Download - Purchasing Decision
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The Purchasing Decision
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Learning Objectives of this Session
• The Decision Making Unit (DMU)
• The Decision Making Process (DMP)
• Factors affecting the Purchasing Decision
• B2C and B2B Purchasing Decisions
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1: The Decision Making Unit (DMU) Model
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The elements of the DMU are:
The Gatekeeper
The Initiator
The Decider
The Buyer
The User
The Financier
Other Influencers
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The Gatekeeper
• Controls access to the DMU
• Controls information input into DMU
• Could be an individual (Secretary / PA)
• Could be a department (Customer Service, Sales, Procurement)
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The Initiator
• The person who recognises a problem / need to be addressed
• May or may not be part of ‘formal’ DMU
• Often associated with ‘The User’
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The Decider
• The person with the authority to make the decision to buy
• May or may not be the person who makes the final choice
• Level of seniority depends on importance of purchase / budget / company culture
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The Buyer
• The person tasked to make the actual purchase
• Degree of choice / power depends on organisation structure
• May be part of a formal ‘Buying Department’
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The User
• The person/s who actually use or consume the product / service
• Degree of influence on DMU depends on company culture
• Importance of feedback / satisfaction depends on company culture
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The Financier
• The person or department which authorises expenditure
• Degree of influence / authority depends on company culture / budget involved
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Influencers
Anyone outside of the DMU which has an influence on its members:
• Formal ‘consultants’• Informal personal
contacts / WoM• Recognised ‘experts’,
role models, personalities and endorsees
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The Decision Making Unit:B2B B2C
• Roles tend to be more formal
• Roles tend to be by job title – but some multi-role play
• Degree of influence may still be affected by strength of personality
• Roles tend to be more informal
• Many roles played by one person
• DMU sometimes associated with members of Family
• Recognises influence of children / non wage earners
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2: The Decision Making Process (DMP) Model
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The stages of the DMP are:
Recognition of need
Developing product specification
Search for information / supplier
Evaluation of alternatives
Select product / supplier
Decision to buy / Determining terms of contract
Fulfilment of contract
Evaluation
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1: Recognition of need
• Many purchases are made to meet a perceived problem
• Customers are interested in ‘benefits’ (solutions) rather than ‘features’
• Problems may be ‘real’ or ‘imagined’• High priority vs low priority problem solving• New technology may create its own ‘need’ eg
Walkman, GPS, iPhone
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2: Product specification
• May be complex formal B2B process
• Also B2C – especially for major purchases
• Budget
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3: Search for information
• Previous purchasing experience• Intensity of search depends on: New Buy / Re-
Buy / Modified Re-buy (Extended, Limited and Routine Problem Solving)
• Advertising and sales literature• Internet• Sales representatives• Store visits• Recommendation from friends and other users
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4: Evaluating alternatives
Factors compared:
• Performance (Capable of meeting need)
• Availability
• Price
• Value for money
• Brand?
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5: Selection of product / supplier
• Shortlisting
• Request for tenders
• Prioritising choices
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6: Decision to buy / Terms of contract
• To buy or not to buy
• Buy now or buy later (re-evaluation of priorities)
• Negotiating terms– Price / Payment– ‘Added value’ benefits
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7: Fulfilment of contract
• Delivery
• Fitting
• Schedules
• Specifications
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8: Evaluation
Has need been met?Problem areas:• Was product / service misrepresented?• Were specifications correctly determined?• Were expectations raised unrealistically?
(overselling)• Customer ‘satisfaction’ or ‘delight’?• Post-purchase dissonance?• Repeat purchase?
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Conclusions:
• Need to identify customers’ decision making processes
• Need to identify members of DMU and their relative influence on the DMP
• What are the customers’ buying criteria• Need to understand buyer behaviour at each
stage of the DMP• Need to adapt customer communications for
each of the above