Organizational/Institutional buyer passes through different stages to buy goods or services. Marketers should know the organizational buying process along with how his customers buy goods or services. Generally, buying process of organizational or institutional customers starts with need recognition and ends with the evaluation of performance.
Following stages include in organizational or institutional buying process:
Following stages include in organizational or institutional buying process:
1. Need Recognition
The first stage of organizational buying process is to recognize problem or need. Such problem or need is recognized due to internal reasons such as unsatisfactory performance of existing machines and equipment, dissatisfaction with latest purchase, lack of cost saving opportunity etc. within the organization itself. Similarly, the external reasons such as announcement of new product, consultation of supplier with sales representative, newspaper advertisement, trade fair etc. also motivate to buy a new product. A successful marketer tries to understand the problems or needs of his institutional customers and uses making program that can to identify problems.
2. Determination Of The Product And Buying Specifications
After problem or need is recognized, an imagination of the product can solve the problem comes to mind. Such imagination should be able to reflect the features of the product. In this stage, help of consultants, engineers, designers, researchers, developers, producers, sales specialists etc. to find out the product or solving the problem. In this stage of buying process, special specifications such as quantity, quality, price, mode of payment etc are determined.
3. Search For Qualified Supplier
In the third stage of institutional buying process, a capable supplier of the necessary goods is searched. Purchase agent can seek capable supplier in consultation with related employees. Potential supplier is searched and proposal demanded by looking the record of the company, contacting with suppliers for information, requesting acquainted suppliers to send their proposal, looking in price list or looking in different business publications etc.
4. Analysis And Evaluation Of Supplier's Proposal
In this stage, evaluation and analysis of the proposals submitted by different suppliers is made. The suppliers can submit their proposals in both written and oral form. The business organization can uses this opportunity to promote its products. It also can make efforts to prove its products to be better in quality, price, durability and other advantages than the products of other companies. In such situation, buying organization should do vendor analysis for systematic evaluation of potential suppliers. The received proposals should be comparatively evaluated on the basis of price, quality, goodwill, services, delivery capacity and personal relation with buyer etc.
5. Selection Of suppliers And Purchase Order
After detailed evaluation of the proposals, the buyer can negotiate for better terms, conditions and price before taking final decision. The buyer should take decision whether to buy all the materials from a supplier or use different suppliers. If more suppliers are used, the buyer need not have to depend on the single supplier. It also gives opportunity to evaluate and compare the services, delivery capacity, time etc. of all suppliers. After a proper supplier has been selected, purchase order is to the supplier. In this stage, packing, mode of transport and delivery, condition of credit facility, mode of payment, services agreement etc. are determined.
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6. Evaluation Of Performance
In the last stage of organizational buying process, products as well as performance of supplier is evaluated. In comparison of personal consumers, the activity of organizational buyers becomes very formal, directed and clear after buy any products. They evaluate the quality and performance of the product supplied by a supplier. evaluation of the products is useful for both supplier an buyer. It also helps to maintain quality and ensure satisfaction of the buyers.
