The Sheth Model of Industrial Buyer Behaviour

Professor Jagdish N Sheth developed the Sheth model in 1973. This model, show in Fig.3.4, emphasizes the joint decision-making by two or more individuals, and the psychological aspects of the decision making individuals in the industrial buying behaviour.

The model includes three components and situational factors, which determine the choice a supplier or a brand in the buying decision making process in an organization. The differences among the individual buyers expectations (Component 1) are caused by the factors, such as (a) the background of individuals, (b) their information sources, (c) active search, (d) perceptual distortion, and (e) satisfaction with past purchases.

The background of individuals depend upon their education, role in the organization, and life style. The factor perceptual distortion means the extent to which each individual participant modifies information to make it consistent with his existing beliefs and previous experiences. It is difficult to measure perceptual distortion, although techniques such as factor analysis and perceptual mapping are available for this purpose.

In component (2), show in Fig 3.4, there are six variables which determine whether the buying decisions are autonomous (i.e.single individual) or joint (i.e.two or more individuals). According to the Sheth Model, larger the size of the organization and higher the degree of decentralization, more will be the possibilities of joint-decision making.

The component (3) in the model indicates the methods used for conflict resolution in joint-decision making process. Problem-solving and persuasion methods are used when there is an agreement about the organizational objectives. If there is no such agreement, bargaining takes place. Conflict about the style of decision making is resolved by politicking.

Situation factors can be varied like economic conditions, labour disputes, mergers ands acquisitions. The model does not explain their influence on the buying process.

Elements of an Invitation for Bids

1. The Introduction
2. General information
3. Description of the goods or services to be procured
4. The minimum qualifications of a vendor
5. Contractual terms and conditions
6. Minimum standards of a bid
7. Required elements of a bid
8. Submittal requirements
9. Evaluation criteria

Source :
http://www.albemarle.org/upload/images/forms_center/departments/county_attorney/forms/Purchasing_Manual_Chapter06_Bidding_Elements.pdf

The Webster and Wind Model of Organizational Buying Behaviour

This is quite a comprehensive model. It considers four sets of variables which affect the buying-decision making process in a firm. These are environmental, organizational, buying center, and individual.

The environmental variables include (a) physical, (b) technological, (c) economic, (d) political, (e) legal, (f) labour unions, (g) cultural, (h) customer demands, (i) competition, and (j) supplier information. For example, in a recessionary economic condition, industrial firms minimize the quantity of items purchased. The environmental factors influence the buying decisions of individual organizations.

The organizational variables include (a) objectives, (b) goals, (c) organization structure, (d) purchasing policies and procedures, (e) degree of centralization in purchasing, and (f) evaluation and reward system. These variables particularly influence the composition and functioning of the buying centre, and also, the degree of centralization or decentralization in the purchasing function in the buying organization.

The functioning of buying centre is influenced by the organizational variables, the environmental variables, and the individuals variables. The output of the group decision-making process of the buying centre includes solutions to the buying problems of the organization and also the satisfaction of personal goals of individual members of the buying centre.

The strengths of the model, developed in 1972, are that it is comprehensive, generally applicable, analitytical, and that it identifies many key variables which could be considered while developing marketing strategies by industrial marketers. However, the model is weak in explaining the specific influence of the key varioables.