Buying center

Buying center consists of every person who is involved in an act of buying in a particular company. These people, for instance, might be the architect designing a new research facility, the scientist working in the laboratories or executives such as purchasing manager, chief executive officer or vice president of research. Every member of the buying center aims to satisfy their personal needs. Those needs may be need of participation or status. Formal organizational structure does not contain a buying center. Its composition and size may vary from transaction or company as its an informal group.

Roles in a buying center

Every participant of a buying center has an individual role, varying from each member:

• Initiator is the one who suggested purchasing a product in the first place.
• Users are the people using the purchased product. Usually, they take part in initiating the purchase and define required specifications.
• Gatekeeper is the one who controls flow of the information. For instance, this role may be taken by a purchasing agent or a secretary that determines who gets an appointment with a buyer.
• Influencer also known as evaluator provides specifications and technical information. Influencers mostly consist of technical personnel.
• Decider is the one responsible for choosing the product. It is usually difficult to appoint one specific person who made a particular decision.
• Buyer or a purchaser is the one with the authority to purchase a product and negotiate details of the transaction. It might be a purchasing agent or even a president of the company, which depends on how important is a particular purchase.

Compositon of a buying center

How big of a role one person plays in a buying center may vary from one situation to another. The center may change because it adjusts to the current situation. Because purchase made by an organization is thought of as a process, not an individual event importance or rather an influence of certain people changes with time. For example, a design engineer plays a key role in the beginning, and later more influence is given to other individuals. Essentially, the overall composition of a buying center may depend on a company, specific transaction, or even a stage in which this transaction actually is.

Importance of a buying center

In the industrial markets, purchase decisions of buying centers play a key role. In order to provide the best marketing strategy for themselves sellers analyze roles and behaviors of buying centers. They identify members of a buying center, especially the quantity of them, their functions, spot in the company's hierarchy, and how much influence do they have. They are especially focused on the deciders. Thanks to that kind of analysis, it is easier for sellers to finalize a purchase transaction.

Examples of Buying center

• A corporate buying center includes employees from different departments like marketing, finance, and IT, who work together to decide on the best purchase for a product or service.
• A consumer buying center includes family members, friends and colleagues who all have an influence on the consumer’s decision to purchase a product or service.
• A healthcare buying center includes doctors, nurses, and administrators in a hospital or clinic who collaborate to purchase the right medical products and services.
• A government buying center includes departments like the Department of Defense, Treasury, and Homeland Security, who work together to determine the best purchase for government projects and initiatives.
• An educational buying center includes teachers, administrators, and school board members who collaborate to purchase the best products and services for their school.

Advantages of Buying center

A buying center is a collection of individuals who are involved in an act of buying in a particular company. It can provide a number of advantages, including:

• Increased efficiency of decision making - By having various members of the buying center involved in the process, decisions can be made more quickly and effectively than if only one or two individuals were responsible for the purchase.
• Greater creativity - By having a variety of perspectives in the buying center, more creative solutions can be generated to meet the needs of the organization.
• Improved communication - The buying center can help to facilitate communication between departments, allowing for a more unified approach to making purchasing decisions.
• Reduced costs - Having multiple people involved in the purchase decision can help to ensure that the most cost-effective solutions are identified.
• Increased accountability - With multiple stakeholders in the buying process, there is more accountability and responsibility when it comes to ensuring that a purchase is made in the best interest of the organization.

Limitations of Buying center

The buying center has several limitations:

• It is difficult to identify the members of the buying center and their respective roles and responsibilities.
• The buying center is an informal group and does not have a formal organizational structure.
• It is difficult to determine the size and composition of the buying center as it can vary from transaction to transaction or company to company.
• The buying center may include people who lack the authority to make decisions.
• Members of the buying center may have conflicting interests, making it difficult to reach an agreement on the purchase.
• The buying center may have difficulty reaching a consensus on the purchase decision due to different levels of knowledge and varying preferences.
• The buying center may be subject to external influences, such as the media, which can impact the decision-making process.

Other approaches related to Buying center

The buying center approach is not the only approach used to understand the buying process. Other approaches include the following:

• Demand Chain Management: This approach emphasizes the collaborative activities of buyers and suppliers to create value in the buying process. It involves identifying customer needs and coordinating the activities of all stakeholders involved in the buying process.
• Social Network Analysis: This approach looks at how information flows among members of the buying center. It examines the relationship among the members of the buying center and how they use social networks to influence each other.
• Behavioral Modeling: This approach suggests that the buying process is a complex decision-making process that is influenced by psychological and sociological factors. It is based on the assumption that buyers are rational decision makers who weigh the various alternatives before making a purchase.
• Buyer Decision Process: This approach views the buying process as a series of steps that the buyer goes through in order to decide which product to purchase. It is based on the assumption that buyers go through a series of steps before making a purchase.

In summary, the buying center approach is just one of many approaches used to understand the buying process. Other approaches include demand chain management, social network analysis, behavioral modeling, and the buyer decision process. Each of these approaches provides valuable insights into the buying process and can help buyers and sellers make better decisions.

Footnotes

Buying center — recommended articles

Ringi — Wardley map — Functional dependence — Buying cycle — Nicosia model — Formalization — Types of governance — Hierarchical dependence — Administrative management

References

• Boone L., Kurtz D. (2008), Contemporary marketing 2009 update, Cengage Learning, Boston, p. 199
• Gaggl M. (2014), Relevance of buying center analysis in industrial markets Anchor Academic Publishing, Hamburg, p. 22-23
• Hutt M. D., Speh T. W. (2009), Business marketing management: B2B, Cengage Learning, Boston, p. 79
• Lamb C. W., Hair J. F., McDaniel C. (2008), Essentials of marketing, Cengage Learning, Boston, p. 194

Author: Kacper Klimek