4.4 Stages in the B2B Buying Process

B2B buying is a complex process involving multiple stages and decision-makers. From problem recognition to performance review, organizations carefully evaluate their needs, search for suppliers, and select the best options to meet their requirements.

The complexity of B2B buying situations varies, ranging from simple reorders to complex new purchases. Specifications play a crucial role in guiding the process, while procurement and contract management ensure smooth transactions and ongoing supplier relationships.

The B2B Buying Process

Stages of B2B buying process (also known as the buying process)

1. Problem recognition
   • Need or problem arises within the organization triggered by internal factors (equipment breakdown, new product development) or external factors (changes in market conditions, competitor actions)
   • Recognizes a discrepancy between the current state and the desired state of the organization
2. General need description
   • Purchasing department describes characteristics and quantity of the needed item, involving cross-functional teams (engineering, marketing, production)
   • Determines product specifications, such as dimensions, materials, and performance requirements
3. Product specification
   • Buying organization decides on and specifies the best technical product characteristics for the needed item
   • Conducts a value analysis, where components are studied carefully to determine if they can be redesigned, standardized (using off-the-shelf parts), or made less expensively (using alternative materials)
4. Supplier search
   • Buyer identifies the most appropriate suppliers by examining trade directories (Thomas Register), conducting online searches, and contacting other companies for recommendations
   • Evaluates potential suppliers based on reputation, product quality, and service capabilities
5. Proposal solicitation
   • Buyer invites qualified suppliers to submit proposals, providing detailed product specifications and requesting a formal proposal (often through a request for quotation (RFQ))
   • Proposals include pricing, delivery terms, and other relevant information (warranties, after-sales support)
6. Supplier selection
   • Buyer reviews proposals and selects supplier(s) based on evaluation criteria (price, quality, reputation, service capabilities)
   • May involve negotiations to secure the best terms and conditions for the buying organization
7. Order-routine specification
   • Buyer writes the final order with the chosen supplier(s), specifying technical specifications, quantity needed, expected delivery time, return policies, and warranties
   • Establishes payment terms and sets up logistics for delivery and receipt of goods
8. Performance review
   • Buyer assesses the supplier's performance by comparing actual performance to expected performance (on-time delivery, product quality, responsiveness to issues)
   • Provides feedback to the supplier and may use performance data for future purchasing decisions

Complexity of B2B buying situations

• Straight rebuy
  • Simplest and most routine buying situation, involving reordering a product or service without modifications
  • Typically handled by purchasing department with little involvement from other departments
  • Requires minimal research and decision-making (office supplies, raw materials)
• Modified rebuy
  • Buying situation where purchaser wants to modify product specifications, prices, terms, or suppliers
  • Involves more decision participants than straight rebuys, including purchasing, engineering, and production departments
  • Requires some additional research and evaluation of alternatives (upgraded machinery, new software)
• New-task buying
  • Most complex buying situation, where purchaser buys a product or service for the first time
  • Involves the most decision participants and the greatest need for information
  • Requires extensive research and evaluation of alternatives (new production line, consulting services)

Impact of specifications on B2B purchasing

• Product specifications
  • Detailed descriptions of product or service characteristics and features ensure purchased item meets organization's requirements and standards
  • Used to compare potential suppliers and their offerings, helping to make informed decisions
  • Overly specific product specifications may limit the number of potential suppliers and increase costs
• Supplier selection
  • Evaluating and choosing the most appropriate supplier(s) based on price, quality, delivery time, service capabilities, and reputation
  • Selecting the right supplier leads to cost savings, improved quality, and better overall value (reliable delivery, consistent quality)
  • Choosing the wrong supplier results in delays, quality issues, and increased costs
  • Building long-term relationships with reliable suppliers streamlines buying process and provides additional benefits (preferential treatment, exclusive access to new products or services)

Procurement and Contract Management

• Procurement
  • The process of acquiring goods, services, or works from external sources
  • Involves vendor evaluation to assess potential suppliers' capabilities and suitability
  • Includes negotiation to reach mutually beneficial agreements on price, quality, and terms
• Contract management
  • Overseeing the implementation and execution of contracts with suppliers
  • Ensures both parties fulfill their contractual obligations and resolve any issues that arise
  • Involves monitoring performance, managing changes, and maintaining relationships with suppliers