Organizational buyers

In economics, organizational buyers are consumers who represent organizations. They are agents of an organization whose task is to procure the goods or services the organization needs to function. Organizational buyers work in a wide array of fields and may represent small businesses, producers, institutions, or even entire governments.

Background

The cornerstone of any economy is the interaction between buyers and sellers. A significant percentage of economic studies have analyzed the behaviors of individual consumers, regular people who conduct everyday shopping for the goods and services they want and need. Most of these individual consumers shop at various organizations, ranging from neighborhood convenient stores to major discount chains to online sales outlets of all sorts. They may buy anything from medicine to new cars to house-cleaning services.

One aspect of economics that is less obvious, and which has received less attention in economic studies, is that organizations themselves—including those focused on selling goods and services—regularly need to purchase goods and services for their own uses. Organizations may need their own business supplies, such as office buildings, computers, and printer ink. They may need raw materials, like steel, wood, or plastic, for their factories to produce goods for sale. Producers of technological devices may seek sources for many necessary components and partially constructed goods, such as radios to add to new cars, to use in their own offerings. Meanwhile, many organizations that are centered on selling acquire finished goods that they can market and resell to their own customers.

Systems of interactions that take place behind the scenes of businesses and other organizations are known as organizational markets, and are a crucial facet in any large economy. They also form a significant industry of their own, as many organizations exist primarily to sell goods and services to other organizations. One of the most important figures in the organizational market is the organizational buyer, one or more agents of an organization who make the final determinations of what the organization will purchase and oversee the transaction.

Overview

Organizational buyers are often influenced by the same kinds of factors that influence individual buyers; for example, they are likely to look for the best quality offerings for the most reasonable prices. However, organizational buyers must also take many other factors into account to ensure they are accurately representing the interests of their organization.

For example, organizational buyers will likely consider the organization’s mission statement and philosophy when considering which goods or services to purchase. An organization that prides itself on environmental friendliness, for instance, would likely not want to purchase items that were not recyclable or biodegradable. An organization that touts American pride and values would likely not want to source all of its offerings from foreign countries.

The organizational buyer will also reference the organization’s rules and precedents when making various decisions, solving problems, adapting to changing circumstances, and dealing with risk. For example, companies may operate using very conservative business plans, or they may be more open to risk. Such factors would come into play if an organizational buyer had the opportunity to make a large and seemingly very advantageous purchase from a new and untested supplier. A risk-averse company would likely discourage such dealings, but companies more open to risk might take the chance in hopes of getting a great deal.

Organizational buyers may take a wide variety of sizes and compositions. On the largest scale, governments frequently act as organizational buyers, because they may need countless resources to function and may create thousands of contracts each year to purchase supplies, hire workers, secure services, and so on. Similarly, major corporations generally also use organizational buyers to procure the goods and services they need to operate, ranging from real estate to office supplies. Institutions, ranging from schools to prisons, also task organizational buyers with getting the resources they need. These resources may include anything from food and furnishings to suppliers of heat and water.

Organizational buyers may also work solely within an economy by buying and selling between economic organizations. Producers, organizations that make goods and services to sell, generally need to start by buying the materials and resources they will need. Large producers employ organizational buyers for just that task. A factory that produces clothing, for example, will need large supplies of fabric and thread, seats and sewing machines for workers, spare parts for the machines, and utilities for the factory building.

Another major area in which organizational buyers function is in reselling, the area of the economy that involves organizations that buy from another organization and resell to consumers. A bookstore may order books directly from publishers to resell on its own shelves. In the twenty-first century, many individuals and small businesses have also gotten into the field of reselling. In these cases, buyers may make arrangements to buy returned goods from large organizations and then resell these items online at a discount.

In some cases, an organizational buyer is an individual empowered to make more-or-less unilateral buying decisions for a larger organization. That person might have a particular flare for new trends, or a strong understanding of consumer sentiment, that helps in making wise and profitable decisions. Some resellers may send organizational buyers across the world to scout new offerings to be purchased in large quantities, shipped back, and sold domestically.

More typically, organizational buyers work in teams. Team members work together and leverage their own personal specialties in making decisions about when and what to buy, from whom, and in what amount. This team approach may be safer, but it may also take a longer time. Small organizations may try to keep their organizational buying staff small so it can work faster and keep new products arriving in a timely fashion.

Bibliography

Bass, Brian. “Marketing, Organizational Buyers and Marketing Strategies.” Houston Chronicle, 2023, smallbusiness.chron.com/marketing-organizational-buyers-marketing-strategies-13123.html. 15 Jan. 2023.

Burnett, John. “Introducing Marketing.” Global Text Project, 2011, solr.bccampus.ca:8001/bcc/file/ddbe3343-9796-4801-a0cb-7af7b02e3191/1/Core Concepts of Marketing.pdf. 15 Jan. 2023.

“Organizational Buyer Behavior.” Lumen Learning, courses.lumenlearning.com/clinton-marketing/chapter/reading-organizational-buyer-behavior/. 15 Jan. 2023.

“Organizational Buyer Behavior.” Saylor Academy, 6 Apr. 2022, learn.saylor.org/mod/page/view.php?id=53918&forceview=1. 15 Jan. 2023.

“Organizational Buyers.” University of Southern California Marshall, www.consumerpsychologist.com/cb‗Organizational‗Buyers.html. 15 Jan. 2023.

Parkinson, Stephen T. and Michael J. Baker. Organizational Buying Behaviour: Purchasing and Marketing Management Implications. Palgrave Macmillan, 1994.