Buying center

A buying center (also known as a decision making unit or DMU) is a group of employees, family members, or members of any type of organization responsible for finalizing major decisions, usually involving a purchase. The buying center can be seen as the combination of these different persons, groups or structural units that participate in buying industrial goods decision-making. ^[1][2] In a business setting, major purchases typically require input from various parts of the organization, including finance, accounting, purchasing, information technology management, and senior management. Highly technical purchases, such as information systems or production equipment, also require the expertise of technical specialists.

Decision making process

When the DMU wants to purchase a certain product or service the following steps are taken inside the buying center:

• Need or problem recognition: the recognition can start for two reasons. The first reason can be to solve a specific problem of the company. The other reason can be to improve a company’s current operations/performance or to pursue new market opportunities.
• Determining product specification: The specification includes the peculiarities that the product/service that is going to be purchased has to contain.
• Supplier and product search: this process contains the search for suppliers that can meet a company’s product or service needs. First a supplier that matches with the specifications of the company has to be found. The second condition is that the supplier can satisfy the organizations financial and supply requirements.
• Evaluation of proposals and selection of suppliers: the different possible suppliers will be evaluated by the different departments of the company.
• Selection of order routine: this stadium starts after the selection of the supplier. It mainly consists of negotiating and agreeing with the supplier about certain details.
• Performance feedback and evaluation: performance and quality of the purchased goods will be evaluated.

In this process of making decisions different roles can be given to certain members of the center of the unit depending on the importance of the part of the organization.

The different roles are:

• Initiator: the initiator(s) make a request to purchase a product or service or recognizes the problem, with this action they start the decision-making process.
• Decider: the decider makes the actual purchase decision. They don’t have or need formal authority but have sufficient weight within the buying team to decide if a service/product will be purchased.
• Buyer: the buyer (also called: purchasing manager) selects the suppliers and manages the buying process such that the necessary products are acquired.
• Influencer: the influencer contributes to the formulation and determination of the specifications of the product or service. The influencer evaluates and recommends which potential supplier satisfies the specific needs of the organization.
• User: the user(s) are the persons that actually use the product or service. They aren’t always involved in the buying process, but have a critical role in the feedback and evaluation process of the performance of the good that has been purchased .
• Gatekeeper: the gatekeeper(s) control the flow of information in to and out of the company and buying center/team.*

In some cases the buying center is an informal ad hoc group, but in other cases, it is a formally sanctioned group with specific mandates, criteria, and procedures.

The formation of the buying centers or decision making unit (DMU) is considered as an important process and therefore depends on several factors like: the size of the company and skills of the personalities and staff members, the type of product/service that is needed, the type of the organization, the different buying process stages (BPS), the duration of the relationships between the buyer (the organization) and sellers or suppliers, and the technologies that are used in the production.

Buying center size

An American research done by McWilliams in 1992 found out that the mean size these buying centers mainly consists of four people. The normal range is between three and five people. The main reason for variety in amount of people is the type of purchase that has to be done and the stage of the buying process.

Conceptual and Methodological Issues in Buying Centre Research

There are several issues concerning buying centre, which were always important and needed additional research . These issues can be divided into three main spheres:

Buying Centre Boundaries and Buying Centre Domain

Distinguishing the buying center from its environment, also defining and delimiting the activities of a particular buying center.

Buying Centre Structure

Understanding how organizational structure may differ from or may shape the structure of the buying center. Examining how a particular buying strategy may serve to mediate the effects of environmental uncertainty on the structure of the buying center.

Process Considerations in Buying Centre

Power and conflict issues within the buying center.

Decision Making

One stream of research focuses on the number of decision phases and their timing and the other emphasizes the type of decision-making model (or choice routine) utilized.

Communications Flow

The informal interactions that emerge during the buying process. ^[3]

References