A man goes into a bar and orders a double whisky. He doesn’t ask the price of the whiskey before he places the order and he passes across a $20 note to make the payment. He doesn’t check the change. The next day in his workplace, the man opens a spreadsheet to compare two potential suppliers. In the spreadsheet he has their costs and has rated each of them on a number of factors such as quality, their experience, their ability to be flexible and so on.
It is Saturday and a woman walks down a supermarket aisle pushing her trolley. A child sits on the trolley and is jabbering away. She has a list of thing she requires and quickly picks them from the shelves and throws them into the trolley. She gets to the counter and is told that she owes $95.60. She passes across her credit card to make the payment. On Monday, refreshed (or possibly tired out) from the weekend she meets with a potential HR supplier and spends all morning running through their bid.
What is it that distinguishes these buying scenarios. We have two scenarios in which the same person is acting quite differently. In a consumer situation there appears to be little consideration of price. In the business to business situation price appears to be under the microscope. Is it the size of the purchasing decision that is causing this difference? Is it the types of products (or services) that are being bought that make the difference? Is it the fact that in one case the person is making a decision on their own behalf with their own money and in another case they are dealing with someone else’s money?
All these factors will come into play for sure. The man has probably been into the same bar many times and knows the price of whisky so doesn’t have to question it. The woman regularly shops at the same grocery store and trusts it to have acceptable prices. In any case, she needs the goods.
Equally, in the business environment the sum of money is likely to be larger even though in the context of the total business it could be quite small. The man and the woman are professionals and have been employed as such. They need to demonstrate that they are making a considered and professional decision.
This brings us to the point of this discussion – we are seriously influenced by the circumstances in which we make buying decisions. If in our private lives when we buy a new car, a new house or order a glass of whisky, we will take price into consideration in varying degrees. Even with a significant purchase such as a house, it is not unknown for us to agree to a price change which could be of the order of a few thousand dollars. In a business to business environment our purchasing decisions are scrutinised by others. We need to demonstrate that due consideration of a rational kind has been given. This is all fairly obvious.
However, to what extent do emotions creep into the business purchasing decision? They are not as apparent as they are in a consumer situation but they surely exist. The importance of not being let down by the supplier is critical to anyone buying on behalf of a company. This means that the supplier’s brand or reputation is likely to weigh heavily in the decision. However, the degree to which this is rationalised in the buying decision is often muddied. The business buying decision can easily be justified by altering some of the rating points in the spreadsheet. Company X is judged to be more reliable than company Y. Company A has clients and testimonials that deem it to be a safer choice than company B.
Understanding the drivers that lead to the choice of one supplier or another is arguably one of the most critical requirements of the business to business marketer. It is therefore surprising and disturbing that the majority of purchasing decisions are never researched independently but are based on hunch and judgement, usually that of the sales force. No wonder most business to business companies leave money on the table.
