Organizational Buyers

Abstract

The circumstance of being a buyer or a customer can be held not only by individuals but also by businesses, organizations and institutions, including those engaged in industrial activities (i.e. activities with productive). It is manifested the so-called organizational market, its clients being made up of physical or juridical persons who purchase goods and services for use as outputs or for resale.

Headnote

Abstract:

The circumstance of being a buyer or a customer can be held not only by individuals but also by businesses, organizations and institutions, including those engaged in industrial activities (i.e. activities with productive). It is manifested the so-called organizational market, its clients being made up of physical or juridical persons who purchase goods and services for use as outputs or for resale.

Keywords: organizational institution, industrial organization, suppliers, demand, output, organizational markets

Introduction

By organizational institutional or industrial purchasing we mean the making decisions process through which companies (firms, organizations or institutions) specify their needs, through material goods and services, and identify, evaluate and elect their brands and suppliers. [1, 1-2] Such are:

* industrial buyers (companies producing goods and services);

* commercial firms;

* governmental organizations.

Organizational market often called the company or business to business market consists of all individuals, companies or organizations purchasing some goods (tangible or intangible) in order to produce more.

1. Specific Features

Selling goods to companies (and not final customers) presents some particularities. Thus:

* company purchases goods not for personal use, but in order to achieve certain goals (a certain productivity, profitability, security, etc.), others than achieving personal satisfaction;

* purchase operations involving several people with different responsibilities, each operating with decision criteria;

* the number of buyers is much lower, the financial situation of suppliers of outputs is dependent upon several companies benefiting, and who directs the demand towards them (whose requirements may be known but much better and easier than the preferences of buyers of goods consumption); as a result, purchases realised by a single customer are much rarer, but more important than those on the consumer goods market (as expensive as these goods are), on this market being checked the well-known Pareto's Law (according to which 80% of the sales of a company are insured by 20% of buyers);

* in general, industrial consumers are represented by technically qualified and professional buyers;

* organizational buyers impose themselves the restrictions, policies and requirements that sellers need to consider;

* purchasing of goods by a company carries much higher risks than those of consumer goods, the risk is proportional to the value of the property (which is incomparably greater than this time);

* consumer motivation on industrial market is more rational than that of consumer on the consume market (which is rather emotional and impulsive), purchasing decisions are strongly influenced by technical specifications, seller analyzes, comparative studies of price, etc.

* purchasing decisions are not taken by one person, but rather belong to the people of the acquiring company will use these products, directly or indirectly;

* industrial market is the widespread practice of using a purchasing commission, which is responsible purchasing decision and choice of the seller;

* industrial market customers use fewer women, in contrast to the large number of acquisitions made by women on the consumer market;

* purchases are accompanied by a number of documents relating to tenders, contracts (sales and service) etc., less common for personal consumption goods;

* purchasing have a direct character, in most cases beneficiaries addressing directly to producers of output, without resorting to intermediaries (especially when it is about complex or expensive products);

* commercial relations between suppliers and users are very close and long-favoured, thing favoured by the very small number of buyers, often reaching even the partnership (the network of these alliances is one of the most important tools that operate makers industrial marketing strategies); purchasers shall keep aftermarket suppliers much closer relationship than with purchases of consumer goods (especially when the object is revealed in car sales, installations, etc.);

* between providers and beneficiaries there are often established relationships of reciprocity, suppliers being chosen among customers and vice versa (a paper manufacturer, for example, procure chemicals they need from an enterprise of this kind, to which they then supply paper she needs);

* in many cases businesses increasingly accept to lose the status of buyers, preferring to lease some goods (such as transport), lease allowing them to reduce their investment efforts (and associated risk) and benefit the latest technical news (with much lower costs), while providers receive significant income in the form of rents they charge, having the ability to sell the products, used in a certain extent, at lower prices (which are more easily accepted by beneficiaries with limited financial possibilities);

* money invested on industrial market (market resources) is more than the one spent on consumer goods, because any transaction on this market involves a suite of other business transactions upstream and downstream. For example, selling electronic components to a company producing television involves the development of previous transactions with companies that provide it with the necessary resources and their manufacture, and also some transactions between the company and a wholesaler, wholesaler and retailer among and between retailer and buyers (users) end-TV. Each participant will buy these goods at a price and sell them to another (superior), which will include any value added, and other tax or duties;

* industrial market is characterized by frequent reciprocal frequent situations, the two companies are both seller and buyer to each other;

* demand is less elastic with respect to price, as a manufacturer of consumer goods (cars, for example) will size the demand of output (let's say toil) not according to price (higher or lower) of them (toil), but depending on the demand of the customers (for cars), without the influence of price on them to be altogether excluded; customers' expectations about the future evolution of prices often lead to an inverse elasticity of demand, at least briefly. This means that often customers buy more goods when prices increase providers, because they expect further increases in the future and try to protect themselves from these anticipated changes;

* due to the fact that economies develop themselves usually cyclic (boom periods being followed by a stagnation or decline period), the demand for industrial goods fluctuates, following, at a certain interval, the economic cycle (this is easier notified in the case of new equipment that changes in enterprises, from time to time).

2. Industrial Market

Peculiarities of the kind reported here are required to be known, their study is very important in preparing and making decisions subject to special investigations related to industrial marketing. Industrial market can be addressed in an individually manner or network; there are essential differences between them: [2]

a) The individual approach to industrial markets based on marketing mix is based on the supplier's point of view and focuses on a single time, while network approach emphasizes the importance of vision while interactions between markets, interpreting the environment as a vast network of companies, which are in relation to each other.

b) Instead of separating the values exchanged at the point of sale in the four elements of the marketing mix, marketing manager under the control of model networks is concerned rather all resources and actions seller and buyer and the interrelationships between them.

c) While the first approach clearly defines the company, drawing legal borders and constituents, the second adopts a perspective of open systems; the company borders are determined only by elements of behaviour and therefore can not be fixed.

d) While the marketing mix approach defines the company as a separate entity engaged in persuading or influencing other consumers and competitors means that the second approach focuses on Cooperation and trust between firms. An innovative model also places a strong emphasis on frequent and long-term relations between participants in the transaction, providing a useful antidote to overly restrictive on the market.

Although there is no single format to determine how industrial companies currently purchase products, they are, in most cases, a standard process comprising several steps. [3] In what follows we examine these typical stages when buying a new product. [4]

1. Recognition of the problem. The purchase process is initiated when a person within the company identifies a problem or need that can be met by purchasing a particular product or service. Recognition of the problem may arise as a result of internal or external stimuli.

2. Description of need in generic terms. Once you recognize a certain need, the next step is to prepare the buyer makes him a description in general terms of the need, specifying the characteristics and quantity of the item required. For standard items, this process presents few problems, but for more complex items, the buyer might have to work together.

3. Product peculiarities. The purchasing organization then deals technical specifications of the product, often benefiting from a team of engineers to value components. Analysing the value is an approach to a reduction of costs which are based on careful study of possible components in order to redesign, standardize methods of production or manufacture less expensive. The team decides which are the most reliable product features and specify them properly. And sellers can use value analysis as a method for obtaining a new amount in their account

4. The search for a provider. The task of buying the desired product is newer and more complex and more expensive, the buyer will spend more time looking for potential suppliers.

5. Formulation of an offer demand. At this stage the buyer invites qualified suppliers to submit proposals. In response, some suppliers will send a catalogue or send their sales representatives. However, when it comes to complex or expensive items, the buyer usually require detailed proposals written or formal presentations from each potential supplier. Proposals should be specific marketing documents, must inspire trust and should make the company stand out from the competition provider.

6. The choice of supply. Buying centre members review the proposals and select one or more suppliers. During the selection of suppliers is made up a list of desired attributes from a supplier and their relative importance, the most important of which are: quality, timely delivery, in compliance with ethical behaviour, honest communication, competitive prices able to provide repairs and service, advice and technical guidance, location, performances, reputation etc. The methodology of choice may be similar to that found in the case of consumer durable goods.

7. Conclusion of the contract and issue the command. A contract with general coverage creates a long-term relationship in which the supplier promises to supply the purchaser whenever needed, keeping prices agreed on a certain time. Such a contract eliminates the costly process of renegotiating the acquisition of reserves must be renewed each time, allowing the buyer to issue purchase orders more but shorter, lower transport costs.

8. Verification of performance. At this stage, the buyer makes a review of supplier performance. To this end, the buyer can contact users of products or services and may ask them to determine whether the respective thank numerous articles. Check performance can make a contract with a particular provider to be extended, changed or cancelled. On the other hand, the seller's duty is to monitor the same factors as the buyer to ensure that the latter receives positive feedback from the user.

3. Influential Factors

There are four categories of factors that influence organizational buyer behaviour [5]:

* environmental factors;

* organizational factors;

* interpersonal factors;

* individual factors.

1. Environmental factors are grouped into seven categories: physical, technological, economic, political, legal, ethical and cultural.

a) The physical environment includes a number of factors (such as climate and geographical location of the organization) that can affect the behaviour of the members and determine constraints and organizational options for purchase.

* The geographical position of a supplier is an important consideration in its selection process as a business partner.

* The climate and the geographical determine availability of material resources for organizations and access to resources, availability of labour and transport systems etc.

b) The level of technology development defines what types of goods and services are available to the buyer organization, influencing the quality of the buying process by developing improved technologies for purchase, providing the buyer with equipment which facilitates the development of more complex buying processes and control rigorous stock.

c) The economic environment is defined by the price and payment conditions, availability of money and credit, final consumer demand and inventory levels in key industrial sectors, etc., optimism or pessimism influencing organizational buyer and their purchasing behaviour.

d) The political environment includes factors such as the country's trade agreements, tariff barriers, defence spending, government assistance to certain areas of activity and government's attitude towards business in general.

e) The legal system has a considerable influence on purchasing activities. Government regulations lay down rules about what must be bought to be included in products (seat belts for cars, for example).

f) The ethical environment Buyers and sellers must behave ethically if they want to be recognized as professionals. How it will be perceived behaviour of ethically consistent choice will affect business partner.

g) The cultural environment determines values that are shared by members of a society and that influence their purchasing behaviour. Large organizations have developed their own common culture which values, norms, habits, traditions and customs. The nature of these different values, styles and behaviours may be evident in the purchasing behaviour of the organization.

2. Organizational factors are those which are reflected in specific objectives, policies, procedures, structures, etc. that define the operations of enterprises which are subject to their control. Decisions on industrial purchases depend largely on the distribution of authority, by way of remuneration and the way in which the communications within the company, marketing managers are obliged to take account of trends manifesting today in terms: the increasing complexity of procurement services, centralized procurements, extending long-term contracts, performance evaluation on line purchases etc.

It is worth noting that purchasing departments are becoming increasingly complex as the effects of inflation and scarcity of material resources are becoming more visible, many enterprises raising them to the level of departments (commercial), in which activities are grouped (and sub-compartments) distinct procurement, inventory management, logistics etc., role and salaries specialists performing this kind is increasing.

Consolidation and centralization of purchasing activities is another trend that manifests itself lately, it leads to restriction of staff dealing with such activities and increase also the level of professionalism that he has to show.

The conclusion of long line of industrial purchasing involves a considerable increase in the importance of trade negotiations, assuming find new ways of contacts between providers and beneficiaries.

The marketer must understand the four aspects of the buying process to design an effective strategy to influence this process. These four sets of variables organizational concerns: tasks, structure, technology and people involved in the purchase.

a) Tasks. They can be classified in different ways: by purpose, level of expenditure for goods or services purchased extension etc.

b) The goals of the organization will influence the behaviour of acquisition targets.

c) Organization buyers' structure exerts influence on purchasing process through several dimensions.

* The degree of centralization is a significant factor. A centralized organization will maintain the purchasing authority in the hands of a relatively small number of people, who are placed in high positions within the organization and leadership pyramid to which access may be difficult due to their high position.

* Formalize the organization is a second factor. A much formalized organization requires that policies and procedures are strictly enforced. The more formality with more and more people participates in the preparation purchasing decision. The decision is also likely to be very structured and follow a written succession. When organizations are highly formal, marketers may find it difficult relationships sale due to inertia forced models that can inhibit new ideas and gain access to a safe place in dealing with such organizations.

* Specialization of an organization exercises also influence on the structure of buyers. Where the organization is divided into various departments according to functional specialization, it is likely that more people are involved in the purchasing decision. Marketer's challenge is to determine what are the influential people needed to reach sales messages.

* Technology can influence not only what is bought, but even the decision process itself. People who are involved in buying situations of an organization will be an important determinant of organizational buying process. These people are independent and interact with each other to influence the purchasing behaviour of members. Pregnancy marketer is to identify those people in the organization with responsibility and authority for purchasing decisions to persuade them to buy. Therefore, it is important to know that people are involved in the decision. Their interactions are also a subject that should be understood.

3. Interpersonal factors. Interpersonal variables are the factors that influence how to make procurement more so as the number of people involved in making decisions on this line is higher. As a result, their authority, status that each is held in the company, the ability to influence others who demonstrate strength in pursuit of goals, etc. factors which are responsible for providing marketing firms have to study carefully when base their own policies.

Interactions between two or more people have a significant influence on organizational purchasing decisions. People involved in a purchase decision may provide information to one another in interactions, as they try to influence the outcome of purchase for their benefit. This interaction is what is called interpersonal influence and normally happens in the context of organizational acquisitions group of individuals who act as a purchasing centre.

Buying Centre consists of those people in the organization that interact during the decision making process of buying. This collective decision preparation may vary depending on size:

(1) How new complex is important purchase decision;

(2) How centralized, formalized and specialized is the organization.

Purchases require more communication and involvement laterally and vertically, therefore, marketers must understand who participates in the preparation of the decision and who is in their interest and degree of influence on the final outcome likely. Their level of involvement may vary from one participant to another, and depending on the stage in the buying decision.

Within the organization, as within a family, members have certain roles (originators, users, influences, buyers, decision makers and extra controllers).

The initiators are the first to recognize a need for a product or service in the organization.

Users are the people who will use the product or service purchased by the organization. They often initiate the purchase process and can assist in developing product specifications. All they can assess product performance based on usage.

Influences directly influence purchasing decisions by providing information for evaluation of alternatives by defining specifications or purchase in connection with the design, quality, delivery etc. Some individuals can often exercise a strong influence during the preparation of group buying decision when they act as lawyers. These group members are leaders with high status who are heavily involved in group decisions. By virtue of their knowledge and specialization and interactions you have with people outside the organization, they are in a strong position to influence the purchasing decision. Therefore, sellers should identify and hire such lawyers in the promotion of the product.

Buyers have the formal authority to select vendors and negotiate the terms of purchase. Often managers and purchasing agents and buyers meet it, but others, such as the head of the organization may also assume such authority.

Makers have formal or informal authority to select suppliers and make the final decision to purchase. Buyer may often be the decider, but it can be another individual. For example, if the design engineer has made the specifications for a product that only one supplier can achieve when the engineer is the decision maker and buyer can purchase agent. Decision makers are often the most important members of the buying centre for selling organization, but they can be simultaneously and difficult to identify.

The controllers verify various forms of information falling within the buying centre. Controllers can significantly influence the purchasing decision of the organization. They are individuals knowing the product, problems, functions and potential suppliers, often and managers of purchase.

The same individual may sometimes play all roles, especially in small organizations. But in larger organizations, the roles are generally performed by different individuals or groups of people. Therefore, the marketing department should identify which members of the buying centre are composed and what are its responsibility and influence purchasing decisions for their company.

Power relations. It goes without saying that managers will not wear labels marked "decider" or "unimportant person". The rank of an individual in the organization can not always be a good indicator of this; sometimes offer an effective secretary hides a supplier if they did not like, the lower rank controllers can have much more significance to influence than typically indicate their category. Thus, the true power relations within the organization buyer buying centre should be well understood by the supplier.

4. Individual factors. Individual factors (age, education, personality, attitudes about risk, etc.) influence the behaviour of those involved in sensitive decisions on purchases of industrial goods, so that must be known and possibly use for companies supplying.

The motivations of the buying centre members are difficult to assess properly. They were generally categorized reason of their duties in the service for reasons not dependent tasks in the organization.

Reasons related to job duties include those relating to product quality, price, service, supply or obtain the right product at the right time from the right source.

The reasons unrelated to tasks include variables such as: the potential for promotion, salary increase, more safety in continuous employment etc.

Buyers are acting selfishly, trying to maximize their profits and minimize losses to a purchase.

Therefore, they seek to decompose a product or service in the various benefits that can be categorized as financial service product, social, political and personal. Although not all buyers will be interested in the same benefits, which is a more pronounced the priority will be accepted unanimously.

Perception. Individuals receive, interpret and organize stimuli in a manner consistent with their world. Perceptions of organizational buying centre members are important for developing effective marketing strategies. Two dimensions of this item are significant: perceptions and selling company products and people have their own role in the preparation of buying decisions.

Learning is another powerful variable influencing individual organizational buying process. Learning happens as buyers make decisions that are satisfactory and this reinforcement increases their tendency to take the same decisions in future similar situations, continuous strengthening of a decision leads to a habit which is a relatively automatic response. As the final consumer habits are many organizational purchases that help simplify the decision making process. Process Development routine has increased confidence in suppliers that will meet the organization's needs known to present products and information on new products. Such decisions help the organization to reduce the risk of failure by developing trade relations with known sources.

Purchasing decisions. Decisions on purchases of industrial goods are prepared and taken in the procurement centres through a centre understanding a group of individuals and groups involved in the decision to purchase and taking part in achieving these objectives thereby and assuming the risks involved. [1, 3]. Specifically, such a group meet company personnel who assume at least one of the five roles that have already been raised: the user (i.e. worker who purchased common use for the production of others, such as being held, as a rule, of those who initiate and develop manufacturing project specifications); prescription (i.e. the person that influence directly or indirectly, purchase decision, which participates in the development of specifications and the choice of suppliers); advisor (i.e. person - specialist - who is consulted on the appropriateness of the act of purchase); buyer (i.e. direct participant in trade negotiations to end the commercial contract); decision-maker, i.e. someone who actually has the power to decide on suppliers, quantities purchased, the time of purchase, etc.); the informant (i.e. the person who controls communications between companies involved in the transactions and providing contacts between representatives of suppliers and users and decision makers).

In deciding to purchase the number of participants varies depending on the importance of commercial transactions. If it is large, in charge of marketing, supplying company, although not able to come into contact with each of them, must be familiar with the role played by each.

The needs that motivates behaviour procurement centres, industrial buyers are divided into:

1) buyers dominated by economic criteria, which base their purchasing decisions on behalf: payback period, rate of return, standard coefficient of economic efficiency, etc;

2) buyers dominated by technical criteria for the reliability, availability, maintainability etc. are located in the forefront issues in the decision to purchase;

3) Buyers users, decision makers through the end users of the product will be made with the appropriate factors.

Deciding procurement involves several steps, such as recognition of the problem; the description of the product purchased; Product specifications; analyze sources of supply; reception and analysis of proposals; choice of supplier; choice and control procedure assessment of the consequences. All these form a so-called grid buying. [6, 27-29]

Conclusions

The complexity of the decision-making process of buying industrial goods depends on the novelty and importance of procurement. The most complex situation arises where new purchases, involving several people, different specialties and different decision-making powers. In fact, only this kind of purchase involves the exercise of all eight categories of operations to which we have referred.

The sale of industrial goods can not be viewed as an isolated act, being the manifestation expression of a whole process of interactions that occur between providers and beneficiaries.

As a result:

* buyers and sellers have an active role as the preparation and execution of commercial transaction;

* behaviour of the buyer (beneficiary) is a long-running transaction is influenced by already established supplier relationships, which, in turn, influences firm (giving reasons keep, modify or abandon);

* establishment of long-term contractual relationship tends to institutionalize relations between the supplier and recipient, which allows achieving the best trade links between their departments.

This collaboration can be facilitated or hindered by several factors (which we have already referred).

References

References

[1] Webster, F. Jr., Wind, Y., (1978), Présentation d'un Modèle Général de Comportement d'Achat Institutionnel, în Encyclopédie de Marketing, vol. 1, Edition Techniques, Paris

[2] http://www.stiucum.eom/marketing/marketing-mix/217/intelegerea-comportamentului-c24582.php

[3] http://www.scritube.com/economie/Comportamentul-consumatorului-22611319.php

[4] http://www.stiucum.com/marketing/marketing-general/Comportamentul-consumatorilor-35545.php

[5] http://www.stiucum.com/marketing/bazele-marketingului/258/influente-asupra-comportamentu53545.php

[6] Haymann, Ph., Némarq, A., Badoc, M., (1979), Le Marketing Industriel, Publi-Union, Paris