The Sheth framework - Marketing Strategy

The Webster–Wind framework identifies and helps to assess key variables that influence an organization’s purchasing decisions, but does not concentrate on the process to any great degree. Sheth (1973) developed model that has some elements in common with the Webster–Wind framework but also has more of an emphasis on the psychology of the decision-making process. He identified the importance of four main factors that influence organizational buyer behavior:

Examples of task and non-task influences on organizational buying

• The expectations of the members of the DMU.
• The factors influencing the buying process.
• The character of the decision-making process.
• Situational factors.

The model is constructed so that the flow of the actual decision-making process can be illustrated (Figure Below).

A model of organizational buyer behaviour

The expectations of the members of the DMU

Every individual in the DMU will have their own attitudes and particular background that shapes the way in which they judge a supplier. An engineer will use different criteria from an accountant. Individuals’ expectations will be determined by their educational background,their job or task orientation and their lifestyle in general. Individuals will also be influenced by information from a range of sources. When the purchase being considered contains a high level of risk to the organization it is likely that a rigorous process will be undertaken to identify as many sources of information as possible.

This information search is likely to be undertaken by the professional buyers and can lead them to play an important gate keeping role by choosing what information is passed on to other members of the DMU. The information provided, as with any communication, will be subject to perceptual distortion by the individuals in the DMU. Individuals’ expectations will also be influenced by their previous experience of the product or service.

The factors influencing the buying process

The Sheth model outlines two sets of factors that will determine the particular buying process for a specific product or service.The first set of factors relates to the product itself:

• Perceived risk:If the purchase is high risk then a detailed search for information will take place, drawing more individuals into the DMU. This could occur if the purchase was a major capital expenditure.
• Time pressure:If a decision has to be made under time pressure a smaller number of individuals will be drawn into the DMU.The fewer people involved the quicker the decision.
• Type of purchase:A routine repurchase of product is likely to be undertaken by an individual who has been delegated the responsibility.
The second set of factors that influence the buying process is related to the organization itself:
• The organization’s orientation:An organization may be, for example, engineering orientated or marketing orientated. This orientation will,to an extent, reflect the balance of power within the DMU and have an important influence on its attitude to a purchase decision. An organization that has a dominant engineering orientation will perceive a purchase by using engineering values.
• Size of the organization:A small organization may have only one individual responsible for buying. This individual may undertake all the information searches themselves. Large organizations are likely to have more individuals involved in purchase decisions.
• Degree of centralization/decentralization:A central buying department would be common in a strongly centralized organization. A much greater spread of individuals would be involved in a decentralized company.

Character of the decision-making process

Sheth’s model identifies two types of decisions:

1. Autonomous decisions are taken by an individual and are relatively straight forward.
2. Joint decisions are undertaken by more than one individual. As the model has already indicated each individual has a unique set of factors influencing them and therefore some level of conflict is likely.

The manner in which these conflicts are resolved affects the final decision. The model outlines four approaches to making decisions:

• Problem solving:This involves gathering information and using a systematic approach to weighing up the alternative options. A disadvantage of this approach is that it inevitably takes time.
• Persuasion:Time is taken in order to get everybody to put the organizational needs and objectives above personal agendas. Again the disadvantage is that this can slow the decision process down.
• Bargaining:This is used in order to reach a compromise. Individuals in the buying Centrex trade concessions. This may result in a sub optimal decision. Individuals may be satisfied but the decision may not be in the best interest of the organization as a whole.
• Politicking:Power and influence are used to coerce individuals into supporting majority positions within the DMU. The model would suggest problem solving and persuasion are the most rational approaches to decision making. Many practicing managers will be well aware that the bargaining and politicking options are common practice in many organizations.

Situational factors

Finally, the model highlights situational variables that are outside the control of the organization but influence the DMU. These variables would be such things as:

• A strike at a key supplier.
• A supplier suddenly taken over by a competitor.
• Financial problems.
• Production breakdown.
• Changes in corporate taxation.

These two models illustrate the complexity of the buying process in organizations. They also give some insights into potential factors that can be used to identify organizational market segments.