Industrial Buying Behavior and Technical Complexity: A Comparative Study of Two Product Cases
Doctoral thesis, 1993
The study reported in this thesis aims to describe and explain industrial buying behavior. It is based on data from two product cases, chosen to be different in technical complexity in terms of product and application.
The assumption of significant differences in buying behavior is confirmed when comparing the buying activities of a technically complex and a less complex product. More individuals, company functions, and hierarchical levels are involved in the purchasing of technically more complex products. Significant differences also exist in these numbers when straight rebuys, modified rebuys, and new task buying are compared. Similar differences are evident regarding the calendar time to process a purchase.
The general theories of a well-defined and clear-cut buying process, always starting from scratch and closed by the supplier decision, are not confirmed. Instead, the buying activities can be said to pass through different buying loops. The activities included are dependent on former loops. Each loop adds to earlier loops. One loop can be significantly different from the other, even when the same product is purchased in the same company. A supplier decision is only perceived to occur in modified rebuys and new tasks. The most frequent decision is to remain with the present supplier.
The buying loops are unexpectedly simple and routinized when technically less complex products are bought. Most loops are of a highly routinized and undramatic straight rebuy character. When buying technically more complex products, the straight rebuy loop is more similar to the modified rebuy loop. Most buying loops are modified rebuy loops. New task occurs very seldom.
Long-term, stable buyer-supplier relations exist, regardless of technical complexity.
A number of buyer roles are suggested to summarize the influence patterns. The executor executes the process, in straight rebuys often quite independently, as the buying is essentially a prolongation of the former buying loops. The determinators are particularly influential in evaluation and decision phases. Most functional categories involved serve as gatekeepers. When considering a large installation of the complex product studied, the determinators often serve as the initiators of the process, or otherwise most often the executors.
Two explanatory factors have been identified as especially powerful to explain the differences in buying behavior when comparing the buying of a technically complex and a technically less complex product, viz. the perceived switching cost and the perceived uncertainty.
It can be proposed that the ambitions to decrease switching cost and uncertainty explain the overall buying behavior. A buyer may also prefer to stay in a relation to avoid uncertainty and short-term switching costs.
Among the dependent variables, two were identified as having the greatest discrimination power, viz. qualitative analysis and technical negotiations. Variations in both of these variables are directly connected to the differences in technical complexity.