10. A Model of Industrial Buyer Behaviour Consumer Behaviour

The purchases made in an industrial organization involve many more people of different backgrounds and it is more complex.

Sheth Model of Industrial Buyer Behavior

There are three main features in this model:

  1. There are different individuals involved who have a different psychological make up.
  2. Conditions leading to joint decision-making by these individuals.
  3. Differences of opinion on purchases or conflicts that have to be resolved to reach a decision.

These are shown in Fig as (1), (2) and (3). The persons involved in the decision-making are from quality control, manufacturing, finance, research and development and other possible areas. These may be named as purchase agents, engineers, and users, as referred to in the model.
These constitute a purchasing committee. They have:

An-integrative-model of industrial buyer behaviour

  • (1a) Different backgrounds
  • (1b) Different information sources
  • (1c) Undertake active search
  • (1d) They have perceptual distortion
  • (1e) Satisfaction with past purchase.

With these characteristics, they develop certain expectations from the product to be bought. The obvious ones are product quality, delivery time, quantity of supply, after sales service and price. These are known as explicit objectives. There are other objectives as well, which are the reputation of the supplier, credit terms, location of the supplier, relationship with the supplier, technical competence and even the personality, skill and lifestyle of the salesman. These are known as implicit objectives.Different individuals in the purchasing committee give emphasis on different aspects of the product. Engineers look for quality and standardization of the product.
Users think of timely delivery, proper installation and after sales service. Finance people look for maximum price advantage. Thus, there are conflicting interests and view that have to be resolved. If autonomous decisions are made, these issue do not surface. There are conditions leading to autonomous or joint decisions.

(2a) Product specific factors
Perceived risk: With higher risks joint decisions are favoured.
Type of purchase: Items involving heavy investments are made jointly, routine and less costly decisions can be made independently.
Time pressure: If goods are urgently required, individual decisions are favoured.

(2b) Company specific factors
Size of the organization: Larger the size of the organization, the more the emphasis laid on joint decision.
Organization orientation: In a manufacturing organization, the purchases are dominated by production personnel and in a technology oriented organization, the decisions are based on engineers.The conflict that arises for buying decision has to be resolved. The resolution can be done by:

  1. Problem solving
  2. Persuasion
  3. Bargaining
  4. Politicking

The fourth aspect is the influence of situational factors which must be considered. These are economic conditions such as inflation, recession or boom, price contracts, rationing foreign trade, strikes or lock outs. Organizational change such as a merger, acquisition change of key personnel, etc. Sometimes these factors outweigh the realistic criteria of decision-making.This model explains how purchase decision are made in an industrial organization.

All the models discussed in this chapter give us an idea of the buying behaviour in diverse situations. An understanding of these models gives the marketer clues to formulate his strategies according to the target audience, e.g., an individual, a family or an industry, etc.

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