BUY GRID FRAMEWORK&BUYING SITUATIONS

SAKSHI JAIN(FB09108)PANKAJ SONI(FB09098

ORGANISATIONAL BUYING BEHAVIOUR

Robinson, Faris and Wind, introduced the buygrid framework as a generic conceptual model for buying processes of organisations. They saw industrial buying not as single events, but as organisational decision-making processes where multiple individuals decide on a purchase.

Organisational buying decisions are usually made by a group of organisational members labelled in the marketing literature as a buying centre.

BUYGRID FRAMEWORK

A conceptual model that describes the organizational buying process. The model serves as an easy framework for visualising the otherwise complex business buying process and enables the vendor to identify the critical phases and situation requiring specific types of information.

IT CONSISTS OF TWO DIMENSIONS:

BUYCLASSES(buying situations): New task Modified Rebuy Strategic Rebuy

BUY PHASE: Problem Recognition General Need Description Product Specification Qualified Suppliers Proposal solicitation and Selection Specify Order Routine Purchase & Use Performance Review

NEW TASK

Buyer purchases a product or service for the first time.

new task buying situation the buyer seeks a wide variety of information to explore alternative solutions to his purchasing problem.

The greater the cost or perceived risks related to the purchase the greater the need for information.

The vendor is in a greater position to influence the decision making process.

MODIFIED REBUY(CHANGE IN SUPPLIER)

The business buyer wants to replace a product or service that the firm has been using.

Company believe that significant benefits such as quality improvement or cost reduction can be achieved by making the change.

The decision making unit is however usually smaller than in new task situation.

STRAIGHT REBUY(REPEAT PURCHASE)

It is a buying situation in which the buyer routinely reorders a product or service without any modification due to satisfaction with the supplier.

The supplier is retained as long as the level of satisfaction with the delivery, quality and price is maintained.

New suppliers can only be considered if these conditions change. The challenge for the new supplier then is to offer better conditions or draw the buyer’s attention to some benefits that it is missing for doing business with it present supplier.

The buyer may in turn use the new offerings from competitors to renegotiate its purchase conditions with the present supplier.

BUYGRID FRAMEWORKBuyclasses

Buyphases New Task Modified Rebuy Straight Rebuy

1. Problem recognition Yes Maybe No

2. General need description Yes Maybe No

3. Product specification Yes Yes Yes

4. Supplier search Yes Maybe No

5. Proposal solicitation Yes Maybe No

6. Supplier selection Yes Maybe No

7. Order-routine specification Yes Maybe No

8. Performance review Yes Yes Yes

7-8

PROBLEM RECOGNITION

BUYER:

A machine breaks down and require new parts. Purchased material turns out to be unsatisfactory. A purchasing manager senses an opportunity to obtain lower prices or better quality.

BUSINESS MARKETERS:

They can stimulate problem by telemarketing, direct mail and calling on prospects.

GENERAL NEED DESCRIPTION

BUYER:

Determines the needed item’s characteristics and required quantity.

BUSINESS MARKETERS :

Describe how their product meets buyer’s needs. The supplier can provide ADD On SERVICES to gain a competitive edge.

SUPPLIER SEARCH

BUYER:

Tries to identify the most appropriate supplier through trade directories, contacts etc..

SUPPLIER:They put products, prices and other information in

order to grab the deal.

PROPOSAL SOLICITATION

BUYER:

They invite qualified suppliers. If item is complex or expensive they demand written proposal form and a formal presentation.

SUPPLIER:They must be expert in presenting proposals which

add value and benefit in customer terms.

SUPPLIER SELECTION

BUYER:To rate and identify the most attractive suppliers

buying centers often use supplier evaluation model.ATTRIBUTE RATING SCALE

WEIGHT

POOR FAIR GOOD

EXCELLENT

PRICE .30 X

SUPPLIER REPUATION .20 X

PRODUCT RELIABILITY .30 X

SERVICE RELIABILITY .10 X

SUPPLIER FLEXIBILTY .10 X

SUPPLIER:They need to do a better job of understanding how business buyers arrive at their valuations

ORDER ROUTINE SPECIFICATION

BUYER:They negotiate the final order, technical

specification, quantity needed, expected time of delievery and so on.

SUPPLIER:They take care that they are complying

with the contract.

PERFORMANCE REVIEW

BUYER:They periodically reviews the performance of the

choosen suppliers.

SUPPLIER:They apply customer relationship management at this

stage of time to enjoy a long term relationship and be their first preference for straight rebuy.

The relationship between the buyer and seller is initiated in phases 1 and 2. Assessing the buyer's needs and determining gaps between the current and desired situation is important. Buyers need assistance in forming realistic perceptions of both the current and the desired situation. Need gaps create the motive behind any purchase.

The relationship needs to be developed during phases 3 to 7. A sales person must be aware that a buyer not only has functional needs, but psychological, social, knowledge and situational needs as well. These components should be addressed in meetings in order to obtain commitment. The purchase can be a one-time transaction of a repetitive nature. When there are multiple deliveries, the supplier and buyer must agree on an order routine.

As buyphases are completed, the process of 'creeping commitment' occurs and reduces the likelihood of new suppliers gaining access to the buying situation.

During the performance feedback and evaluation phase, the relationship between the seller and buyer can develop into a longer term engagement. Buyer loyalty and customer satisfaction are primarily determined by the sales activities during this last phase.

CHARACTERISTICS OF BUYING SITUATION

Newness of problem Information requirements Consideration of alternatives

BUY CLASS NEWNESS OF PROBLEM

INFORMATION REQUIREMENT

CONSIDERATION OF ALTERNATIVES

NEW TASK HIGH MAXIMUM IMPORTANT

MODIFIED REBUY

MODERATE MODERATE LIMITED

STRAIGHTREBUY

LOW MINIMAL NONE

BUY GRID FRAMEWORK ANALYSIS

All phases are applicable for new task. Some phases are applicable for modified or

straight rebuy. New task situation is most difficult since

buyers have less knowledge, no people & more people.

Modified rebuy is not difficult situation since it has few activities.

Straight rebuy situation is handled routinely, as repeat purchases are made.

THANK YOU