SIM_5_Nina Tobler

Org. Buying behavior

Buying

B2B buying means organisations buying from other organisations, not private people buying for themselves.
Example: A bakery buying flour from a mill (B2B) vs. you buying bread from the bakery (B2C).

Goals

You should be able to explain the types of B2B markets, the buying situations, the influences on buying, and how B2B differs from consumer buying.
Example: “Is a hospital’s purchase of an MRI machine like me buying a phone?” You should be able to answer that.

B2B

In B2B markets, organisations buy products and services to produce other products and services for others. Demand is a derived demand: it comes from demand for the final product.
Example: If fewer people buy cars, demand for tyres, steel and car chips falls too. Switzerland shows this well: chemicals and pharma make up 52% of exports, machinery 13% and watches 8%. Over 99% of Swiss businesses are SMEs, and the EU is the biggest trading partner.

Reflection

Think back to consumer behaviour: what changes in B2B and what stays the same?
Changes: more people involved, formal and rational criteria, technical specs, contracts, long-term relationships, big amounts. Stays the same: buyers are still humans with needs, emotions, trust and risk concerns, and they still go through steps like need recognition, search and evaluation.

Manufacturers: Buyers, who are we selling to?

Manufacturers buy raw materials, components, semi-finished goods and finished goods. They are often located in one region, are easier to serve than many individual consumers, and buying power sits in a few hands.
Example: A car factory buys steel, batteries and chips from a small number of big suppliers. Pharma firms cluster around Basel. Risk for suppliers: losing one big customer hurts a lot.

Resellers

Resellers (wholesalers, retailers, specialist distributors) buy to resell at a profit and change the product very little. They think about derived demand further down the channel: “Will end customers buy this?” They worry about obsolescence(product gets outdated), packaging and inventory (stock costs money).
Example: Migros buys chocolate and cares about shelf space, expiry dates and whether shoppers will actually pick it.

Public

The public sector includes schools, hospitals, prisons and government departments. They usually buy through tenders:

• Open tendering: any number of suppliers can submit a bid.

• Selective tendering: only a few pre-selected suppliers are invited.

• Private contracting: the authority contacts suppliers individually.

Example: SBB buying new trains through open tender; a hospital like USZ inviting only 3 qualified suppliers for a medical device (selective).

New-task

A completely new need or problem, with little or no buying experience. The firm puts in great effort to define specifications and collect information, so decision making is extensive. Technical experts get involved, and supplier reputation, service quality and delivery deadlines matter. There are no strong predispositions toward any supplier.

Example: The Swiss Air Force buying a new fighter jet, or a company buying its first CRM system. Marketing tip: give lots of information, advice and build trust.

Becoming a mom for the first time—> searching for a stroller

Modified-rebuy

The need is unchanged, but the buying team is unhappy with the current product or supplier. They want better quality, price or service and need information on alternatives.

This is limited problem-solving: the criteria are clear, but they are unsure which supplier fits best.

Example: A company is annoyed by slow repairs and delays from its current IT hardware supplier and compares other suppliers. Marketing tip: challengers show a better offer, while the current supplier must fix its issues fast.

need for a new computer

Straight-rebuy

Routine re-purchase of a common product, handled almost automatically by the purchasing department. It relies on proven products from reliable, established vendors and leads to long-term relationships. This is routine problem-solving: choice criteria are well developed and refined over time.

Example: A supermarket reorders the same chocolate bars every week. Marketing tip: newcomers have a hard time breaking in, so the current supplier must simply stay reliable.

routine/ automatic—> when out of stock, restocked

Buygrid

The buy grid model (Robinson et al. 1967, De Boer et al. 2001) maps the 8 buying phases against the 3 buying situations.
The 8 phases:

(1) recognise the need,

(2) determine characteristics and quantity,

(3) describe specifications,

(4) search for and qualify suppliers,

(5) acquire proposals,

(6) evaluate proposals and select suppliers,

(7) select an order routine,

(8) performance feedback.

Example: A new-task buy goes through all 8 phases thoroughly. A straight rebuy skips most of the early phases.

Recognition

Phase 1. B2B purchases are driven by the needs of production and daily operations. Economic swings can change requirements quickly. Requirements planning governs purchasing of raw materials, components, supplies and big installations. Long-term contracts are common, especially when an item is expected to be scarce or more expensive, and they can lower costs and improve supplier relations.

Example: A chocolate maker signs a long-term cocoa contract because it expects prices to rise.

Requirements (Determiatio of characteristics and product)

Phase 2 Determination of characteristics of needed product: the needed product must meet technical requirements from production, so engineers and technical experts are involved.

Phase 3Determination of product desired and quantities needed: value analysis is a systematic check of design, quality and performance to cut procurement costs, together with cost analysis.

Example: Phase 2: a pharma firm defines sterile packaging with exact specs. Phase 3: “Do we really need stainless steel, or does a cheaper material do the same job?”

Screening

Phase 4 narrows many potential suppliers down to one, like a funnel, in two steps:

• Softcore screening (qualitative): does the supplier fit our firm policy and supplier portfolio? Do company values match, and do both sides benefit?

• Hardcore screening (quantitative, weights and scores): evaluate capabilities such as production, technical support and R&D (e.g. number of new products per year).

Example: An outdoor brand first drops suppliers that do not meet its sustainability values (soft), then scores the rest on capacity, delivery and R&D (hard).

Proposals

Phase 5: qualified vendors are asked for specific proposals or samples. Straight rebuy: contact the chosen vendor directly. Modified rebuy: more time analysing proposals. New task: takes the most time.
Phase 6: evaluate offers with choice criteria such as quality standards, delivery schedules and price, then select suppliers.
Example: A hospital asks 3 qualified suppliers for offers and compares them on price, delivery time and quality.

Routine

Phase 7: the order goes to the vendor, status reports go to the user department, inventory levels are set, and delivery, set-up and training happen if needed. A purchasing contract can streamline future buying and turn it into a straight rebuy.
Example: A framework contract with a coffee supplier means monthly delivery without renegotiating each time.

Evaluation

Phase 8: buyers rate product and supplier on performance, delivery and service, often with a weighted scorecard (quality 45%, delivery 25%, price 20%, technology 10%). Approved suppliers have an advantage in straight rebuys because extensive evaluation is skipped. Non-approved suppliers must get the buyer to move from routine reordering to considering alternatives.
Example: A supplier that delivers late twice loses points and may lose its approved status. Notice that price is only 20% of the score.

Comparison
Do the three buyclasses differ across the 8 phases?

Yes.

• New task: all 8 phases, intensive.

• Modified rebuy: shorter early phases, but search, proposals and evaluation matter.

• Straight rebuy: mostly the order routine and feedback phases.

Example: Buying a fighter jet = all phases, years of work. Reordering printer paper = just place the order.

Variation

Three things vary from high to low across the buy classes: importance of the buying decision, degree of buyer-seller interaction, and number of criteria used in supplier selection. All three are high for new tasks and low for straight rebuys.
Example: Fighter jet = high importance, lots of interaction, many criteria. Paper clips = low on all three.

Kraljic
The supplier selection model (Kraljic 1983, De Boer 2001)

sorts purchased items by profit impact and supply risk:

• Routine (low impact, low risk): many suppliers, rationalise and automate. Pens, paper, detergents.(might check every few years for alternatives) sushi: chopsticks

• Leverage (high impact, low risk): many suppliers, competitive bidding, short-term contracts, active sourcing =looking for. Standard steel or packaging.

• Bottleneck (low impact, high risk): monopolistic market, long-term contracts, develop alternatives, contingency planning. A spare part only one firm makes. Sushi= different Soy sauces (not everywhere available)

• Strategic (high impact, high risk): few suppliers that are hard to switch, medium/long-term contracts, partnership, continuous review. Chips or batteries for an electric car maker. Sushi= very special fish (blowfish)

Influences: Four groups of forces shape B2B buying

environmental (economy, technology, politics), organisational (strategy, purchasing), group (the people in the buying team) and individual (personality, motives).
Example: A recession, a new technology, office politics and one buyer’s fear of risk can all change a decision.

Environmental (influences)

Economic influences: industrial demand is directly linked to consumer markets, and global marketers must watch regional economic and political forces. Technological influences: fast-changing technology can restructure an industry and dramatically change buying plans.
Example: Consumers buy fewer cars, so carmakers cut orders for parts. The shift to electric cars moved purchasing from engine parts to battery suppliers.

Organisational (influences)

Suppliers who understand the customer’s strategic priorities and challenges can offer tailored solutions. Purchasing is increasingly aligned with corporate strategy, focusing on long-term supplier relationships, cost modelling and environmental issues.
Example: A company with a net-zero goal prefers suppliers with low CO2, so a supplier pitching recycled materials has an edge.

Group Influence

The B2B buying process is a set of smaller decisions made or influenced by several people.
Example: For new software, IT, finance, the end users and the boss all have a say.

DMU
The buying centre (Decision-Making Unit) has six roles:

initiator (starts the process),

user (works with the product),

influencer (shapes the decision, often technical experts),

decider (makes the final choice),

buyer (handles the order and contract) and

gatekeeper (controls information flow). One person can hold several roles.

Example: Office coffee machine: an employee complains (initiator), staff drink the coffee (users), the facility manager advises (influencer), the manager approves (decider), purchasing orders (buyer), the assistant filters sales calls (gatekeeper).

Individual

Buying decisions are made by individuals with their own personalities, experiences and goals. Marketers must understand each buyer’s perceptions and motivations.
Example: A risk-averse buyer sticks with the known supplier to avoid blame, while a young engineer is excited by an innovative newcomer.

Case
The FHNW computer screens case, with suggested answers:

• Buying situation: most likely a modified rebuy (replacing old screens, maybe a new supplier), or a straight rebuy if a framework contract exists.

• Key phases: specifications (2 and 3), supplier screening and evaluation (4 to 6), and feedback (8). | problem yess, characteristics yess= compatibility, need= yess (technical: how many, standard), supplier= yess (established? already/new?), selesction= yess (according to criteria), routine= yess (if delivery date, tech support, warrants, who installs defined), performance= yess (never skipped, for next times)

• DMU roles: initiator = lecturers or staff with broken screens, users = students, staff and lecturers, influencer = IT department, decider = IT head or management, buyer = procurement, gatekeeper = admin or assistants.

• Greatest influence: The Management (Finance, IT have strong influence)

• Criteria: price, quality, energy efficiency, warranty, delivery, service, sustainability, longevity and compatibility.

• Bonus point: FHNW is a public institution, so tender rules likely apply.(=public institutions usually can’t just pick a supplier they like. For bigger purchases they have to follow public procurement rules, which means putting the order out to tender)

Reflection
Same question as before: what changes and what stays the same from consumer to B2B?

Changes: groups instead of individuals, formal criteria, long relationships, derived demand. consumers= psychological, org= objective, rational

Same: humans with emotions, trust and risk perception, plus a similar step-by-step decision process, Stept: need, where, what, buy, evaluate |