Modelling organizational buying as a sequence of decisions

Organizational buying consists of several stages, each of which yields a decision. These decisions may be linked together in a sequence to form a simple yet powerful model that marketers can use to predict outcomes of proposed marketing programs and to diagnose problems in existing programs. The model may be used with qualitative or quantitative data. The model helps both practitioners and scholars to identify research needs and opportunities.     

Coalitions in organizational buying

It has been argued that many, if not most, organizational buying decisions are made not by individuals, but by coalitions. At the same time, coalition formation has been all but ignored in theoretical and empirical research on the buying process. This article discusses the nature of coalitions and their likelihood in industrial buying. Managerial implications of the presence of coalitions are drawn for both the industrial buying and selling organization.     

Emerging models of organizational buying processes

The purpose of this article is to assess past and current trends in the literature on buying decisions by organizations and to look constructively toward future problems and developments. Until recently, organizational buying behavior has been largely ignored. There are, however, a number of promising developments, and we might be at the threshold of moving from alchemy to the beginning stages of scientific understanding.The article starts with a brief discussion of the “methodological” and “substantive” choices that can be made in studying organizational processes that underlie buying behavior. An appreciation of these choices is necessary for the examination of the past and current literature. The major trends in the study of organizational buying behavior are then identified and evaluated. Building upon these trends, we sketch the basic dimensions of the organizational buying processes and highlight some of the major problem areas to be faced in future research and model development. Throughout the article we assume some familiarity with the professional and academic literature in industrial buying.     

Lateral influences and vertical authority in organizational buying

Eight hypotheses are developed to guide research on the prediction of two structural dimensions of organizational buying behavior. The structural dimensions examined are: (1) the extent of lateral influence on buying decisions; and (2) the distribution of vertical authority for buying decisions. Predictor variables include organizational size, environmental diversity, environmental uncertainty, and the scope, complexity, and newness of the purchases themselves. Some implications of the hypotheses for industrial marketing management are also developed.     

Salesperson influence tactics and the buying agent purchase decision: Mediating role of buying agent trust of the salesperson and moderating role of buying agent regulatory orientation focus

Little is known about antecedents of salesperson influence tactic usage or how and which influence tactics impact buying agent purchase decisions. To aid such understanding, we draw from the relationship selling literature, and both regulatory fit and focus theories, to propose a novel theoretical framework and test hypotheses. The study's findings, derived by applying the critical incidence methodology to a heterogeneous dataset of buying agents (n > 200) representing small and medium enterprises and acting as key informants on salespeople, show that: (i) salesperson influence tactics heterogeneously explain the buying agent's trust of the salesperson, (ii) trust of the salesperson serves as a mechanism through which influence tactics impact the buying agent's purchase decision, (iii) buying agent's regulatory orientation moderates the relationship between salesperson influence tactics and buying agent's trust of the salesperson, and (iv) salesperson regulatory orientation predicts a salesperson's use of particular influence tactics. The article concludes with a discussion of the practical and theoretical implications of the research.     

What factors influence buying center brand sensitivity?

Building on information processing theory (IPT), this empirical study investigates the factors that drive a buying center's level of sensitivity to brand information. The authors propose that buying center brand sensitivity is related in a curvilinear fashion with purchase importance and purchase complexity, and that these relationships are moderated by several environmental, firm, and product factors. Data provided by 273 organizational buying center members confirm the presence of an inverse U-shaped relationship between purchase importance and brand sensitivity, strengthened in conditions of high brand presence and high end-customer demand. Purchase complexity and brand sensitivity appear to relate in a U-shaped fashion but only in light of the moderating effects of product tangibility. The relationship between purchase complexity and brand sensitivity appears stronger when buying firms are small and have prior contractual ties with their selling partners. These results offer guidance to managers concerning when business-to-business (B2B) brand investments are likely to offer their greatest return.     

Performance feedback and supplier selection: A perspective from the behavioral theory of the firm

Drawing upon the behavioral theory of the firm, this study explores the behavioral antecedent of buying firms' decisions in supplier selection through relational referrals, beyond the predominant argument from relational network theory. Centering on the risk and uncertainty of searching for new suppliers, this study attempts to integrate the behavioral theory and relational network theory in explaining buying firms' supplier selection. Data from 112 Chinese manufacturing firms were used to test the hypotheses. The results suggest that performance feedback triggers buying firms' decision on the extent of reliance on relational referrals to select suppliers. Outperforming firms are more likely to use relational network to select suppliers while underperforming firms are less likely to use. This relationship will be strengthened when the intensity of market competition and specific investment in buyer-supplier relationship are high.     

Vendor selection and the buying process

This paper reports the results of a study dealing with the vendor selection process in organizational buying. Purchasing managers in two different types of organizations assessed the importance of vendor attributes and buyer information sources in connection with two different buying tasks. Theoretical and managerial implications are discussed in connection with: (1) the relative importance of vendor attributes and buyer information sources; and (2) the influence that different buying tasks and different buying organizations have on the importance of vendor attributes and information sources.     

OEM buying process for new components: Purchasing and marketing implications

This article identifies the buying process for a new component. In-depth case studies were conducted at a wide range of potential customers. The buying process was mapped or flow charted in each organization. A general model of component buying was developed.     

Impact of organizational and buyer characteristics on the buying center

A mail survey of 200 organizational buyers was conducted to determine if the number of individuals in the buying center or the amount of perceived self-influence varied by organizational and buyer characteristics or by the type of purchase decision. The results of the study indicate that the type and size of the firm, as well as the buyer's educational level, affect both the number of individuals in the buying center and the amount of perceived self-influence of the organizational buyer. The results further indicate that the size of the buying center increases and the amount of perceived self-influence decreases as the purchase decision becomes more complex.     

Understanding users' performance evaluation of IT solutions

Traditionally, buying center research in business marketing has long focused on the role of various buying center members, including users, in influencing purchasing decisions. Recent studies have also established the important role users play in successfully implementing information technology (IT) initiatives of buying organizations and its influence on future relationships with sellers. Consequently, in order to ensure future business, marketers need users to evaluate their solutions favorably. This study attempts to understand the factors influencing user evaluation of performance of sellers' IT solutions. Based on an inter-disciplinary approach, a model of antecedent factors to explain user evaluation of suppliers IT solutions is proposed and tested. Results gleaned from a survey of 361 users of Internet-based technology in an automotive supply chain indicate that user attitudes toward technology, satisfaction with the new technology, users' overall understanding of supply chain management principles, and job-related consequences influence user evaluation of IT solutions.     

Plural governance: The effect of internal production on supplier performance

We suggest that both making and buying the same product or service has several effects on supplier performance. A model is developed and tested by use of answers gathered from the Danish municipalities. The results support the three hypotheses that (1) the negative effects of technological uncertainty on supplier performance decrease when buyers combine internal production and external sourcing, (2) the negative effects of performance uncertainty on supplier performance decrease when buyers combine internal production and external sourcing, and (3) the negative effects of asset specificity on supplier performance decrease when buyers combine internal production and external sourcing. However, the moderating effects depend on how the plurality is measured. The results indicate that internal production may facilitate effective governance of the relationships with external suppliers. Implications for research on make-or-buy decisions and for practice are also discussed.     

Conflicts of interest and agent heterogeneity in buyer brokerage

This article investigates the incentives of agents working with buyers (buying agents) under the fixed percentage commission system and the implications on housing market outcomes. Our model shows that the absence of a binding contract creates a risk of losing clients for buying agents, which helps mitigate the conflict of interest between buying agents and their clients. Both the buying agent's prediction accuracy regarding their client's reservation prices and the level of tolerance given by the buyer to the buying agent affect the binding force. Results from simulations and empirical analyses using house transactions in Canada support our model predictions.     

Industrial publicity: One of the best promotional tools

One of the most frequently forgotten and misunderstood promotional tools in industrial marketing is publicity. Yet most surveys rank editorial material in trade journals as one of the most important sources of information used by industrial customers in making buying decisions and evaluating products. This article discusses how industrial marketers can use publicity as an effective promotional tool, with emphasis on its major advantages, namely, high credibility and low cost per contact.     

Effects of governance on investment decisions and perceptions of reporting credibility: Investment experience of Taiwanese individual investors

This paper examines the effects of governance strength on individual investors’ investment decisions and their perceptions of the credibility of financial reporting by Taiwanese companies. It also examines whether the investment experience of individual investors influences their perceptions and decisions. Our experimental results show that governance strength enhances the price that individual investors are willing to pay for stocks, along with the perceived credibility of firm reporting. Furthermore, the associations are moderated by the investment experience of individual investors, suggesting that more-experienced individual investors are better able to incorporate governance strength into their judgment than less-experienced individual investors. Additionally, investment experience is positively related to the emphasis that individual investors give to corporate governance information in making investment decisions.     

Sales Promotion and Cooperative Retail Pricing Strategies

Supermarket retailers make strategic pricing decisions in a high-frequency, repeated game environment both in buying and selling fresh produce. In this context, there is some question as to whether a non-cooperative equilibrium can emerge that produces margins above the competitive level. Supermarket pricing results from tacitly collusive equilibria supported by trigger price strategies played in upstream markets. Upstream activities are, in turn, driven by periodic retail price promotions. This hypothesis is tested using a sample of fresh produce pricing data from 20 US supermarket chains. The results support the existence of tacitly collusive non-cooperative equilibria in upstream and downstream markets.     

Centralized and decentralized buying influences

This article empirically measures the effects of organizational separation on industrial buying in the commercial construction industry. It was reasoned that the relationship between organizations and their buying centers should depend on the separations between organizational buying units. Two types of organizational separation were measured— geographic separation and communication separation. Industrial sellers must relate selling effort to buying behavior and procedures. This study reports on how buying influence varies between firms that operate at various levels of organizational separation. The managerial implications of matching the pattern of buying influence with appropriate selling effort is presented.     

The relative importance of industrial promotion tools

This article describes a survey of the perceptions of organizational buyers regarding the extent to which their purchasing decisions are influenced by various promotional tools. The results of this survey provide some practical implications for industrial marketers regarding the relative effectiveness of various promotional tools and the relative emphasis that they should place on each of them.     

Applying territoriality to steps in the buyer/seller process

Territoriality is the drive of an individual to stake out, establish, maintain, and defend an area of space for personal use. The “area of space” may be physical or psychological. Industrial buyers and others involved in the buying process, as members of organizations, will act to establish individual territories within the organization and may also act to represent an organization's territorial needs. Because an understanding of the behavior of buyers is important to industrial sales people, and because the concept of territoriality is a mixture of psychological processes, physical behavior, and the space surrounding an individual, a Territoriality Scan System is proposed to assist the salesperson in improving his or her sales communications with industrial buyers. A salesperson can gather important information about an industrial buyer's psychological processes by observing the buyer's physical behavior and surrounding physical space using the Territoriality Scan System. These observational measurements can then be used to enhance the entire sales presentation.     

Bagging bundle benefits in broadband and media mergers: Lessons from Sky/Vodafone for antitrust analysis

The historic precedents in telecommunications antitrust findings have tended towards finding harm to competition when network operators integrate downstream and bundle the provision of applications and services. The reason for this is that market power in network provision is thought to be extended into the applications market(s). More recently however, proposed mergers have been between telecommunications and media distribution firms, both of whom have some degree of market power, already sell their own services in bundles, and who may or may not have been offering combined bundles already via contractual agreements. Examples include Sky/Vodafone in New Zealand, and Time Warner/AT&T in the United States as well as Vodafone/Unitymedia in Germany and Media Capital/Altice in Portugal. These complex proposed arrangements pose challenges to competition authorities, whose legal and procedural rules and precedents, especially those defining the relevant markets affected by the merger or vertical integration activity, have been developed from the analysis of simpler cases. These precedents may not be sufficient to analyse current cases, characterized by multiple products catering to heterogeneous consumer preferences, and consumers are not constrained to buying only one variant of the products in each of the upstream and downstream markets.We illustrate the challenges by way of a case study of the proposed merger between Sky and Vodafone, declined by the New Zealand Commerce Commission in February 2017. Limitations in existing market definition processes and the evaluation of market power where bundling already occurs risk overlooking complex demand-side interactions that influence the profitability and efficiency of various structural and contractual strategic choices. We propose that classic merger and antitrust analysis based on econometric cost-benefit analysis can be augmented by using simulation and numerical analysis of a range of bundle offers expected to be relevant in decision-making. We develop a simple model and use it to illustrate how it may be used to inform broadband and content mergers, and other complex antitrust cases, such the assessment of the effects of two-sided markets and firm pricing decisions.