Unlike consumer buying habits, businesses usually have a more formal approach toward purchasing. Rather than make impulse purchases, businesses will compare prices, compare suppliers and compare the quality of goods and services before completing a sale. Although some companies may spend more time on specific steps in the process or they may eliminate certain steps altogether, most business-to-business purchases can be divided into eight distinct steps.
1. A Problem Is Identified
The purchasing process does not begin until someone identifies a problem within the organization, which can be solved by purchasing a good or service. Anyone within the organization can initiate this – from a customer service rep out of printer paper – to the CEO who decides that it's time to expand to a larger facility. In some instances, a sales person may help someone in the organization to identify a need that no one had previously recognized.
2. General Need Description
After a problem is identified, the organization determines which product or service is required. When an office is out of printer paper, the office manager may decide that more paper is needed. However, a software engineer in the same company might suggest that the organization become paperless by providing all employees in the office with tablet computers.
3. Product or Service Specification
Once the general need is agreed upon by those who have purchasing authority in that organization, they will then narrow down the options by specifying what the product or service must offer. If they have decided on tablets, they would then specify the size they want, how much memory the tablets offer, and so on. If they decide on paper, then they would determine the quantity and quality of paper required.
4. Potential Supplier Search
The third step of the buying process involves looking for potential suppliers. If the company doesn't already have an established relationship with a vendor that offers the product, then often the company must look online, attend trade shows or contact suppliers by telephone. Purchasers determine if the suppliers are reputable, financially stable and if they'll be around for future requirements.
5. Request for Proposals
For large purchases, organizations usually write out a formal RFP, a Request for Proposal, and then send it to their preferred suppliers. Alternatively, they may make the process public so that anyone can send in a proposal. For smaller purchases, this could be as simple as looking at the price on a website.
6. Supplier Evaluation and Selection
In this part of the process, supplier proposals and prices are evaluated to determine who is offering the best price and the best quality. Often, price alone is enough to win an organization's business, as many businesses will weigh the price against financing options, supplier reputation and whether or not a supplier can provide the organization with future goods and services.
7. Establishing Credit and Order Specification
Once the winning supplier has been selected, the organization places the order. This may involve establishing credit with the supplier, agreeing on terms, as well as reviewing shipment times and any other deliverables that may come with the sale, such as installation or product training.
8. Supplier Performance Review
After the product has been delivered or the service has been performed, the organization will review the purchase to see if it meets acceptable standards. For larger purchases, this could be a formal review involving key decision makers in the organization and the supplier's sales staff. For smaller purchases, it is often informal. For example, if the company ordered a box of paper that arrived late or was damaged, the company may decide not to buy from that supplier again, without ever informing the supplier of a problem.
Richard Berkút
Richard Berkút
Helping Local Businesses Thrive With An All-In-One Marketing & Sales System - ZIOZ! Father Of 3 Amazing Kids! I Love Helping Schools With Marketing!
Published Mar 18, 2021
Stages of the Business Buying Decision Process
The main difference between B2B and B2C is who the buyer of a product or service is. The purchasing process is different in both cases and the following is a list of the stages involved in B2B buying:
Step 1: Recognize the Problem
Machine malfunction, the firm introduces or modifies a product, etc.
Step 2: Develop product specifications to solve the problem
- Buying center participants assess the problem and need to determine what is necessary to resolve/satisfy it
Step 3: Search for and evaluate possible products and suppliers
- Look in company files and trade directories, contact suppliers for information, solicit proposals from known vendors, examine websites, catalogs, and trade publications
- Conduct a value analysis – and evaluation of each component of a potential purchase; examine quality, design, materials, item reduction/deletion to save costs, etc.
- Conduct vendor analysis – a formal and systematic evaluation of current and potential vendors; focuses on price, quality, delivery service, availability, and overall reliability
Step 4: Select product and supplier and order product
- This step uses the results from Step 3
- An organization can decide to use several suppliers, called multiple sourcing. Multiple sourcing reduces the possibility of a shortage by strike or bankruptcy.
- An organization can decide to use one supplier, called sole sourcing. This is often discouraged unless only one supplier exists for the product; however it is fairly common because of the improved communication and stability between buyer and supplier.
Step 5: Evaluate Product and supplier performance
- Compare products with specs
- Results become feedback for other stages in future business purchasing decisions
This 5 step process is mainly used with new-task purchases and several stages are used for modified rebuy and straight rebuy.
Understanding the stages of business buying and the nature of customers’ buying behavior is important to a marketing firm if it is to market its product properly. In order to entice and persuade a consumer to buy a product, marketers try to determine the behavioral process of how a given product is purchased.
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