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The decision making process by which formal organisations confirm the need for products and services to be purchased, consider and select among alternative suppliers and brands ( Richard Glavee, 2009). Industrial purchasing occur in the context of formal organisation influenced by cost, budget and profit considerations. Besides, the institutional and industrial buying normally involves many people in decision process with complex interactions 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 information below is a description of these three dimensions, introduced through a historical review research carried 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 1967, the Canadian marketing researchers, Robinson et al., established the buygrid framework as a universal conceptual model for organizational buying processes. They did not perceive industrial buying as distinct events, but as decision-making processes in organizations where a series of buyers decide on a purchase. This specific framework comprises of a matrix of buy phrase and buy class.
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 figure of complex organizational purchasing models implies to explain the process whereby the acquisition of products or services in an organizational institution is considerable. They vary from Webster's (1985) simple four stage model to more perplex models of Sheth (1977) and Wind (1981). Both the Sheth and Wind models integrate a large spectrum of buying determinants within a stimulus result format. Wind denotes that this particular model does not necessarily have any requirement to reach the exact decision-making process.
Alternatively, the model shows a major bundle of variables blocks that marketing department need to relate in their attempt to understanding buying behavior. " The Sheth model surpass the building block stage to figure out interrelationships between different variables in a sequential diagram format. Generally it is structured with such of the model are not testable in its present form. However, it does combine the literature in the line into a rational causal model which is a basis for learning about organizational buying behavior.
Hutt,(2009) aimed to frame the industrial buying process as an selection process. They analysed the purchase directing factors, duration of process and the use of information sources. They made the conclusion that the organizational selection process is extremely complicated, ultimately more than the selection process of an individual.
The critical review of the buying and acquisition article influence an individual to make the conclusion that a simple application of the acquisition model is not convenient for the analysis of new product or new idea acquisition by organizations.
The model represented in Figure 4 is a synthesis of an attribute model, the Buygrid model and the Robertson model of organizational buyer choice (Wilson, 1999). Two frameworks of the model are needed to use for buying centre activity. In some cases there are firms which are practically more active in environment scanning for new products or ideas that will develop their organization's competitiveness. In the dynamic organizations, it is conclusive that the shareholder (Patchen, 1999) will understand new product or idea before the organizational buying process is introduced by the problem recognition stage. It is expected that these shareholders become advocates of the new process or ideas and try to run the buying process within the organization.
The next point of departure from conventional models is that needs are framed and are illustrated by set of attributes that are products or services interrelated and salesperson interrelated. On the other side, it is rational to differentiate and define the buying situation in terms of this bundle of attributes. This ideology of the concept offer the possibility to draw upon attitude theory.
The third point of start is that the selection model of Robertson (1999) is dwelt within the organizational buying model. For instance, in the latent model, perception and apprehension are the outcome of search. Search is the venture while perception and apprehension are the outcomes. Furthermore, the interpretation of proposals define an activity where the results are an attitude structure established on the purchasing attributes. This attitude concept results to the legitimization stage. Similarly, the purchasing of the new product or service appears to be an suitable course of action. This yields to trial which the evaluation of the product or idea.
The adoption process is concluded by the attitude set up on the total set of attributes. What benefits the organizational buying or adoption process so perplexed is that this attitude is exactly an analysis of the individual members buying centre attitudes. There is a need to build up an approach of integrating the structural attitude of the buying centre. The functional attitude that leads a product or idea through legitimization to trial to selection is reliant on the influence relationships within the buying centre.
A model of Organizational Buying Process
Figure 4 shows a merged model of the organizational Buying/Adoption Process for new product or ideas.
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 re-buy, and (3) the modified re-buy, 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.
As mentioned above the buying situation is usually classified into three major categories;
the new task, the modified re-buy, and the straight re-buy situations.
In a new task buying situation organizational buyers are in a large stage of decision making that might be referred to as an extensive problem-solving stage, in which the buyer faces a buying situation that is different from any previous buying experience. It is a buying situation in which the business buyer purchases a product or service for the first time. For instance a new type of machine or software is needed and the purchaser is in an unfamiliar buying situation. 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. The vendor has a greater possibility to affect the decision making process with the information provided. Similarly, its personnel need to respond to the information needs of several of people within the decision-making unit ( Frank Bingham, 2001).
In a modified re-buy, the distinctive element is the re-evaluation of alternatives. The buying requirements have changed so that the relatively routine buy or purchase is no longer a routine. As the customer's needs have changed, the business marketing effort must change in response. 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 (Stephen Robbins, 2007).
A straight re-buy situation is the most common purchasing situation in business buying. The buyer purchases a part, material or service routinely, with little thought going into the buying process. The marketing goal of the business seller is to become a supplier for such relatively routine types of purchases. This can be a difficult challenge, however, because of the buyer time constraints and previously established relationships. Present supplier strive to maintain potential suppliers attempt to establish their worth by promising better quality products, more reliable and efficient service and lower prices.
The Buying Centre
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.
Dimensions of the Buying Centre
There are many theoretical and practical issues having to do with the structure and functioning of buying centres. Johnson (2006), specified five dimensions of buying centre structure and interactions. Those are shown below.
Dimension of the buying centre
The number of organizational levels exerting and communicating with the buying centre.
The number of separate functions, department and divisions involved in the purchase decisions.
The number of individuals involved in the communication network.
The number of two person; dyadic communication among the buying centre participants as a percentage of the total connections.
Degree of the purchasing manager in the buying communication network, the buying communication sent and received, weighted by the total number of the buying centre participants.
Table - Dimensions of the buying centre (Johnson, 2006)
Roles of the Buying Centre members
Buyers are known to assume some common roles in a buying process ( wind, 2002). These roles are classified into six groups which are shown below.
The one or group of individuals who become aware of a company problem and recognise that the problem can be solved via acquisition of a product or service.
Usually act as problem or product experts. They have information about a range of vendor offerings. Other buying centre members therefore rely on their information for their assessment of prospective vendors' offerings. Thus, by controlling information, and, by having access to decision makers in the firm, the gatekeepers largely determine which vendors get the chance to sell.
Those who have a say in whether a product or service is bought or not. The more critical a purchase is to company's business, the higher the number of influencers. Critically strategic purchases frequently entail high resource outlays and affect the task performance of several employees, the heads of whom naturally have a say in the purchase decision making process.
Those who make the actual purchase decision. For instance, they say yes or no to what vendors offer. In less complex purchase situations, the decision making responsibility may fall on one person. But where the purchase is complex, group decision may be required.
One who makes arrangements for the delivery of the goods. He is also often directly involved in negotiating the conditions under which the transactions will be made.
Those who usually make use of the products in normal working process.
Table- Members of the buying centre and their roles (Wind, 2002)
Factors influencing the buying process and the buying centre
Different attributable influences that affect the buying process and the buying centre previously addressed ( Johnston, 1996) :
Aspects influencing the buying process
Technology, goal, task, actors, structure.
Formal authority, persuasiveness
Status, politics, ethics.
Physical, economic, technological, legal, political and cultural.
Organizational factors are internal factor having more or less influence on buying decision. Every organisational purchaser has clear goals and objectives, well accepted producer and system for purchasing and a suitable organizational structure (Richard Glavee, 2009). These factors directly and indirectly affect its purchasing decision. These characteristics develop clues for establishing buying decision. The goals of an organisation affect the types of product it needs and the criteria by which it figures out supplies.
Organizations set up their policies for their purchase decision. Governmental organisation traditionally adopt bidding while making a decision. Organizational structure stipulates responsibilities and authority for decision making a job to positions across a company.
Considering Inter-personal factors, Raymond Mc Dowell (2007) stated that industrial buying decisions are generally collaborative and also as different individual with certain status, persuasiveness and authority. Buying centre comprises of individuals of the organisation involved with purchase decision process. They are exposing to the risks arising out of it. They also have an average members of a buying centre regarding purchases to be made. Conflicting situations are likely to occur among the members of a buying centre in marketing purchasing decision. It is essential for the suppliers to know about such conflicts in order to find concrete solution so that the marketing programme can adjusted appropriately. Conflicts arising among buying centre participants need to be solved rapidly so that purchasing will done on time.
Individual factors plays a significant role in buying decision in the final analysis. The other factors like organizational, environmental amongst others are essential but individuals involved in purchase decision are of a considerable importance. It is essential for a supplier to keep compute details of all individuals engaging in a purchase decision process. Personal factors include age, maturity , job position and education. Final decision depends largely on such factors. In final analysis, officer or individual have the responsibility for taking the buying decision. The industrial buyer may be decisive or may have co-operative attitude.
Environmental factors create an important element of organizational purchasing (Richard Glavee, 2009). This consists of government, policy, economic situation, technological development, competitive development in the industry and their introduction. For instance, if the industry purchaser perceives that the government may increase tax on industrial buying of material is most likely to increase in future coming, his buying of material will increase as buying will enhance additional cost in the future due to tax burden. The technology of an organizational buyer may be updated if interest are low and machinery is expected at fair rates. Purchases will be realised at lower level if recession flows are indeed visible in the economy. An industrial buyer will be cautious in the buying decisions to avoid any losses to the organisation. An industrial buyer will gather information about economic situation in the country and will make proper decisions after reviewing such economic information
According to Jakob Neilsen (2000) , Word of Mouth (WOM) is the "world's most powerful sales tool" . Muller (2001) pointed out that WOM is often seen as a catchall term to justify unsual marketplace forces. There has been little understanding or consensus about what word-of-mouth is, how, when, and why it works. Scholars, too, have repeatedly lamented about the paucity of a common theoretical basis. Prahalad (2004), explained when the function of the organizational turns from a traditional latent role to a more active one, organizational interactions, organizational communities and word-of-mouth shift to indispensable to the development of marketing strategy.
The current source can be categorized into three streams of research at two different levels, the macro levels, the macro level that is WOM between populations or societal groups and thirdly the micro level where it consists of individual to individual (Peter Fader, 2010). The fundamental research stream category put emphasis on the justifications why individuals proactively disseminate the word about products and services they have experienced. The second stream of research concentrate on better understanding information seeking behaviors, or, more precisely, under what situation individuals depend on the WOM communications more than other sources of information to make a purchase decision. A third stream of research applies the conception of why certain sources of information have more importance than others. Considering this study, a revision of WOM research at the micro level is needed.
Like mentioned earlier, WOM studies tend differentiate between WOM supply and demand based on assumption that one of the parties is an ultimate recipient of WOM. While in any prevailing WOM circumstances, recommendations, opinions, information are likely to succeed in both ways.
Research carried out by Louise Canning (2007) is complied in terms of the antecedents, consequences and moderators of Word-Of-Mouth, based on product, individual self and community at the level of the participant.
Provision of WOM
Product-Antecedent: The relation between WOM and judgment of product quality has encountered considerable research attention (Raymond Mc Dowell, 2007). Thus WOM is considered as a behavioral response to result of quality.
For some people, WOM is perceived as an exit outcome to dissatisfaction with the product quality. On the other hand, for others it can be a behavioral manifestation of a latent loyalty towards the supplier or the brand. Like in quality judgments, satisfaction can result to positive WOM through an exit, voice and loyalty logic argument(Debra Nelson,2002). Study on satisfaction or dissatisfaction most often adopts the view that negative WOM is a form of complaint behavior. To such a degree that satisfaction has affective bases, the statement specified earlier about the influence to WOM route has validity as well (Stephen Robins, 2008).
The involvement with a product certainly provides a person with the motivation and ability to come up with product-related conversations with others. Like John Jantsch (2010), observed an individual's frequent or profound engagement with a product or service brings out to overflowing thoughts and emotions that can easily recalled in WOM experiences, frequently willfully so, in order to clear out the tension or the experience. Intense involvement with advertising message, similarly, develop an eagerness to engage in WOM about the message or the product. While re-examining practical evidence, Jerry Wilson (2006), affirmed the association between WOM transmission and involvement. Dissatisfaction with a product presumed to be essential by the individual is particularly filled with WOM potential (Dave Balter et al. 2009).
Product-consequences: According to Peter Fader (2010), there exists any presence of studies on product-related consequences on WOM communication on the source. Consequently, a cause-effect relation between loyalty and WOM but cannot be certified at this time.
Product-Moderators: Researchers have been able to separate several product-related factors that reduce the occurrence and extent of WOM activity. Price awareness for product, for one, has been encountered to correspond remarkably with WOM transmission. Preceding a dissatisfactory experience, individuals have demonstrated to participate in more or less WOM conversations depending on the seriousness and controllability and composure of the problem (Catherine Bowman,2009), as well as the perceived likelihood of a favorable redress (Wilson, 2006). Positive outcomes concerning complaint handling and redress, like the diffusive and synergetic justice of the redress orientation and the convenience of recovery, can lead positive consequences for a provider as individuals have the tendency to respond to positive things about the provider (Dave Balter, 2009).
Individual Self-Antecedents: WOM conversations are yield for the reason of advancing the interests of the individual self. In these situations, product-related buzz, assumptions, opinions and recommendations are pursued as mere accessories. John Jantsch (2010) clearly reported how individuals took the recent product news or experiences as 'conversational device' in social exchanges with their neighbors. The research of Catherine Bowman et al. (2009) affirmed that individuals create and approved sense of self as they take WOM as a stratagem to capture the attention, build up connoisseurship, infer pioneering spirit, display insider information, evangelize, denote status, certify own judgment and assert superiority.
Individual Self-Moderators: Certain psychographic, demographic and personality variables have been examined to set up their moderating influence on WOM behavior. Age controls WOM, as elderly individuals have the tendency to supply more referrals; most likely because of their larger social networks constructed over the years (Louise Canning (2007). In organizational contexts, buyers of family or privately owned firms conveyed more WOM compared to those who buys from smaller and less-experienced firms (Prahalad, 2004).
Through the past decades, significant research attention has been denoted to identifying the personality-related moderators of WOM supply behavior. Dave Balter (2009) came up with two-step flow theory of communication, which had as its vital element a group of people called 'opinion leaders' Progressive research described the personality characteristics and WOM propensity of opinion leaders (Stephen Robins, 2008). Researchers have currently referred 'market mavens' as a group of people who has the tendency to spread WOM in divers product categories (Brad Santeller et al. 2010).
Individual Community-Antecedents: The involvement and concern of an individual with other individuals can inspire WOM behavior as well . John Jantsch (2010) suggested emotions of love, care, friendship and neighborliness are motives for sharing enthusiasm of other individuals and benefits of using products and services. Regarding the social exchange model of interpersonal communication, Emanuel Rosen (2009) deduced that WOM information would be disseminated depending on the type of obligations one individual expects from or has towards another individual.
Individual Community-Moderators: The research of George Silverman(2010), explained how the dissemination of information and the ideas between individuals relied mostly upon the relevancy of the topic for the group and its structure. Similarly, Catherine Bowman (2009) showed situations of collective problem solving lead to WOM conversations. The willingness of an individual involve in WOM might be moderated by the strength of the social networking that lie between himself and the potential recipient. This has been recommended and analytically authenticated by Emanuel Rosen (2009).
WOM is not influential in B2B
Relatively fewer B2B customers continually purchase something without first telling their colleagues about their involvements with the vendor or product. According to current study of Word of Mouth literature as the one followed by Brad Santeller (2010) show that the research conducted revealed that 84% of respondents said Word-Of-Mouth recommendations influence their purchase decisions.
B2B companies only have a few Advocates
B2B marketers recognize that within a single account there are many people who spread Word of Mouth (Brad Santeller, 2010). This includes gate keepers, decision makers, technical buyers, end users, and others. While some are more influential than others, all these people form part of a Word of Mouth Centre within an account. At a distinct enterprise account, there may be 500 people who form part of a Word of Mouth centre.
The impact of Word of Mouth can't be measured.
As referred by John Jantsch (2010), there are a multiple of tools that allow B2B marketers to evaluate the quantity and quality of Word of Mouth about their companies and products on the social networks. Advanced Word of Mouth analysis enable B2B marketers to measure business and marketing results. For instance, advanced analysis track Advocate impacts on open rates and conversion rates. These advanced analysis allow marketers to control the authenticated power of Word of Mouth and track its impact as precisely as email marketing campaign.