineers, users, purchasing agents, and others, the buyer identifies and prioritizes important product characteristics. Armed with knowledge, this buyer understands virtually all the product-related concerns of a typical customer.

From a marketing strategy perspective, there is opportunity to influence purchasing decisions at this stage by providing information about the nature of the solution you can provide to address the organization’s problems. Trade advertising can help potential customers become aware of what you offer. Web sites, content marketing, and direct marketing techniques like toll-free numbers and online sales support are all useful ways to build awareness and help potential customers understand what you offer and why it is worth exploring. Public relations may play a significant role by placing stories about your successful customers and innovative achievements in various trade journals. (Note that the AirCanada video you just watched is an example of this. The video was created by IBM and is offered as one of many “IBM client stories.”)

Product Specification

Technical specifications come next in the process. This is usually the responsibility of the engineering department. Engineers design several alternatives, with detailed specifications about what the organization requires. These specifications align with the priority list established earlier.

Supplier Search

The buyer now tries to identify the most appropriate supplier (also called the vendor). The buyer conducts a standard search to identify which providers offer what they need, and which ones have a reputation for good quality, good partnership, and good value for the money. This step virtually always involves using the Internet to research providers and sift through product and company reviews. Buyers may consult trade directories and publications, look at published case studies (written or video), seek out guidance from opinion leaders, and contact peers or colleagues from other companies for recommendations.

Marketers can participate in this stage by maintaining well-designed Web sites with useful information and case studies, working with opinion leaders to make advantageous information available, using content marketing strategies to make credible information available in sources the buyer is likely to consult, and publishing case studies about customers using your products successfully. Consultative selling (also called personal selling ) plays a major role as marketers or sales personnel learn more about the organization’s goals, priorities, and product specifications and provide helpful information to the buyer about the offerings under consideration.

Proposal S olicitation

During the next stage of the process, qualified suppliers are invited to submit proposals. Depending on the nature of the purchase, some suppliers send only a catalog or a sales representative. More complex purchases typically require submission of a detailed proposal outlining what the provider can offer to address the buyer’s needs, along with product specifications, timing, and pricing. Proposal development requires extensive research, skilled writing, and presentation. For very large, complex purchasing decisions, such as the solution sale described above, the delivery of a proposal could be comparable to a complete marketing strategy targeting an individual customer. Organizations that respond to many proposals typically have a dedicated proposal-writing team working closely with sales and marketing personnel to deliver compelling, well-crafted proposals.

Supplier Selection

At this stage, the buyer screens the proposals and makes a choice. A significant part of this selection involves evaluating the vendors under consideration. The selection process involves thorough review of the proposals submitted, as well as consideration of vendor capabilities, reputation, customer references, warranties, and so on. Proposals may be scored by different decision-makers using a common set of criteria. Often the selection process narrows down vendors to a shortlist of highest-scoring proposals. Then the short-listed vendors are invited to meet with the buyer(s) virtually or in-person to discuss the proposal and address any questions, concerns, or gaps. At this stage, the buyer may attempt to negotiate final, advantageous terms with each of the short-listed vendors. Negotiation points may cover product quantity, specifications, pricing, timing, delivery, and other terms of sale. Ultimately the decision-makers finalize their selection and communicate it internally and to the vendors who submitted proposals.

Consultative selling and related marketing support are important during this stage. While there may be procurement rules limiting contact with buyers during the selection process, it can be helpful to check in periodically with key contacts and offer any additional information that may be helpful during the selection process. This phase is an opportunity for companies to demonstrate their responsiveness to buyers and their needs. Being attentive during this stage can set a positive tone for how you will conduct future business.

Order-Routine Specification

The buyer now writes the final order with the chosen supplier, listing the technical specifications, the quantity needed, the warranty, and so on. At this stage, the supplier typically works closely with the buyer to manage inventories and deliver on agreement terms.

Performance Review

In this final stage, the buyer reviews the supplier’s performance and provides feedback. This may be a very simple or a very complex process, and it may be initiated by either party, or both. The performance review may lead to changes in how the organizations work together to improve efficiency, quality, customer satisfaction, or other aspects of the relationship.

From a marketing perspective this stage provides essential information about how well the product is meeting customer needs and how to improve delivery in order to strengthen customer satisfaction and brand loyalty. Happy, successful customers may be great candidates for published case studies, testimonials, and references for future customers. Dissatisfied customers provide an excellent opportunity to learn what isn’t working, demonstrate your responsiveness, and improve.

Procurement Processes for Routine Purchases

As noted above, the complete eight-stage buying process described here applies to new tasks, which typically require more complex, involved purchasing decisions. For rebuys and routine purchases, organizations use abridged versions of the process. Some stages may be bypassed completely when a supplier has already been selected.

Organizations may also use e-procurement processes, in which an approved supplier has been selected to provide a variety of standard goods at pre-negotiated prices. For example, an organization may negotiate an e-procurement agreement with Staples that allows employees to order office supplies directly from the company using an approval workflow in the ordering system. These systems help simplify the buying process for routine purchases, while still allowing appropriate levels of approvals and cost controls for the buyer.

Introduction to Marketing I 2e (MKTG 1010) Copyright © 2021 by NSCC & Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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Further Reading

There are many websites and books on agile methods. here are a few examples worth considering.

Denning, S. (2008), “The Age of Agile: How Smart Companies Are Transforming the Way Work Gets Done”, AMACOM.

Google Scholar  

Project Management Institute, (2017), “Agile Practice Guide”, Project Management Institute.

Rigby, D., Elk, S. and Berez, S. (2020), “ Doing Agile Right: Transformation Without Chaos”, Harvard Business School Press.

Bellizzi, J.A. (1979), “Product type and the relative influence of buyers in commercial construction”, Industrial Marketing Management , Vol. 8, pp. 213–220.

Article   Google Scholar  

Ghingold, M. and Wilson, D.T. (1998), “Buying center research and business marketing practice: Meeting the challange of dynamic marketing”, Journal of Business & Industrial Marketing , Vol. 13 No. 2, pp. 96–108.

Johnston, W.J. and Lewin, J.E. (1996), “Organizational buying behavior: Toward an integrative framework”, Journal of Business Research , Vol. 35, pp. 1–15.

Lilien, G.L. and Wong, A.M. (1984), “An exploratory investigation of the structure of the buying center in the metalworking industry”, Journal of Marketing Research , Vol. 21 No. February, pp. 1–11.

McWilliams, R.D., Naumann, E. and Scott, S. (1992), “Determining buying center size”, Industrial Marketing Management , Vol. 21, pp. 43–49.

Robinson, P.J., Faris, C.W. and Wind, Y. (1967), Industrial Buying and Creative Marketing , Allyn & Bacon, Boston.

Töllner, A., Blut, M. and Holzmüller, H.H. (2011), “Customer solutions in the capital goods industry: Examining the impact of the buying center”, Industrial Marketing Management , Vol. 40 No. 5, pp. 712–722.

Tuli, K.R., Kohli, A.K. and Bharadwaj, S.G. (2007), “Rethinking customer solutions: From product bundles to relational processes”, Journal of Marketing , Vol. 71 No. 3, pp. 1–17.

Webster Jr, F.E. and Wind, Y. (1972), “A general model for understanding organisational buying behavior”, Journal of Marketing , Vol. 36 No. April, pp. 12–19.

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Prior, D.D. (2021). The Organisational Buying Process Revisited. In: Organisational Buying. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-67414-4_3

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Consumer vs. Organizational Buying and Culture Essay

Comparisons of organization buying and consumer buying, the role of organizational culture in organizational buying.

Similar to consumers, organizations are also involved in buying decisions. However, the processes involved in organizational buying are quite complex compared to the buying decision process in consumers. In the organization buying processes, the purchasing decisions are more often than not replaced with new complex ones. Organizations often buy in three circumstances, including straight re-buy, modified re-buy, and new tasks (Hawkins et al., 2010). Each of these situations determines distinct organizational behavior (Hawkins et al., 2010).

While making purchasing decisions, organizations take into consideration factors such as the availability of information, whether the purchase will solve the organization problem, as well as the final payment for the purchases. Moreover, the organization purchasing decision-making process undergoes various stages ranging from problem identification to post-purchase evaluation (Hawkins et al., 2010). In between this purchasing, decision-making process spectra are the information search assessment and assortment process as well as the purchase implementation.

Like the individual buying decision-making process, information search forms a critical part of the process. The internet forms the basic element through which the information is retrieved across the various phases in the buying decision-making process (Graham, 2010). Functional attributes, including price, quality, and the brand image, play a critical role in the buying decisions of both the organization and the individual consumer. Both the organization and the household are influenced in the same manner by these attributes. The individual consumer act in the same way towards the functional attributes as the organization buyers (Lantos, 2010).

However, the purchasing implementation is more complex in organizations than in individual buying decisions. The most important process in purchase implementation is the process of payment. To the organizations, how the payment is made remains critical in their decision-making process (Hawkins et al., 2010). The post-purchase evaluation is similar in both the individual consumers and the organizations. The entities will perform several assessments to determine the life-cycle cost of the product.

The organization’s buying-decisions are being influenced by both internal and external factors. One of these factors includes the firm’s culture. The organization culture is the way the organization operates (Hawkins et al., 2010). The characteristics that determine the organization’s culture includes the firm’s magnitude, setting, actions, goals, position, and the industry in which it operates. These characteristics are external to the firm. However, they influence the firm’s behavior, particularly the buying pattern (Hawkins et al., 2010). Other characteristics that determine the firm’s culture includes its internal composition. These include the income allocation to the workers, the major age group, and gender composition as well as education levels.

The firm’s internal composition influences its buying pattern. For instance, the market will be segmented depending on the internal composition, and the buying-decisions are based on this macro-segmentation (Hoyer & MacInnis, 2008). The other external factors that influence the firm’s culture comprise of the society in which the organization operates as well as the government policy. Internal factors include discernment, principles and standards, knowledge, reminiscence, intentions, and sensations. Firms embrace values and perceptions that influence the general behavioral style (Hawkins et al., 2010). The individuals within the organization hold these values and perceptions in differing levels. Organizations develop images, motifs, and learn from past behavior. Whereas the motives of the organizations are rational, individuals guided by their emotions make decisions. All these factors must be put into consideration for the buying decision to be successful.

The way each organization perceives these cultural values make it distinct from others. For instance, seller organizations such as Hewlett & Packard applied the organization buying behavior principle to be distinctive in the highly competitive technology market. Also, the organization understood the fact that its buying behavior will eventually influence the buying pattern of its consumers. Generally, the organization’s buying behavior influences individuals buying patterns.

Graham, J. (2010). Critical thinking in consumer behavior: Cases and experiential exercises . Boston: Prentice Hall.

Hawkins, D. I., Mothersbaugh, D. L., & Best, R. J. (2010). Consumer behavior: Building marketing strategy. Boston: McGraw Hill.

Hoyer, W. D. & MacInnis, D. J. (2008). Consumer behavior . Farmington Hills, MI: Cengage Learning.

Lantos, G. P. (2010). Consumer behavior in action: Real-life applications for marketing managers. Armonk, NY: M.E. Sharpe.

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IvyPanda. (2024, January 20). Consumer vs. Organizational Buying and Culture. https://ivypanda.com/essays/consumer-vs-organizational-buying-and-culture/

"Consumer vs. Organizational Buying and Culture." IvyPanda , 20 Jan. 2024, ivypanda.com/essays/consumer-vs-organizational-buying-and-culture/.

IvyPanda . (2024) 'Consumer vs. Organizational Buying and Culture'. 20 January.

IvyPanda . 2024. "Consumer vs. Organizational Buying and Culture." January 20, 2024. https://ivypanda.com/essays/consumer-vs-organizational-buying-and-culture/.

1. IvyPanda . "Consumer vs. Organizational Buying and Culture." January 20, 2024. https://ivypanda.com/essays/consumer-vs-organizational-buying-and-culture/.

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IvyPanda . "Consumer vs. Organizational Buying and Culture." January 20, 2024. https://ivypanda.com/essays/consumer-vs-organizational-buying-and-culture/.

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Organization Buying Behaviour: Overview, Factors and Impact

organization Buying behaviour is an interesting concept to discuss and understand. It refers to the behaviour of consumers when it comes to purchasing products or services from organizations. But why does this matter? Organizations buy from other companies too, and those transactions greatly affect the business world. This article will look at an organization’s buying behaviour, what factors influence it, and how it can impact businesses. We’ll also explore tips for optimizing your own organization’s buying behaviour. Whether you’re an entrepreneur or a corporate executive, this information will be invaluable in better understanding why organizations make the decisions they do when buying products or services.

What Is Organization Buying Behaviour?

Organization buying behaviour is a process that businesses go through to purchase all the products and services needed for their operations . It includes researching, evaluating, negotiating and finalizing deals with suppliers. The main objective of organizational buying behaviour is to ensure that the organization gets the best possible deal in terms of quality, price and service from suppliers.

Organizational buying behaviour starts with recognizing customer needs such as raw materials or finished goods, equipment or services etc. Then research has to be done to identify potential suppliers who can meet these needs at competitive prices while providing good quality standards. After this step, evaluation takes place in which various aspects like supplier’s reputation & reliability are taken into consideration along with technical capabilities & pricing structures offered by them. 

Negotiations follow after this phase wherein vendors try their best to meet customer requirements within their proposed budget limits. Once an acceptable agreement is reached between buyer & seller, it leads towards the concluding phase, where order details are finalized & payment terms are laid out before finally placing an order for the desired product/service from chosen vendor/supplier. 

In conclusion, organizational buying behaviour could be defined as a systematic approach followed by companies when attempting to acquire necessary items required for running business operations successfully.

How does Organization’s Buying Behaviour work?

1) Needs/Wants : Organizations must first identify their needs and wants to determine what type of product or service they need to purchase. This includes evaluating the organization’s budget, desired features, size of the purchase, time frame for purchasing decisions etc. 

2) Research Suppliers : Once organizations have identified their needs and want, they can begin researching potential suppliers capable of providing these products/services at an acceptable price point. They may also consider any affiliations with certain brands or other companies and supplier ratings on various platforms. 

3) Select/Evaluate The Supplier : After conducting research, organizations should select one or two potential suppliers best suited for their particular needs and requirements before formally negotiating terms with them (e.g., pricing structure). Additionally, organizations can evaluate each supplier based on factors such as delivery timescales, customer service capabilities, etc., to ensure it fits within the framework set by the organization’s specific objectives before making a final choice about which supplier will be used for this project/purchase decision. 

4) Negotiate Terms & Conditions : Once both parties agree upon terms and conditions related to pricing structures and timeline expectations, then both parties can enter into a contract formalizing agreement between them regarding said topics so that all involved understand what is expected out of this transaction moving forward before ordering/delivering goods or services being discussed hereinbefore mentioned above.

5) Final Decision : After considering these factors and reaching an agreement, the organization can make their final purchase decision. They should ensure that they are obtaining value for their money and that the supplier they have chosen is reliable and trustworthy. They should also consider any potential risks associated with this supplier before committing. 

Organization buying behaviour is a complex process, but understanding each step can help organizations make informed decisions about which suppliers to use for their needs and wants.

Also read:  Product Management: A Beginner’s Guide

What Are The Features of Organizational Behaviour?

• Attitude : Organizational behaviour focuses on studying individual and group attitudes within an organization, such as job satisfaction and commitment to organizational goals.
• Communication : It studies how communication flows between members of the organization, including both verbal and non-verbal forms of communication . 
• Leadership : The study of leadership styles, traits, and effectiveness in motivating employees and developing a shared vision is part of organizational behaviour research.
• Power & Influence : This covers how power is distributed among various organisational roles and how influences can be used to effect change or achieve desired outcomes from work groups or teams.
• Decision-Making Processes : Organizations need effective decision-making processes to remain competitive in today’s rapidly changing marketplace. These processes are studied through organizational behaviour theories and game theory or system dynamics modelling techniques. 
• Group Dynamics : Organizational behaviour also looks at team dynamics–how people interact with each other when working together as a team towards achieving common goals — covering topics like conflict resolution/management, creativity/innovation management etc.
• Motivation : Organizational behaviour examines what motivates individuals in different ways – whether it be intrinsic rewards (like a feeling of achievement) or extrinsic rewards (such as bonuses). It uses this knowledge to determine methods that will help motivate employees more effectively, which enhances their productivity levels overall.
• Communication : This is essential for any organization because it enables the effective exchange of information between different departments and personnel within the company, leading to better understanding, cooperation among parties involved, and smoother functioning operations overall.

Factors Affecting Organizational Buying Behavior

Economic factors play an essential role in the buying behaviour of organizations. When purchasing decisions, organizations consider economic conditions such as inflation, taxes, interest rates and consumer income levels. The economy’s stability profoundly affects how much money businesses are willing to spend on goods or services. If a company operates in an uncertain economic climate, it will likely be more conservative with its spending and opt for cheaper products.

Economic factors have a major influence on organizational buying behaviour due to their direct impact on profitability and cost savings opportunities. On the other hand, if a business is flourishing in a healthy economy with low unemployment and rising wages, it may be inclined to invest more money into higher-quality products to help it stay ahead of its competition. Additionally, companies must factor in their budget before making any purchase decision which limits what they’re able to purchase within their desired price range.

Technological Factor

Technology is playing an increasingly important role in influencing organizational buying behaviour. Technological advances can create new opportunities for firms to reduce costs and increase efficiency, leading to changes in purchasing decisions. For example, automated solutions such as robotic process automation (RPA) or AI-driven decision-making are becoming more popular among organizations because they allow them to free up their time and resources while also optimizing their operations.

Technology can also influence the types of vendors that organizations choose and the products and services they purchase. 

Organizations may look for suppliers who have invested heavily in innovative technologies or those with a proven track record of successful technology deployments. Additionally, technological trends such as cloud computing or big data analysis are driving organizations towards vendors that provide these capabilities so they can stay competitive in their industries.

Political and Legal Factors

Political and legal factors have a major influence on organizational buying behaviour. Government policies, regulations and laws determine the terms of purchase for many organizations, such as labour laws and environmental regulations. These factors can limit what an organization can buy or receive in terms of goods/services as well as how much they can spend on certain items. Additionally, taxes, subsidies, tariffs and other government incentives affect the cost of acquiring products from suppliers, which impacts organizational buying decisions.

Political unrest or changes in government leadership also have a huge effect when it comes to decision-making regarding purchasing patterns, as do ethical considerations about sourcing products from different countries or regions (e.g., boycotts). Ultimately, political and legal forces shape an organization’s ability to purchase certain items within their budget constraints and their moral obligation to make ethical choices while doing so.

Social Responsibility Factor

Organizational buying behaviour is heavily impacted by the social responsibility factor. Companies are now more conscious of their impact on society, leading them to consider how their decisions affect the bottom line, the people and environments in the local community, and beyond. Corporate social responsibility initiatives such as donating a certain percentage of profits to charities, reducing environmental footprints, or offering employees additional benefits and support can influence purchasing decisions.

Consumers today expect companies they purchase from to be transparent in their actions, making it important for organizations to act responsibly while still maintaining competitive prices. Organizations that actively demonstrate socially responsible behaviours may gain an edge over competitors who do not prioritize these values, ultimately resulting in increased sales.

Organizational Factor

Organizational factors play an important role in influencing organizational buying behaviour. These factors include organizational structure, size and resources such as budget, staff availability and technology. The larger the organization is, the more complex its decision-making process becomes due to the different stakeholders involved in making decisions. Additionally, the higher the budget available for purchases determines how much a company can spend on products or services being bought.

Furthermore, staff availability also directly impacts whether they have enough people to undertake research and make informed decisions when it comes to spending money. Lastly, technology makes it easier for companies to do research online, affecting their buying choices and getting access to industry trends and new products quickly. These organisational factors directly affect an organization’s buying behaviour, making them fundamental elements of consideration by buyers before committing any expenditures.

Risk Attitude Factors

Risk Attitude Factors are an important determinant of organizational buying behaviour. They refer to the degree of risk aversion or comfort with taking risks when making purchasing decisions. This can influence how much research and consideration is given when choosing suppliers and what type of alternative solutions may be sought. Purchasing managers may be more likely to choose a well-known vendor if they have a low tolerance for taking risks, but those with a greater risk appetite may consider less familiar vendors that offer better pricing structures or other advantages.

Additionally, different departments within an organization may have varying levels of risk attitudes, which could affect the overall decision-making process and outcome. Understanding these factors can help organizations make informed decisions about their supplier selection processes and ensure the best possible options are being considered for each situation.

Interpersonal Factors

Interpersonal factors are an important factor in organizational buying behaviour. Interpersonal relationships and interactions between buyers, their peers and outside organizations can significantly impact how purchases are made. In particular, the influence of key decision makers such as senior management or influential people within the organization can play a major role in influencing buying decisions.

Additionally, informal networks within an organization often help shape purchase decisions by providing information and support that is unavailable through formal channels. 

Interpersonal dynamics such as power differentials between parties involved in buying processes also affect organizational purchasing behaviour; for example, suppliers may exert more influence over buyers if they possess superior bargaining power due to market dominance or industry expertise. Understanding interpersonal factors are, therefore, essential for understanding organizational buyer behaviour.

  Psychological Factors

Psychological factors heavily influence organizational buying behaviour. These factors can refer to the emotional state of individuals in a company, which affects their decision-making abilities and preferences when purchasing. Furthermore, individual attitudes towards various products or services can also influence organizational buying decisions. For example, if employees have strong positive feelings about a particular brand, they may be more likely to recommend it over competitors’ offerings.

Conversely, negative emotions towards certain brands may lead people to not purchase from them at all. Additionally, perceptions of quality and price are key psychological considerations that need to be considered when evaluating potential purchases for a business venture. Understanding these elements can help organizations make better-informed buying decisions to satisfy their customers’ needs while optimizing costs for the company itself.

  What Are The Impacts of Organizational Buying Behaviour?

• Increased Competition : Organizational buying behaviour can lead to increased competition between vendors and suppliers, resulting in better products and services at lower prices.
• Improved Productivity : Organizations with a well-defined purchasing policy can make more informed decisions when selecting their suppliers, leading to improved productivity by obtaining the right quality of goods at the best price. 
• Price Stability : When organizations purchase from a limited number of suppliers or manufacturers, they tend to develop long-term relationships with them, which helps to ensure pricing stability over time. 
• Risk Reduction : Organizations that follow a standard procedure for their purchases are less likely to face any supply chain issues than those that do not regularly adhere to any specific policies or procedures for purchasing materials and components from different sources. 
• Improved Relationships With Suppliers & Vendors : Following an organized approach in dealing with vendors & suppliers helps create mutually beneficial relationships wherein both parties strive towards improving their respective performance levels while achieving profitability objectives and shared value creation goals over the long term.
• Higher Quality Products & Services : By carefully assessing all potential options on offer – such as cost, delivery times, and product/service quality – companies can take advantage of economies of scale by negotiating bulk discounts for higher-than-average order quantities in exchange for improved quality standards across all items purchased.

  Conclusion

Organization buying behaviour is a complex process that involves multiple stakeholders, factors and impacts. It relies on the internal culture of an organization, as well as external environmental forces. Organizations can better anticipate their customers’ needs and develop strategies to improve customer satisfaction and loyalty by understanding these factors.

Organizations must also be aware of the potential for ethical issues related to purchasing decisions and take steps to ensure responsible decision-making processes are in place when it comes to their buying activities. Ultimately, by understanding organisational buying behaviour, organizations can more effectively manage purchasing operations while creating opportunities for increased efficiency and profit margins.

Our Executive Development Programme in General Management is the perfect opportunity to learn in-depth about organizational buying behaviour. With this programme, you will develop an in-depth comprehension of the principles that drive organization buying behaviour today. Through our interactive curriculum, you will gain a comprehensive understanding of how businesses make decisions when it comes to purchasing goods and services. We’ll cover market analysis, pricing strategies, supplier selection criteria and more. You’ll also have access to experienced professionals with industry knowledge who can guide your learning journey.

More Information:

Understanding Talent Management And Its Importance

What Is Supply Chain Management And Why Is It Important?

What is Strategic Human Resource Management? Definition and Examples

What is the difference between logistics and supply chain management?

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Organisational Buying: Introduction, Process, Situations and Buying Centre Roles | Business Marketing

In this article we will discuss about:- 1. Introduction to Organisational Buying 2. Organizational Buying Decision Process 3. Buying Situations 4. Buy Grid Frame Work 5. Buying Centre Roles.

• Buying Centre Roles

1. Introduction to Organisational Buying:

Organisation 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. Organisations buy in furtherance of organizational objectives, such as to manufacture and deliver goods and services to members, customers or the community.

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Organizational buying is heavily influenced by derived demand, that is, demand for an end product or for a product or service sold by the buyer’s customers. The demand for components by a manufacturer will be dependent on demand coming from their customers, the retailers and wholesalers, who in turn are reacting to demand from their customers, the consumers.

Overall consumer demand may in turn be impacted by economic, social, political and technological factors in the environment.

The organizational buying process is entirely different from the consumer buying process. While buying decisions are made relatively easily and quickly by individual customers, organizational buying involves thorough and deep analysis. Organizations purchase products ranging from highly complex machinery to small components.

In an organization, the purchase decisions are influenced by several individuals and are not made in isolation by an individual. Organizational buyers are more concerned about the price and quality of the product along with the service being provided by the vendor.

Price plays a major role, since the price of the raw materials is the investment from which profits are generated. Thus, price is a major factor which affects the profitability of the firm. Service also plays an important role, because no organization would like to buy goods from a vendor who cannot provide timely and efficient service.

Organisations adopt certain methods for buying products such as checking a sample before the actual purchase. Most organizational purchases involve purchase of products in large lots. So it is not feasible to individually inspect each and every item in the lot.

In such situations, a sample is checked assuming that this sample represents the entire lot. Like the consumer markets, organizational markets also possess certain demand characteristics. The organizational demand for products or services may be inelastic, derived, joint or fluctuating in nature.

Organizational markets normally purchase the goods or services for producing other goods and services, using these as raw materials. There are also resellers, who purchase the products to sell directly to other customers without any modifications.

Apart from producers and resellers, there are also government and institutional customers who buy the goods. Government buys goods for public utility or for use in their departments or for production purposes.

The buying decisions of organizations are influenced by environmental factors, organizational factors, social factors and personal factors. Participants in the organizational buying process play as many as seven different roles, namely those of initiator, influencer, user, decider, approver, buyer and gatekeeper.

Although organizations differ significantly from each other in their purchasing process, the various stages of industrial buying comprise problem recognition, general need recognition, product specification, value analysis, vendor analysis, order routine specification, multiple sourcing and performance review.

Marketers need relevant information about the characteristics of the industries for marketing their goods and services effectively. To search for such information, the prime sources are government and industrial publications. The Standard Industrial Classification is a process where such characteristics of manufacturing, financial and service sectors are depicted in a coded format.

Organizational Buying :

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.

Organizational Buying Behaviour :

Organizational buying behavior is the sum total of an organization’s attitudes, preferences, intentions and decisions regarding the buying behavior in the marketplace when purchasing goods for manufacturing or reselling.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); 2. Organizational Buying Decision Process :

Organizational buying behavior refers to the process of how companies or organizations buy goods and services. Organizational Buying is not an easy activity as most people think of it.

Following are the stages in the Organizational Buying process:

Stage-1 – Problem Recognition :

The first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.

Stage-2 – General Need Description :

At this stage of business buying Process Company describes the general characteristics and quantity of a needed item.

Stage-3 – Product Specification :

At this stage of the business buying process buying organization decide on the product and specifies the best technical product characteristics for a needed item.

Stage-4 – Value Analysis :

An approach to cost reduction, in which components are studied carefully to determine if they can be redesigned, standardized or made by less costly methods of production.

Stage-5 – Supplier Search :

At this stage of the business buying process buyer tries to find the best vendors.

Stage-6 – Proposal Solicitation :

The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.

Stage-7 – Supplier Selection :

The stage of the business buying process in which the buyer reviews proposal and selects a supplier or suppliers.

Stage-8 – Order-Routine Specification :

The stage of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.

Stage-9 – Performance Review :

The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modifies or drops them.

3. Buying Situations :

A buying situation relates to the circumstances surrounding a purchase that can be defined by the quality of information and experience that the buyer has concerning the products and vendors available, as well as the effort it will take to make the purchase decision.

Straight rebuy is the situation under which the buyers are engaging in the routine purchase of standard products from a familiar supplier where you don’t make any modifications from the most recent order.

A perfect example is ordering some boxes of copier paper, pens and pencils from your office supplier. It doesn’t take much effort except to confirm the sales order has been satisfied.

Modified rebuy is the situation where the purchaser is going to buy a similar product but there is a significant difference in the purchase from the previous purchase. The difference may include a change in the product specifications or a new supplier.

An example may be switching to a different type of software provided by a different vendor. This buying situation involves more effort because you are going to have to research product specifications and evaluate vendors, as well as possibly negotiate new contracts.

4. Buy Grid Frame Work :

In 1967, the Canadian, American and Israeli marketing researchers, Robinson, Faris and Wind, introduced the buy grid framework as a generic conceptual model for buying processes of organisations.

They saw industrial buying not as single events, but as organizational decision­ making processes where multiple individuals decide on a purchase. Their framework consists of a matrix of buyclasses and buyphases.

The buyclasses are:

1. New Tasks :

The first-time buyer seeks a wide variety of information to explore alternative purchasing solutions to his organizational problem. The greater the cost or perceived risks related to the purchase, the greater the need for information and the larger the number of participants in the buying centre.

2. Modified Rebuy :

The buyer wants to replace a product the organisation uses. The decision making may involve plans to modify the product specifications, prices, terms or suppliers as when managers of the company believe that such a change will enhance quality or reduce cost.

In such circumstances, the buying centre proved to require fewer participants and allow for a quicker decision process than in a new task buyclass.

3. Straight Rebuy :

The buyer routinely reorders a product with no modifications. The buyer retains the supplier as long as the level of satisfaction with the delivery, quality and price is maintained. New suppliers are considered only when these conditions change.

The challenge for the new supplier is to offer better conditions or draw the buyer’s attention to greater benefits than in the current offering.

The buyphases are:

Based on field research, Robinson, Faris and Wind divided the buyer purchase process into eight sequential, distinct but interrelated buyphases:

(i) Recognition of the organizational problem or need.

(ii) Determination of the characteristics of the item and the quantity needed.

(iii) Description of the characteristics of the item and the quantity needed.

(iv) Search for and qualification of potential sources.

(v) Acquisition and analysis of proposals.

(vi) Evaluation of the proposals and selection of suppliers.

(vii) Selection of an order routine.

(viii) Performance feedback and evaluation.

The most complex buying situations occur in the upper left quadrant of the buy grid matrix where the largest number of decision makers and buying influences are involved. A new task that occurs in the problem recognition phase (1) is generally the most difficult for management.

The buying process can vary from highly formalized to an approximation depending on the nature of the buying organisation, the size of the deal and the buying situation.

The relationship between the buyer and seller is initiated in phases 1 and 2. Assessing the buyer’s needs and determining gaps between the current and desired situation is important. Buyers need assistance in forming realistic perceptions of both the current and the desired situation.

The relationship needs to be developed during phases 3 to 7. A sales person must be aware that a buyer not only has functional needs, but psychological, social, knowledge and situational needs as well.

These components should be addressed in meetings in order to obtain commitment. The purchase can be a one-time transaction of a repetitive nature. When there are multiple deliveries, the supplier and buyer must agree on an order routine.

As buyphases are completed, the process of ‘creeping commitment’ occurs and reduces the likelihood of new suppliers gaining access to the buying situation.

During the performance feedback and evaluation phase, the relationship between the seller and buyer can develop into a longer term engagement. Buyer loyalty and customer satisfaction are primarily determined by the sales activities during this last phase.

Pros of Buy Grid Model :

The major implication of Robinson, Faris and Wind’s research is that industrial buying behaviour depends more on the buying situation than on the type of product.

The model explains the likely interaction between buyer and seller activities given the purchase needs of an organisation. It helps sales personnel deliver the correct message at the right time.

Suppliers need to fill out this matrix for their firm’s specific situation.

For each cell in the matrix (buy situation and buy phase), the following questions must be answered:

1. Is this combination of situation and phase relevant?

2. Which organisation members influence this purchase decision?

3. What are the used performance indicators?

4. What are the information sources?

The buying side of the model can be used for both consumer and business related buying processes. It applies to all purchase situations.

The model is based on the observation that buyer’s expectations and behaviour change according to whether the purchase is new, a modified rebuy or a straight rebuy.

The model can provide the basis for a formal selection process (e.g. request for information and request for proposal).

The buy grid framework proved its worth to the scientific community as one of the few industrial marketing models.

Cons of Buy Grid Model :

The organizational buying model focuses mainly on products and not on services.

A shortcoming of the organizational buying approach is the negligence the supplier’s side and the influence this party wields on the customer’s organizational decision process.

The model neglects the importance of acquisition in sales processes.

5. Buying Centre Roles :

A buying centre is comprised of all those individuals and groups who participate in the buying decision-making process, who share some common goals and the risks arising from these decisions.

Before identifying the individuals and groups involved in the buying decision process, a marketer must understand the roles of buying centre members. Understanding the buying centre roles helps industrial marketers to develop an effective promotion strategy.

When a buying centre includes many participants, the industrial/ business marketer will not have the time or resources to reach all of them. Small sellers could concentrate on reaching the key buying influences. Large sellers on the other hand go for multi-level in-depth selling to reach as many buying participants as possible.

It is important to note, that functional responsibilities and job titles are often not true indicators of the relative influence of buying center members in a purchase decision task.

The buying center is defined as members of the organization having face-to-face contact with others with respect to the purchase decision and who realize or perceive both an influence and a responsibility to a purchase decision.

In the tradition of formal organizational theory, the responsibility and authority of the member’s organizational position creates a formal stake for him/her in purchase decisions involving his domain.

Also, an individual can become a buying center member by possessing information critical to the decision. The main role participants are purchasing agents, scientists and managers.

Key Members of Buying Centre :

Within any organization, the buying centre will vary in the number and type of participants for different classes of products.

But on an average a buying center of an organization has the following seven members or a group of members who play these roles:

1. Initiators :

Usually the need for a product/item and in turn a supplier arises from the users. But there can be occasions when the top management, maintenance or the engineering department or any such recognize or feel the need. These people who “initiate” or start the buying process are called initiators.

Under this category come users of various products. If they are technically sound like the R&D, engineering who can also communicate well. They play a vital role in the buying process. They also act as initiators.

They are people who have formal authority to select the supplier and arrange the purchase terms. They play a very important role in selecting vendors and negotiating and sometimes help to shape the product specifications.

The major roles or responsibilities of buyers are obtaining proposals or quotes, evaluating them and selecting the supplier, negotiating the terms and conditions, issuing of purchase orders, follow up and keeping track of deliveries. Many of these processes are automated now with the use of computers to save time and money.

4. Influencers

Technical personnel, experts and consultants and qualified engineers play the role of influencers by drawing specifications of products. They are, simply put, people in the organisation who influence the buying decision.

It can also be the top management when the cost involved is high and benefits long term. Influencers provide information for strategically evaluating alternatives.

5. Deciders :

Among the members, the marketing person must be aware of the deciders in the organisation and try to reach them and maintain contacts with them. The organisational formal structure might be deceptive and the decision might not even be taken in the purchasing department.

Generally, for routine purchases, the purchase executive may be the decider. But for high value and technically complex products, senior executives are the deciders. People who decide on product requirements/specifications and the suppliers are deciders.

6. Approvers :

People who authorize the proposed actions of deciders or buyers are approvers. They could also be personnel from top management or finance department or the users.

7. Gate Keeper :

A gatekeeper is like a filter of information. He is the one the marketer has to pass through before he reaches the decision makers. Understanding the role of the gatekeeper is critical in the development of industrial marketing strategies and the salesperson’s approach. They allow only that information favourable to their opinion to flow to the decision makers.

By being closest to the action, purchasing managers or those persons involved in a buying centre may act as gatekeepers. They are the people whom our industrial marketer would first get in touch with.

Hence, it happens that information is usually routed through them. They have the power to prevent the sellers or information from reaching members of the buying centre. They could be at any level and even be the receptionists and telephone operators.

Related Articles:

• Consumer Behaviour: Meaning, Process, Types, Buying Motives and Factors | Marketing
• Consumer Buying Process
• Buyer’s Motive and Decision Making Process (With Diagram)
• Marketing Communication: Concept, Objectives, Process, Golden Rules and Components | Business Marketing

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The Organizational Buying Process With Example

Table of Contents

For B2B companies, understanding the organizational buying process is crucial to success. It’s important to understand how buyers make decisions and why they choose one company over another when it comes to purchasing services or products. 

Organizational buying is the process by which businesses purchase needed goods and services to maintain operations. This process typically follows a series of stages, each of which has its own unique characteristics and implications for sellers.

The Organization Buying Process Defined 

The organizational buying process is a model that explains how businesses go about making purchase decisions. It consists of five stages: problem recognition, general need description, product specification, supplier search, and evaluation of alternatives.

In each stage, buying organizations evaluate the decision-making criteria relevant to their situation and use them to narrow down their options until they find the product or service that best meets their needs. 

Example 1:  Microsoft Corporation 

Microsoft Corporation is an example of a company that has successfully navigated the organizational buying process. Microsoft first identified its need for cloud computing services, which triggered its problem recognition stage. 

Next, it evaluated various vendors who offered cloud computing services in order to determine which one best met its needs. 

Finally, it evaluated different options and selected Amazon Web Services (AWS) as its cloud computing provider based on cost, scalability, and reliability considerations. By following this systematic approach to evaluating potential suppliers and making an informed decision based on all available data points, Microsoft was able to select a supplier that best fit its needs. 

Example 2: Apple Incorporated 

Apple Incorporated is another example of a company that has successfully navigated the organizational buying process. In order to produce iPhones in mass quantities at competitive prices, Apple needed to find suppliers who could provide parts at a low cost but with high quality standards. 

After identifying its need for parts suppliers Apple began its supplier search stage by evaluating numerous potential vendors from around the world before ultimately selecting several suppliers from China based on price negotiations as well as quality considerations such as reputation and delivery timescales. 

By taking an organized approach to supplier selection Apple was able to source parts at competitive prices while still ensuring that its iPhones meet customers’ expectations in terms of quality and performance.  

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The Steps Of The Organizational Buying Process

Organizational buying is a complex process that involves multiple stakeholders, decision-makers, and influencers. It is important to understand the organizational buying process in order to effectively target and market to potential customers. 

The organizational buying process consists of five distinct stages: needs identification, supplier search and evaluation, purchase decision-making, purchase implementation, and supplier performance review. 

Let’s take a look at these stages in more detail. 

Needs Identification: 

This stage involves identifying an organization’s needs for goods or services. Different departments within an organization may have different needs for products or services that are required for their daily operations. 

For example, an IT department may need new hardware or software while the marketing department may need services such as graphic design or website development. 

Supplier Search and Evaluation: 

This stage involves researching potential suppliers who can provide the goods or services that are needed by the organization. During this stage, organizations will evaluate potential suppliers on factors such as price, quality of goods/services offered, delivery timescales, customer service levels etc., before making any decisions about which supplier to use. 

Purchase Decision Making: 

Once all of the research has been done and the suppliers have been evaluated on various criteria, then it is time for the organization to make a decision about which supplier to use for their purchase. 

Organizations typically involve multiple stakeholders in this decision-making process in order to ensure that all relevant perspectives are taken into account when making a final selection of supplier.  

Purchase Implementation: 

Once a supplier has been selected by the organization then it is time to implement the purchase agreement with them. This includes signing contracts and setting out payment terms between both parties involved in the transaction. 

It is also important that both parties are clear on what exactly is being purchased as well as any additional costs associated with delivery or installation of goods/services etc., if applicable. 

Supplier Performance Review: 

After completion of all contractual arrangements between both parties it is important to review how well they performed during each stage of the purchasing process in order to identify any areas where improvements could be made going forwards. 

Organizations should always keep track of how their suppliers perform so that they can adjust their approach accordingly when selecting new suppliers in future purchases. 

The Role Of The Purchasing Department In The Organizational Buying Process

The purchasing department is responsible for making all purchasing decisions within an organization. In order to ensure that these purchases are made in a cost-effective, efficient manner, these decisions must be based on comprehensive research and analysis. 

The Role of the Purchasing Department 

When it comes to making purchasing decisions, the responsibility falls to the purchasing department. This department is responsible for analyzing data and conducting research to determine which products will be most beneficial to their organization. 

This includes researching potential suppliers, evaluating product quality and pricing, negotiating terms with suppliers, and ensuring compliance with legal regulations. 

In addition, they must also take into consideration any changes in market conditions or customer demands that may impact their purchase decisions. 

Analyzing Data and Research 

In order for a purchasing department to make informed decisions about potential purchases, they must analyze data and conduct research on potential suppliers and products. 

This includes gathering information from internal sources such as inventory lists or sales figures as well as external sources such as industry reports or competitor analyses. By doing this, they can get a better understanding of what products will meet their organizational needs at the best price point.  

Negotiating Terms with Suppliers 

Once a purchasing decision has been made, it is then up to the purchasing department to negotiate terms with suppliers. This includes setting up payment terms, delivery methods, quality requirements, warranties, etc. 

It is important that these negotiations are conducted in an open and honest manner so that both parties can come away with a mutually beneficial agreement.   

Key Factors That Influence The Organizational Buying Process

The organizational buying process is a complex process. It involves multiple stakeholders, each with their own objectives and goals. In order to understand how to optimize the process for success, it’s important to first understand the key factors that influence it. 

Stakeholders and Decision-Making Structures 

The organizational buying process is heavily influenced by who is involved in the decision-making process. Depending on the size of the organization, there may be a variety of stakeholders who have different roles in making buying decisions. 

This could include executive level managers, middle managers, department heads, and individual buyers. Each stakeholder has different interests and objectives that can influence the outcome of the decision-making process. 

In addition, larger organizations are often structured into departments or divisions, each with its own decision-making structure. Understanding this structure can help you better anticipate how decisions will be made within an organization and ensure that you’re targeting your marketing efforts accordingly.  

Environmental Factors 

Another key factor that influences the organizational buying process is environmental factors. These include economic conditions, technological advances, customer preferences, competitive pressures and government regulations. 

Organizations must consider these external factors when making purchasing decisions in order to stay competitive in their market or industry. 

For example, if customer preferences shift towards a new type of technology or product offering, businesses must respond quickly or risk becoming outdated or irrelevant in their market space.  

Organizational Characteristics 

Finally, there are various characteristics of an organization itself that can influence its buying behavior such as budget constraints and purchasing policies and procedures. Organizations often have specific budget constraints they must adhere to when making purchases which can limit what types of products or services they are able to purchase at any given time. 

Additionally, organizations may also have specific purchasing policies or procedures they must follow in order to comply with legal requirements or internal control standards. Understanding these policies can help you tailor your sales approach accordingly so you don’t run afoul of any rules during your sales interactions with potential customers.  

Organizational Buying Process Vs Consumer Buying Process

Every day, businesses and consumers alike make decisions about what products or services to purchase. But while the same basic concepts apply, there are a few key differences between how organizations and individuals go about making these decisions.

Blog Body: Decision-Making Unit 

The first main difference between an organization’s purchasing process and an individual’s purchasing process is the decision-making unit. Organizations often have many people involved in the decision-making process, such as different departments and various levels of management, who all need to approve the purchase. 

This means that there must be consensus among all parties involved before any action can be taken. On the other hand, an individual buyer only needs to consult with themselves before making a purchasing decision. 

Risk Involved 

Another difference between organizational and consumer buying processes involves risk. Organizations tend to take greater risks when making their purchases since they are investing more money than an individual would. 

For example, if an organization invests $50 million in new software, they will likely spend more time researching different options before finally settling on one vendor over another because they don’t want to risk losing that money if their purchase turns out to be a bad investment. 

On the other hand, a consumer might not bother researching too much before spending $50 on something because that amount of money isn’t as large of an investment for them as it is for an organization. 

Nature of Buying Decision 

Finally, organizations and individuals differ in terms of the nature of their buying decisions. Organizations typically look for lower prices so that they can get more value out of their purchases while individuals usually prioritize convenience over cost savings when making their purchases. 

For example, if a company needs new office furniture for its employees, it will likely focus on finding furniture at low prices in bulk quantities rather than just getting what it needs from one vendor quickly even though it may cost them more in the long run. 

Meanwhile, a consumer may opt for convenience by ordering furniture from one vendor even though it may be slightly more expensive than buying from multiple vendors because it saves them time and effort in comparison.

Common Challenges In The Organizational Buying Process

The organizational buying process is an intricate, complex system. It involves multiple stakeholders and decision makers, numerous steps, and a variety of challenges. While understanding the organizational buying process can be difficult, it is essential for companies that want to succeed in their markets. 

Here’s what you need to know about the common challenges businesses face when navigating the organizational buying process. 

Analyzing Buyers 

The first step in any successful organizational buying process is to understand your target buyers. Companies must analyze their buyers’ needs and wants, preferences, motivations, and objectives to ensure they are providing the right product or service at the right price. 

This requires thorough research into potential buyers’ demographics and psychographics as well as an understanding of their purchasing power. 

This step can be especially difficult if a company is targeting multiple segments or markets. 

Understanding Buyers’ Requirements 

Once you have identified your target buyers and understand their needs, you must then determine how best to meet those needs. Each buyer may have different requirements for what they expect from a product or service; some may require customization while others may need specific features or delivery times. 

Organizations must take these requirements into account when developing their solutions so that they can satisfy all customer expectations without compromising quality or performance. 

Managing Internal Conflicts 

In any organization there will be internal conflicts between various departments and individuals over which solution will be chosen by customers. These conflicts can arise due to differences in opinions on prices, product features, delivery times, etc., which can slow down the decision making process as groups debate over which option is best for them, and ultimately for customers. 

Companies must be prepared to manage these internal conflicts efficiently so that they don’t affect customer satisfaction levels or delay shipping times unnecessarily. 

Case Study: A Real-World Example Of The Organizational Buying Process

Understanding how customers make decisions is critical for businesses. This is especially true when it comes to the organizational buying process, which can be complex and unpredictable. 

To help you better understand how this process plays out in real life, let’s take a look at a case study involving an organization that recently went through this process. 

The Case Study 

The organization in question was a large nonprofit that needed to purchase software to manage their donor database. To select the right software, they had to go through five stages of the buying process: problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. 

Problem Recognition: 

At this stage, members of the organization’s leadership team identified their need for new software by analyzing their existing system and determining which areas could be improved upon. They then met with IT staff to discuss potential solutions and what kind of features they would need from a new software package. 

Information Search: 

After deciding on their criteria for selecting software, members of the IT team conducted extensive research into various options. They compared different packages based on price, features, scalability and customer service options before narrowing down their choices. 

Evaluation of Alternatives: 

Once they had identified several contenders for their donor management software needs, members of the leadership team evaluated each option based on performance metrics such as ease-of-use and reporting capabilities. They also looked at customer reviews and testimonials before making their final decision. 

Purchase Decision: 

After careful consideration, the leadership team chose one particular package that best fit their needs and budgeted accordingly. After signing a contract with the vendor, they moved forward with implementation. 

Post-Purchase Behavior: 

Once the software was installed and operational, members of the IT staff monitored usage metrics such as user adoption rates to ensure that it was meeting expectations. They also kept an eye out for any problems or glitches that may arise during initial use so that they could address them quickly.

How To Foster Collaboration During The Organizational Buying Process

The organizational buying process is essential to understanding how an organization can effectively and efficiently purchase goods or services. It is important for organizations to understand this process as it can help them make better-informed decisions on purchasing initiatives. 

Additionally, collaboration among decision makers during this process is a key factor in increasing efficiency and productivity. Let’s take a look at some of the ways organizations can foster collaboration within the organizational buying process. 

The first step to successful collaboration within the organizational buying process is setting goals and objectives. These should include desired outcomes, expected timelines, budget constraints, and any other details that need to be discussed in order to reach a consensus among stakeholders. 

Once these objectives have been outlined, it becomes easier to establish roles and responsibilities between decision makers. This helps set expectations for all involved and encourages collaboration by providing clarity on who is responsible for what tasks throughout the process. 

Another way to foster collaboration within the organizational buying process is through communication channels such as emails, video calls or messaging platforms like Slack or Microsoft Teams. 

Establishing clear communication protocols makes sure everyone stays on track with their tasks while allowing stakeholders to easily check in with each other if there are any issues or questions that need addressing before moving forward with a purchase decision. 

Additionally, having consistent meetings with all stakeholders also helps ensure that everyone understands their role throughout the entire process from start to finish. 

Finally, having data-driven discussions about potential solutions can help promote collaboration within the organizational buying process by allowing decision makers to present their findings in a structured manner while encouraging feedback from others in attendance. 

Utilizing data-driven insights allows stakeholders to make decisions based on facts rather than gut feelings which decreases risk and increases efficiencies when making purchasing decisions. 

Additionally, when all involved parties are able to draw conclusions based on hard data it reduces chances of disagreement or confusion as everybody has access to the same information which can then be used when formulating strategies for moving forward with purchases.  

How To Balance Cost And Quality In The Organizational Buying Process

In organizational buying processes, you need to balance cost and quality. This process can be difficult to navigate because quality and cost are often inversely related. If you want the best quality, you may have to pay more, while if you want a cheaper option, you may be compromising on the quality of your product or service. 

Therefore, it is important to analyze both cost and quality before making any decisions. Let’s look at four strategies you can use when balancing cost and quality in organizational buying processes. 

Strategy 1: Analyze Your Needs Carefully 

Before starting the buying process, take some time to analyze your needs carefully. Make sure that you know exactly what type of product or service you need and what features it should include. 

Then create a list of criteria that the product or service must meet so that it will fit with your organization’s goals. This will help narrow down the options and make sure that whatever product or service you choose will meet your needs for both cost and quality. 

Strategy 2: Research Multiple Vendors 

Once you have identified your needs, start researching multiple vendors who provide products or services that fit those needs. Compare different vendors based on their price points as well as their reputation for providing high-quality products or services. 

Be sure to read customer reviews and ask for references before making a decision about which vendor to use. This will help ensure that you find a vendor who meets both your cost requirements and provides excellent quality products or services. 

Strategy 3: Negotiate With Vendors 

Once you have identified a few vendors who meet your needs, it’s time to negotiate with them in order to get the best deal possible on price without sacrificing too much on quality. 

You can do this by discussing potential discounts or other incentives they may offer in exchange for using their services or purchasing their products. 

It’s also important to make sure that any agreement includes clear terms regarding price restrictions and guarantees of high-quality products or services so that there is no confusion about what is expected from each party involved in the transaction.     

Strategy 4: Monitor Results Over Time 

Once the purchase has been made, monitor the results over time to ensure that both cost and quality remain consistent throughout the life of the agreement between yourself and the vendor(s). Pay attention not only to how much money was spent but also how long it took for results to be achieved as well as any issues with delivery times or customer satisfaction levels associated with each product/service purchased from each vendor involved in the transaction(s). 

Doing this will help ensure that both parties receive value from their investment over time without sacrificing too much on either end of the bargain when it comes to costs vs. benefits received from each transaction made between them during this process.

The Future Of The Organizational Buying Process

The way businesses purchase goods and services has changed dramatically over the past five years. As technology continues to advance, so too does the organizational buying process. 

Technology Evolution 

The biggest factor driving the evolution of the organizational buying process is technology. Technology is changing the way companies purchase goods and services in a variety of ways. 

First, it is making it easier for businesses to compare prices across vendors, allowing them to get the best deal possible. 

Second, it is providing companies with more access to data about their customers and suppliers, allowing them to better understand their needs and preferences. 

Finally, technology is making it easier for companies to automate parts of their purchasing process, freeing up time and resources that can be used in other areas. 

Impact on Businesses 

The changes in technology are having a profound impact on businesses that are part of the purchasing process. For example, vendors are now able to offer more customized pricing options based on customer needs and preferences. 

This allows them to compete more effectively against competitors who may have lower prices but don’t have access to the same level of data or customization capabilities. 

Additionally, companies that can effectively leverage data to customize offerings are able to increase customer satisfaction, loyalty, and repeat purchases—all key factors in driving profitability. 

Impact on Customers 

The changes in technology are also having an impact on customers who participate in the organizational buying process. Increased access to data allows customers to make more informed decisions when selecting vendors and products/services. 

Additionally, increased customization options mean that customers can find products/services that better meet their individual needs without sacrificing quality or price points. 

Finally, automation of certain elements of the purchasing process makes it easier for customers to buy from vendors they trust without having to spend hours researching options or waiting for quotes from multiple vendors. 

The Impact Of Globalization On The Organizational Buying Process

In today’s global economy, organizations have access to a far larger pool of potential suppliers than ever before. As a result, the organizational buying process has become increasingly complex.

The Impact of Globalization on the Organizational Buying Process 

Globalization has had an immense impact on the organizational buying process in recent years. By providing organizations with access to a much larger pool of potential suppliers, it has opened up new opportunities for organizations to purchase goods and services at lower prices or higher quality than they could find locally. 

However, this also presents some challenges for organizations as they attempt to navigate this ever-expanding supplier base. 

One challenge that globalized markets present is increased complexity in supplier management. With so many potential suppliers available, organizations must be sure to develop processes and systems that can effectively track and manage relationships with all their suppliers. 

Additionally, since many of these suppliers may be located in other countries or regions, organizations must ensure that they are meeting all local regulations and laws when engaging with them. 

Another challenge presented by globalization is increased competition in the marketplace. Organizations now have more options when selecting a supplier or service provider than ever before, which can make it difficult for them to differentiate between providers and choose one that meets their needs best. 

Additionally, with so many options available, it can be difficult for an organization to stand out from its competitors in order to attract new customers or retain existing ones. 

The organizational buying process is complex, but taking the time to understand it can help your business build strong relationships with customers and make smart purchasing decisions. By considering key factors that influence the process, understanding common challenges, and maintaining a balance between cost and quality, you can streamline the organizational buying process for your business.

References 

https://www.shopify.com/uk/enterprise/b2b-buying-process

https://www.sana-commerce.com/blog/how-to-be-selected-in-the-b2b-buying-process/

https://hbr.org/2017/03/the-new-sales-imperative

Related posts:

• B2B Organizational Buying Considerations
• What Are The 7 Stages In The B2B Buying Process?
• Which B2B Buying Decision Is The Most Complex?

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What is Organizational Buying Process with Example

Organizational Buying Process Refer to the process through which any Organization Goes Through in Order to make any purchase or buying decision. Just like normal people go through various stages in order to buy a particular good Industries/ Organization to goes through it.

Every Organization and Industry has to purchase various goods and services in order to keep their business running.

The complex and problem-solving process through which organization/Industries go through while making these buying decisions is known as Organizational Buying Process.

The behavior that they show during this Process is Known as Organizational Buying Behaviour

Steps In Organizational Buying Process

It is not the organization making the decision it’s their members who make the buying decision. It is a Group based activity in Industrial Buying

Let us go through Various Steps Through Which an Organization might go in order to make their Buying Decision.

Any Organization go Through these 6 Stages In order to make a buying Decision

STEP 1 :- Problem/Need Recognition

Organization Buyer always Start with the problem recognition with identification of demand for a particular product in the market.

It can be a need of buying more inventory like printer, bench or to solve a particular problem like under production by buying more machine.

Unlike Consumer need Recognization is not always a complex it can be routine work. Problem Recognization is not always for solving a problem it can also be to grab an opportunity in the market.

In this organization see and identify the problem of their end customers and also their consumption pattern.

Example :- Suppose you own 10 food courts in your city and you sell burger over there and you find that more consumer is asking for sandwiches. Now you have identified the problem and a new opportunity. Now you need to find a vendor to buy and sell sandwiches. So once you recognized your need its time to go to the next step.

STEP 2 :- Product Specification 

This Stage Involve Clearly Understanding the problem in hand and laying down all the general characteristics of the product or service that might solve the given problem.

For any organization, it is necessary to estimate the exact quantity and the period in which Product need to be delivered.

Example :-  Now as in the previous Step we identified that our customers are being shifted from burger to Sandwiches.

Now we need to estimate How much Quantity of Product say packets of sandwiches, Type of sandwiches and when do we need them.

Now we find that we need 500 packs of sandwich bread every day on a regular basis in the morning at 8:00 Am. Now its time to move to our Next Step. 

STEP 3 :- Product and vendor Search

Its time to find the required product and the list of all the vendors available. Now as you know the product specification now organizational buyer will try to find various suppliers that can solve the problem and also qualify to be suitable suppliers. 

Organizations need to collect a lot of information from various resources such as Company Files, Current supplier detail, Records, directories, Connections, Websites, Word of mouth in order to get a list of suppliers.

Example :- Now we know which type of bread do we need and how much we need and when do we need.

In this step, we will look at the ous option of Product and their vendors, wholesaler, distributor, available in our area in order to make a list of them

Now we had used our contacts searched web and made a list of all product and suppliers that are available in our city.

STEP 4 :- Product and Vendor Evaluation

In this step as we searched and made a list of all the available vendors and alternatives available to us its time to evaluate all those alternatives.

In this step, we will be evaluating all the available products and their vendors in order to select the most appropriate among them.

We will evaluate all the vendor available to us on various parameter and basis such as:- 

• Product quality
• credit availability
• reliability
• value Analysis
• cost analysis
• Capability of Supplier
• Reputation of Supplier
• After-sale Service

The supplier will also be evaluated on the basis whether or not they can supply the requires quantity of products and their after-sale service

Example:- Now we have got the list of all the suppliers available to us Its time to evaluate them and their products as well

Let’s suppose They have two types of bread for making sandwiches and there are 20 suppliers in your area who can supply you the required products

First, you need to decide the product in our case its bread that which type of bread you want to use.

Once you are done with bread Its Time to evaluate all the supplier based on their bread quality, price and whether they will be able to supply the required quantity on time or not.

Once you evaluated all the supplies its time to move to the step.

STEP 5 :- Outlet Selection and Purchase

In the last step, we had evaluated all the suppliers and Products available to us.

This step involves the selection of the final product and the supplier based on the information gathered during the Evaluation Process.

In this step, we will finally select our vendor. 

Example:- In the last step as we had evaluated all the supplier and product available to us. Now its time to finally choose one who fits our need and makes the final purchase or we can say palace our order for loaves of bread. 

STEP 6 :- Post Purchase Evaluation

Finally, we are at our last step of organization buying Process

This step involves the evaluation of the performance of the supplier by the organization.

The major part of the post-purchase evaluation is the service of the supplier, quality of the product delivered, delivery on time, customer response, After-sale service by the supplier, etc.

The motive of the step is to minimize the dissatisfaction and to encourage customers to tell us our mistakes to make improvements.

Example ;- In the last step we had placed the order for the bread. In this step, we will evaluate our decision of making a purchase.

Its time to evaluate how supplier responds to our quarries, quality of bread delivered, time of delivery, Behaviour of supplier and whether your organization is satisfied with the purchase does purchase fulfill the organization objective or not.

Organization Behaviour is a Behaviour That a organization show during the decision making and buying process is known as Organizational Behaviour

Organizational buying Process is a process through which an organizatin Goes in order to purchase a particular Product or service. 

There are six Steps involved in the Organizational Buying process. 

• Need/ Problem recognization

2.Product Specification

• Product and Vendor search
• Product and Vendor Evaluation 
• Outlet selection and purchase

6.Post Purchase Evaluation

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Organizational Buying Process

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1. Explain all elements of the organizational buying process including the influences and stages

J Paul (Chapter 4) have stated that the need for an understanding of the organizational buying process has grown in recent years due to the many competitive challenges presented in business-to-business markets. Since 1980 there have been a number of key changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importance given to developing partnerships with suppliers.

Organization Buying Process

There are eight phases in the buying and these are purchase initiation; evaluations criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice implementation The first phase of purchase initiation requires an initiator to begin or start the process of buying and the requirements are given to the purchase department. In the second phase, the evaluations criteria are formed and boundaries are set in which parameters for evaluation of the product is set. The next stage is the information search where the purchaser begins searching for suitable vendors from either the existing suppliers or from external suppliers who are not registered with the company. Once the information is searched then comes the stage of supplier definition for the request for quotation and in this stage, qualified vendors are asked to respond to a request for quotation. Once the suppliers respond with the quotations, then the quotations are reviewed and based on the best choice between quality and price, the selected suppliers are called in for a negotiation. At this stage, the organization can decide which supplier can be given the contract. Factors such as previous track records, adherence to deadlines and quality aspects and the price factor and other commercial aspects may influence the decision to award the contract to a specific buyer. Once the choice is made, then the vendor is informed and details such as the purchase order, delivery schedule, payment terms, etc. are informed to the buyer.

Influences in Purchase

Paul (Chapter 4) mentions different types of producers and they can be grouped into categories such as Producers, Intermediaries, Government Agencies and Other Institutions. The author has suggested that there are different types of influences on the buying process and they are: Purchase Type Influences; Situational Influences and Behavioral Influences.  Purchase Type influence includes Straight Rebuy, Modified Rebuy and New Task Purchase. In Straight Rebuy, involves routinely reordering from an existing supplier and Modified Rebuy considering a limited number of alternatives before making a selection while New Task Purchase involves an extensive search for information and a formal decision process. Situational Influences include a number of players such as Purchasing roles; Initiators the people that recognizes a need or problem and starts the purchasing process; Users people who actually use the product; Influencers are people who affect the buying process;

Buyers The people who have the authority and responsibility to select the suppler and negotiate the terms of the contract; Deciders The person who has the power to select the supplier and receives the contract and Gatekeepers who control the flow of information in the buying center. In addition, there are Organization- Specific Factors and Purchasing Policies and Procedures that are part of the situational influence. Behavioral Influences include Personal Motivations where Buyers are often influenced by personal factors such as friendship, professional price, fear and uncertainty, trust and personal ambitions and Role Perceptions where Individuals behavior depends on their perception of their role, their commitment to what they believe is their expected role and what it is to be perceived as.

Stages in Purchase

Paul (Chapter 4) has mentioned four stages in organizational buying and these are Organizational Need, Vendor Analysis, Purchase Activities and Post purchase Evaluation. organizational Need the organizations need to recognize their needs and have a willingness and ability to meet them while in Vendor Analysis, Buyers must search for, locate and evaluate potential providers of goods and services and Suppliers are rated on product quality, on-time delivery, price, payment terms and use of modern technology. Purchase Activities can involve long time periods of negotiations on price and terms and formal contracts stating quality, delivery and service criteria while in the Post purchase Evaluation, evaluations need to be done on whether the products are acceptable for future purchase or should a new supplier be found.

2. Compare the organizational buying process to the consumer buying process

This section provides a comparison between consumer and organizational buying.

How are the buying processes different?

Paul (Chapter 3) has pointed out that there are many unique influences in consumer buying and these tend to make the buying process for consumers different from organizational buyers.

Consumer buyers are subjected to influences such as Social Influences, Cultural Influences, Culture and Subculture, Social Class, Reference Groups and Families and in addition there are a number of Marketing Influences, Situation Influences and Psychological Influences. Consumer buying is influenced by many factors that have been researched extensively. Social influences have both direct and indirect effect on the buying process. Cultural influence are defined by a number of values such as Achievement and success activity, Efficiency and practicality, Material comfort, Individualism, Freedom, External conformity, Humanitarianism, Youthfulness and Fitness and health. In addition, consumer buying is influenced by social classes such as upper class, middle class, working class and the lower class. The drivers, needs and aspirations for these classes are very different from each other.

Marketing Influences have a great impact on consumer buying and these include· Product Influences, Price Influences, Promotion Influences and place influences. Product Influences are formed by marketers which differentiate their products from their competitor and create the perception of a worthwhile product purchase and includes features such as Brand name, quality, newness and complexity. Price Influences have an impact and conscious consumers may buy products more on the basis of price than other attributes. Promotion Influences include Marketing communications that can influence consumers to think about products, what emotions they experience in purchasing and using them and what behavior they perform including shopping in particular stores and purchasing specific brands while Place influences can include Products that are convenient to buy in a variety of stores increases the chance that consumers finding and buying the product, products sold in exclusive stores may be perceived by consumers as having a higher quality and that products offered by non-store methods create consumer perception that the products are innovative and exclusive.

Organizational buyers (Paul, Chapter 4) are relatively free from such influences and the buyers are professional buyers who have to operate with a set of organization policies and rules. For such buyers, time, quality, deadlines and price are the most important factors. Since organizations buyers  buy in bulk, they can negotiate for lower costs and they can also demand certain redesigns or customization and can demand that goods be door delivered. They also have the power to reject substandard products and can withhold payment if the supplier does not satisfy the requirements. The organization buying process is more structured and rationale and is dependant on quality requirements of the user. Cultural, social and group influences have little effect on such buying. There is lesser involvement of middlemen, computer systems are used for buying and there is a derived demand.

How are the buying processes similar?

Paul (Chapter 3, Chapter 4) has suggested that the overall buying process for consumers and organizations are similar. Similarities are consumer/ organization need; vendor analysis, Purchase Activities and Post purchase Evaluation. Both evaluate a product and rate it as per the quality, price and performance and both types of buyers may evaluate multiple vendors before asking for rates or reduction in rates. This is especially true for large value purchases such as house and car for consumers and plant and machinery for organization buyers. Both consumers may take up extensive search for information and in addition, there is the buying activity on both buyers and a post evaluation where the product that is bought is evaluated on the real and the perceived value.

J.Paul Peter James H. Donnelly, Jr.”A Preface to Marketing Management”; 10th Edition

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BUS203: Principles of Marketing

Course introduction.

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Course Syllabus

First, read the course syllabus. Then, enroll in the course by clicking "Enroll me". Click Unit 1 to read its introduction and learning outcomes. You will then see the learning materials and instructions on how to use them.

Unit 1: The Definition and Principles of Marketing

Many people incorrectly believe that marketing and advertising are the same. In reality, advertising is just one of many tools used in marketing, which is how firms determine which products to offer, how to price those products, and who they should be made available to. We will explore ways marketing departments and independent agencies answer these questions, whether through research, analysis, or trial and error. Once a company identifies its customer and product, marketers must determine the best way to capture the customer's attention. Grabbing the customer's attention may entail undercutting competitors' prices, aggressively marketing with promotions and advertising (like "As Seen on TV" ads), or targeting ideal customers. The strategy a marketing firm chooses for a particular product is vital to the product's success. The idea that "great products sell themselves" is simply not true. By the end of this course, you will be familiar with the art and science of marketing a product.

Completing this unit should take you approximately 6 hours.

Unit 2: Segmenting, Targeting, and Positioning

Philip Kotler, the grand dean of marketing textbooks, has suggested that if marketers can nail their target and position, all other aspects of a marketing campaign will fall into place. Target and position define whom we are trying to reach with our marketing campaign and what message (or position) we will use to connect. The concepts of targeting and positioning are so critical to marketing success that we now dedicate an entire unit to them.

Completing this unit should take you approximately 2 hours.

Unit 3: Customers and Marketing Research

Marketing is all about the customer. But who is the customer? If you are a car manufacturer, you have multiple types of customers. You might have governments and rental agencies that wish to buy fleet vehicles. We call these customers business-to-business (B2B). You would also have dealerships to whom you want to sell your cars; this is also B2B. Then, there are the end-users or dealer's customers. Though the dealer owns the car when it is sold, the manufacturer almost always plays a crucial role in marketing that car. Identifying your target customer can be difficult, but with the proper definitions and the right research, marketers will know their customers better than they know themselves.

Completing this unit should take you approximately 7 hours.

Unit 4: Life Cycles, Offers, Supply Chains, and Pricing

Products do not last forever. New products typically cost more than existing products due to the high costs associated with production and development. Technology products best illustrate this. The fact that initial customers will be early adopters of a new product affects the marketing strategy. As the product grows and matures, the strategy changes; marketers lower the price over time. When a product is in the declining stage, most competitors leave the market, and prices are very low. At each stage, the marketing of the product is different.

When a new product is developed and offered, a company must consider what will create the product's value to the customer, whether the customer is a consumer or another business. Marketers must always ask where a new product will fit in their current lineup and how the new product will serve as an extension of an existing brand. Take the car manufacturer BMW. They make sporty luxury vehicles aimed at the upper-middle and wealthy classes.

Developing an inexpensive, lower-quality vehicle to compete with cars in another class may dilute the brand and hurt sales. However, suppose BMW were to market the vehicle under a different brand. In that case, they could diversify their product portfolio, avoid the risk of diluting the BMW brand and be able to reach new customers all at the same time. Some firms go to great lengths to disassociate their brands from one another, while others embrace a family of brands model. Appropriate decisions vary by industry and strategy. Equally crucial in delivering value to the customer through an offering is how a company sources the goods and services necessary for production and delivers the end product for customers to purchase. This process is known as the supply chain.

Finally, in this unit, we will examine issues in pricing, including the costs of delivering a product, customer and societal perspectives, the impacts of competition, and ultimately the revenues a company may generate.

Unit 5: Distribution and Promotion

Once marketers have identified the right product and determined appropriate pricing, they must decide how to raise awareness and distribute the product effectively. This unit will focus on these decisions. Distribution is a complex process involving taking a product through the manufacturing process, shipping to warehouses, distributing to sellers and customers, and returning products. Marketers must work with supply chain managers to determine the best method to route products. If marketers expect sales to be heavier in the northeast than in the west, additional resources will need to be allocated there to meet demand. There are several strategies for moving a product through various distribution channels. These vary based on anticipated demand, actual demand, and competition. Marketers must have a proactive strategy; they cannot sit on inventory and wait for orders because inventory storage is expensive, and a lack of sales is disruptive.

The final and arguably most vital aspect of marketing is the actual promotion of the product. This can take the form of giveaways, competitions, advertising, sales, and anything else a creative manager can think of. Marketers must consider several aspects. If you employ a sales staff to promote the product, how do you compensate them? If you pay a commission, how much commission will be paid per unit? Will the sales staff be given discretion on price, or do you want to send a consistent message that the price is locked in? If a new company has limited funds for advertising campaigns, might they use public relations tactics to gain free media coverage? These are just a few considerations that marketers must consider. This final unit will provide you with tools to make the best possible promotion decisions.

Completing this unit should take you approximately 5 hours.

Unit 6: Launching a Marketing Campaign

Marketing is not just a matter of internal strategies and customer analysis. There are factors outside of the company that must be considered with any marketing strategy. Though marketers can control how they might respond to customer needs and expectations, they face the often-unpredictable reactions of customers to them. Maintaining customer satisfaction is essential to sustainable success. Marketers need to be sensitive to the regulatory and ethical constraints that may be placed upon them by a wide range of domestic and international industry standards and society's expectations. Companies must also face social forces that challenge their success. For example, marketers must be aware of each region's social and cultural aspects in which they choose to market a product. Even a worldwide brand such as Coca-Cola must adjust its marketing strategy for every region it enters. An awareness of the cultural factors affecting a marketing strategy can make the marketing message much more effective. Often, marketers will address social issues relevant to the lives of their audiences or society with social marketing campaigns. Finally, as a marketing campaign prepares for its launch, all the issues addressed in this and earlier units must come together in a formalized document – the comprehensive marketing plan.

Completing this unit should take you approximately 4 hours.

Unit 7: Social Media Marketing

Social media refers to digital technologies which allow people to interact. The foundation stems from how people talk and behave without a standard set of rules or principles to follow. There can be a shift in social media set by the users, which causes tech developers and marketers to adjust the way they create or produce. Therefore, it is critical to understand social media and stay abreast of the trends and patterns in data. Social media buzz does not necessarily mirror society. The insights found on social media are sometimes a poor reflection of real social life. In this unit, you will understand the trends, content, communication, platforms, and marketing used across social networking sites (SNS). The next sections will guide you in understanding each component.

Completing this unit should take you approximately 3 hours.

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Organizational Buying Behavior

Introduction.

Corporate purchasing is the system of decision-making through which social groups identify, identify, assess, and select substitute products and vendors. Organizations acquire services and goods to representatives, consumers, or the community following organizational aims, such as production and delivery (Jonsson & Holmström, 2016). The demand for a finished piece or even for a service or product offered for sale by the purchaser’s customers is primarily affected by organizational purchase (Smith, Busi, Ball, & Van Der Meer, 2019). A manufacturer’s demand for components will rely on demand from its customers, retailers, and distributors who respond to their clients’ orders, the consumers.

Concerning buying centers, companies acknowledge that all stakeholders need to work collaboratively to oversee the procurement process for alternative equipment and other resources that would help address the potential issues threatening the success of their various operations. The emotional and psychological factors are generally unobserved (Lilien, 2016). By neglecting these less concrete aspects of sales, a seller may lose sales and may not even know why.

Taiwan Semiconductor Manufacturing Company’s (TSMC) Case Study

Thus, Taiwan Semiconductor Manufacturing Company’s procurement process illustrates the distinct organizational buying behaviors and the buying sectors. Notably, since it was established in 1987 and has always been the significant semiconductor fabricator ever since, the wholly-owned foundry model has been developed by TSMC (Inoni, Salami, & Olannye, 2019). The enterprise supports a thriving ecosystem of international partners and customers with leading process technology and innovative enablement solutions for the worldwide semiconductor industry (Cho, Moh, & Liu 2016).

Buying Behaviour: Howard Sheth Model

TSCM’s stakeholders value the marketing, social and psychological elements in determining their distinct purchasing behaviors. The Howard Sheth theory refers to an approach to assessing the combined influence on the purchase intention or preference of consumers and industrial buyers on the social, cognitive, and marketing elements in a precise sequence for processing information.

The Psychological World: The Buying Centre

TSMC conducts sustainability initiatives and sets out multiple effective and open stakeholder channels of communication. These networks aid TSMC in understanding its requirements and aspirations as essential benchmarks of our CSR policies and plans. A company that enhances its supply chain reach can deliver higher performance and market share (Cambra-Fierro, Centeno, Olavarria, & Vazquez-Carrasco, 2017). The key to the growth and continued existence of SMEs is customer satisfaction. The critical indicator is identified to distinguish between high or successful business performance and low or unsuccessful business performance in today’s society (Inoni et al., 2019). In other words, organizational performance can be improved due to the customer gratification product value or service provided by a particular organization.

The Buying Conditions or Situation

With the argument that a company’s purchasing behavior determines its success, TSMC acknowledges the significance of both the internal and external influences. For instance, the goal-oriented unit values its collaboration with the Openfire despite several other vendors available for selection. Openfire is developing a strategy into highly integrated custom domain SoCs. Besides, the enterprise improves the significance of its customer products through innovation at all phases of creation and then delivers thoroughly tested silicone and platforms to its partners.

The Joint Decision-Making Process

Interestingly, TSMC considers collaborating with suppliers that promote the principles of corporate social responsibility. The business is lucky to work with a few of its industry’s most sustainable and ecologically aware customers and partners (Schleper, Blome, & Wuttke, 2017). The partners and the client, both of whom they work with, are actively committed and proud to be engaged in a company focused on human beings, the planet, and financial gains. Thus, the stakeholders are also committed to their sustainable practices (Ariffin, Yusof, Putit, & Shah, M. I. A., 2016). Additionally, to have a social responsibility, a company must first be responsible to its shareholders. The more noticeable a company is and the greater its responsibility because of its compatriots, the more competition and sector to define standards of conduct it receives.

The Buying Centre

Organizational markets also have specific demand characteristics, as in consumption markets (Schleper et al., 2017). Current macroeconomic customers are buying the goods, apart from manufacturers and resellers. The government purchases goods for public use or use in or for industrial purposes in its departments. Organizations’ procurement decisions depend on environmental, strategic, social, and personal factors.

Implications of Buying Centre On Sales

In 2009, an internal committee devoted to managing its supply chain, the TSMC brought together fabulous operations, operations management, risk, and quality scheme management. The Committee focuses on mitigating risks and improving the distribution network (Goodman, & Sanders Thompson, 2017). Every other quarter, the management team comprises an executive vice president and the managers, sets performance objectives, and reviews advancement. The working group of the Committee aids suppliers in reducing the risk of manufacturing and processing by communicating risk management strategies and assisting suppliers to enhance quality management systems, green procurement, environmental protection, and security (Tseng, Chang, & Chen, 2019). Parallel to the financial situation of the core suppliers, the stakeholders monitor their supply chain inventories and draft support plans through constant contact or public information (Tamvada, 2020). The working team organizes regular meetings to check performance and deal with the problems of suppliers, an indication that they value the sustainable business-to-business (b2b) strategy for the company’s sustainable success.

People Involvement

The company helps build the distribution network on a feasible basis to ensure safe working conditions, respectful and dignified working relations, compliance with the ethical code, and ecological sustainability. TSMC suggested Local Supply Optimization and Sustainability Risk Management to fulfill its dedication to an accountable distribution chain. The proposed suggestions lead supplier members in social, environmental, and economic growth to strengthen their resilience continuously (Chavez, Yu, Feng, & Wiengarten, 2016). Partners must connect upstream suppliers, entrepreneurs, and providers to undertake sustainability management initiatives (Kusi-Sarpong, Gupta, & Sarkis, 2019). TSMC aims to strengthen the supply chain further, extend its outsized effect and accomplish the strategic objectives of the semiconductor industry.

Buying Situations

Political, socioeconomic, technological, and environmental factors may, in turn, influence overall consumers’ needs (Tjahjono, 2017). The organizational purchasing process differs from the purchasing process of the consumer. The prices and performance of the goods, together with the service supplied by the supplier, are more worried to organizational purchasers. Price is a crucial part since the prices of the building ingredients are the investments that generate profits. Price is, therefore, an essential factor affecting the company’s profitability. Service is also a critical aspect because no company wishes to purchase stuff from a supplier that cannot provide a reliable and effective service (Xu, Chen, Jia, Brown, Gong, & Xu, 2018). The majority of corporate purchases involve the buying of various large products. In these circumstances, a snippet is examined if the whole lot is shown in this sample.

New Task Purchases

TSMC invented the 7nm technology to help increase the output within a restricted period. The advancing technology that is promoting e-commerce calls for the need of the supply chain management to make amendments aimed at promoting the success of the business initiative (Miedaner, Kuntz, Enke, Roth, & Nitzsche, 2018). The delivery of their products is especially critical for businesses, which are hugely reliant on customers and suppliers (Nam, Dong, & Lee, 2017). The principal parties involved in the production supply chain, ending with merchandise delivery to customers, are the producers, retailers, suppliers, shippers, and distributors (Wang & Chen, 2016). The need for embedded inventory management is becoming relevant with a growing reliance on technological progress and changing customer expectations.

Modified Repurchases

The quality of the parts and components supplied can fall through the net without proper monitoring. Besides, a vendor audit is an efficient way of assessing the quality and risk of a specific supplier before this becomes an issue (Chen & Hung, 2016). By ensuring that the quality of their suppliers and the standards of delivery remains high, firms can maximize their overall quality – something that a distributor audit aims to achieve (Zhang, Pawar, & Bhardwaj, 2017). Supplier problems can cost enterprise money, or even worse, can harm its customers (Cambra-Fierro et al., 2017). A supplier evaluation can help identify serious issues early during the production cycle with an efficacious supplier quality management solution, but it depends on the positive feedbacks from the buyers.

Straight Repurchase

Manufacturers of their stock and delivery process can devise strategies to contact their operational providers and update deliveries in real-time. Production is a complicated task, and any production obstacles generally lead to higher costs and an increase in the product cycle time (Silvius & Schipper, 2019). By adopting technology, which will gain more visibility in all business fields and make data-oriented decisions involved inaccurate data, technology will make the entire production process more efficient (Scott et al., 2017). The net effect of technology use in the supply chain management includes lower product costs, fewer capital expenditures, and more significant customer and supply chain stakeholders’ satisfaction.

Organization Buying Model

Specifically, the organizational buying behavior process is a systematic process before making a buying decision. The process begins with problem recognition, with the entrusted key stakeholders identifying the need for new purchases within the corporation (Silvius & Schipper, 2019). Secondly, the business describes the distinct quantities and features of the critical needs to help address the problems (Cerchione & Esposito, 2016). Product specification is the subsequent phase that the procurement officers specify the available alternatives to help solve the identified issues. Next, a cost reduction approach where components are carefully examined to determine whether they can be modified, normalized, or produced using cheaper manufacturing methods before finding the best vendor (Malaquias, Malaquias, & Hwang, 2016). The firm invites qualified suppliers, selects the most skilled supplier, and finally orders the specified products.

One of Sales Elements: Negotiation

The US Company has a team with TSMC for more than one year to prepare the outsourced manufacture of CPUs in the new Tainan manufacturing plant. TSMC works closely with the suppliers to guarantee that they comply with the specific policies to promote sustainability in the department. Supplier inspections are a crucial component of the approval process of suppliers carried out by manufacturers and retailers when new suppliers are accepted (Caro, Chintapalli, Rajaram, & Tang, 2018). They also enable a consumer to constantly examine its suppliers so that the regulations and processes are updated. The overall objective of an audit by a supplier is to ensure that food and customer regulations are observed. As the supply chain of a company grows, its risk also increases. The danger of underperformance lies with every new supplier.

Impacts of Negotiation On Sales Process

TSMC recognizes the partners that disregard their unique organizational values and replace them with alternative dealers who uphold humanity and have vision and mission statements that match TSC (Hallikainen, Paesbrugghe, Laukkanen, Rangarajan, & Gabrielsson, 2017). Under a Provider independent audit, external auditors visit the production plant of their suppliers to analyze production capacity, quality management, safety, and social compliance or effect on the environment (Jajja, Asif, Montabon, & Chatha, 2019). It is the best means of getting a description of their provider’s company and regulations and receiving, if necessary, all the data appropriate to carry out corrective measures.

Culture Perspectives

Marketing strategies have a significant influence on culture. The seller must not neglect the history of native culture before marketing or advertising. Only if the product fits better in line with customs, traditions, standards, and cultural requirements can consumers be attracted. For instance, TSMC invests in modern technologies and techniques to guarantee that they meet the ever-changing interests of the customer bodies (Jankalova, 2016).

National Cultures

Although Confucianism influences the Chinese business culture, the TSMC serves as a dedicated corporate citizen worldwide with international operations extending to Asia, North America, and Europe. By offering the widest variety of developed, specialty, and advanced sensor services, TSMC dispatched 281 different process technologies and assembled 11,617 brands for 510 clients in 2020 (Kohnz, 2018). TSMC is the very first production facility to offer the world’s latest semiconductor innovation, a 5-nanometer industrial output.

Communities of Meaning

In the corporation-supplier relationship, ethical culture is of great significance. If the key players need acknowledgment as professionals, purchasers must show ethical conduct. Each group must therefore understand what is regarded as honest and unethical. When buyers perceive the business of selling as non-ethical, they can affect both the choice of supplier and the buyer’s work. Cultural values shared by members influence their purchasing behavior. Large companies have also established their own workplace culture that differs in values, standards, customs, and habits. In the organizational buying behavior of the company, the aspect of these different values, styles, and behaviors are essential.

Corporate Culture

The commitment of the company to promote CSR defines the operations within the organization. Charitable activities, and voluntary activities, companies will benefit the social system and bolster their branded products. It is equitably essential to the community as CSR is to a company (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). CSR initiatives can help build strong relations between staff and companies, enhance morality, and assist both staff and workers in feeling closer to their world (Plambeck & Taylor, 2016). Specifically, the company establishes a sustainable and reliable supply chain that upholds human safety, rights, health, and the environment. The firm’s distinct Plan-Do-Check-At cycle makes it exceptional and compliant with the CSR principles.

Professional Culture

Global consumers have become more and more aware of the responsibility of companies to oversee their providers in recent years. TSMC believes that assisting suppliers promote the qualities of the environment, health, and safety increases the chance of their supply chains and provides TSMC with an opportunity to contribute to society (Chen & Dawande, 2020). The productivity of the union in the sustainable development of the value chain can respond to global consumer complaints (Platzer & Sargent, 2016). Although some actions are gradual and complicated, they are determined to maintain their leading position in implementing them.

Impact of Culture On Sales Strategy

However, a B2b buying behavior is critical for the success of an establishment, with their excellent association determining the much-desired customer satisfaction. The innovative ideas by the workers to promote the supply chain also make Taiwan Semiconductor Manufacturing Company oversee the successful distribution channels and hence meeting the specific organization’s values. Internal factors that influence purchasing decisions are motivation and culture. Each purchasing company has particular aims and goals, excellent producers and purchasing systems, and proper command characteristics.

Current Perspectives On B2B Buying Behavior

Digitalizing business processes is now more a requisite than a value-added proposition for manufacturers to build significant customer bases. This change has boosted the need to create a digital ecosystem incorporating operations performed in the distribution chain by different entities seamlessly (Leonidou, Christofi, Vrontis, & Thrassou, 2020). Technological progress now allows companies to develop end-to-end solutions that accelerate processes and prevent effects on the supply chain (Hallikainen et al., 2017). Furthermore, the critical component in supply chain management is real-time or near-real-time information. A supply chain application is installed to control and augment the information exchange between various key supply chains to achieve timely procurement. Additionally, introducing innovative tools results in inventory decreases, improved production efficiency, and convenient customer satisfaction.

Changing Buyer Behavior

The goal-oriented company partners with the suppliers and other stakeholders to meet the ever-changing expectations of its target customers. The quick delivery process is a vital ingredient for the satisfaction of the customer. Higher customer satisfaction leads to more excellent retention and business repetition. Technology can play a critical role in increased deliverability and maintaining the suppliers and other stakeholders informed about the production and delivery schedule (Bienhaus & Haddud, 2018). The processes can be designed to notify customers from order confirmation to fulfill an order throughout the process. It may provide an opportunity to improve the knowledge of customer narcissism and regulate while simultaneously transferring suppliers’ service assignments to the vendor, which spares money and time for manufacturing companies. Consumers are a parameter for the company to measure its success in a market rather than merely an asset. That is why it is so crucial to understanding customer behavior.

Conclusion and Recommendation

One remarkable fact is the desire to interact with the clients and other stakeholders during a company’s globalization process. These factors influence one’s purchase decision directly and indirectly. However, although the TSCM’s commitment to oversee successful supply chain management, it is evident that the company is continuing to experience losses following its business practices. Educating the suppliers and other members of the supply chain management team is crucial. For instance, the suppliers have to recognize and modify their figures regarding procedural dissimilarities among the agencies, which assign decision-making rights and duties to employment positions around the corporation according to the structural structure. Policies such as inventory levels and protocols such as disbursements or bids also affect organizational buyers’ purchasing choices.

Additionally, regular and comprehensive research practices will be usable in identifying the potential determinants that might undermine the successful B2b. Research indicates that “innovation” can generate economic assessments of new ideas representing progress in corporations’ economic development. Innovation is an essential factor in developing business success and gaining a competitive advantage while at the same time creating significant challenges for organizations. Thus, investing in research studies will help TSCM identify the loopholes in its supply chain, hence boosting its likelihood of realizing success.

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Organizational buying behaviour

Published Date: 23 Mar 2015 Last Modified: 08 May 2017

Disclaimer: This essay has been written and submitted by students and is not an example of our work. Please click this link to view samples of our professional work witten by our professional essay writers . Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of EssayCompany.

Organizational Buying Behaviour

The decision making process by which formal organisations establish the need for products and services to be purchased, evaluate and choose among alternative brands and suppliers, ( Richard Glavee, 2009). Industrial buying takes place in the context of formal organisation influenced by budget, cost and profit considerations. Furthermore, the industrial and institutional buying usually involves many people in decision process with complex interactions among people and among individuals and organizational goals.

(Hutt, 2009), as an outcome of the vast area of prior research, proceeded the characterization of the industrial buying behaviour divided into three major aspects: The Buying Process, The buying Centre and Factors influencing the buying centre.

The following is a description of these three dimensions as introduced through a historical review research conducted on each one.

The Buying Process

Many researchers have accentuated the importance of modelling of the buying process (John Schermerhorn, 1973) and several projected the organizational buying process.

David A. Kolb, (1996) ascribed that all those models use the acknowledgement of the same significant conceptual stages as problem recognition, information search, evaluation and systematically some form of decision phase. These stages are presented either merged or individualized, through inconsistent levels of the detail included in characterizing each one.

One of the first model referred by Rubin (2006) is the Webster's model from 1985. In spite of its conceptual integrity, its importance forms on the fact that it established the foundations toward a rationalization of the organizational buying process. This fact validated its selection for more elaborated description on this review.

In 2002, the Canadian, American marketing researchers, Robinson et al., introduced the buygrid framework as a generic conceptual model for buying processes of organisations. They saw industrial buying not as single events, but as organisational decision-making processes where multiple individuals decide on a purchase. Their framework consists of a matrix of ''buy class" and "buy phase".

Together, these two works laid the conceptual foundations for the study of OBB, applied on which, many articles have been published that either spread out or tested the models proposed by these scholars.

Organizational Buying Process model

The number of complex organizational buying models that purport to describe the process by which an organization acquires products or services is large. They range from Webster's (1985) simple four stage model to the more complex models of Sheth (1977) and Wind (1981). Both the Sheth and Wind models incorporate a broad spectrum of buying determinants within a stimulus response format. Wind point out that their model, "does not claim to know what is the exact decision-making process. Instead, the model presents a major set of variables blocks that marketing personnel should identify in their attempt to understanding buying behavior. " The Sheth model goes beyond the building block stage to hypothesize interrelationships between large number of variables in a flow chart format. It is loosely structured with such of the model untestable in its present form. Nevertheless, it does pull together and integrate the literature in the field into a logical causal model that is a starting point for understanding organizational buying behavior.

Hutt,(2009) attempted to conceptualize the organizational buying process as an adoption process. They examined process activating factors, purchase directing factors, duration of process and the use of information sources. They concluded that, "the industrial adoption process is exceedingly complex, far more so than the individual's adoption process.

The review of the buying and adoption literature leads one to conclude that a simple application of the basic adoption model is not appropriate for the study of new product/new idea adoption by organizations.

The model described in Figure 4 is a composite of the Robertson model, the Buygrid model and an attribute motel of organizational buyer choice (Wilson, 1999). Two forms of the model are required to account for buying center activity. Some firms are much more active in the scanning of the environment for new ideas or products that will improve their organization's competitiveness. In the active organizations, it's likely that the stakeholders (Patchen, 1999) become aware and comprehend s new product or idea before the buying process is initiated by the problem recognition stage. It is likely that these stakeholders become advocates of the new ides or process and try to initialize the buying process within the organization.

The second point of departure from traditional models is that needs are conceptualized as being represented by bundle of attributes that are product/service related, supplier company related and salesperson related. In other words, it is possible to describe and specify the buying situation in terms of this set of attributes. This conceptualization allows us to draw upon attitude theory as we model the adoption/decision process.

The third point of departure is that Robertson's adoption model is nested within the organizational buying model. For example, in the passive model, awareness and comprehension are the result of search. Search is the activity and awareness and comprehension are the results. Similarly the evaluation of proposals describes an activity where the outcomes are an attitude structure based upon the attributes of the purchase. This attitude structure leads to the legitimization stage where the buying of the new product or idea seems to be an appropriate course of action. This leads to trial which helps evaluate the product or idea.

The selection/adoption process is determined by the attitude based upon the total bundle of attributes. What sakes the organizational buying/adoption process so complex is that this attitude is really a summary of the individual members buying center attitudes. There is a need to develop a methodology of integrating the attitude structures of the buying center. The operative attitude that moves a product/idea through legitimization to trial to selection/adoption is dependent on the influence relationships within the buying center.

A model of Organizational Buying Process

Advances in Consumer Research Volume 14, 1999 Pages 323-325

As James Campell (2002), the buygrid model is a conceptual model, which describes the different combinations of buying phases and buying situations. It incorporates three types of buying situations: (1) the new task, (2) the straight rebuy, and (3) the modified rebuy, combined with eight phases in the buying decision process. The model serves as an easy framework for visualising the otherwise complex business buying process and enables the vendor to identify the critical phases and situation requiring specific types of information.

Buying Situations

As mentioned above the buying situation is usually classified into three major categories;

the new task, the modified rebuy, and the straight rebuy situations.

It is a buying situation in which the business buyer purchases a product or service for the first time. In a new task buying situation the buyer seeks a wide variety of information to explore alternative solutions to his purchasing problem. The greater the cost or perceived risks related to the purchase the greater the need for information and the larger the number of participants in the decision making unit. This provides the vendor with considerable opportunity and challenge. The vendor is in a greater position to influence the decision making process by the information that it provides. At the same time its personnel must respond to the information needs and scepticism of a large number of people within the decision-making unit.

Modified Rebuy.

It is a buying situation in which the business buyer wants to replace a product or service that the firm has been using. The decision making may involve plans to modify the product specifications, prices, terms or suppliers. This is the case when managers of the company believe that significant benefits such as quality improvement or cost reduction can be achieved by making the change. The fact that the company had previous experience with the purchase and use of the product means that the decision criteria may be well defined in such situations. Nevertheless, some uncertainties still linger in the minds of some decision-makers. There is the risk that the new supplier may perform poorer than the present one. Again the situation carries enormous opportunities and challenges for vendors competing for the order. The decision making unit is however usually smaller than in new task situation and therefore makes it relatively easier for the vendor's marketing personnel to attend effectively to the information needs of the buyers.

Straight Rebuy.

It is a buying situation in which the buyer routinely reorders a product or service without any modification due to satisfaction with the supplier. The supplier is retained as long as the level of satisfaction with the delivery, quality and price is maintained. New suppliers can only be considered if these conditions change. The challenge for the new supplier then is to offer better conditions or draw the buyer's attention to some benefits that it is missing for doing business with it present supplier. The buyer may in turn use the new offerings from competitors to renegotiate its purchase conditions with the present supplier. It is therefore difficult to capture orders from companies engaged in routine purchases.

Robinson et al. (2002)

Modified Rebuy

Modified rebuy practically differs from the straight where new substitutes are taken into account, without involving any new supplier. Frequently firms, re-classify their straight rebuys and classify existing suppliers. Modified rebuy arise from those ibid.

The Buying Center

As Hutt (2009) mentioned, Companies do not buy, people do. It is of utmost importance to have a concrete knowledge about those involved in the buying decision making process of the goods or services that a vendor aim to sell. It has been indicated that many individuals are pertained in the buying process of industrial goods.

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Climate Forward

The missing $1 trillion.

It’s still unclear how the world will pay for developing nations to fight climate change.

By David Gelles and Manuela Andreoni

For the past two years, world leaders, economists and activists have called for sweeping overhauls to the World Bank and the International Monetary Fund that would make the two lending institutions more adept at combating climate change.

Discussions about how to reform lumbering multilateral bureaucracies can get tedious quickly. But ultimately the debates are all about money. How to make more money available for developing nations that are being battered by extreme weather? And how to make sure poor countries don’t spend too much money servicing their debt?

Experts estimate that at least $1 trillion a year is needed to help developing countries adapt to hotter temperatures and rising seas, build out clean energy projects and cope with climate disasters.

“For many countries, they will only be able to implement strong new climate plans if we see a quantum leap in climate finance this year,” Simon Stiell, the United Nations climate chief, said in a speech last week.

Starting in 2022, a burst of activity had made the prospect of such a quantum leap seem within reach.

Policymakers and economists gathered in Barbados and hashed out an ambitious reform agenda. The president of the World Bank stepped down after coming under fire for not doing enough to address climate change, and was replaced by an executive who promised to embrace climate work. Emmanuel Macron, the president of France, hosted a summit aimed at building momentum for the work.

But at the annual spring meetings of the World Bank and the I.M.F., which are taking place in Washington this week, reality is setting in.

While more money has become available to address climate issues over the last year or so, the sweeping reforms many had envisioned are proving to be out of reach.

Some of that is a process problem. Overhauling 80-year-old international institutions with complicated governance structures and tens of thousands of employees is no small task.

But much of the challenge comes back to money. So far, the countries that control the World Bank — including the United States, Germany, China and Japan — have not allocated huge new sums for climate issues in the developing world, and the private sector has not stepped in to fill the gap.

“The numbers do not show the kind of progress that we really need,” said Rachel Kyte, a visiting professor at Oxford and former World Bank executive. “We’ve got to get a little bit more radical.”

Those calling for reform argue that if only the World Bank took a bit more risk, private sector investors would come off the sidelines with hundreds of billions of dollars in investments for climate efforts in poor countries.

The World Bank has made some meaningful changes during its first year under Ajay Banga, its new president. It is approving loans to developing countries faster, has streamlined the lending process, is offering lower interest rates and has begun lending more money without raising new funds from shareholders.

The bank is also working to raise $100 billion from rich countries and the financial industry, money that it can use to fund projects in the world’s poorest nations.

But even with those changes, that hoped-for wave of private capital has failed to materialize. Banks and institutional investors remain wary of spending too much money on climate projects in the developing world.

Instead, rich countries continue to see an increase in climate investments, while many poorer countries are missing out.

“There’s more financing going into renewable energy in developed markets, but it’s not going into emerging markets and developing economies,” Kyte said. “That’s the big problem.”

Nearly as important as making more money available for climate investment is finding ways to unburden poor countries from crushing loads of debt.

This year, developing countries will spend over $400 billion to service their debts, the highest sum they have paid in at least two decades . And there are no signs that wide-scale debt relief is being considered at the spring meetings this week.

As is the case at the World Bank, incremental changes are afoot at the I.M.F. The organization is considering incorporating climate and development goals when assessing countries’ debt repayment plans. Such a move could help deeply indebted nations negotiate better terms and spend more money on climate investments rather than interest payments.

But on the whole, there is still a yawning gap between the mammoth investments that experts say are necessary and the money that is being put on the table.

“We’ve succeeded in converging people around the scale of the problem,” said Avinash Persaud, the special adviser on climate change at the Inter-American Development Bank, and one of the leaders of the reform movement. “Now people are looking for the big solutions to fit that scale. The multilateral development banks have to play a key role, but we can’t do it alone.”

A drought is pushing millions into hunger in southern Africa. What’s behind it?

My colleague Somini Sengupta and I reported today that an estimated 20 million people across six countries in southern Africa are facing what the United Nations calls “acute hunger,” as one of the worst droughts in more than four decades shrivels crops and decimates livestock.

But did man-made climate change cause this drought? The answer is a bit complicated. Let me explain why.

A group of scientists who looked into the causes of the drought that has affected parts of the region reported this week that they couldn’t find any links to climate change. The analysis by World Weather Attribution , a group that specializes in the rapid analysis of weather-related disasters, found that the El Niño, a natural climate pattern, had made the drought twice as likely to happen.

But scientists from W.W.A. and other institutions acknowledged that man-made global warming could have also played a role. Droughts are a lot harder to attribute to global warming than heat waves, scientists say. That is particularly true in southern Africa, in part because reliable weather data there can be hard to come by.

“Considering the scarcity of the meteorological station network across the various countries of southern Africa helps us realize that what we may consider as ‘ground truth’ sometimes is just a statistical extrapolation of the nearest weather station (which may be many kilometers away),” Maria Chara Karypidou, a postdoctoral researcher at Aristotle University of Thessaloniki in Greece who studies the region but wasn’t part of the study, wrote to me.

Deforestation may also have a greater impact that we realize. A study published in the journal Nature last year showed how deforestation in the tropics caused large declines in rainfall between 2003 and 2017. But better understanding the role of deforestation in specific events would also require more precipitation data.

It’s clear that climate change will make life a lot harder in this part of the world, but pinpointing the causes of an extreme weather event is increasingly important as lawsuits and bills seek to hold fossil fuel companies accountable for the damage caused by climate change.

Still, droughts are a part of the natural cycle, too, and it could well be that humans had nothing to do with this one. That doesn’t mean that we can’t better prepare for them, said Maja Vahlberg, a consultant for the Red Cross Red Crescent Climate Centre, and one of the authors of the study. “The impacts on food security and livelihoods show that people are vulnerable to shifts in rainfall,” she said, “regardless of the causes.” — Manuela Andreoni

More climate news

A new study estimates that climate change will cost $38 trillion a year by 2049 , The Associated Press reports.

Nearly 600 fast-charging stations were switched on for U.S. drivers in the first three months of the year, Bloomberg reports . That’s one for every 15 gas stations.

Former President Donald Trump railed against renewable power at a fund-raising dinner last week, saying, “I hate wind,” The Washington Post reports .

The global wind industry hit a record for new installations last year, according to a report reviewed by Reuters .

The journal Nature looked at lawsuits that led governments to strengthen their climate policies .

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David Gelles reports on climate change and leads The Times’s Climate Forward newsletter and events series . More about David Gelles

Manuela Andreoni is a Times climate and environmental reporter and a writer for the Climate Forward newsletter. More about Manuela Andreoni

Learn More About Climate Change

Have questions about climate change? Our F.A.Q. will tackle your climate questions, big and small .

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The Italian energy giant Eni sees future profits from collecting carbon dioxide and pumping it  into natural gas fields that have been exhausted.

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