Who does the buying in Industrial market, and what are the types of decisions made?

For smooth functioning of the organisations operations, as part of “Strategic Marketing Planning”, responsibilities have to be clearly assigned to departments and managers. Purchasing agents or managers from the purchasing department are mostly involved in straight rebuy or modified rebuy situations. The main responsibilities include-

• Choosing a supplier
• Data collection on goods to be procured (quality, characteristics, expiry, etc.)
• Negotiating price
• Signing of contract

In case of a New Task situation, the decision is mostly taken by experts from different departments- finance, production, marketing, etc. To accelerate the buying process and overcome hurdles of taking approvals in the hierarchy, some organisations have upgraded the position of the manager in purchasing department to the level of Vice President.

Sometimes the buying decisions involves giving responsibility to people outside the organisation. Webster and Wind in Organisational Buying Behaviour refers to these decision making units as Buying centre.

Buying Centre consists of all the people from within as well as outside the organisation who decide in making a purchase and aligning the same with the organisations mission.

As the people involved at the buying centre may change as per the buying situations, a supplier or a seller has to identify the point of contact at the buying centre. The power structure varies from organisation to organisation. Depending on the same a seller has to gather all the information, and accordingly pitch for the proposal or follow-up on the contracts signed.

For example, a supplier approaching an organisation for the sale of laptops may face few major examinations.
(1) There will be a group of engineers or other staff members who are concerned about the quality, characteristics of the laptop and computers,
(2) The finance department will be concerned about the price factor of the purchase.
(3) The legal team will be concerned about various contract details, and so forth

Types of decisions made –
There are many decisions made in business buying but mostly following important types of decisions are made in Business Buying-

• Approval authority to buy the product – The designated person having the authority to approve the buying.
• Product characteristics – Mostly the engineers from production or operations department who will be working on the final end product specify the characteristics of the products to be bought for production.
• Price negotiation – Marketing or Finance team after proper consultation with each other makes this decision keeping in mind the objectives of the organisation like market share, market growth goals, overall cost and expenses, etc.
• Selecting a supplier – Senior management is mostly involved in selecting a supplier after taking inputs from all the concerned departments.
• Contract / paper work – The legal team finalises the paper work mostly or the organisation takes help from experts outside the organisation.

Business buyers tend to buy all the products and services from one seller or few sellers. This benefits the organisation in many ways.

For Example, it helps in cost reduction, no over storage needed for emergencies, long term relationship brings effectiveness, less price fluctuation as contract signed over long period.The decision making differs from organisation to organisation. Depending on the size of the organisation, each of the above decisions can be made by different people. For a small firm which has limited resources and small production unit, a single person like a Senior Production Manager can take all the decisions with the help from its staff.

The organisation should not make regular changes to Buying Centre as it becomes complicated for the suppliers to communicate with the concerned authority. A well designed Marketing strategy clearly defines the roles and responsibilities at each step in the functioning of the organisation.

The marketing team from the suppliers have to proactively reach out to organisations to give presentations, etc. for the sale of their products. They need to understand the structure of the organisation to identify the various approval and advising authorities for effective sales and competitive advantage.