“Knowledge of the process that organizational buyers follow in making purchasing decisions is fundamental to responsive business marketing strategy.” (Hutt & Speh, 2013)
TaeSung Park
Bachelor of Business and Commerce, Monash University.
The
key shortcut to success in business to business marketing is to enhance the
“customer’s customers’ experience” (Hutt & Speh, 2013). In order to cater
the customer and their customers’ needs simultaneously in the business market, business
marketers must identify and understand their buyer’s organizational buying
behavior. Understanding and implication of organizational buying behavior is
very crucial for business marketers to identify and organize buying influences
within profitable market segments and to effectively and efficiently reach the
organizational buyers with offers that can cater their and their customer’s
needs (Hutt & Speh, 2013). Organizational buying behavior is not about
single act or event but is a process in which many people in the organization
conducting decision making with complex interaction of individuals and
organizational goals mostly in the context of formal organization influenced by
budget, cost and profit consideration (Webster & Wind, 1972).
Organizational buying behavior involves followings; 1.Buying process, 2.Buying
situation. The dynamics of organizational buying behavior will be illustrated
and implied with “Distilled” which is the world’s no.1 online marketing service
firm as an example (BestSEOCompanies, 2013).
Distilled
especially offers the best SEM/SEO – short for search engine marketing/
optimization – which is defined as “the art or science of gaining top search
engine placement for relevant keyword phrases through making search engines
believe business’s site is more relevant than their competitor’s” (HonestSEO,
2013).
1. Organizational
buying process involves 8 stages;
Initially,
process begins when the organization detected the problem – the
discrepancy between a desired outcome and current situation - that might be
solved, or the value can be captured by acquisition of specific product (Webster
& Wind, 1972). Therefore, problem recognition stage is very crucial for
business marketers to persuade their clients, and business marketers must
accurately understand the value and problem of customer and how they would
value their products (Anderson & Narus, 1998). For example, Microsoft might
want to launch new webpage for its hybrid PC and need for the best online
marketing practice. Microsoft’s needs can be solved by enabling their new
product’s website to be exposed on high ranking of search engines which
successful SEO service can fulfill. In addition, Distilled can precipitate
Microsoft’s need for SEO by either advertising about their problem (Hutt &
Speh, 2013), or technologically manipulating Microsoft’s website to be down-ranked
on search engine which strategy called ‘black hat’ or ‘spam external links’
strategy so that they recognize their problem (SEOBlackhat, 2013). However,
latter strategy is very risky as it is unethical and can be led to legal
action.
Organization
then establishes general description of needs and product
specification subsequently. This stage will influence on final selection of
the supplier (Hutt & Speh, 2013). For example, once marketing manager in
Microsoft recognized needs for SEO, he/she will establish the general descriptions
such as ‘How long SEO will take to highly rank our new hybrid PC’s website? How
many keywords should we target? How much up to which ranking can SEO guarantee?
How much traffics can SEO guarantee to our website?’ Subsequently, marketing manager will
co-operate with purchasing manager in Microsoft to drive into establishing for
product specification such as ‘how much it will cost? How great quality of
external links – crucial components for successful SEO (Moz, 2013) - can SEO supplier
provide? Does SEO supplier provide extra services such as social media
marketing?’ Therefore, in order for business marketers in Distilled to be
successful, they must determine their capability and range of product very
accurately that will be drawn into favorable proposal to be offered to clients
consequently.
Once
individuals in the organization determined its needs specifically, they
commence searching for suppliers and alternatives of them, obtain and
analyze the alternative proposals among individuals within the organization
such as individual forces, and finally select the supplier which stage
is very important as it directly leads to the sales. According to Dickson
(1966) criteria for business to select suppliers are various that can be
abstracted over 50 distinct factors. Figure 1 below illustrates how managers
weigh on the factors when choosing suppliers.
Figure.1 - Source from: An
analysis of vendor selection systems and decisions
Verma and Pullman (1998) found that managers in an organization
‘perceive’ the quality as the most important criterion for supplier attributes,
however, when comparing their ‘perceive’ with ‘actual practice’ there is a gap
which means that although purchasing managers in organization ‘perceive’ that
quality is more important than other attributes when selecting supplier, it is
not the most important criterion when it comes to ‘actual purchase’. For
example, when managers in Microsoft seek and evaluate the specification of
suppliers for SEO to launch its new website, they will ‘perceive’ more on efficiency
and consistency in terms of quality so its website can be highly ranked for
longer time. Additionally, Distilled may show its favorable quality and
technologies with their portfolio when proposing to Microsoft as quality and performance
history influences much on manager’s decision making according to figure 1. However,
criteria for individuals in Microsoft during selecting suppliers might be vary
depending on many factors such as forces influencing organizational buying
behavior, ‘actual purchase’ might be different from ‘perceived’ value,
therefore Distilled must determine its client’s requirements accurately.
After
selecting the supplier, the buying organization will establish the order
routine and evaluate the performance of the product after it is provided by the
supplier. Since Distilled provides not the physical product but only services,
selection of order routine stage will be very simple comparing to physical
product suppliers. At performance review stage, which is the last stage of the
organizational buying process, it is important for suppliers and they must
ensure that their clients’ needs are perfectly satisfied, otherwise they will lose
their huge profit (Hutt & Speh, 2013). To illustrate, in order to maximize
buyer’s value, Distilled can provide particular team in Microsoft the training
for online marketing strategy so that Microsoft can insistent their high
ranking on search engines even after the service period.
2. Organization
can be in 3 buying situations;
When buying organization faced
totally new problem or needs comparing to the past experience, it can be said
they are in new-task buying situation and employ extensive problem solving
process (Hutt & Speh, 2013). New task buying situation can be approached in
two ways; judgmental new task, strategic new task. Judgmental new task approach
can be used when the organization faces the greatest level of uncertainty
whereas strategic new task approach is in the situation where purchasing
decision of buying firm is extremely important for its strategy and finance (Hutt
& Speh, 2013). In addition, Cardozo (1980) observed that uncertainty of new
buying task can be divided into 5 types; need, technical, acceptance, market,
and transaction uncertainty. To illustrate, if Microsoft had never had online
marketing division in the past, and they capture the opportunity of online
marketing recently, they may be facing to technical uncertainty as well as
trying to approach judgmental new task decision-making. Therefore, business
marketer in Distilled should gather information about the problem that
Microsoft confronts, their changing needs (Hutt & Speh, 2013), and prepare
the tempting proposal that is basic and easy as in new-task buying situation.
If the buying organization has
recurring value or problem to get objectives, they are in straight rebuying
situation and will take routine problem solving process. Buying
organization can apply two approaches for straight rebuying decision-making; causal
and routine low priority (Hutt & Speh, 2013). Routine low priority requires
more information in a sense of changing marketplace to consider rebuying
whereas causal approach needs almost no information or analysis. Once Microsoft
is satisfied with the SEO service provided by Distilled, they might want to
repurchase the service to cater their own needs without consuming almost no
information analysis. However, they also may want to approach routine low
priority decision-making and search another advanced technology in the
marketplace because SEO service is depending on up-to-date technology of search
engine. In addition, in order for business marketers in Distilled to deal with
buyers in straight rebuying situation, they should reinforce customer
relationship management (CRM) which
is a cross-functional process for achieving the continuous dialogue with customers,
and try to be “in” the list of buying organization (Hutt & Speh, 2013).
When
buying organizations seeks alternative solutions for their requirement even
though they have been satisfied with present vendors, they are in modified
rebuying situation which mostly occurs when the buyer is disappointed with the
performance of present supplier or because of internal forces such as financial
matter or quality improvements (Hutt & Speh, 2013). During limited problem
solving process which best fits for modified rebuying situation, buying
organization mostly has organized criteria but are not sure about which
suppliers to choose (Hutt & Speh, 2013). For instance, if Distilled could
not make its buyer’s website to be highly ranked within promised period, and buyer
decided to reduce the cost for online marketing due to lowered sales, buyer is
in modified rebuying situation. In order for Distilled to be “in” supplier
again, they must try the best effort to give them superior value and trust. Furthermore,
Doney and Canon (1997) found that there are factors that invokes trust building
process between supplier and buyers such as supplier firm’s reputation, size,
salesman, and suppliers should weigh on trust building process for long-term
loyalty and benefits although it is expensive and complex.
Conclusion
Based on the
application of organizational buying behavior, business marketer can precipitate
the buyers by advertising or proposal that enlighten their problem or potential
opportunity. In order to build up profitable and long-term relationship and
superior value to its buyers, business marketers should know their capability
to serve them, at the same time, how the buyer perceives and evaluate the
alternative suppliers. Furthermore, business marketers need to establish appropriate
augmented product such as after-sales service, and make best effort to satisfy
the buyers to move into straight rebuying situation rather than modified
rebuying away.
(1638 words)
Reference
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