Organizational Buying Meaning
Organizational buying is different from normal buying which individuals like you and me do as in this case it refers to that buying which is done by big organizations not for their use rather these organizations use these goods for further manufacturing. In simple words, organizational buying is more of a derived demand as companies will buy products which can be used to manufacture those products which are demanded by the company’s consumers. In order to understand more about this concept, one should look at important features of organizational buying –
Organizational Buying Characteristics
Bulk Buying
Organizations never purchase 1 or 2 units of any good rather they buy goods in bulk quantities and that is the reason why suppliers have to give companies bulk order discount which in turn results in companies buying goods at a much cheaper rate than normal consumers. Hence, for example, suppose the price of the printer is $500 for normal consumers who purchase 1 or 2 printers but if some big company goes to buy 100 or 200 printers for office use then chances are that company will get those printers at 20 to 30 percent cheaper.
Repeat Orders
Another important feature of organizational buying is that the majority of times companies will repeat their orders from the same suppliers as organizations need goods on a repeat basis. Hence, for example, normal people will buy sugarcane once or twice every year but sugar companies will need sugarcane every fortnightly or monthly from sugarcane manufacturers.
Planned Buying
Consumer buy goods on impulse so if you are passing by some apparel shop and you like apparel than you will buy that apparel instantly even though you had not any plans to buy apparel from that shop but as far organizations are concerned it does not work that way as organization buying plans are made in advance and they will seldom buy on impulse which is the case with normal consumers. In simple words, planned buying is one of the important features of buying done by organizations.
Lengthy Process
When we go to buy something than it takes 30 minutes or 1 hour to purchase a good but when it comes to organizational buying it does not work that way rather it is a lengthy process as many departments are involved and sometimes it may take days to complete the buying by organizations. Hence for example, if the company has to buy some goods than first it will demand quotation from several suppliers and then it will analyze those quotations and after that, there will be some negotiations with suppliers and then the company will direct its purchase department to place an order from a particular supplier.
Close Relationship with Suppliers
Organizations usually have a close relationship with their suppliers due to repeat as well as bulk orders and that is the reason why companies get goods on credit from their suppliers. In simple words just like in the sea there are thousands of small fishes but few whales and sharks in the same way in case of suppliers there are thousands of small individual consumers but only a few big companies who are the consumers of suppliers and that is the reason why suppliers know companies by their name and seldom remember the names of individual customers.
As one can see from the above characteristics of organizational buying that it is quite different from normal buying and that is the reason why big companies have separate departments as well as a process for making the buying decision for the organization as a whole.