Home AIOU Solved Projects AIOU Solved Project 8407 The B-to-B Buying Process

AIOU Solved Project 8407 The B-to-B Buying Process

ACKNOWLEDGEMENTS

This postulation is devoted to Allah, my Creator and my Master, and envoy, Mohammed (May Allah favor and give him), who showed us the motivation behind life. My country Pakistan, the hottest womb; Allama Iqbal Open University, Islamabad; my second wonderful home; My awesome guardians, who never quit giving of themselves in incalculable ways, My dearest friend, who drives me through the valley of dimness with the light of trust and support, My cherished siblings and sisters; especially my dearest sibling, who remains by me when things look disheartening, My beloved Parents: whom I can’t compel myself to quit loving. All the general population in my life who touch my heart, I commit to this research.

ABSTRACT

Typically, the B2B buying group consists of six to 10 decision-makers, each armed with four to five pieces of information they’ve gathered independently, and all must communicate with one another to figure out whether they should buy the solution. Moreover, the pool of options and solutions organizations can choose from is constantly expanding as new technologies, products, suppliers, and services emerge.

It has become nearly effortless for buyers to do their research on new solutions independently due to the easy availability of quality information through digital channels. As sellers, we have fewer opportunities to influence customers directly, but there’s also the other side to it. Due to an abundance of options and endless flows of information, customers find it harder and harder to buy.

According to a recent survey by Gartner, more than three-quarters of the customers described their purchase as very complex or difficult. This means that with the right approach and guidance, you can help them succeed.

The B2B buying process is neither linear nor predictable. Each person in every buying center can influence the final decision pretty much at any stage if they discover new information or notice something they haven’t seen before. The only thing that drives purchase is quality information presented in an accessible way.

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This is called “buyer enablement” — providing customers with the information they need to complete their critical buying tasks. So the best seller for a B2B client is the one who can make it easier to navigate the buying process. Supplying information that is truly helpful to decision-makers in each buying center will increase the likelihood that they will buy from you.

Introduction

When you sell B2B, you don’t normally sell to just one person. You’re selling to a group of decision-makers who have different levels of influence and different positions in the company.

Apart from the basic hierarchy, which is clearly important, different individuals can have a significant impact on the purchase, regardless of their position within the company. Moreover, there may be stakeholders outside of the company who are also influencing the purchase.

In order to understand how the purchase is made, it is crucial to keep track of both the hierarchy and the lines of influence involved in this process. What are these lines and how can you leverage this understanding to help your buyers make a purchasing decision? Let’s shed some light on it.

The Buying Centers In The B2B Sales Process

Buying centers refer to the groups of people from within or outside a company who have a certain degree of influence on the buying process. Each individual in the buying center can perform one or a few of these roles:

User: Someone who is actually going to use the product and feels the need for it.
Initiator: Someone who notices the problem or the new opportunity and voices out the new requirements.
Influencer: Someone significant, possibly from the outside of an organization, whose opinion can influence the buying decision.
Gatekeeper: Someone who controls the flow of information in the organization.
Decision-Maker: Someone who makes a final call and approves the purchase.
Buyer: Someone who actually buys the solution.

Each of these roles may be represented by a single individual or by dozens, or perhaps by hundreds of people, depending on the product and company structure. You need to be able to convince people in every buying center with content that is personalized to their interests and needs, yet conveys an overall coherent picture of the product.

Stages:

There are 6 stages in the B2B buying process. Depending on the type of product and the level of need for that product, moving through the various stages can happen quickly with the possibility of even skipping one or two stages or it can take a considerable amount of time with customers wavering between stages.

Awareness

The first stage of the B2B buying process is when a customer realizes there is a problem. They become aware of a business need. For example, this could be as simple as a small business experiencing growth, and the Marketing Director recognizing that in order to keep up with demand and continue to grow and generate leads, they need help automating their marketing processes. In this scenario, the Director has identified a problem and acknowledges a need to fix it.

Commitment to Change

After recognizing a problem, the next stage of the B2B buying process is when the customer commits to fixing the problem. It’s at this time when the customer starts thinking about the budget necessary to fully address the issue, how making a change to the business process would impact other areas of the organization, and whether the problem can be addressed in stages or all at once.

Considering Options

During this stage, the customer researches the various options to solve the problem. Going back to the example with the Marketing Director, she may be asking herself questions like what type of marketing automation platform would best suit our needs? Is this something that could be managed in-house by one of the marketing team members? Is it better to hire an outside agency to manage the transition and oversight? What impact would marketing automation have on our current website and databases?

Commitment to the Solution

After researching the different options a customer will decide on the best solution for their business. This could mean the customer decides on a specific platform like Hubspot or an agency like Measured Results Marketing to help them implement the desired marketing automation tasks.

Decision Time

We are closing in on the end of the B2B buying process. At this stage of the game, the customer needs to justify the decision they are making to themselves and any upper management. Referring back to our example, the Marketing Director decided the best option and smoothest transition for implementing a marketing automation process meant hiring an agency. She narrowed it down but wants to make sure she’s making the right decision. This typically means meeting with a sales rep and asking specific questions about why they should choose your agency to solve their problem. This is when the tough questions can get asked, and you must prove to the customer that choosing your business is the best solution for their problem.

Final Selection

The final stage of the B2B buying process is when the Marketing Director makes a decision and purchases the services and/or product. From this point forward, excellent customer service should be the focus. Happy customers lead to repeat customers and referrals.

Practical study

Navigate the evolution of the B2B buying journey

Your sales reps have roughly 5% of a customer’s time during their B2B buying journey. Lack of time with buyers coupled with rapidly shifting buying dynamics, fueled by digital buying behavior, is reshaping the strategic focus of sales organizations.

Download the Gartner guide for CSOs to learn how to:

Navigate the evolution of the B2B buying journey over the next five years
Position your unique value-add to help guide customers to decision confidence while minimizing uncertainty
Accelerate beyond foundational analytics toward AI-powered insights

Sellers have little opportunity to influence customer decisions

The ready availability of quality information through digital channels has made it far easier for buyers to gather information independently, meaning sellers have less access and fewer opportunities to influence customer decisions.

In fact‚ Gartner research finds that when B2B buyers are considering a purchase‚ they spend only 17% of that time meeting with potential suppliers. When buyers are comparing multiple suppliers‚ the amount of time spent with anyone sales rep may be only 5% or 6%.

The customer’s buying journey is hard

The typical buying group for a complex B2B solution involves six to 10 decision makers‚ each armed with four or five pieces of information they’ve gathered independently and must deconflict with the group. At the same time, the set of options and solutions buying groups can consider is expanding as new technologies, products, suppliers, and services emerge.

These dynamics make it increasingly difficult for customers to make purchases. In fact, more than three-quarters of the customers Gartner surveyed described their purchase as very complex or difficult.

B2B Buyers complete a set of jobs to make a purchase

To understand how to best help customers advance through a complex purchase, Gartner research identified six B2B buying “jobs” that customers must complete to their satisfaction in order to successfully finalize a purchase:

Problem identification. “We need to do something.”
Solution exploration.“What’s out there to solve our problem?”
Requirements building. “What exactly do we need the purchase to do?”
Supplier selection.“Does this do what we want it to do?”
“We think we know the right answer, but we need to be sure.”
Consensus creation.“We need to get everyone on board.”

The buying journey isn’t linear

B2B buying doesn’t play out in any kind of predictable, linear order. Instead, customers engage in what one might call “looping” across a typical B2B purchase, revisiting each of those six buying jobs at least once.

Buying jobs don’t happen sequentially, but more or less simultaneously.

Information drives purchase ease and high-quality sales

All of this looping around and bouncing from one job to another means that buyers value suppliers that make it easier for them to navigate the purchase process.

In fact, Gartner research found that customers who perceived the information they received from suppliers to be helpful in advancing across their buying jobs were 2.8 times more likely to experience a high degree of purchase ease, and three times more likely to buy a bigger deal with less regret.

B2B Buying Situations

Who makes the buying decision depends, in part, on the situation. Common types of buying situations include the straight rebuy, the modified rebuy, and the new task.

The straight rebuy is the simplest situation: the organization reorders a good or service without any modifications. These transactions are usually routine and may handled entirely by the purchasing department because the initial selection of the product and supplier already took place. With the modified rebuy, the buyer wants to reorder a product but with some modification to the product specifications, prices, or other aspects of the order. In this situation, a purchasing agent may be involved in negotiating the terms for the new order, and several other participants who will use the product may participate in the buying decision.

The buying situation is a new task when an organization considers buying a product for the first time. The number of participants and the amount of information sought tend to increase with the cost and risks associated with the transaction. For marketers, the new task is the best opportunity for winning new business because there is no need to displace another supplier (which would be the case for the rebuy situations).

For sales opportunities that are new tasks, there may be an opportunity for a solution sale (sometimes called system selling). In these opportunities, the buyer may be interested in a provider that offers a complete package or solution for the business problem, rather than individual components that address separate aspects of the problem. Providers win these opportunities by being the company that has both the vision and the capability to provide a combination of products, technologies, and services that address the problem–and to make everything work together smoothly. Solution sales are particularly common in the technology industry.

Characteristics of Organizational Buying

B2B purchasing decisions include levels of complexity that are unique to organizations and the environments in which they operate.

Timing Complexity

The organizational decision process frequently spans a long period of time, which creates a significant lag between the marketer’s initial contact with the customer and the purchasing decision. In some situations, organizational buying can move very quickly, but it is more likely to be slow. When personnel change, go on leave or get reassigned to other projects, the decision process can take even longer as new players and new priorities or requirements are introduced. Since a variety of factors can enter the picture during the longer decision cycles of B2B transactions, the marketer’s ability to monitor and adjust to these changes is critical.

Technical Complexity

Organizational buying decisions frequently involve a range of complex technical dimensions. These could be complex technical specifications of the physical products or complex technical specifications associated with services, timing, and terms of delivery and payment. Purchases need to fit into the broader supply chain an organization uses to operate and produce its own products, and the payment schedule needs to align with the organization’s budget and fiscal plans. For example, a purchasing agent for Volvo automobiles must consider a number of technical factors before ordering a radio to be installed in a new vehicle model. The electronic system, the acoustics of the interior, and the shape of the dashboard are a few of these considerations.

Organizational Complexity

Because every organization is unique, it is nearly impossible to group them into precise categories with regard to the dynamics of buying decisions. Each organization has a characteristic way of functioning, as well as a personality and unique culture. Each organization has its own business philosophy that guides its actions in resolving conflicts, handling uncertainty and risk, searching for solutions, and adapting to change. Marketing and sales staff need to learn about each customer or prospect and how to work with them to effectively navigate the product selection process.

Unique Factors Influencing B2B Buying Behavior

Because organizations are made up of individual people, many of the same influencing factors discussed earlier in this module apply in B2B settings: situational, personal, psychological, and social factors. At the same time, B2B purchasing decisions are influenced by a variety of factors that are unique to organizations, the people they employ, and the broader business environment.

Individual Factors

B2B decisions are influenced by characteristics of the individuals involved in the selection process. A person’s job position, tenure, and level in the organization may all play a role influencing a purchasing decision. Additionally, a decision maker’s relationships with peers and managers could lead them to exert more–or less–influence over the final selection. Individuals’ professional motives, personal style, and credibility as a colleague, manager, or leader may play a role. To illustrate, a new department head might want to introduce an updated technology system to help her organization work more productively. However, her short time in the role and rivalry from other department heads could slow down a buying decision until she has proven her leadership capability and made a strong case for investment in the new technology.

Organizational Factors

Purchasing decisions, especially big-ticket expenditures, may be influenced by the organization’s strategies, priorities, and performance. Generally the decision makers and the providers competing for the business must present a compelling explanation for how the new purchase will help the organization become more effective at achieving its mission and goals. If a company goes through a quarter with poor sales performance, for example, the management team might slow down or halt purchasing decisions until performance improves. As suggested above, organizational structure plays a central role determining who participates in the buying process and what that process entails. Internal organizational politics and culture may also impact who the decision makers are, what power they exert in the decision, the pace of the buying process, and so forth. An organization’s existing systems, products, or technology might also influence the buying process when new purchases need to be compatible with whatever is already in place.

Business Environment

B2B purchasing is also influenced by factors in the external business environment. The health of the economy and the company’s industry may determine whether an organization chooses to move ahead with a significant purchase or hold off until economic indicators improve. Competitive pressures can create a strong sense of urgency around organizational decision making and purchasing. For instance, if a leading competitor introduces a compelling new product feature that causes your organization to lose business, managers might be anxious to move forward with a project or purchase that can help them regain a competitive edge. When new technology becomes available that can improve products, services, processes, or efficiency, it can create demand and sales opportunities among companies that want the new technology in order to compete more effectively.

Government and the regulatory environment can also influence purchasing decisions. Governmental organizations often have very strict, highly regulated purchasing processes to prevent corruption, and companies must comply with these regulations in order to win government contracts and business. Similarly, lawmakers or governmental agencies might create new laws and regulations that require organizations to alter how they do business—or face penalties. In these situations, organizations tend to be highly motivated to do whatever it takes, including purchasing new products or altering how they operate, in order to comply.

Data collection methods

The organizational buying process contains eight stages, which are listed in the figure below. Although these stages parallel those of the consumer buying process, there are important differences that have a direct bearing on the marketing strategy. The complete process occurs only in the case of a new task. In virtually all situations, the organizational buying process is more formal than the consumer buying process.

It is also worth noting that B2B buying decisions tend to be more information-intensive than consumer buying decisions. As the marketing opportunity progresses, buyers seek detailed information to guide their choices. It is unlikely that a B2B buyer—in contrast to a consumer—would ever make a final buying decision based solely on the information they see in a standard advertisement. The data was collected through research paper.

SWOT analysis

Strengths and Weaknesses	The internal environment – the situation inside the company or organization	For example factors relating to products, pricing, costs, profitability, performance, quality, people, skills, adaptability, brands, services, reputation, processes, infrastructure, etc.	Factors tend to be in the present
Opportunities and Threats	The external environment – the situation outside the company or organisation	For example: factors relating to markets, sectors, audience, fashion, seasonality, trends, competition, economics, politics, society, culture, technology, environmental, media, law, etc.	Factors tend to be in the future

Conclusion & Recommendations

Individual consumers are not the only buyers in a market. Companies and other organizations also need goods and services to operate, run their businesses, and produce the offerings they provide to one another and to consumers. These organizations, which include producers, resellers, government and nonprofit groups, buy a huge variety of products including equipment, raw materials, finished goods, labor, and other services. Some organizations sell exclusively to other organizations and never come into contact with consumer buyers.

B2B markets have their own patterns of behavior and decision-making dynamics that are important to understand for two major reasons. First, when you are a member of an organization, it’s helpful to appreciate how and why organization buying decisions are different from the decisions you make as an individual consumer. Second, many marketing roles focus on B2B rather than B2C marketing, or they may be a combination of the two. If you have opportunities to work in B2B marketing, you need to recognize how the decision-making process differs in order to create effective marketing for B2B customers and target segments.

Unlike the consumer buying process, multiple individuals are usually involved in making B2B buying decisions. A purchasing agent or procurement team (also called a buying center) may also be involved to help move the decision through the organization’s decision process and to negotiate advantageous terms of sale.

Organizations define and enforce rules for making buying decisions with purchasing policies, processes, and systems designed to ensure the right people have oversight and final approval of these decisions. Typically, more levels of consideration, review, and approval are required for more expensive purchases.

For anyone involved in B2B marketing or selling, it is important to know:

Who will take part in the buying process?
What criteria does each person use to evaluate prospective suppliers?
What level of influence does each member of the process have?
What interpersonal, psychological, or other factors about the decision team might influence this buying process?
How well do the individuals work together as a group?
Who makes the final decision to buy?

Because every organization is unique, the answers to these questions will be different for every organization and every sale. Marketers should understand their target segments well enough to identify commonalities where they exist and then create effective marketing to address the common roles and decision makers identified.

For example, a technology company selling a travel- and expense-management system should expect decision makers from several departments to be involved in the purchasing decision: the HR department (to ensure the system is user-friendly for employees and compatible with company travel policies), the accounting department (to ensure the system is a good complement to the company’s accounting and finance systems), and the IT department (to ensure the system is compatible with the other systems and technologies the company uses). Marketers should focus first on managers in the group most responsible for travel and expense policy—typically the HR department. As the company generates serious interest and leads, marketing and sales staff should take the time to learn about decision dynamics within each organization considering the system. Marketing and sales support activities can focus on getting each of the essential decision makers acquainted with the product and then convincing them to make it their final selection.

References

Shelly, Gary (2011). Systems analysis and design. Boston, MA: Course Technology, Cengage Learning. p. 10. ISBN 978-0-538-47443-6.
Garbade, Michael (2011). Differences in Venture Capital Financing of U.S., UK, German and French Information Technology Start-ups A Comparative Empirical Research of the Investment Process on the Venture Capital Firm Level. München: GRIN Verlag GmbH. p. 31. ISBN978-3-640-89316-4.
Poppo, Laura; Zenger, Todd (2002). “Do formal contracts and relational governance function as substitutes or complements?”. Strategic Management Journal. 23(8): 707–725. doi:1002/smj.249. ISSN 0143-2095.
E-COMMERCE, AN INDIAN PERSPECTIVE. P.T. Joseph, S.J. 2015. pp. 43–45. ISBN978-81-203-5154-7.
E-commerce: Formulation of Strategy. Robert T. Plant. 2000. pp. 26-27. ISBN0-13-019844-7.
TechTarget, B2B2C (business-to-business-to-consumer), accessed 23 January 2021

AIOU Solved Project 8407 The B-to-B Buying Process