Influences on Business Buying
Four main influences impact the business buying decision process: environmental factors, organizational factors, interpersonal factors, and individual factors.
Competitive conditions may enable a company's short-term success, where the organization is able to operate irrespective of customer desires, suppliers, or other organizations in their market environment. Early entrants into emerging industries are likely to be internally focused due to few competitors. During these formative years, customer demand for new products will likely outstrips supply, while production problems and resource constraints represent more immediate threats to the survival of new businesses.
Nevertheless, as industries grow, these sectors become more competitive. New entrants are attracted to potential growth opportunities, and existing producers attempt to differentiate themselves through improved products and more efficient production processes. As a result, industry capacity often grows faster than demand and the environment shifts from a seller’s market to a buyer’s market. Firms respond to changes with aggressive promotional techniques such as advertising or price reductions to maintain market share and stabilize unit costs.
Different levels of economic development across industries or countries may favor different business philosophies. For example:
- Certain environmental and economic factors can lead to an apprehensive buying center.
- Firms can suffer from strategic inertia, or the automatic continuation of strategies unresponsive to changing market conditions.
Organizations that fall victim to strategic inertia believe that one way is the best way to satisfy their customers. Such strategic inertia is dangerous since customer needs as well as competitive offerings eventually change over time.
For example, IBM's traditional focus on large organizational customers caused the company to devote too little effort to the much faster-growing segment of small technology start-ups. Meanwhile, IBM's emphasis on computer technology and hardware like the IBM cell processor Figure 1 made the company slow to respond to the explosive growth in demand for Internet-based applications and services. Thus, in environments where such changes happen frequently, the strategic planning process needs to be ongoing and adaptive. All business participants, whether from marketing or other functional departments, must pay close attention to customer preferences and competitor activities.
Organizational factors such as the company's objectives, purchasing policies, and resources can influence the buying process.The size and composition of the buying center also plays a role in the business buying decision process.
The interpersonal relationships between people working in the company's buying center can hinder the buying process. Buying center members need to trust each other and operate under full disclosure.
The personal characteristics of people in the buying center can influence the buying decision process. Individual factors including age, education level, personality, job tenure, and position within the company all play a role in how a person influences the buying process.