Organizational Buying Processes Versus The Consumer Buying Processes - Essay Example

Organizational Buying Process “Organization buying process involves the decision-making by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers”, states Bhasin (2010). In simpler words, organizational buying process is how organizations buy products and services. Stages Stages in organizational buying process are described as under: Problem identification. First stage is the recognition of the problem that a good or service is needed to fulfill a requirement.

Requirement description. In this stage, the requirement of the good or service is explained which includes its quality and quantity. Product specification. This stage deals with the final decision about the product and specifies the technicalities of the product. Value Analysis. During this stage, special consideration is given to cost reduction that is, identifying a way in which some components of the product can be made in less costly way. Search for vendors. At this stage, the organization looks out for suppliers or vendors.

Solicitation of Bids/Proposals. At this stage, the buyer invites the sellers to place their bids or proposals. Selection of seller. After reviewing the bids/proposals, the organization selects the best seller. Order placement. Then, the organization places its order with the seller specifying the quality of the goods, quantity, price, delivery time, warranty, return policies, and etcetera. Performance review. At this stage, the organization decides whether it has to continue with the seller for future purchases by reviewing its performance and the quality of the goods or services rendered.

Influences According to Reid and Bojanic (2009), factors that influence organizational buying process include:External influences. These are factors like political, technological, economic and competitive factors, along with cultural and geographical differences. Internal influences. These are factors like size of the organization, personality and motivation of buying individuals, and the structure of the buying unit.Comparison and Contrast with Consumer Buying Process Organizational buying process is very much similar to the consumer buying process.

Consumers also go through the same stages of buying process as the organization starting from identifying the need for purchase and ending at building an opinion for future purchases. The difference between the two buying processes is that consumer buying is for personal use, or for the use of family or household; whereas, the organizational buying is either for further production of goods, or sale to consumers, or usage within the organization. Another difference is that business buying involves a few large scale buyers; while in consumer buying, there are a lot of small scale buyers (who are the consumers).

Also, the demand of products or services in organizational buying actually depends on the demand of products and services from the consumers, and it is not vice versa. Demand of products in business markets does not depend upon the change in price whereas the demand of products in consumer markets depends upon the change in price because consumers decide upon the purchase after considering the price. Hence, organizational buying is price inelastic; while, consumer buying is price elastic. ReferencesBhasin, H. (2010). Organizational Buying Process.

Marketing91.com. Retrieved September 10, 2011, from http://www.marketing91.com/organizational-buying-process/Reid, R.D., & Bojanic, D.C. (2009). Hospitality Marketing Management. USA: John Wiley and Sons.