PP 04

Selling and Sales Management
Eleventh edition
Part 2
Sales environment
Chapter 4
Consumer and organisational
buyer behaviour
Copyright © 2019, 2015, 2012 Pearson Education, Inc. All Rights Reserved
Differences between consumer and
organizational buying
1- fewer organizational buyers:
• The importance of one customer to business to
business marketer is far in excess of that to the
consumer marketing company. Often, 80 % of output
will be sold to perhaps 10-15 customers.
2- close, long-term relationship between
organizational buyers and sellers:
• The growth of key account selling.
• In the consumer market, customers and
manufacturers rarely meet in person.
3- organizational buyers are more
rational:
• on the whole, organizational buying is more rational.
• customers are increasingly using life-cycle cost and
value-in-use analysis to 2015,
Copyright © 2019, evaluate products.
2012 Pearson Education, Inc. All Rights Reserved
Differences between consumer
and organizational buying
4- organizational buying may be to specific
requirements:
• it is not uncommon for buyers to determine product
specifications and for sellers to tailor their product offerings
to meet them. This is feasible because of the large potential
revenue of such products.
• This is far less a feature in the consumer market, where a
product offering may be developed to meet the need of a
market segment but, beyond that, meeting individual needs
would prove uneconomic.
5- reciprocal buying may be important in

organizational buying:
• The buyer may demand that the seller buys some of
the buyer’s product in returning for securing the
order. Copyright © 2019, 2015, 2012 Pearson Education, Inc. All Rights Reserved
Differences between consumer and
organizational buying
6- Organizational selling/buying may be more
risky:
• the contract is being agreed before the product is made.
• the product itself may be highly technical and seller
may be faced with unforeseen problems.
7- Organizational buying is more complex:
• many organizational purchases are new to the company,
and involve SEVERAL people at different levels of the
organization.
• the sales task may be to influence as many as of these
people as possible and may involve multi-level selling by
means of sales team, rather than an individual
salesperson.
• Negotiations is often important due to the presence of
professional buyers and sellers, and size and complexity
of organizational buying.
• The supplier’s list of price may be regarded as the
starting point forCopyright
negotiation.
© 2019, 2015, 2012 Pearson Education, Inc. All Rights Reserved
Organizational buyer behavior
• Organizational buyer behavior has been
broken down into three elements:
1- structure: the who factor, who participate

in the decision making process and their
particular roles.
2- process: the how factor, the pattern of
information getting, analysis, evaluation and
decision making which takes place as the
purchasing organization moves toward
decision.
3- content: the what factor, the choice
criteria used at different stages process and by
different members of the decision making unit.
Structure-who buys?
- The buyer or purchasing officer is not the only
person who influence the decision. Rather, the
decision is in the hands of a decision making unit
or buying center.
- There are six roles in the structure of the decision
making unit:
1- initiator: those who begin the purchase
process.
2- users: those who actually use the product.
3- deciders: those who have the authority to
select the supplier.
4- influencers: those who provide information
and add decision criteria throughout the process.
5- buyers: those who have authority to execute
the contractual arrangements.
6- gatekeepers: those who control the flow of
information, e.g. secretaries who may allow or
prevent access to a DMU member.
Structure-who buys?
• The Salespeople task is to identify and reach
the key members in order to convince them.
Salespeople need to avoid two deadly sins:
1- working within their “comfort zone” this is
where they spend too much time with people
they like and feel comfortable with but who
are unimportant with regard to which product
to buy or which supplier to use.
2- spending to much time with “nay Sayers”.
These are people who can say no but who do
not have the authority to say yes. The
salespeople should focus on the latter group.
- when the problem to be solved is highly
technical, suppliers may work with engineers
in the buying org in order to solve problems
and secure orders.
Figure 4.1
The consumer decision-making process
Source: Adapted from Blackwell, R.D., Miniard, P.W. and Engel, J.F. (2003) Consumer Behaviour. Orlando, FL: Dryden. Reprinted with permission of South-Western, a division of
Thomson Learning: www.thomsonrights.com
Figure 4.5
The organisational decision-making process
(buy phases)
Process
• Step one : recognition of a problem
(need):
 needs and problems may be recognized
through either external or internal factors.
 We have three different kinds of internal
and external factors:
1- internal/active: recognizing a need and
then take an action to satisfy this need.
2- internal/passive: recognizing a need
but take no action.
3- external: example, a production
manager may be satisfied with the
production process until being made
aware of another more efficient method.
Process
• Step two: determination of characteristics,
specifications and quantity of needed item.
• At this stage of decision making process the
DMU will draw up a description of what is
required.
• The ability of a salesperson to influence the
specifications can give their company an
advantage at later stages of the process. By
persuading the buying company to specify
features that only their product possesses
(lockout criteria), the salesperson may
virtually have closed the sale at this stage.
• Step three: search for and qualification of
potential sources:
• Generally speaking, the cheaper, less
important the item and more information
the buyer possesses the less search takes
place.
Process
• Step four: acquisition and analysis of
proposals:
- After having number of companies which
are technically experienced, have good
reputation, and are considered to be
qualified to supply products, proposals will
be called for and analysis of them
undertaken.
• Step five: evaluation of proposals and
selection of suppliers:
- Each proposal will be evaluated in the light
of criteria deemed to be important to each
DMU member.
- Each member may use different criteria
when judging the proposal.
- The outcome of this procedure is the
selection of a supplier
Copyright or
© 2019, 2015, suppliers.
2012 Pearson Education, Inc. All Rights Reserved
Process
• Step 6: selection of an order routine:
- at this step we settle issues like details
of payment, and delivery. Usually this is
conducted by the purchasing officer.
- in some buying decisions this stage is
merged into stages 4 and 5 when delivery
is an important consideration in selecting
a supplier.
Step 7: performance feedback and

evaluation:
- formal: evaluation forms.
- informal: conversation.
Content
• This aspect of organizational buyer behavior
refers to the choice criteria used by member
of the DMU to evaluate supplier proposals.
• These criteria are likely to be determined by
the performance criteria used to evaluate the
members themselves.
• Example: a purchasing manager who is judged
by the extent to which he/she reduces
purchase expenditures is likely to be more
cost conscious than a production engineer
who is evaluated in terms of the technical
efficiency of the production process he/she
designs.
• Organizational buying is characterized by
both functional (economic)
• And psychological ( emotive).
A number of important criteria :
1- quality:
- the emergence of total quality management as
a key aspect of organizational life reflects the
importance of quality in evaluating a suppliers
products and services.
- Total quality management (TQM) is an
integrative philosophy of management for
continuously improving the quality of products
and processes.
-TQM functions on the premise that the quality
of products and processes is the responsibility
of everyone who is involved with the creation or
consumption of the products or services offered
by an organization.
- BUYERS ARE LOOKING FOR CONSISTENCY OF
PRODUCTS OR SERVICE QUALITY SO THAT END
PRODUCTS ARE RELIABLE, INSPECTION COSTS
REDUCED AND PRODUCTION PROCESSES RUN
SMOOTHLY.
2- price and life cycle cost:

-for materials and components of similar
specifications and quality, price becomes
key consideration. For standard items,
price may be critical to making a sales
given that number of suppliers can meet
delivery and specification requirements.
- increasingly, buyers take into account

life cycle costs, which include
productivity savings, maintenance costs
and residual value, as well as initial
purchase price, when evaluating
products.
3- continuity of supply:
- on of the major costs to a company is
a disruption of a production run,
therefore, continuity of supply is a
prime consideration in many purchase
situation.
- companies which perform badly on

this criterion lose out, even if there
price is competitive, because small
percentage price edge does not compare
with costs of unreliable delivery.
4- perceived risk:
- perceived risk come in two forms:
a- functional risk: such as uncertainty with
respect to product or supplier performance.
b- psychological risk: such as criticism
from work colleagues, fear of upsetting the
boss, losing status, being ridiculed by others
in the department, or sometimes losing
one’s job.
- buyers often reduce uncertainty by
gathering information about competing
suppliers, checking the opinions of
important others in the buying company,
only buying from familiar or reputable
suppliers, and spreading risk through
multiple sourcing ( different sellers).
4- office politics:
interdepartmental conflicts may manifest
itself in the formation of competing “camp”
over the purchase of a product or service.
Example: because department x favors
supplier A, department Y automatically
favors suppliers B.
5- personal liking/disliking:
- a buyer may personally like one
salesperson more than another and this
may influence suppliers choice, particularly
when competing products are very similar.
- even when supplier selection is on the
basis of competitive bidding, it is known for
purchasers to help salespeople they like to
be competitive.
Table 4.2
Choice criteria
Implications
- A salesperson may need to change the sales
presentation when talking to different DMU
members.
- the choice criteria used by buying

organizations change over time as
circumstances change:
- price may be relatively unimportant to a
company when trying to solve a highly
visible technical problem, and the order will
be placed with the supplier who provides the
necessary assistance.
- Later, after the problem has been solved

and other suppliers become qualified, price
may be of crucial significance.
Factors affecting organizational buyer
behaviour
• There are three factors which
influence the composition of the
DMU, the nature of decision-
making process and the criteria
used to evaluate product
offerings:
• The buy class
• The product type
• The importance of the purchase
to the buying organization.
behaviour
• There are three factors which
influence the composition of the
DMU, the nature of decision-
making process and the criteria
used to evaluate product
offerings:
• The buy class
• The product type
• The importance of the purchase
to the buying organization.
Figure 4.6
Influences on organisational purchasing
behaviour
The buy class
• The buy class: there are three different kinds of buy
class:
1- new task:
occurs when the need for the product has not arisen
previously so that there is little or no relevant
experience in the company, and a great deal of
information is required.
2- straight re-buy:
occurs when an organization buys previously purchased
items from suppliers already judged acceptable.
routine purchasing procedures are set up to facilitate
straight re-buys.
3- modified re-buy:
lies between the two extremes; a regular requirement
for type of product exists and the buying alternatives
are known, but sufficient changes has occurred to
require some alteration of the normal supply
procedures.
The buy class
• The buying class affect organizational buying
in the following ways:
1- the structure of the DMU changes; for
straight re-buy, possibly only the purchasing officer
may be involved, whereas for new a new buy,
senior management, engineers, production
manager and purchasing officers are likely to be
involved.
2- the decision making process is likely to be
much longer as the buy class changes from
straight re-buy to a modified re-buy and then, a
new task.
3- in terms of influencing DMU members, they
are likely to be much more receptive for new task
and modified re-buy situation than straight re-buy.
The Product Type
• The product type:

products can be classified according
to four types:
1- materials to be used in the
production process, e.g. steel
2- components to be incorporated in
the finished products, e.g. tires
3- plant and equipment.
4- products and services for
maintenance, repair and operations
(MROs), e.g. screwdrivers, welding
equipment, lubricants
behaviour
First, the people who take part in the decision
making process tend to differ according to
product type.
Second, the decision making process tends to be
slower and more complex as product type moves
from: MRO to Components to Materials- Plant and
Equipment.
- For MROs items, blanket contracts rather than
periodic purchases are increasingly being used.
The supplier agrees to resupply the buyer in
agreed prices terms over a period of time. This
has the advantage to supplying company of
effectively blocking the efforts of the competitors’
sales force for longer periods of time.
Third Classification of supplier’ offering by product
type gives the sales force clues as to who is likely
to be influential in the purchase decision.

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Selling and Sales Management

5- reciprocal buying may be important in

1- structure: the who factor, who participate

Step 7: performance feedback and

2- price and life cycle cost:

- increasingly, buyers take into account

- companies which perform badly on

- the choice criteria used by buying

- Later, after the problem has been solved

• The product type:

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