A buying center, also called decision-making unit (DMU), brings together "all those members of an

organization An organization or organisation (Commonwealth English; see spelling differences), is an entity—such as a company, an institution, or an association—comprising one or more people and having a particular purpose. The word is derived from ...

who become involved in the

buying process Purchasing is the process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly betwee ...

for a particular product or service". The concept of a DMU was developed in 1967 by Robinson, Farris and Wind (1967). A DMU consists of all the people of an organization, who are involved in the buying decision. The decision to purchase involves those with purchasing and financial expertise; those with technical expertise and of course the top-management. McDonald, Rogers & Woodburn (2000) say that identifying and influencing all the people involved in the buying decision is a prerequisite in the process of

sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...

. The concept of a buying center (as a focus of

business-to-business Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when: * A business is sourcing materials for their production process for output (e.g., a ...

marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...

, and as a core fundamental in creating

customer In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for ...

value and influence in organisational efficiency and effectiveness) formulates the understanding of purchasing

decision-making In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the Cognition, cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be ...

in complex environments. Some of the key factors influencing a buying center or DMU's activities include: * Buy class (e.g. straight rebuy, new task or modified rebuy) * Product type (e.g. materials, components, plant and equipment and MRO (maintenance, repair and operation) * Importance of the purchase In some cases the buying center is an informal ad hoc group, but in other cases, it is a formally sanctioned group with specific mandates,

Decision-making process

When the DMU wants to purchase a certain product or service the following steps are taken inside the buying center: * Need or problem recognition: the recognition can start for two reasons. The first reason can be to solve a specific problem of the company. The other reason can be to improve a company's current operations/performance or to pursue new market opportunities. * Determining product specification: The specification includes the peculiarities which the product/service that is going to be purchased must contain. * Supplier and product search: this process contains the search for suppliers that can meet a company's product or service needs. First a supplier that matches with the specifications of the company has to be found. The second condition is that the supplier can satisfy the organizations financial and supply requirements. * Evaluation of proposals and selection of suppliers: the different possible suppliers will be evaluated by the different departments of the company. * Selection of order routine: this stadium starts after the selection of the supplier. It mainly consists of negotiating and agreeing with the supplier about certain details. * Performance feedback and evaluation: performance and quality of the purchased goods will be evaluated. In this process of making decisions different roles can be given to certain members of the center of the unit depending on the importance of the part of the organization.

Buying center size

American research undertaken by McWilliams in 1992 found out that the mean size of these buying centers mainly consists of four people. The range in this research was between three and five people. The type of purchase that has to be done and the stage of the buying process influence the size. More recent research found that the structure, including the size, of buying centers depends on the

organizational structure An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims. Organizational structure affects organizational action and provides the foundat ...

, with centralization and formalization driving the development of large buying centers.

Conceptual and methodological issues in buying center research

There are several issues concerning buying centers which need additional research. These issues can be divided into various spheres:

Buying center boundaries and buying center domain

Distinguishing the buying center from its environment, also defining and delimiting the activities of a particular buying center.

Buying center structure

Understanding how organizational structure may differ from or may shape the structure of the buying center and examining how a particular buying strategy may serve to mediate the effects of environmental uncertainty on the structure of the buying center.

Process considerations in buying center

Power and conflict issues within the buying center.

Decision making

One stream of research focuses on the number of decision phases and their timing and the other emphasizes the type of decision-making model (or choice routine) utilized.

Communications flow

The informal interactions that emerge during the buying process.

References

{{reflist Business-to-business Organizational behavior Procurement