Industrial Buying Behavior Models

The buying decisions of industrial buyers are influenced by many factors. Usually, these are influenced by organisational factors or task-oriented  objectives viz. best product quality, or dependable delivery, or lowest price and  personal factors or non-task objectives viz. like promotion, increments, job  security, personal treatment, or  favor.   When the suppliers proposals are  substantially similar, organizational buyers can satisfy organisational objectives  with any supplier, and therefore personal factors become more important. When  suppliers offers differ significantly, industrial buyers pay more attention to  organisational factors in order to satisfy the organisational objectives. There are  two models available to provide a comprehensive and integrated picture of the  major factors that combine to explain organisational buying  behavior. These  are:

The Webster and Wind Model

The Webster and Wind Model of organisational buying  behavior  is quite a  comprehensive model. It considers four sets of variables:  environmental, organizational, buying center, and individual, which, affect the  buying-decision making process in a firm.

Industrial Buying Behavior Models - The Webster and Wind Model of Organizational Buying Behaviour
Source: R.E. Webster, Jr and Y Wind, journal of Marketing, 36, pp 12-17, April, 1972.

The environmental variables include physical, technological, economic,  political, legal,  labor unions, competition and  supplier information. For example, in a recessionary economic condition,  industrial firms minimize the quantity of items purchased. The environmental  factors influence the buying decisions of individual organisations. The  organizational variables include objectives, goals, organisation structure,  purchasing policies and procedures, degree of centralization in purchasing, and  evaluation and reward system. These variables particularly influence the  composition and functioning of the buying center, and also, the degree of  centralization or  decentralization  in the purchasing function in the buying  organisation. The functioning of buying center is influenced by the  organisational variables, the environmental variables and the individual  variables. The output of the group decision-making process of the buying center  includes solutions to the buying problems of the organisation and also the  satisfaction of personal goals of individual members of the buying  cente. The  strengths of the model, developed in 1972, are that it is comprehensive,  generally applicable, analytical, and that it identifies many key variables, which  could be considered while developing marketing strategies by industrial  marketers. However, the model is weak in explaining the specific influence of  the key variables.

The Sheth Model

In 1973, Professor Jagdish N Sheth developed the Sheth model of Organizational Buying. This model  highlights the decision-making by two or more individuals jointly, and the  psychological aspects of the decision-making individuals in the industrial  buying  behavior   It includes three components and situational  factors, which determine the choice of a supplier or a brand in the buying  decision making process in an organization. The differences among the  individual buyers expectations (Component 1) are caused by the factors:  background of individuals; information sources; active search; perceptual  distortion; and satisfaction with past purchases. The background of individuals  depends upon their education, role in the organization, and life style. The factor  perceptual distortion means the extent to which each individual participant  modifies information to make it consistent with his existing beliefs and previous  experiences. It is difficult to measure perceptual distortion, although techniques  such as factor analysis and perceptual mapping are available for this purpose. In  Component (2), there are six variables, which determine whether the buying  decisions are autonomous or joint. According to the Sheth Model, larger the  size of the organization and higher the degree of decentralization, more will be  possibilities of joint-decision making.

Industrial Buying Behavior Models - Sheth Model of Industrial Buyer Behaviour
Source: Jagdish N. sheth, “A Model of Industrial Buyer Behaviour”, Journal of Marketing, 37, pp 50-56, October, 1973.

The methods used for conflict resolution in joint-decision making process are  indicated by the Component (3) in the model. Problem-solving and persuasion  methods are used when there is an agreement about the organizational  objectives. If there is no such agreement, bargaining takes place. Conflict about  the style of decision-making is resolved by politicking. Situation factors can be  varied like economic conditions, labour disputes, mergers and acquisitions. The  model does not explain their influence on the buying process.

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