There are some basic concepts that should be discussed before going into detail about the business buying process.
Business Market:
All the businesses that purchase goods or services to modify them for the purpose of reselling are collectively called the business market. Business markets have derived demand that basically originates from consumer demand.
Buying Situations in Business Markets:
Following are the three types of business buying situations.
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Straight Rebuy:
In this situation, the previous routine order is made by one business without any modifications. -
Modified Rebuy:
In this case, a business wants to modify its order with respect to product specifications, price, or terms, etc. This requires more participants in the decision-making process. -
New Task:
When a business buys a specific product or service for the first time, then this case is called new task buying.
Participants of Business Buying Process:
Following are the five participants that may be involved in the business buying process.
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
What is Business Buying Process:
The business buying process is quite different from the consumer buying process because in this case the business market is involved, which has a different set of characteristics and demands. Companies operating in business markets adopt separate marketing strategies.
Stages of Business Buying Process
The business buying process is split into eight stages. New task buying contains all of these steps whereas straight or modified rebuy may skip some of them. These stages are as follows.
a) Problem Recognition
b) Description of General Need
c) Specification of Product
d) Search for Supplier
e) Proposal Solicitation
f) Selection of Supplier
g) Order-Routine Specification
h) Performance Review
Problem Recognition:
In the first stage of the business buying process, a certain problem is recognized by someone in the organization so that it can be solved through the purchase of a new product or service. External or internal stimuli result in the creation of such a recognized problem.
In the case of internal stimuli, the management of the organization may decide to manufacture a new product or a production machine may become damaged that needs certain new parts. Another internal reason may be that the supplier is not providing effective goods at a fair price. On the other hand, external elements may be in the form of a new product idea at a trade show, seeing new advertisements, or any favorable offering by a salesperson, etc.
Description of General Need:
This stage starts when a clear need has been identified by the organization. In this step, a description of the general need is prepared which shows general characteristics and the quantity of the required product. In the case of simple items, this process is linear, whereas in the case of complex items the process involves a team of buyers, engineers, and other professionals who work together to agree on the desired product. The significance of reliability, price, durability, and other features are ranked for the desired product or service by the team.
Specification of the Product:
In this stage, the organization involved in the business buying process prepares a detailed list of technical specifications of the desired product through value analysis conducted by the engineering team. In value analysis, careful studies are made to determine cost reduction in the production process for redesigning or standardizing the desired product or service. The professional team covers the best features and characteristics required for purchasing the product. Selling organizations can also use this step to increase their sales.
Search for Supplier:
In this step of the business buying process, the buying organization searches for suppliers in order to make a purchase from the best one. For this purpose, a list of competitive vendors is prepared by the buying organization through the use of supplier directories, the aid of the internet, or by contacting other organizations to obtain recommended names. The internet is increasingly becoming a platform for such searching nowadays as most organizations are entering this virtual world.
In the case of buying new and expensive products, more time is consumed in searching for suitable suppliers that can best meet the specifications of the required product. Suppliers should keep themselves enrolled in relevant directories to maintain a good reputation in the market. Moreover, salespersons should also target supplier-searching organizations in business markets.
Proposal Solicitation:
In this stage, suppliers are asked to submit their proposals. In some cases, suppliers send only their salespersons or simple catalogs. But when the desired product is expensive and complex, proper formal presentations and detailed written proposals are required from qualified suppliers. Marketers of business organizations should also be skillful in writing and presenting business proposals to buying organizations.
Selection of Supplier:
At this stage, the final supplier is selected from the list of potential suppliers who have submitted their proposals to the buying organization. The selection team of the buying organization reviews proposals of all suppliers and lists the offered attributes on the basis of rank of importance.
Following are some of the main attributes that serve as the basis for the selection of potential suppliers.
• Quality of product
• Delivery time
• Ethical corporate behavior
• Reasonable price
• Honest communication
• Past performance and reputation
• Repair and maintenance services, etc.
Order-Routine Specification:
The order-routine specifications are prepared in this step, which contain the order having a final list of specifications, the selected supplier, delivery time, quantity required, price, and repair and maintenance services, etc.
Performance Review:
This is the last stage of the business buying process in which the performance of the supplier is reviewed by the buying organization. For this purpose, the buying organization contacts customers or users of the purchased product and asks them to provide their experience of using that product. Mainly, the satisfaction level of users serves as the basis for performance review of the product purchased from the business supplier.
The performance review helps in future decisions of the business buying process in the form of straight rebuy, modified rebuy, or new task buying. The selling organization must also take into account the same factors that would affect the performance review by the buying organization.
