General Need Description

Business Buying Process

The processes for making decisions for organisations and consumers are quite different from each other. There are eight stages in a business buying process:...

Step 1: Problem Recognition

Problem recognition is the first and most essential step of the business buying process. In this step, a company recognises a problem or need that requires to be solved by acquiring a particular product or service. This step can be a result of internal or external factors....

Step 2: General Need Description

The second step involves determining the quantity and quality of the product and thus preparing a general need description. If the items are standard, the business buying process presents limited problems. However, in the case of complex products, to define them, the buyer may have to work with other people like engineers, consultants, users, etc. The team defining the item may want to rank the importance of price, durability, reliability, and other attributes required in it. Thus, in the second step of the business buying process, the buyers can get help from the alert business marketer in defining their needs by providing them information regarding the value of characteristics of different products....

Step 3: Product Specification

After receiving input from the second step, the buying organisation must prepare technical specifications for the required parts. At this step, the technical and other value-related specifications of the product are examined. These requirements need to match the organisational needs. The suppliers may offer products with broader applications but at a higher price. The product value analysis helps in reviewing product requirements and actual specifications to reduce waste. The marketer must collaborate with his technical and financial partners to assess the feasibility of the project and to explain the services they can provide to create and supply the product....

Step 4: Supplier Search

The next step in buying for a business is to identify the most suitable vendors. The organisational buyers evaluate the potential vendors and suppliers based on the effectiveness and quality of their products and services. In general, the vendors’ dependability, market standing, and financial situation are taken into consideration. Some vendors are removed from the consideration list because they can’t deliver by the specified time or have a bad reputation for their brands. Finally, the approved list, from which the final suppliers are chosen, contains the qualified vendors. It is necessary to distribute brochures and place advertisements in particular media, such as trade publications. This stage consists only of compiling a list of qualified vendors....

Step 5: Solicitation of Proposals

In the fifth stage, vendors are invited to submit their price quotes. To provide their quotations, the suppliers employ catalogues or sales representatives. When purchasing expensive and complex things, it is possible to ask vendors for written proposals, compare those proposals and choose the best vendor based on the results. The requested proposal from vendors should include both technical and marketing information. The effectiveness of the oral presentations depends on the vendor’s ability to gain the organisation’s buyer’s trust by showcasing their capabilities and possibilities....

Step 6: Supplier Selection

During this step in business buying process, several ideas are evaluated based on their relevance. The buying centre is prepared to choose the vendor for organisational buying after carefully examining the various vendor proposals. It is usually done with the compilation of a list of the necessary vendor attributes and their significance....

Step 7: Order-routine Specification

The purchaser places an order with the chosen vendor by listing technical specifications, required quantity, expected time of delivery, return policies, and warranties. However, in the case of repair, maintenance, and operating products, the buyer instead of using periodic purchase orders, may use blanket contracts. A blanket contract is a contract that creates a long-term relationship under which the supplier makes a promise to the buyer to resupply goods when required at agreed prices for a determined time period....

Step 8: Performance Review/ Post-Purchase Evaluation

The final step in an organisation’s purchasing process is post-purchase evaluation. Buyers create an evaluation based on factors like cost, quality, delivery schedule, after-sale service, etc. After routine departmental discussions, an overall rating is provided. It helps in making the choice of whether to work with the vendor going ahead or to look for another. The assessment sheet is also distributed to them in order to provide vendors with a chance to get better....

Conclusion

Understand the process that businesses go through when making purchases if they are to create effective strategies. The are 8 steps of this business buying process, starting from identifying a problem and ending with appraising the performance of selected suppliers. Knowing what happens at every level will enable to customize their methods for influencing those in charge of decisions so they can win deals....

Business Buying Process – FAQs

Why Business Process Management is Important?...