Question

Business buying process is the process where business buyers determine which products and services are needed to purchase and then find, evaluate, and choose among alternative brands. Buyers who face a new-task buying situation usually go through all stages of the buying process.

Name and describe the stages of the business buying process. Give real life examples and include a diagram to illustrate your answer.

Answer 1

Business buying process refers to the process where the business makes efforts to buy the raw materials or any services from outside the business, from other suppliers. It is important to take the business buying decision very carefully so that no error is committed. Following steps are followed while taking the buying decision:

• Awareness and recognition: the first step in recognising the suppliers from different areas, from whom the purchasing can be made possible. It means gathering information and data from different sources and being aware about the need for buying and what exactly need to be bought.
• Researching about specifications: next, the business need to do bit more research about the specific things need to be bought and deciding the exact number of items to buy, the price to spent, the time period for acquisition etc.
• Request for proposal: next the business demands proposals from different suppliers in terms of tenders and makes sure the suppliers mentions the quantity of goods they can supply, the quality and the price they will charge from the business.
• Evaluation: next the business evaluates the different proposals received from different suppliers and ensuring that the demands put by the business are net by the suppliers' proposals. Evaluation needs to be done carefully and quickly.
• Taking final decision: next, the business will take final decision on from where the raw materials to buy, which suppliers' tender to accept and where to close the deal.

For example: TATA motors, manufactures cars for public use of different varieties. The company have to take decision on whether to buy the alloys (including steel, aluminium, copper) from which supplier and in how much price. For this the company takes decisions by opening up bids for suppliers and selecting the best supplier for some of the alloys to be used in their vehicles. The diagram below highlights the process:

From the picture it is clear that every business need to involve themselves with the buying decision and make sure that every stage is being followed with care and final decision is made after proper evaluation of all the suppliers in hand. No business can skip any of the stage and the final decision need to be taken carefully.