CHAPTER III

INDUSTRIAL BUYING BEHAVIOUR: AN OUTLINE

3.1 Introduction
3.2 Channels of Distribution in Industrial Markets
3.3 Classification of Industrial Products and Services
3.4 Purchasing Orientations of Industrial Customers
3.5 Purchasing Objectives
3.6 Buy- Phases in the Industrial Buying- Decision Process
3.7 Types of Purchases or Buying Situations
3.8 Models of Organisational Buying Behaviour
3.9 Buying Centre and Buying Influencers
3.10 Summary
3.1 Introduction

Industrial buying is growing in importance because of the fast

growth of the industrial market. Although the size of the business market
is enormous, much larger and complicated than that of the consumer
market, the subject has not yet received the importance it deserves. There
is a dearth of research and literature on this subject. Of late, it has started
getting a wider acceptance among academicians and business enterprises.
In an industry environment, the buying process is more complex and
purchase decisions are based on many factors such as compliance with
product specifications, product quality, availability or timely supply,
acceptable payment and other commercial terms, cost effectiveness, after-
sales-service and the like. Purchase decisions generally take a longer time
and involve many individuals from technical, commercial, materials and
finance departments. After the initial offer made by a seller, there are
negotiations and exchange of information between specialists and
representatives in each functional area from both the buyer and the seller
organisations. Thus inter-organisational contacts take place and
interpersonal relationships develop. The relationships between the seller
and buyer are highly valued and over a period of time, they become stable
because of a high degree of interdependence. The present chapter deals
with the core aspects of industrial buying behaviour.

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3.2 Channels of Distribution in Industrial Markets
The channels of distribution in industrial markets are significantly
different from that of consumer markets. Chart 3.1 displays the channels
of distribution in industrial markets.

Chart 3.1
Channels of Distribution in Industrial Markets

MANUFACTURER

COMPANY SALES FORCE

REPRESENTATIVE
OR AGENCY

DISTRIBUTOR
OR DEALER

CUSTOMER CUSTOMER CUSTOMER

As displayed in Chart 3.1, distribution channels are more direct

from the manufacturer to the customer in industrial markets and the
number of middlemen involved are very few. Due to the importance of
inventory and stock control and the technicalities involved in selling,
manufacturers often use their own sales persons to sell directly to major

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customers. Distributors or dealers are used for selling to small-scale
customers.

3.2.1 Types of Industrial Customers

Commercial Enterprises, Government Customers, Institutional
Customers and Cooperative Societies are the different types of industrial
customers.

3.2.1.1 Commercial Enterprises

These are private sector, profit seeking organisations consisting of
Industrial Distributors and Dealers, Original Equipment Manufacturers
(OEM’s) and Users.

3.2.1.1.1 Industrial Distributors and Dealers

They purchase industrial goods and resell them in the same form to
other industrial customers such as commercial enterprises, government
and institutional customers.

3.2.1.1.2 Original Equipment Manufacturers (OEM’s)

These industrial customers purchase industrial goods to incorporate
them in the products that they produce.

3.2.1.1.3 Users
When a commercial enterprise purchases industrial products or
services to support its manufacturing process or to facilitate business
operations it is classified as a User.

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3.2.1.2 Government Customers
The largest purchasers of industrial products in India are Central
and State Government Departments such as Railways, Defence,
Telephones, State Transport Undertakings, State Electricity Boards and
Director General of Supplies and Disposal (DGS&D). These government
units purchase almost all kinds of industrial products and services and
they represent a huge market.

3.2.1.3 Institutional Customers

Public and private institutions such as Hospitals, Schools, Colleges,
Universities and Prisons are classified as Institutional Customers.

3.2.1.4 Cooperative Societies

An association of persons forms a Cooperative Society. It can be
manufacturing units like Cooperative sugar mills or non-manufacturing
organisations like Cooperative banks or Cooperative housing societies.

3.3 Classification of Industrial Products and Services

Materials and Parts, Capital Items and Supplies and Services are
the different types of Industrial Products and Services.

3.3.1 Materials and Parts

These are the goods that enter the product directly consisting of
raw materials, manufactured materials and component parts. The costs of
these items are treated by the purchasing company as a part of the
manufacturing cost.

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3.3.1.1 Raw Materials
These are the basic products that enter the production process with
little or no alterations.

3.3.1.2 Manufactured Materials

Manufactured materials include those raw materials that are subject
to some amount of processing before entering the manufacturing process.
Acids, fuel oil and steel are examples of manufactured materials.

3.3.1.3 Component Parts

Components such as electric motors, batteries and instruments that
can be installed directly into products with little or no additional changes
are classified as component parts.

3.3.2 Capital Items

It includes items which are used in the production process and they
wear out over a certain time frame and include Installations and Heavy
Equipment, Accessories and Light Equipment and Plant and Buildings.

3.3.2.1 Installations and Heavy Equipment

These are major and long term investment items such as general
purpose and special purpose machines, turbines, generators, furnaces and
earth moving equipment.

3.3.2.2 Accessories and Light Equipment

These include power operated hand tools, small electric motors,
dies, jigs, typewriters and computers.

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3.3.2.3 Plant and Buildings
These are the real estate property of a company and include the
firm’s offices, plants (factories), warehouses, housing, parking lots and
the like.

3.3.3 Supplies and Services

Supplies and services support the operations of the purchasing
organisation.

3.3.3.1 Supplies
Items such as paints, soaps, oils and greases, pencils and stationery
belong to this category.

3.3.3.2 Services
This includes a wide range of services like building maintenance
services, auditing services, legal services, courier services, marketing
research services and the like.

3.4 Purchasing Orientations of Industrial Customers

Buying orientation, Procurement orientation and Supply Chain
Management orientation are the three purchasing orientations that
business buyers can adopt in their day to day purchase transactions with
their suppliers.

3.4.1 Buying Orientation

The purchasing firms with a buying orientation have a narrow and
short term focus. Buyers in these firms adopt the following practices.

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3.4.1.1 Lowest price
The buying firm usually selects the lowest price supplier. Quality
and availability are the factors that are considered as qualifiers for a
supplier to be considered.

3.4.1.2 Gain power

The buying firm gains power over suppliers by using tactics like
commoditisation and multi-sourcing.

In commoditisation, buyers argue that there are no differences

between various supplier offers in terms of technical services, product
quality or product features. Buyers hint that the product is a commodity
and price is the only thing to be negotiated.

In multi-sourcing, the buying firm asks quotations from several

suppliers and after negotiations, places orders with many suppliers who
compete to get a better share of the buying firm’s purchases.

3.4.1.3 Risk
Buyers avoid risk altogether to reduce the chance of criticism and
penalisation for making a mistake. The tactics used to avoid risk are -
i. Following standard purchase procedures established by the
company.
ii. Depending on suppliers who have proved their performance earlier
and thus avoiding the risk of buying from new suppliers.

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3.4.2 Procurement Orientation
Here, the purchasing firm has a long term focus and is proactive.
Buyers with such orientation seek both quality improvements and cost
reductions. Buyers adopt the following practices.

3.4.2.1Collaborative relationship with major suppliers

This results in quality improvements and cost reductions. The
buyer and supplier implement Just in Time (JIT) delivery scheduling and
quality assurance to attain zero defects level.

3.4.2.2 Working closely with other functional areas

Buyers are involved in describing the specifications of the
products or services that the firm is looking for, ensuring quality of
purchased goods and timely availability of products and services. They
work closely with their manufacturing group on material requirement
planning to make sure that goods and services arrive on time.

3.4.3 Supply Chain Management Orientation

Here, the role of purchasing is further expanded to become more
value-adding. Such companies focus on how to improve the whole value
chain from raw materials to end users. Buyers adopt the following
practices.

3.4.3.1 Deliver value to end users

Using marketing research, the supply managers would understand
the requirements of end users and direct the entire supply chain to deliver
superior value to end users.

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3.4.3.2 Outsource non-core activities
The firm would outsource non-competitive and non- strategic
systems or sub-systems that have many qualified suppliers.

3.4.3.3 Support collaborative relationships with major suppliers

Supply managers work with major suppliers to lower total cost and
increasing value to achieve mutual benefits.

3.5 Purchasing Objectives

Generally, the purchase management objective is defined as buying
the right items of the required quality in the right quantity at the right
price for delivery at the right time and place.

3.5.1 Delivery and Availability

One of the prime objectives of the purchase function is to ensure
that purchased goods and services are available or delivered when and
where needed.

3.5.2 Product Quality

Product quality should be consistent with specifications and use of
the product. It is important to ensure consistency in product quality to
reduce the cost of inspection and also to reduce interruptions in the
production process due to rejections.

3.5.3 Lowest Price

Buyers would like to buy at the lowest price consistent with
availability and quality of the product. Low price is meaningless if the
product is not delivered when needed or if the quality of the product is
unacceptable.

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3.5.4 Services
Industrial buyers need many types of services accompanying the
purchase of goods. These services include -
i) Prompt and Accurate Information from Suppliers
ii) Application or Technical Assistance
iii) Spare Parts Availability
iv) Repairs and Maintenance Capability and
v) Training, if required.

3.6 Buy-Phases in the Industrial Buying – Decision Process

The industrial buying activity consists of various phases or stages
of buying decision making process. The importance to be given to the
various phases will depend on the type of buying situations.

Robinson, Faris and Wind developed eight phases of buying-

decision process in industrial markets in 1967 and called the process Buy-
phases. These are explained below.

3.6.1 Phase - 1 - Recognition of a Problem

The recognition of a problem or need may originate within the
buying firm. When the quality of material supplied by the existing
supplier is not satisfactory or the material is not available when required
or the machine supplied by the existing supplier breaks down frequently
the buying organisation recognises the problem.

3.6.2 Phase - 2 - Determination of the Characteristics and Quantity of

needed Product
Once the problem is recognised within or outside the buying
organisation, the next phase is how to sort out the problem. For technical

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products, the technical departments (Research and Development,
Industrial Engineering, Production or Quality Control) will suggest
general solutions of the needed product. For non- technical goods or
services, either the user department or purchase department may suggest
products or services based on experience and also the quantity required to
solve the problem. However, if the required information is not available
internally within the buying organisation, the same can be obtained from
outside sources.

3.6.3 Phase - 3 - Development of Specifications of needed Product

After the general solution to the problem is determined in the
second phase, the buying organisation in the third phase develops a
precise statement of the specifications or characteristics of the product or
service needed. During this phase, the purchase department takes the help
of their technical personnel or if required outside sources such as
suppliers or consultants.

3.6.4 Phase - 4 - Search for and Qualification of Potential Suppliers

In this phase, the buying organisation searches for acceptable
suppliers or vendors. The first step taken by the buyer is to obtain
information on all the suppliers and then in the second step decides on the
acceptable or qualifying suppliers. The search for potential suppliers is
based on the various sources of information like trade journals, sales
calls, word-of-mouth, catalogues, trade-shows and industrial directories.
Factors such as quality of product or service, reliability in delivery and
service are considered in qualification of suppliers.

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3.6.5 Phase – 5 - Obtaining and Analysing Supplier Proposals
Once the qualified suppliers are decided, the buying organisation
obtains proposals by sending enquiries to qualified suppliers. A supplier’s
proposal can be in the form of a formal offer, quotation or a formal bid
submitted by the supplier to the buying organisation. It should include -
i. Product Specifications
ii. Price
iii. Delivery Period
iv. Payment Terms
v. Taxes and Duties applicable
vi. Freight
vii. Cost of Transit Insurance and
viii. Any other relevant Cost or Free Service provided

For purchase of routine products or services, phases four and five

may occur simultaneously as the buyer may contact qualified suppliers to
get the latest information on price and delivery period.

For technically complex products and services, a lot of time is

spent on analysing proposals in terms of comparisions on products,
services, deliveries and the landed cost (which includes the price after
discount plus excise duty, sales tax, freight and insurance).

3.6.6 Phase-6 - Evaluation of Proposals and Selection of Suppliers

The buying organisation evaluates the proposals of competing
suppliers and selects one or more suppliers. Further, negotiations may
continue with selected suppliers on price, payment terms, delivery and the
like. The decision makers in the buying organisation may evaluate each
supplier on a set of agreed attributes or factors.

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3.6.7 Phase-7 - Selection of an Order Routine
In this stage, the mechanics of exchange of goods and services
between a buyer and a seller is worked out. The activities include -
i. Placement of Purchase Order with the selected Suppliers
ii. Quantity to be purchased from each Supplier
iii. Frequency of Order Placement by Buyers and Delivery Schedules
to be adhered to by the Suppliers
iv. Levels of Inventory needed
v. Follow-up of actual Delivery to ensure it to be as per Delivery
Schedule and
vi. Payment Terms to be adhered to by the buyer.

The user department would not be satisfied until the supplier

delivers the required item with acceptable quality and as per the delivery
schedule indicated in the purchase order.

3.6.8 Phase-8-Performance Feed-back and Post- Purchase Evaluation

In this final phase, a formal or informal review regarding the
performance of each supplier takes place. The user department gives a
feed-back on whether the purchased item solved the problem or not. If
not, the members of the decision making unit review their earlier decision
and decide to a give a chance to the previously rejected supplier.

3.7 Types of Purchases or Buying Situations

For a better understanding of the buying process, it is necessary to
consider different types of purchases or buying situations. There are three
common types of buying situations called buy-classes and they are
explained below.

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3.7.1 New purchase
In this situation, the company is buying the item for the first time.
The need for a new purchase may be due to internal or external factors. In
such situations, the buyers have limited knowledge and lack of previous
experience. Hence, they have to obtain a variety of information about the
product, suppliers, price and the like. In a new task decision,
i) Risks are more
ii) Decisions may take longer time and
iii) More people are involved in decision making.

3.7.2 Modified Re-buy

A modified re-buy situation occurs when the organisation is not
satisfied with the performance of existing suppliers or the need arises for
cost reduction or quality improvement. A change in supplier may also be
necessary if technical people in the buying organisation ask for changes
in the product specifications or marketing department asks for additional
features in the product to gain some competitive advantage. As a result,
search for information about an alternate source of supply becomes
necessary. However, the modified re-buy situation occurs mostly when
the buying firms are not satisfied with the performance of existing
suppliers.

3.7.3 Straight Re-buy

This situation occurs when the buying organisation requires certain
products or services continuously and when such products and services
have been purchased in the past. In such a situation, the buying
organisation places repeat orders with the suppliers who are currently
supplying such items. This means that the product, price, delivery period
and payment terms remain the same in the reorder as per the original

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purchase order. This is a routine decision (with low risk and less
information needs) taken by a junior executive in the purchase
department.

3.8 Models of Organisational Buying Behaviour

Industrial (or business) buyers are influenced by many factors
when they make buying decisions. Generally, business buyers are
influenced by organisational factors or task- oriented objectives (like best
product quality, or dependable delivery or lowest price) and personal
factors or non-task objectives (like promotions, increments, job security,
personal treatment or favours).

When the supplier proposals are substantially similar,

organisational buyers can satisfy organisational objectives with any
supplier and hence personal factors become more important. When
supplier offers differ substantially, industrial buyers pay more attention to
organisational factors in order to satisfy the organisational objectives.

There are two models (or frame work) available to provide a

comprehensive and integrated picture of the major factors that combine to
explain the organisational buying behaviour. These are -

i) The Webster and Wind Model and

ii) The Sheth Model

i) The Webster and Wind Model of Organisational Buying Behaviour

The Webster and Wind Model of Organisational Buying Behaviour
explains the buying behaviour in an organisation with the help of four
sets of variables. Chart 3.2 displays the Webster and Wind model of
Organisational Buying Behaviour.

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 Chart 3.2
The Webster and Wind Model of Organisational Buying Behaviour

ENVIRONMENTAL VARIABLES
         a) Physical 
         b) Technological 
  c)  Economical 
         d) Political and Legal 
         e) Labour Unions 
         f)  Cultural 
         g) Customer Demands 
         h) Competitive Practices and Pressures 
         i)  Supplier Information 

ORGANISATIONAL VARIABLES
        a) Objectives and Goals 
        b) Organisation Structure 
        c) Purchasing Policies and Procedures 
        d) Evaluation and Reward System 
        e) Degree of Decentralisation in Purchasing 

ORGANISATIONAL BUYING 
DECISIONS 
BUYING CENTRE VARIABLES a) Choice of Suppliers 
        a) Authority  b) Delay Decision and Search  
        b) Size       for more information 
        c) Key Influencers  c) Make or Lease or Buy 
        d) Inter‐personal Relationship         d) Do not Buy 
        e) Communication 

INDIVIDUAL VARIABLES
        a)  Personal Goals 
        b)  Education 
        c)  Experience 
        d)  Expertise 
        e)  Values 
        f)   Job Position 
        g)  Life Style 
        h)  Income 

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 As displayed in Chart 3.2, the Webster and Wind model of
Organisational Buying Behaviour is quite a comprehensive model. It
consists of four sets of variables which affect the buying-decision making
process in a firm. These are environmental variables, organisational
variables, buying centre variables and individual variables.
The environmental variables include -
i. Physical
ii. Technological
iii. Economical
iv. Political and Legal
v. Labour Unions
vi. Cultural
vii. Customer Demands
viii. Competitive Practices and Pressures
ix. Supplier Information

For example, in a recessionary economic condition, industrial firms

minimise the quantity of items purchased. The environmental factors
influence the buying decisions of individual organisations to a great
extent.

The organisational variables include -

i. Objectives and Goals
ii. Organisation Structure
iii. Purchasing Policies and Procedures
iv. Evaluation and Reward System and
v. Degree of De-centralisation in Purchasing

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 These variables particularly influence the composition and
functioning of the buying centre and also the degree of centralisation or
de-centralisation in the purchasing function of the buying organisation.

The functioning of the buying centre is influenced by the

organisational variables, the environmental variables and the individual
variables. The output of the group decision- making process of the buying
centre includes solutions to the buying problems of the organisation and
also the satisfaction of personal goals of individual members of the
buying centre.

The strengths of the model are that it is comprehensive, generally

applicable, analytical and that it identifies many key variables which
could be considered while developing marketing strategies by industrial
marketers. However, the model is weak in explaining the specific
influence of the key variables.

ii) The Sheth Model of Industrial Buyer Behaviour

The Sheth Model of Industrial Buying Behaviour explains the

buying behaviour in an organisation with the help of three components
and situational factors. Chart 3.3 displays the Sheth Model of Industrial
Buyer Behaviour.

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 Chart 3.3
The Sheth Model of Industrial Buyer Behaviour

COMPONENT I COMPONENT II COMPONENT III SITUATIONAL

FACTORS

Differences Variables that Methods used

among determine for conflict
individual whether buying resolution in
buyers caused by decision is
joint decision-
factors- autonomous or
  joint- making process-
a.Background of  
 
individuals a.Product specific  
factors including: i.Problem
b.Their
 
solving
information i.Time pressure Supplier or
sources ii.Persuasion Brand choice
ii.Perceived risk
c.Active search iii.Bargaining
iii.Type of
d.Perceptual purchase iv.Politicking
distortion
b.Company  
e.Satisfaction with specific factors
past purchases including:
i.Company size

ii.Company
orientation

iii.Degree of
centralisation
 

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 As displayed in Chart 3.3, the Sheth model of Industrial Buyer
Behaviour developed by Professor Jagdish N. Sheth emphasises the joint
decision making by two or more individuals and the psychological
aspects of the decision - making individuals in the Industrial Buying
Behaviour.

The model includes three components and situational factors which

determine the choice of a supplier or brand in the buying decision-
making process in an organisation. The differences among the individual
buyer expectations (Component I) are caused by factors such as

a) The background of individuals

b) Their information sources
c) Active search
d) Perceptual distortion and
e) Satisfaction with past purchases

The background of individuals depends upon their education, role

in the organisation and life style. The factor perceptual distortion means
the extent to which each individual participant modifies information to
make it consistent with his existing beliefs and previous experiences.

In Component II, there are six variables (Time pressure, Perceived

risk, Type of purchase, Company size, Company orientation and Degree
of centralisation) which determine whether the buying decisions are
autonomous (i.e. single individual) or joint (i.e. two or more individuals).
According to the Sheth model, larger the size of the organisation and
higher the degree of decentralisation, more will be the possibilities of
joint- decision making.

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 Component III in the model indicates the methods used for conflict
resolution in the joint - decision making process. Problem solving and
persuasion methods are used when there is an agreement about the
organisational objectives. If there is no such agreement, bargaining takes
place. Conflict about the style of decision - making is resolved by
politicking.

Situational factors can be varied like economic conditions, labour

disputes, mergers and acquisitions. However, the model does not explain
their influence on the buying process.

3.9 Buying Centre and Buying Influencers

A major task facing the industrial marketer is to identify those
individuals who are involved in the purchasing decision process, that is,
the decision making unit. A decision making unit may consist of only one
person, but it is normally a group of individuals. In industrial marketing,
these decision makers are referred to as the buying centre.

3.9.1 Identifying Buying Centre Members

The buying centre is an informal, cross departmental decision unit
in which the primary objective is the acquisition, impartation and
processing of relevant purchase related information. Generally, people
within an organisation become involved in the buying centre for one of
the following two reasons -
a) They have formal responsibility
b) They have importance as a source of information

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 The emphasis of this discussion regarding buying centres is upon
functional areas, that is, various organisational groups that exert influence
on the purchase decision.

3.9.2 Marketing
When a purchase decision has an effect on the marketability of a
firm’s product, such as altering the product’s material, packaging or
price, marketing people become active influencers in the purchase
decision process. The purchase of parts and materials tends to influence
the sales volume of the final product.

3.9.3 Manufacturing
Manufacturing is responsible for determining the feasibility and
economic considerations of producing end products. Thus, engineering
decisions on specifications, parts and materials are confirmed in this
department and equipment needs, costs and impacts on current production
are given careful consideration. Continuous feed back to the purchasing
department on the performance of suppliers also makes manufacturing a
key influencer in the selection and retention of suppliers.

3.9.4 Research and Development (R&D)

R&D departments are involved in the initial development of
products and processes and set broad specifications for component and
materials criteria, minimum end product performance standards and
occasionally manufacturing techniques. This department is important to
marketers for two major reasons. First, the earlier the marketer becomes
involved in the development process, the greater the chance of
incorporating a feature into the final design. Second, by understanding the

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direction in which customers or prospective customers are moving,
marketers are able to plan the direction of their own business.

3.9.5 General Management

Top management becomes involved in purchase decisions when
the firm is faced with unfamiliar situations not related to day- to- day
activities or when purchase decisions are likely to have major
consequences on the firm’s operations. When top management is directly
involved in a purchase, it is also likely to be actively involved in
establishing guidelines and criteria for future purchases of similar
products.

3.9.6 Purchasing
Purchasing is not the most central figure in the purchasing process.
In fact, research consistently indicates that the dominant sphere of
influence of purchase falls within phases 4, 5 and 6 of the buying-
decision process – when specifications of products to be purchased have
been established and suppliers have been qualified.

Since, purchasing agents are specialists who have negotiation

expertise, knowledge of buying products and close working relationships
with individual suppliers, they are the dominant decision makers and
influencers in repetitive buying situations. They also exercise a high level
of influence over selected types of purchases when uncertain
environmental conditions are present and when the probability of
interrupted supply or shortages are high.

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3.9.7 Identifying Key Buying Influencers
Since, members of buying centres change as an organisation moves
through the purchase process, the task of identifying key buying
influencers becomes quite complex. Further, research indicates that key
influencers are most often located outside the purchase department. For
example in a buying centre for highly technical products, purchase
agents, engineers, scientists, production and quality control personnel are
usually included in the buying centre – engineers and scientists however
have the greatest level of influence.

Key buying influencers are those persons who are capable of

swaying other influencers either knowingly or unknowingly. For instance,
a buying centre involved in the purchase of capital equipment may
consist of ten buying influencers, yet there are four of these influencers
who are able to influence others because of their authority, knowledge or
information. The ability to identify key buying influencers and sell
product attributes is vital for a good marketing person.

3.9.8 Interpersonal Dynamics of Industrial Buying Behaviour

Organisational Buying Behaviour is ultimately influenced by
forces within the organisation as well as environmental forces. The status
and operating procedures of purchase, the degree of involvement and
interaction of various groups and group members and their different
perceptions have a significant impact on purchase decisions. Knowledge
of these forces is an essential ingredient in the development of an
effective industrial marketing strategy. Effective and responsive industrial
marketing strategy depends on the industrial marketer’s knowledge of
how organisational buying behaviour is affected by forces within the
organisation. Seldom does an organisational buyer make a decision in

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isolation. Purchase decisions are influenced by organisational group and
individual forces as well as external forces.

The position of purchase department and its status within the

organisation has a significant influence on industrial buying behaviour.
Purchases are also affected by a complex set of decisions made by several
individuals in buying centres - individuals with different levels of
information and expertise and different backgrounds. For a marketing
strategy to be successful, the industrial marketer must have a clear
understanding of how organisational groups interact, the amount of
influence the various group members possess and how this influence
varies throughout the buying- decision process.

3.9.9 Purchase Department’s influence on Buyer Behaviour

International material shortages, sky rocketing costs of materials
and energy, fluctuating nationalistic moods, conflicting social goals,
profit squeezes and greater government regulations of business have all
brought about a recognition of the importance of the purchase function.
The average industrial firm spends approximately 60 percent of its sales
on materials, services and capital equipment. In view of the above,
purchase is now being viewed as an ‘asset- management tool through
asset- utilisation and inventory control’.

3.10 Summary
In this chapter, the researcher has presented a detailed theoretical
input on industrial buying behaviour. It is hoped that an acquaintance of
the theoretical frame work would help to have a better understanding of
the practices followed in the lubricating oil industry which is presented in
the subsequent chapters.

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