Note on Buying Process of Individual Buyers and Institutional Buyers

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Individual customers

The customers who buy goods or services for their daily domestic use are called individual/non-Institutional buyers. Such customers buy goods or services for ultimate use. They buy the goods for daily needs such as food grains, clothes, books, copies, kitchen utensils and materials, medicines, ornaments, cosmetics etc.

The buying process of individual customer

Source: 2012books.lardbucket.org
Source: 2012books.lardbucket.org

1. Problem or Need Recognition

The individual buyer also passes through different stages to buy other goods and services, markets should know the individual buying process along with how his/her customers behave. Generally, the following stages are included in the individual buying process. The first stage of the individual buying process is to recognize the problem or need.

2. Determination of the Product and Buying Specification

After the problem or need has been recognized imagination of the product that can solve the problem comes into mind. Such imagination should be able to reflect the features of the product.

3. Search for Qualified

In the third stage, of buying process, a capable supplier of the necessary goods is searched . The purchasing agent can seek capable suppliers in consultation with related employees.

4. Analysis and Evaluation of Suppliers Proposal

In this stage, evaluation and analysis of the proposal submitted by different suppliers are made. The first stage of the institutional buying process is to recognize the problem or need. The business organization can use this opportunity to promote its product.

5. Selection of Supplier and Purchase Order

After the detailed evaluation of the proposals, the buyers can negotiate for better terms ,conditions and price before taking the final decision. The buyer should take a decision whether to buy all the materials/goods from a supplier or use from different suppliers.

Institutional Costumers

Institutional consumers are those costumes who purchase the goods for industrial purposes.Governmental and non-governmental organizations, which buy products for office use are also institutional buyers.

The buying process of Institutional Customers

The buying process of institutional customers are as follows:

1. Need or Problem Recognition

An organization/institutional buyers also pass through different stages to buy goods or services. The market should know the organizational buying process along with how their customers buy goods or services. Generally, the following stages are included in organizational/institutional process. The first stage of the institutional buying process is to recognize internal reasons such as unsatisfactory performance of existing machines and equipment, dissatisfaction with the latest purchase, lack of cost saving opportunity etc. within the organization itself.

2. Determination of the Product and Buying Specification

After the problem or need has been recognized, an imagination of the product that can solve the problem comes into mind. Such imagination should be able to reflect the feature of the product. This stage help consultants, engineers, designers, researchers, developers, producers, to find out the product for solving the problem. In this stage, of buying process, special specifications such as quantity, quality, price, mode of payments etc are determined.

3. Search for Qualified Suppliers

In this third stage of buying process, a capable supplier of the necessary goods is searched. The purchasing agent can seek capable suppliers in consultation with related employees. A potential supplier is searched and a proposal is demanded by looking at the record of the company,contacting with suppliers for information, requesting, acquainted suppliers to send their proposal looking at the price list or looking at different business publications etc.

4. Analysis and Evaluation of Suppliers Proposal

In this stage, evaluation and analysis of the proposals submitted by different suppliers are made. The suppliers can submit their proposal in both written and oral forms. The business organization can use this opportunity to promote its products. It also can make efforts to prove its products to be better in quality, price durability, and other more advantages than the products of the companies. In such a situation the buying organization should be vendor analysis for systematic evolution of potential suppliers. The received proposals should be comparatively evaluated on the basis of price, quality, goodwill, services, delivery time, delivery capacity, personal relations with the buyers etc.

5. Selection of Suppliers and Purchase Order

After the detailed evaluation of the proposals, the buyers can negotiate for better taking of the final decision. The buyer should take a decision whether to buy all the material goods from a supplier or use from different suppliers. If more suppliers are used the buyers do not have to depend on the single supplier. It also gives an opportunity to evaluate and compare the services, delivery capacity, time etc of all suppliers. After the proper supplier has been selected a purchase order is given to the supplies. In this stage, packing, mode of transport and delivery, conditions of credit facility, mode of payment, services agreement etc. are determined.

6. Evaluation of Performance

In the last stage of buying process the products, as well as performance of the supplier, is evaluated. In comparison to personal consumers, the activity of organizational buyers becomes very formal, direct and clear after buying any products. They evaluate the quality and performance of the product supplied by a supplier. Evaluation of the products is useful for both the supplier and buyer. It also helps to maintain quality and ensure satisfaction of the buyers. The sellers should take evaluation programs positively. The supplier can understand the needs of customer through the reports given by the buyer and can try to provide more effective services.

References:

Koirala, Dr. Kundan Dutta. Elementary Marketing. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd, 2014.

Thapa, Gopal, Dipendra K. Neupane and Dilli Raj Mishra. Introduction to Marketing. Kathmandu: Asmita Books Publishers and Distributors (P) Ltd., 2014.

  1. The customers who buy goods or services for their daily domestic use are called non-Institutional buyers.
  2. The first stage of the institutional buying process is to recognize the problem or need.
  3. The purchasing agent can seek capable suppliers in consultation with related employees.
  4. The suppliers can submit their proposal in both written and oral forms. 
  5. After a proper supplier has been selected a purchase order is given to the supplies. 
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