Question

1.List and describe the three most common types of organizational buying situations.

2. Describe the five major stages in the typical buying process.

Answer 1

Buying Situations -

Common types of buying situations include the straight rebuy, the modified rebuy, and the new task.

The straight rebuy is the simplest situation: the organization reorders a good or service without any modifications. These transactions are usually routine and may handled entirely by the purchasing department because the initial selection of the product and supplier already took place. With the modified rebuy, the buyer wants to reorder a product but with some modification to the product specifications, prices, or other aspects of the order. In this situation, a purchasing agent may be involved in negotiating the terms for the new order, and several other participants who will use the product may participate in the buying decision.

The buying situation is a new task when an organization considers buying a product for the first time. The number of participants and the amount of information sought tend to increase with the cost and risks associated with the transaction. For marketers, the new task is the best opportunity for winning new business because there is no need to displace another supplier (which would be the case for the rebuy situations).

For sales opportunities that are new tasks, there may be an opportunity for a solution sale (sometimes called system selling). In these opportunities, the buyer may be interested in a provider that offers a complete package or solution for the business problem, rather than individual components that address separate aspects of the problem. Providers win these opportunities by being the company that has both the vision and the capability to provide combination of products, technologies, and services that address the problem–and to make everything work together smoothly. Solution sales are particularly common in the technology industry.

Buying Process -

1. Problem Identification:

This step is also known as recognizing of unmet need. The need is a source or force of buying behaviour. Buying problem arises only when there is unmet need or problem is recognized. Need or problem impels an individual to act or to buy the product. Buyer senses a difference between his actual state (physical and mental) and a desired state. The need can be triggered by internal or external stimuli. Internal stimuli include basic or normal needs – hunger, thirst, sex, or comfort; while external stimuli include external forces, for instance, when an individual watch a new brand car, he desires to buy it.

Marketer must identify the circumstances that trigger a particular need. He can collect information from a number of consumers regarding how stimuli spark an interest in products. Based on information, he can develop marketing strategies to trigger consumer interest.

2. Information Search:

Interested consumer will try to seek information. Now, he will read newspapers and magazines, watch television, visit showroom or dealer, contact salesman, discuss with friends and relatives, and try all the possible sources of information.

They include handling, examining, testing, or using the product. Selection of sources depends upon personal characteristics, types of products, and capacity and reliability of sources. Each information source performs different functions in influencing buying decision. By gathering information from relevant sources, the consumer can learn about different products and brands available in the market.

3. Evaluation of Alternatives:

In the former stage, the consumer has collected information about certain brands. Now, he undergoes evaluation of brands. He cannot buy all of them. Normally, he selects the best one, the brand that offers maximum satisfaction. Here, he evaluates competitive brands to judge which one is the best, the most attractive. Evaluation calls for evaluating various alternatives with certain choice criteria.

4. Purchase Decision:

This is the stage when the consumer prefers one, the most promising band, out of several brands. The former stage helps consumers evaluate various brands in the choice set. The brand that offers maximum benefits or satisfaction is preferred. Simply, the most attractive brand, that can offer more benefits in relation to price paid, is selected by comparing one brand with others. Comparison shows superiority/inferiority of the brands.

Now, consumer makes up his mind to purchase the most preferred brand. However, three factors further affect whether buying intention result into actual purchase. More clearly, the consumer’ decision to avoid, modify, or postpone a purchase decision is influenced by these factors.

5. Post-purchase Decisions:

Consumer buys the product with certain expectations. Though he decides very systematically, there is no guarantee of a complete satisfaction. There is always possibility of variation between the expected level of satisfaction and the actual satisfaction. His subsequent behavior is influenced by degree of satisfaction/dissatisfaction.