Organizational Buyer Behavior

Theories are our rules; they guide our behavior. Decisions makers in business have theories too. They decide to take action. Understanding how things work, such as how people make buying decisions as part of their job, can help managers figure out what to do when situations change.

Organizational buyers, however, do not always seek to maximize the benefits the organization; sometimes they seek to maximize benefits for themselves. In addition, relationships are between people, and buyers consider personal relationship skills as one important aspect of purchases.

Is an expectancy theory of organizational buyer motivation, similar to expectancy theories you may have been introduced to in management. RM theory points out that buyers are motivated by both intrinsic rewards, or those rewards they give themselves, and extrinsic rewards, or rewards given by the organization. All rewards are not equal, however. Valance, or the degree of importance or value attached to a reward, varies from person to person in a fashion.

Another important element is perceived probability, or the perception that effort on a particular set of tasks will lead to accomplishment of performance outcomes that wil, in turn, lead to the desired rewards. The RM model says that probability times valance determines the individual´s level of motivation , or the amount of effort that be buyers is willing to expend to engage in that set of tasks.

Perceptions of probability are dependent on the organization’s measurement system, and others factors; each person also considers his o her own ability to carry out the tasks, a perception called self-efficacy.

Marketers can increase perceptions of self-efficacy by increasing the buyer’s experience or knowledge. Demonstrations and free trials are ways that marketers increase self-efficacy. Also, advertising and other marketing communications that increase knowledge about products can increase a buyer’s perception of self-efficacy. Buyers choose to do certain tasks (such as see demonstrations) based on the probability associated with those tasks. How much and how well they do the tasks is a function of their motivation, which takes into account the valence for rewards associated with the purchase.

1. Identify situation:

Degree of company orientation Degree of self-orientation

2. Evaluate personal relevance:

Formal reward system Informal and social reward systems Intrinsic rewards

3. Assess action alternatives and requirements

4. Choose behavior strategy: Defensive: process-oriented, minimize threats Offensive: results-oriented, maximize gain.

Behavior choice theory states that buyers go through a choice process to arrive at decisions of how they will buy, as opposed to the choice process of what will be bought modeled as part of the buygrid. The degree to which the individual works to achieve personal benefit is called self- orientation, whereas the degree to which the individual works to achieve benefit for the company is company orientation. Self-orientation and company orientation operate in- dependently, so one purchase situation could result in both high self-orientation and high company orientation.

The final stage of the model is the selection of a strategy. There are two types of strategies: offensive strategies (strategies designed to maximize gain) and defensive strategies (strategies designed to minimize loss).

Other defensive strategies would include asking the boss to make the decision, getting as many people involved as possible in order to share the blame if things go wrong, and paying attention to the process

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