CONSUMER BEHAVIOUR IN THE INDUSTRIAL MARKET PDF

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It contains topics such as sorting buyers in the industry, industrial buying, purchasing decision process, and buying behavior of companies....

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CONSUMER BEHAVIOUR IN THE INDUSTRIAL MARKET

Similarities to consumer behaviour The similarities between industrial purchasing behaviour and consumer purchasing behaviour can be reflected in the following: — The normal result is a purchase. — The decision is the result of a process. Differences with consumer behaviour The differences between industrial and end-consumer purchases are greater than the similarities, and are reflected in the following: — The demand of organizations is derived. It is an application that is based on others it serves, whether it is the final demand for goods and services from individuals or the demand of other organizations. — Demand is subject to further fluctuations. This is a consequence of its derivative claim character. A slight contraction in final demand for personal computers, for example, will immediately lead to a greater inventory build-up among retailers and wholesalers, who will stop purchasing from manufacturers until they Decrease. This will slow down the pace of new equipment manufacturing and significantly slow down the purchase of components from suppliers. Therefore, a small variation in final demand can have a big effect on the demand for industrial products. — Demand is often more inelastic. — Demand is more concentrated. — Purchases made are of a higher volume. — The purchase decision is usually not made by one person. — The purchasing process is more complex, longer and more sustainable. — The purchasing criteria are different. Industrial buyers take many criteria into account in their purchasing decisions. Most of these factors are rational, but they also occur emotionally. In general, the organization is more interested in the overall satisfaction that the offer yields than in the individual characteristics or attributes of the products or services purchased. Industrial procurement puts more emphasis on technical assistance and training provided by the supplier or on costs, product quality, delivery times and the financial conditions of the offer. These differences are evident in the advertising of products for the industrial market. Organizations sometimes use what is called value analysis, which is a cost-cutting procedure, by studying each component of the product provided, to determine whether it can be redesigned, standardized or produced at a lower cost. cost. In terms of the products purchased, the specifications required and the importance of

the pre-sale and after-sales service, the main differences between industrial purchasing behaviour and that of end consumers. CLASSIFICATION OF INDUSTRIAL BUYERS Organizations, taking into account the types of goods and services purchased and the purpose of their purchases, can be categorized into five groups: agricultural and cooperative enterprises, livestock or fishing, industries, resellers, governments and companies and other service institutions. Businesses and cooperatives, livestock or fishing In general, purchases by farmers, ranchers and fishermen are much lower than those in the industrial and service sectors. The gross domestic product (GDP) of Mexico's agricultural sector accounts for only 3.2% of the total. In addition, in most cases, purchases are made by very small organizations, families or individuals, whose purchasing processes are not very streamlined. Only a few agricultural organizations, some of which are co-operatives, reach large volumes of purchases. Industries This group includes extractive, energy production, manufacturing and construction companies. These industries acquire goods and services to incorporate into the products they produce or because they need them to develop their operations. Most of the products that industries buy are raw materials, materials, components or semi-finished products that they incorporate into their production processes. But they also buy machines, heavy equipment, tools and tools, furniture, computers, etc., which must be able to manufacture their products. Resellers They are the ones who buy the finished products and resell them without making any physical transformation, that is, they do not create a useful form. However, they increase the value of the product, adding services such as delivery, financing, technical assistance, etc. These organizations therefore create the usefulness of place, time and possession. This group consists mainly of wholesalers and retailers. These organizations also purchase products they need for the development of their activities that are not resold, such as buildings, furniture, data processing equipment, etc. Some retailers are among the best charged companies in the world and are among the top industrial shoppers, such as the Walmart supermarket chain. The company was listed by Fortune magazine as the highest turnover in 2010, with profits in billions of dollars. Government The state is the largest buyer in almost all countries. Their purchase volumes are very large, as evidenced by the size of the federal government's purchases; indeed, to the spending on goods and services of all federal entities, we must add

those of the 31 states of the Republic and the Federal District, as well as those of all existing municipal entities throughout the national territory. Service companies The services sector is the largest and most dynamic of the developed economies. It accounts for about 66% of GDP, although this figure includes reseller and utility activity. It is possible to distinguish between service companies seeking public service and non-profit service companies. The former include financial institutions, insurance companies, transportation companies, hotels, communications, entertainment, independent professionals, etc., and among others, religious institutions and charitable causes, education, hospitals, etc. These organizations do not purchase products to process or resell. The goods and services they buy are only those that compel them to do business. The types of products purchased vary considerably depending on the activity they develop; Thus, for example, the purchase of cars represents a significant part of its purchases for a company that is committed to its income and, on the other hand, has no relevance or is minimal for a tax consulting company. INDUSTRIAL BUYING Depending on the novelty of the purchase decision, the amount of information required and the consideration of new alternatives, three terms or situations of industrial purchase may occur: first change of purchase, buyout and buyback. First purchase This is unusual. It's about dealing with a new purchase decision. There is no prior experience, so a high volume of information will be required and the various alternatives will be carefully considered, due to the risk associated with the decision and the importance of establishing guidelines for subsequent purchases. More systematically. The decision-making process will therefore take a long time. a) repurchasing This method of purchase is the most common in the organization. In this situation there is already previous experience, product specifications are established and there is a list of suppliers who encounter them. The information required will be minimal and will not be considered a new alternative. The decision-making process is short and routine and other decisions can be delegated. HOW COMPANIES DECIDE YOUR PURCHASES The industrial purchasing process consists of several steps, similar to those outlined in the consumer purchasing process. However, the intermediate stages of

the process, from the time the problem is recognized to the purchase decision, are generally much longer and more complex. The purchasing decision process begins when someone in the organization poses a need that can be resolved with the purchase of a property or service. The second step is to establish the product specifications. In addition to users, experts and advisors can influence this step. On the other hand, purchasing agents who act as custodians will filter information to decision makers and those who influence the purchasing decision-making process. The stage ends with the submission of the purchase request to the purchasing department. The third step will be to find alternative products and suppliers that meet the established specifications. Subsequently, in the fourth stage, these alternatives will be evaluated. After evaluating the alternatives, one of them will be selected and the order will be placed. Once the product is received, its performance and supplier compliance will be assessed. This experience will serve as a source of information for future purchases. The complexity and duration of the decision-making process will be high in first-time situations; instead, they will be reduced in the case of buybacks and interim buyback changes. The different roles that are assumed by the members of the purchasing department have an uneven influence on the purchasing decision-making process. Organisation ACHAT DELATO MODELS Organizations' purchasing behaviour patterns, similar to consumer behaviour, may include only one or more elements of the purchasing process or all of that. In the first case, these are partial models and, in the second case, global models. Partial patterns of buying behaviour a) Supplier selection model Lehmann and O'Shaughnessy It is based on the supplier's rating using the weighted average of 17 attributes. These attributes are of different importance depending on the type of product. b) Wind supplier loyalty model Loyalty is defined in the model as the proportion of purchases made to a given supplier. It is assumed that this depends on the following factors: — The variables specific to the offer: price, quality, delivery and service. — The buyer's previous experience. — Organizational variables, such as the emphasis on cost savings or complaints. — Variables that simplify purchases: inertia, proximity, comfort, etc. Global Purchasing Behaviour Models a) Sheth model

This model covers individual and joint decisions. Under this model, the following can be distinguished in the purchasing behavior of organizations: — The psychological characteristics of those involved in the purchase decision. — The conditions for joint decision-making, i.e. the different people involved in the procurement process. These factors may be specific to the product or organization. — The joint decision-making process, with the emergence of inevitable conflicts and their resolution processes. The model, part of the expectations that purchasing agents, technicians and users have on the products to buy and suppliers. These expectations are influenced by the knowledge and experiences possessed by these individuals, as well as by the sources of information with the corresponding distortion in their perception, the active search for them and the satisfactions obtained in the previous purchases. In the purchasing process, there are specific factors of the product and the company that determine that the decision is autonomous, with a greater degree of delegation or, conversely, joint. Product-specific factors include type of purchase, perceived risk and time pressure. If the purchase is the first or a change of supplier, the decision is more likely to be joint; on the other hand, if it is a repeated purchase, there will be a larger delegation. For its part, the greatest perceived risk will force joint decisions and time pressures will move in the opposite direction, leading to the delegation of the decision. The company-specific factors that the model considers to influence the decisionmaking process are the direction, size and degree of centralization of the organization. More technical or operational guidance will allow different people to participate in the purchase decision. On the other hand, the larger the size of the company and the lower the degree of centralization, the more likely decisions are to be made together. The model pays particular attention to the joint decision-making process. This process begins with the initial purchase decision and continues with the search for information, the evaluation of alternative offers and the resolution of possible conflicts between the parties who jointly decide. If the conflict between the parties is due to a disagreement over the benefits of the product or suppliers, new information will be requested or the information available will be expanded to address the issue. If the conflict is due to a disagreement over an evaluation criterion, it can be resolved by persuasion. If the conflict lies in the objectives of the purchase, it can be resolved through negotiation, and if it is the channels or styles of decision-making, through "policy". The decision-making process is either autonomous or joint, resulting in the choice of supplier or brand. In this last stage, situational factors, such as strikes, machine failures, import or price controls, mergers, etc., may alter the decision. b) Model Webster and Wind

He particularly considers the behaviour of the purchasing department, which he defines as all the people within the organization involved in the purchasing decision process. Four sets of variables are taken into account in the model: — Environmental factors. They affect the general conditions of business activity and act as restrictions on decisions. — Characteristics of the organization. The technology used in the business affects what is purchased and the nature of the purchasing process. The organizational structure, represented by the system of authority, hierarchy, rewards and workflows, also influences the purchasing process, as well as the objectives and tasks and the role played by the various actors involved in the process of buying. — Interpersonal relationships. The structure of the purchasing department is at the origin of different types of interpersonal relationships that influence the purchasing decision-making process. — Individual variables. Organizations are made up of people, so the purchasing behavior of these is ultimately the sum of individual behaviors. Therefore, the motivation, experience, personality, etc., purchasing agents also have a decisive influence on the behavior of organizations. c) Cardoso model This model considers industrial purchasing behaviour as a set of seven sequential steps: 1. Take or not participate in a proposed purchase. 2. Set goals and specifications. 3. Ask for proposals and/or offers. 4. Choose a specific offer. 5. Approve the election. 6. Accept the products provided or the services provided. 7. Buyback. These decisions can be chained in a sequence with probabilities of predicting the act of purchase or a series of purchases. Under this model, the probability of a series of purchases can be framed as the joint probability of performing each of the indicated steps. d) Other models Anderson and Chambers develop a model of the purchasing process of organizations that is based on the fundamental proposition that the behavior of individuals in the organization is largely determined by how their measurements are rewarded Activities. The model consists of two submodels. The first is the motivation of the people involved in the

purchasing process. The second describes the process of the group's interaction and the formation of consensus among its members....