Industrial Buying Process

Phase 1. Recognition of a problem

first phase that is recognition of problem, the buying process starts when person in organization identifies problem or need that can be met by obtaining goods and services. The buying centre examines their organizational needs and search for options that are available to address those needs. The definition stage includes several activities such as recognizing and defining the organizational problem, defining the outlines of the solution and specifying product or service that can satisfy organizational needs (Webster & Wind 1996).

Phase 2. Determination of the characteristics and quantity of needed item

Phase two include description of need which involves determination of traits and quantities needed. The common attributes include reliability, durability and price. Activities in this stage are searching of potential suppliers, proposal solicitation, and evaluation of offers and finally selection of most appropriate supplier. It must be established that in case of straight rebuy, organization will probably decide the same supplier (resort, travel agency), even if it is not the cheapest one, but because of the awareness of service and safety. However, in a new-task situation, the company is willing to seek carefully, considering both financial and service factors (Vitale et al., 2010).

Phase 3. Description of the characteristics and specification

Phase three is product specification or delivery solution stage which is obtaining the inputs from previous stage. The buying organization has to develop the technical specification of the required products. In this stage product is divided into two items. The specification about product and items are listed.

Phase 4. Search for a qualified potential sources

Phase four is supplier search among the potential sources. The marketers have to ensure that the supplier is in the list of potential suppliers.

Phase 5. Acquisition and analysis of proposals

In fifth phase of Proposal solicitation, the list of capable supplier is shortened on the basis of critical factors. After that purchasing department ask for proposals sent by each supplier. After evaluation, some companies are invited to give presentation. Proposal must include all specification such as price, delivery period, charges and taxes.

Phase 6. Evaluation of proposals and selection of suppliers

Phase six consist of supplier selection. Each of the supplier's presentation is rated as per definite evaluation model. Buying organizations try to negotiate with chosen supplier for reasonable price and terms and conditions for final selection. Various parameters such as reliability, delivery, flexibility, price and services are considered for supplier selection.

Phase 7. Selection of an order routine

In order to routine specification, the buyer negotiates the final order, listing the technical specification; the quantity needed and expected time of delivery.

Phase 8. Performance feedback and evaluation

Final phase of purchase decision process consist of formal and informal review and feedback of product performance as well as merchant performance. The buyer may contact customer and collect their responses

Objectives in Organizational buying

Before vendors can respond effectively to customer information needs, they must understand the various criteria that customers use in evaluating potential suppliers. Different groups of individual will view the supplier’s offering from their unique perspectives. While industrial buying tends to reflect organizational goals, organization members are influenced by both task and non-task objectives.

Task-oriented objectives involve pragmatic considerations such as price, quality, service, and return on investment. Non-task objectives center on personal factors such as the desire for job security, recognition, promotion and salary increases. When suppliers’ offerings are similar in such factors as product attributes, price and delivery, buyers have little basis for task-oriented choices. Since they can effectively satisfy organizational goals through several suppliers, buyers often tend to be more influenced by personal factors, or non-task objectives.