Buying center

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Critically in business-to-business marketing, the interplay of various "forces" determining the competitive position including aspects such as:

  • Buyer-seller relationships
  • Buying processes
  • Levels of - adoption of the marketing mentality, demand, internationalisation
  • other generic marketing influences (e.g. macroeconomic, political etc.)

can combine to necessitate increased systematisation of some marketing decisions. .[1] Reflecting these various "pulls and pushes" the buying center(s) (also known as a decision making unit or DMU), a group(s) of employees, family members, or members of any type of organization, are responsible for finalising major decisions, usually involving a purchase and as part of a process, rather than separate transactions.[2] The buying center can be viewed as the combination of these different stakeholders, often in a highly fluid and incredibly complex environment where the buyer may seem uncertain of their needs, attitudes and behaviours.[3][4][5][6][7][8][9] The backdrop is increasing professionalisation, a shift to strategic rather than tactical tasks (i.e. fewer "on the road" sales people) and greater awareness (and in some cases:Vertical disintegration).[10][11][12][13][14] In a business setting, major purchases typically require input from various parts of the organization, including finance, accounting, purchasing, information technology management, HR and senior management etc., hence demonstrating the relative complexity of B2B marketing. Usually, the DMU is seen as an integral part of the process of B2B marketing / behaviour (industrial marketing/behaviour), as opposed to consumer marketing and consumer behaviour.[15] Nevertheless, research indicates that generally industrial marketing may be substantially less rational than had previously been assumed.[16] The key factors influencing the DMU's activities include: 1. Buy class (e.g. straight rebuy, new task or modified rebuy) 2. Product type (e.g. materials, components, plant and equipment and MRO (maintenance, repair and operation)) 3. Importance of the purchase[17]

Decision making process[edit]

When the DMU wants to purchase a certain product or service the following steps are taken inside the buying center:

  • Need or problem recognition: the recognition can start for two reasons. The first reason can be to solve a specific problem of the company. The other reason can be to improve a company’s current operations/performance or to pursue new market opportunities.
  • Determining product specification: The specification includes the peculiarities that the product/service that is going to be purchased has to contain.
  • Supplier and product search: this process contains the search for suppliers that can meet a company’s product or service needs. First a supplier that matches with the specifications of the company has to be found. The second condition is that the supplier can satisfy the organizations financial and supply requirements.
  • Evaluation of proposals and selection of suppliers: the different possible suppliers will be evaluated by the different departments of the company.
  • Selection of order routine: this stadium starts after the selection of the supplier. It mainly consists of negotiating and agreeing with the supplier about certain details.
  • Performance feedback and evaluation: performance and quality of the purchased goods will be evaluated.

In this process of making decisions different roles can be given to certain members of the center of the unit depending on the importance of the part of the organization.

The different roles are:

  • Initiator: the initiator(s) make a request to purchase a product or service or recognizes the problem, with this action they start the decision-making process. e.g. maintenance manager
  • Decider: the decider makes the actual purchase decision. Typically, they don’t have or need formal authority but have sufficient weight within the buying team to decide if a service/product will be purchased.
  • Buyer: the buyer (also called: purchasing manager) selects the suppliers and manages the buying process such that the necessary products are acquired.
  • Influencer: the influencer contributes to the formulation and determination of the specifications of the product or service. The influencer evaluates and recommends which potential supplier satisfies the specific needs of the organization.
  • User: the user(s) are the persons that actually use the product or service. They aren’t always involved in the buying process, but have a critical role in the feedback and evaluation process of the performance of the good that has been purchased .
  • Gatekeeper: the gatekeeper(s) control the flow of information in to and out of the company and buying center/team.*

In some cases the buying center is an informal ad hoc group, but in other cases, it is a formally sanctioned group with specific mandates, criteria, and procedures.

The formation of the buying centers or decision making unit (DMU) is considered as an important process and therefore depends on several factors like: the size of the company and skills of the personalities and staff members, the type of product/service that is needed, the type of the organization, the different buying process stages (BPS), the duration of the relationships between the buyer (the organization) and sellers or suppliers, and the technologies that are used in the production.

Buying center size

An American research done by McWilliams in 1992 found out that the mean size of these buying centers mainly consists of four people. The normal range is between three and five people. The main reason for variety in amount of people is the type of purchase that has to be done and the stage of the buying process.

Conceptual and Methodological Issues in Buying Centre Research[edit]

There are several issues concerning buying centre, which were always important and needed additional research. These issues can be divided into three main spheres:

Buying Centre Boundaries and Buying Centre Domain

Distinguishing the buying center from its environment, also defining and delimiting the activities of a particular buying center.

Buying Centre Structure

Understanding how organizational structure may differ from or may shape the structure of the buying center. Examining how a particular buying strategy may serve to mediate the effects of environmental uncertainty on the structure of the buying center.

Process Considerations in Buying Centre

Power and conflict issues within the buying center.

Decision Making

One stream of research focuses on the number of decision phases and their timing and the other emphasizes the type of decision-making model (or choice routine) utilized.

Communications Flow

The informal interactions that emerge during the buying process.[18]

References[edit]

  1. ^ Baines, Paul; Fill and Page (2011). "14". Marketing (2nd ed.). Oxford: Oxford University Press. p. 517. ISBN 978-0-19-957961-7. 
  2. ^ Baines, Paul; Fill, Chris; Page, Kelly (2011). "14". Marketing (2nd ed.). Oxford: Oxford University Press. p. 515. ISBN 978-0-19-957961-7. 
  3. ^ Roseira, Catarina; Carlos, Brito (April 2014). "Managing Value Co-Creation through Interfaces with Suppliers". International Business Research (Canadian Center of Science and Education) 7 (4): 11–30. doi:10.5539/ibr.v7n4p11. ISSN 1913-9004. Retrieved 24 May 2014. 
  4. ^ Chahal, Mindi (3 April 2014). "B2B branding: where is the love?". Retrieved 24 May 2014. 
  5. ^ Forrester Research; Close-Up Media Inc (June 9, 2013). "Business Marketing Association Reports Findings of Forrester Study on Global Marketing". Wireless News. Retrieved 24 May 2014. 
  6. ^ decision-making unit definition from Financial Times Lexicon
  7. ^ Marketing: The Core By Roger A. Kerin, Steven William Hartley, William Rudelius, page 130
  8. ^ Marketer, Secret (4 February 2014). "My challenge of matching 'product push' with 'market pull' is much like the online/offline debate". Marketing Week (online). 
  9. ^ Baines, Paul (2011). Marketing. Oxford: Oxford University Press. p. 516. ISBN 978-0-19-957961-7. 
  10. ^ Baines, Paul; Fill, Chris; Page, Kelly (2011). "14". Marketing (2nd ed.). Oxford: Oxford University Press. p. 515. ISBN 978-0-19-957961-7. 
  11. ^ Marketing Weekly News (8 February 2014). "Experian Marketing Solutions, Inc.; Patent Application Titled "Using Commercial Share of Wallet to Rate Business Prospects" Published Online". Marketing Weekly News /NewsRx. p. 673. 
  12. ^ Taylor, Paul (29 January 2014). "Analytics and mobility among big 2014 trends". Financial Times (London). p. 4. 
  13. ^ Marketing Weekly News (25 January 2014). "Dealiche; Dealiche Restaurant Deal Platform Challenges Paid Coupons with Frictionless Marketing". Marketing Weekly News / NewsRx. p. 101. 
  14. ^ Davies, Matthew (18 January 2014). "Business questions: Expert advice". Financial Times (London). 
  15. ^ Jobber, David (2013). Principles and Practices of Marketing. Maidenhead: McGraw-Hill Higher Education. pp. 153–174. ISBN 9780077140007. 
  16. ^ Grunbaum, Niels Nolsoe; Andresen, M; Hollensen, S; Kahle, L (August 2013). "Magazines, Journals, Books and Articles from the Icfai University Press". IUP Journal of Marketing Management (Institute of Chartered Financial Analysts of India University press) 12 (3): 27–51. ISSN 0972-6845. Archived from the original on 2007-10-11. Retrieved 3 March 3014.  Check date values in: |accessdate= (help)
  17. ^ Jobber, David; Ellis-Chadwick, Fiona (2013). "5". Principles and Practices of Marketing (7th ed.). Maidenhead, UK: McGraw-Hill Higher Education. pp. 162–165. ISBN 9780077140007. 
  18. ^ http://www.emeraldinsight.com/journals.htm?articleid=852984 Conceptual and Methodological Issues in Buying Centre Research by Bobert B. Spekman and Kjell Gronhaug