The Business Buying Decision Process
The group of individuals responsible for making a buying decision in a B2B context are labelled the decision making unit (DMU).
Describe the roles and functions that comprise decision making units in B2B organizations
- In a business setting, major purchases typically require input from various parts of the organization, including finance, accounting, purchasing, information technology management, and senior management.
- An economic buyer is a typical member of the DMU. The buyer is buying the product to achieve some sort of business advantage.
- The infrastructure buyer, another typical member of the DMU, influences the buying decision because he’s the guy that is going to make the purchase happen.
- The user buyer, another member of the DMU, influences the buying decision because he is one of the people through which the economic buying objective will be realized.
- B2B: Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Decision Making Units
In the business-to-business ( B2B ) context (as opposed to B2C), buying decisions are made in groups. The group responsible for making the buying decision in companies is referred to as the decision making unit (DMU).
Within organizations, major purchases typically require input from various parts of the organization, including finance, accounting, purchasing, information technology management, and senior management. Highly technical purchases, such as information technology systems or production equipment, require the expertise of technical specialists. In some cases, the buying center acts as an informal ad hoc group. In other cases, the buying center is a formally sanctioned group with specific mandates, criteria, and procedures.
For example, in the hi-tech sector, the decision making unit generally comprises the following roles:
- The economic buyer – This individual is responsible for buying products that enable the company to achieve a business advantage. The economic buyer justifies the purchase by linking it to profit. The economic buyer’s position within the organization can range from the business unit manager level to as high as the CEO.
- The infrastructure buyer – This role influences the buying decision at the execution level. If a product poses challenges at the installation phase, then the infrastructure buyer and/or DMU steps in to decide whether the return on investment (ROI) is worth the time and money required to set up the infrastructure. The infrastructure buyer is typically someone in the IT department.
- The user buyer – This position influences the buying decision at the user level and decides whether the organization will achieve its financial objectives through the purchase. For instance, if end users provide negative feedback about the product, or demonstrate that the product is hard to use, then the economic buyer will determine whether the purchase will prevent the company from reaching its economic goals.
A buying center is a group of people within an organization who make business purchase decisions.
Describe the different functions and roles that comprise buying centers within B2B organizations
- In a business setting, major purchases typically require input from various parts of the organization, such as finance, accounting, purchasing, information technology management, and senior management.
- The five main roles in a buying center are the users, influencers, buyers, deciders, and gatekeepers.
- In a generic situation, one could also consider the roles of the initiator of the buying process (who is not always the user) and the end users of the item being purchased.
- Buying Center: A group of employees, family members, or members of any type of organization responsible for finalizing major purchase decisions.
A buying center is a group of employees, family members, or members of any type of organization responsible for finalizing major purchase decisions. In a business setting, major purchases typically require input from various parts of the organization, such as finance, accounting, purchasing, information technology management, and senior management. Highly technical purchases, such as information systems or production equipment, also require the expertise of technical specialists. In some cases the buying center is an informal ad hoc group, but in other cases, it is a formally sanctioned group with specific mandates, criteria, and procedures. The employees that constitute the buying center will vary depending on the item being purchased.
In a generic sense, there are typically six roles within buying centers. These roles include:
- Initiators who suggest purchasing a product or service
- Influencers who try to affect the outcome decision with their opinions
- Deciders who have the final decision
- Buyers who are responsible for the contract
- End users of the item being purchased
- Gatekeepers who control the flow of information
Because of the specialized nature of computer and software purchases, many corporations use buying centers that are specialized for information technology acquisition. These specialized buying centers typically receive information about the technology from commercial sources, peers, publications, and experience. In this process, top management, the IT director, IT professionals, and other users collaborate to find a solution.
A better buying center for marketing might include:
- Users – The users will be the ones to use the product, initiate the purchase process, generate purchase specs, and evaluate product performance after the purchase.
- Influencers – The influencers are the tech personnel who help develop specs and evaluate alternate products. They are important when products involve new and advanced technology.
- Deciders – Deciders choose the products.
- Buyers – Buyers select suppliers and negotiate the terms of purchase.
- Gatekeepers – Gatekeepers are typically secretaries and tech personnel. They control the flow of information to and among others within the buying center. Buyers who deal directly with a vendor are gatekeepers.
B2B buying situations are relationship-oriented, pragmatic, and negotiable compared to the average B2C exchange situation.
Recognize the key differences in the buying situation between B2B and B2C sales
- Selling to organizations is quite different (in most cases) than selling to consumers. This means the marketing approach will also be different.
- One of the main differences between B2B and B2C is the buying situation. Buying situations in a B2B exchange are likely to be customized specifically for the client, and strategically oriented.
- Some of the key differences between B2B and B2C buying situations include the importance of relationship building, price, volume, payment, promotions, and the level of negotiation.
- From a more general perspective, a B2B marketer must be aware that their buyers are going to consider the purchase strategically as a team, and come to a practical conclusion.
- B2B: An abbreviation for business-to-business sales, in which both buyer and seller are organizations rather than individual consumers.
B2B v. B2C
When considering different buying situations as a marketing professional, one of the first questions to ask is whether the goods are being provided to customers ( mass marketing B2C) or to other businesses (focused B2B). Selling to businesses usually requires a significantly different marketing approach, including differences in what the buying situation will be like.
As a consumer base, businesses are a huge source of business in and of themselves. Selling to other businesses often has significantly higher transaction amounts (large volume), and the scale of the contracts can make marketing endeavors very cost-effective and profitable. Just as in B2C, attracting attention through advertising, marketing, and direct sales is central to a successful marketing strategy.
B2B consumers are often pursued quite differently than B2C consumers as a result of these different circumstances. In mass marketing, the goal is to identify channels where the organization can engage with thousands or millions of potential consumers at once. For B2B, this can also be effective but is much less common. Usually for B2B, the buying situations are a bit more personal, and the buying decision process involves much more strategic consideration.
In order to understand how to market to another business, a simple first step is understanding how these types of clients approach the buying process. Business are quite different than single consumers in regards to buying strategies, often pursuing much larger contracts with much greater care. To understand the buying situations, it is useful to consider the decision-making process (spontaneity vs. strategy), differences in pricing, payment approaches, repeat purchases, relationships, and the role of a purchaser at an organization.
Spontaneity: B2B buying situations are less likely to be spontaneous, and more likely to be discussed carefully among various stakeholders. For example, a consumer may buy a soft drink without overthinking the price, manufacturer, or business relationships (e.g. just to satisfy their thirst). A grocery store, however, will carefully consider which types of soft drinks to stock, how many to buy, how to ship them, how to price them, etc.
Pricing: B2B buying situations are often less concrete in terms of overall (or per unit) pricing. Take the above example. An individual buying a soft drink will probably not barter the price down with the cashier. However, a store purchasing 10 cases each month will discuss price carefully with the soft drink producer, and will likely pay a different price per unit than other grocery stores (depending on volume, shipping, storage, etc.).
Payment: Payments between companies are generally predicated on monthly, quarterly, or annual invoices. Payments between consumers are immediate, or perhaps will rely on a credit card. This changes the buying situation, particularly when factoring in the time value of money.
Relationships: B2B purchasing situations often require the meeting of various groups in each organization. A relationship will be built on these meetings, creating trust, alignment, and agreement on how the buying process will be planned and executed. B2C purchasing situations are often much less personal, requiring little to no relationship between the organization and the consumer.
Promotions: Finally, it’s also worth noting that the method of promotion and the source of interactions between prospective buyers and sellers is often different for B2B and B2C exchanges. Trade shows, conferences, and meetings are actually forms of marketing communications and promotional strategy, as one-to-one interactions between buyers and sellers is necessary to build trust for high capital and high volume purchases.