3. Phases in Industrial buying decision
process
Technically known as Buy phases
Recognition of a problem or need
Determination of the characteristics and quantity
needed
Development of the specifications of the product
Search for qualifications of potential suppliers
Obtaining and analysing supplier proposals
Evaluation of proposals and selection of suppliers
Selection of an order routine
Performance feedback and post purchase evaluation
4. Recognition of a need
The recognition of a problem or need may originate
within a buying firm or also may be recognised by a
smart marketing guy…
Reasons for need arousal:
When the quality of material supplied is not satisfactory
When the material is not available with the supplier
When the machine supplied breaks down very often
5. Determination of characteristics
and quantity of the product
What type of products are needed and in what
quantity?
For technical products – the technical department
takes the decisions (R & D, production, quality
control)
For non-technical products – either the user
department or the purchase department
6. Development of specifications of
needed product
Once the product and quantity is decided, the
specifications are decided.
Opportunity for industrial marketers to get involved in
this stage of the decision making process.
Concept of Early Supplier Involvement (ESI) program.
Also known as Early Purchasing Involvement (EPI)
program
7. Search for qualifications of
potential suppliers
First step is to get information on all available
suppliers
Sources – trade journals, sales calls, word-of-mouth,
catalogues, trade-shows and industrial directories
Qualifications are based on the purchasing objectives.
8. Evaluation of proposals and
selection of suppliers
Factor analysis of all the suppliers
(quality, delivery, price, service, flexibility)
Selection of an order routine
The activities involved in this step are:
Placement of orders
The quantity to be purchased from each supplier
Frequency of order placement
Levels of inventory needed
Follow up of actual delivery
Payment terms
9. Performance feedback and post
purchase evaluation
Getting feedback is most important process.
Three benefits of retaining existing customers:
Repeat orders
Referrals
Cross selling
10. Buying Situations
New purchase (or New Task)
In this situation, the firm is buying for the first time.
Here, the risks are more
Decisions may take a longer time
More people are involved in decision making
Modified Rebuy (or Change in Supplier)
This situation occurs when the customer is not satisfied
with the existing vendor
Straight Rebuy (or Repeat Purchase)
Here, the customer is satisfied with the existing vendor
11. Buying Center Roles
The buying center is sometimes referred to as the
decision making unit (DMU) or the buying group.
There are 6 roles of buying center members:
Initiators
Buyers
Users
Influencers
Deciders
Gatekeepers
12. Identifying key DMU members
Top management persons
Technical persons
Purchase department persons
Accounts/ finance persons
Marketing function persons