1. INDUSTRIAL
MARKETING
Nature of Industrial Buying and Buying
Behaviour

2. Buying Objectives / Motives
 Organizational purchase objective is defined
as buying the right items, in the right quantity,
at the right price, for delivery at the right time
and place.
 The management defines what is “right” for
each dimension.
 Two major categories of organizational buying
objectives are:
 (a) Economic or Task Objectives;
 (b) Non-economic / Non-task Objectives

3. Economic Buying Objectives
 Delivery / Availability
 Product Quality
 Price
 Reliability of Supply
 Service
 Reciprocity

4. Non-economic Objectives
 Prestige
 Career Security
 Personal Relationships
 Political Factors
 Social Factors
 Vested Interests

5. Types of Business Markets
 Commercial Enterprises
 Industrial Distributors / dealers (middlemen, resellers)
 Original equipment manufacturers (OEM’s) (Exide for Maruti Suzuki)
 Users / Industrial customers (TVS, Tata Motors)
 Government Customers
 PSU (BHEL, ONGC)
 Govt. Undertakings (Indian Railways, Electricity Boards, Defence units)
 Organizational / Institutional Customers
 Public Institutions (Govt. hospitals, prisons)
 Private Institutions (Pvt. Hospitals, schools, colleges)
 Not-for-profit (charitable) organizations (Temple trusts, orphanage)
 Cooperative Societies
 Manufacturing units (State Sugar Coop Society, AMUL, PARAG)
 Non-manufacturing units (Cooperative banks, housing societies)

6. Factors in Business Buying
 Webster & Wind Model summarizes the
factors influencing business buying decisions:
Environmental
Factors
Organizational
Factors
Buying Centre
Factors
Individual
Factors
Physical Goals & Tasks Roles Status
Economic Technology Resources Politics
Technological Actors Ethics
Legal & Political Structure
Cultural

7. Buying Centre Roles
 Initiator
 Influencers
 Users
 Deciders
 Buyers
 Gatekeepers

8. Organizational Buying Process /
Stages
1. Recognition of problem or need.
2. Determination of the characteristics of the
item and quantity needed.
3. Specifying the requirements.
4. Search for potential suppliers.
5. Acquisition & analysis of supplier proposals.
6. Evaluating & selecting suppliers.
7. Selecting of an order routine.
8. Performance feedback & evaluation.

9. The BUYGRID Model
 Robinson et al have identified 8 buy phases
(stages), and 3 buy classes (situations).
 The THREE major Buy Classes (Situations)
are:
 New Purchase (or New Task)
 Repeat Purchase (or Straight Re-buy)
 Change in supplier (Modified Re-buy)

10. Analytical Framework of BUYGRID
Model
Buy Situations Buy Classes
New
Task
Modified Re-
buy
Straight Re-
buy
Problem Recognition Yes May be No
Determine characteristics &
quantity
Yes May be No
Description of requirements Yes Yes Yes
Search for potential suppliers Yes Yes No
Acquisition & analysis of
proposals
Yes Yes No
Evaluation & selection of supplier Yes Yes No
Selection of order routine Yes Yes No
Performance feedback &
evaluation
Yes Yes Yes

11. Industrial Purchase System
 Purchasing practice in Commercial
Organizations (large & medium size) is quite
complex and involves several departments like
production, stores, materials, quality, finance,
accounts, engineering, etc.
 The purchase practices change on the basis of
nature of business, size of operations, volume,
variety, and technical complexity of the
products to be purchased.

12. Major Purchase Steps
 User Dept. initiates process by issue of PR (purchase
requisition) or indent to purchase / material dept.
 Material dept. checks availability of stock. If not in stock then
identify suppliers, get quotations, negotiate, select supplier
and issue PO (Purchase Order).
 Receipt of material, check challan against PO, issue MRR
material receipt report).
 Quality control dept. inspects material and issues IR
(Inspection Report).
 Purchase dept. sends supplier invoice along with MRR & IR
to accounts for release of payment to supplier.
 Materials dept. dispatches the required material to user dept.

13. Purchasing in Government
Units
1. DGS&D finalizes running contracts for
standard products for Central Govt. Units.
2. In other State Govt. Units the products and
company first gets registered as approved
supplier.
3. For standard products tender notices are
advertised in newspapers. Tenders are
procured by suppliers, filled & submitted in
sealed covers specifying all technical and
commercial details of supply.

14. Purchasing in Government
Units
4. Competitive bids are used in purchase of
both standard and special items.
5. In case of Closed and Limited Tenders the
bids and not opened or announced in open;
which is done in case of Open Tenders on the
tender opening date.
6. L1, is the lowest bidder calculated in terms of
landed price. L2, L3, etc are called for
negotiation if they agree to offer the similar
landed price, PO is released in their favour.

15. Purchasing in Government
Units
7. On receipt of supply in stores, inspection is carried
out and report submitted to concerned dept. and
also to accounts.
8. Follow-up is done in a case the supplier fails to
supply the entire lot in time. Or material receipt is
not in accordance with the supply specifications or
does not match the PO.
9. If receipts match the PO and stands approved by
all concerned departments the relevant documents
are sent to Accounts for release of payment as per
agreed terms and the existent Rules and Policy of
the Govt. Unit.
10. Auction and Reverse Auctioning.