GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

MKTG 329: Organizational Marketing

Coursework: Paired Essay
Buying center in B2B purchase process: Relationships
influence on Business Buying Behaviour by buying center.

Course: BBA-BS (Marketing and Entrepreneurship)

Module: MKTG 329: Organizational Marketing
Module Leader: Mr. Vipin Agarwal
Word Count: 2266 Words
Page 1 of 10

Team Members:
Kshitij Khandelwal (130009) (33547785)
Yeswanth Katragunta (130048) (33548013)

GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

Introduction

Lorvens Infra Projects India Limited is a private limited company registered under companies act
1956, in India in 2010. Its corporate office is situated in Hyderabad, India. Lorvens Infra belongs
to Infrastructure industry operating in Indian markets fulfilling private and public infrastructure
needs. Lorvens infra services include public works demanded by government corporations like
road laying, drainage pipelining, electricity infrastructure development, water pipelining etc, and
also acts as sub-contracts for big scale government projects like dams. Its private projects serves
all infrastructural needs of private business buyers such as real estate projects, private company
building infrastructure, commercial zones infrastructure etc.
As Lorvens infra operates in B2B markets, its services are provided by acquiring project contracts
through bidding process. Government commissioned infrastructure projects have standard service
outcomes which makes Lorvens infra to undergo typical tender process, in which they need to
compete on price with basic quality in offering due to the welfare nature of the projects. On the
other hand, securing private projects also involves bidding process but there are different
competence factors to withstand competition which comprises quality, brand image, relationship
with business buyer etc and budget factor is flexible due to long term and durable rationality of
decision making. Although, itss parent company Vasundhara Projects Private Limited had a wide
experience in infrastructure development due to its operations in real estate industry, brand and
experience wise Lorvens infra is considerably new company in the industry and faces huge
competitions where its competitors bag projects with their unique competencies which gained
customer loyalty especially in private sector. This made tough for Lorvens infra to increase their
project acquisitions per annum in volume and also it is finding difficult to obtain big scale projects
because of low brand image and illusion of less experience perception by business buyers.

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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

Literature Review

In organizational buying, purchase decision involves set of people who generally are called
Decision making unit (DMU) or buying center. The roles in DMU includes Initiator, is any person
who identifies the need and initiates the buying process. Users, are the direct operators of product
who usually find the need of product. Buyers, are the ones who select, negotiate and coordinate
the buying process. Influencers, draw technical specifications, create criteria for the offering.
Deciders, finally take decision and approves a product to be purchased with a rationale. Gate
Keepers, are people who filters everything into organization, they can control the information flow
which influence opinions (Chand, 2015).
Like B2C, Purchases done by organization goes through a particular process which involves
certain steps. Need recognition is the first step where the user in organization identifies the need
for the product. Need description and quantification comes next where the need is analyzed and
technical specifications required by product to fulfill that is drawn by buying center of the
organization. Supplier Search, in which buying center searches for potential suppliers through
websites, tradeshow and other media who can serve their need according to the specifications.
Proposal request, this is after scrutinizing the available suppliers, competent suppliers are asked
to send proposals of their product offerings. Supplier selection, suppliers are evaluated according
to the criteria developed by members of buying center and best proposal is selected. Order routine
is then initiated which includes placing order, product delivery, negotiation contracts, order
frequencies etc. Purchase Evaluation is done on product performance and feedback is given if
gaps of improvement are found (Brauner and Copacino, 2009).
Business buying process is differs according to the buying situation create in organization. Usually
there are three types of buying situations. New task, is buying a totally new product. It is a first
time purchase where business center typically follows whole business buying process and all
members in DMU participates in buying process. Modified re-buy, involves buying same product
from different supplier or buying modified product from same suppliers, this usually occurs when
there are significant result by product performance and supplier review in the process, Most but
not members of DMU participates in this purchase situation. Straight re-buy, occurs when the
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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

initial purchase is repeated from same supplier. This usually happens when order routine is set and
the product is generally a component and involves only buyers and gate keepers and sometimes
decision makers of DMU in during process (Brennan et al, 2011).
Relationships in business markets has a totally different approach than in consumer markets. In
business markets either you can follow a transactional approach where the relationship between
supplier and buyers is quid-pro-quo, short term relation with single or limited number of
transactions with focus on product and sales. On the other hand relationship approach is long term
and transactions are continuous with focus on customer value and loyalty. Nature of Business to
business relations are characterized into four peculiarities; continuity and stability of supplierbuyer relationship, complexity in configuration of buying center members and their relationship
with suppliers, Symmetry in resources and capabilities and creating balance while infusing change
in organization, formality in relationship tend to start as informal and move on to formal with set
standards and rules to ease the complexity, maintain symmetry and ensure continuity in long run (Snehota
and Hakansson, 1995).
In this context, relationships is about inter organizational relationships with emphasis on supplier-buyer
relation and its influence on DMU buying behavior. The supplier-buyer interaction is convoluted by
involving various touch points in organizations where information flows happen. While formal
relationships exist within business setting, after business hours relationships are maintained in informal
ways and only limited to decision maker of DMU. Also, relationships will not alone create and flow the
business, to sustain business relationships, other factors like quality, price, reliability, brand matters to
keep buyers loyal and their trust in par. Maintaining a personal relationship with the business or owner
family have a significant impact especially in family owned business as family members can indirectly
influence the supplier selection decision in the process through the active members of DMU and to
maintain a consistent personal and business relationship suppliers need to fulfill the business rationale
factors thus ensuring a fruitful mutual benefit (Lam 2009).
To establish relationship between buyer and suppliers, relationship dimensions plays a key role. According
to literature, the most important dimensions are trust, which is the established confidence between
businesses in terms of reliability and integrity in supplying product, Commitment ensures the stability in
the supplier-buyer relationship and leads to longevity of the association, satisfaction allows loyalty factor
and is important is business buying situations and Communication acts as bonding agent through flow of

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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

information between contact points in inter organizational networks. Although these four dimensions are
identified as common for almost all business relationships, there are more than these four dimensions
which possesses varying degrees of prominence according to the specific industry relationships existence,
like competence, relationship benefits, customization, shared values, attractiveness of alternatives etc
(Theron and Terblanche, 2009).
Supplier-Buyer relationships can severe due to transactional issues like late payments, insufficient
information flow between parties etc. These resource conflicts raise unnecessary issues in business
relationships. To counter this, there exist a concept called resource ties, where external resource
providers are pulled into loop so that existing relationship is not disengaged because of resource glitches
(Snehota and Hakansson, 1995). There are innovative companies dashed up to solve this, for example,
Trade Rocket, a company who found resource flow gap in supply chain financing. It finances supplier
receipts which allows suppliers to have an uninterrupted cash flow at the same time without disturbing
relationship with its buyer which it does not wish to due to payment issues (pymnts, 2016).
Earlier, there is a distinction between business buyers and general consumers, due to evolution of media
into social and digital channels, business buying behavior have been consumerized. DMU members are
using social media to support them in decision making by reading reviews, analyzing brands etc. This
phenomenon urges suppliers to adopt relationships approaches through digital channels. They started
becoming more social and network through websites, with digital tools suppliers are processing
information on real-time basis and keeping their buyers updated with their new competencies. Digital
technology ensured Real time data and social media interactions which facilitated to offer modular
product proposals to their buyers, such that gaining competitive advantage and establish long term
relationships (Lingqvist 2015).

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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

Analysis

The Problem
Lorvens Infra is a relatively new entrant in an overly competitive market. Although the company
has successfully taken up many infrastructure related projects that are sanctioned by state
government but projects from private sector are limited. Reputed builders and real estate
developers selects there contractors on the basis of contractors portfolio among many attributes.
The main problem in relation to growth is that the company is relatively new. It has low brand
recognition among the private sector companies. Also, as the company is relatively new, there is
trust deficit among prospective clients about the performance of the company.

Possible Solutions:
To look for possible solutions for the problems, we will be closely analyzing 2 frameworks through
which we can understand the B2B decision making unit. By understanding them, we can get the
necessary inputs to make strategic choice so that our problem can be solved.
Buying Behaviour in a B2B transaction is way different from B2C transaction. In B2C, there are
hardly 1 or 2 decision makers but in B2C there are many decision makers. These people have
expertise in their respective fields. B2B buyers therefore have a more complex set of needs in
comparison with consumer buyers. Business leaders have both sane and passionate needs that
should be satisfied by suppliers. The distinction is that these two sorts of necessities each work on
both an individual and organization level business leaders have both sane and passionate needs
that should be satisfied by suppliers (Harrison, 2016). According to (Harrison, 2016), a customer
place importance in your offering in two respects, i.e., the proportion of budget they spend on the
offer and the level of strategic importance.
According to our analysis, our company has to target following types of DMUs to expand its
business:

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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

High strategic importance, high spend (example: plant equipment): Our offer is high esteem and
basic to the continuous operations of the customer. The customer is greatly recognizing and its
necessities regularly exceptional. You are a key accomplice, a part of the customer's business. The
customer side choice making unit contains 5 or more individuals, including a few authorities and
individuals from the C-suite (Harrison, 2016).
Low-spend, high strategic importance: Youre putting forth may not put strain in your customer's
financials, but rather it is vital to their continued operations. With little to pick up and everything
to lose by changing a trusted supplier, customers are ultra-careful and cautious (Harrison, 2016).
The customer's choice making unit will contain a few individuals and incorporate no less than one
specialized pro, who will require an organization style association with you and include him or
herself in the finest subtle elements of your offer. They can't bear the cost of for anything to turn
out badly. You have numerous chances to separate around aptitude, learning, dependability,
proactivity, organization and brand.
When a decision on buying a product or service is to be taken for the company, a DMUs decision
in this respect affects those who work with them, those who work for them. A decision in this
respect reflects both the company needs and personal needs taken care of. In a purchase decision
both the rational and emotional motivational needs of a company is taken care of by the DMU
(Harrison, 2016).
Rational motivations: To know the exact rational, company-level needs, a basic question what do
you require from a supplier is asked form a DMU. These needs are clearly stated in request for
proposal (RPFs) and well organized by supplier and customer alike. Supplier has to fulfil all these
needs to get qualified and considered for the contract. Therefore, the supplier choice is directly
related to the needs to be fulfilled (Harrison, 2016).
Emotional Motivation: It is often believed that a company doesn't have ab heart and soul. But
companies do have certain values and principles on which they work. It is essential for a supplier
to understand these ethos. Working under these values helps in creating long lasting relationships.
For companies, there brand is there biggest asset and they all work in purview of this. Companies
are more comfortable with working other companies having same or similar set of values
(Harrison, 2016).
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GDGWI: MKTG 329

Yeswanth Katragunta

Kshitij Khandelwal

Conclusion

Lorvens Infra should focus in the above two mentioned dimensions to secure good projects from
private players. By providing an innovative approach and cost effective proposal, we can say that
buying centers of our prospective clients would give our proposal utmost importance. Lorvens
infra is directly responsible for meeting the clients functional needs such as specifications,
expertise in completion of projects, timely completion and completion of work within the
stipulated budget.
It is also to be noted that organizations have a set of values that Lorvens Infra has to recognize.
Working within those ethos not only improves supplier-buyer relationship but also it acts as a
bridge to forge long term relationships which not only brings us with new business but also
expands our brand name in the business community. This word to word marketing would provide
Lorvens Infra a good brand recognition in the market. As a recognized and reputed brand, we can
expect a steady and stable growth of the company.
Once this has happened, the clients would take straight re-buy route of buying process to make
purchases. Straight re-buy is when the buyer purchases products familiar to regular suppliers on a
routine automatic, with limited involvement of people, minimum information requirements and
without consideration of many alternative sources of supply.
Strategic as well as special bonds with the highest authority in a DMU is also important. Although
business relations are maintained in a formal setting, but it is in the best interest of Lorvens Infra
to try and tap the confidence of decision makers in a DMU. A personal touch would enable the
company to not only get preferential treatment but also this would help in maintaining long term
relationship with the client. Forging of interpersonal relationship would be beneficial for both the
parties as the aspiration and outcome of a contract would be closely monitored.

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Kshitij Khandelwal

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