Types of Business Purchase Decisions

While it would appear business customers face the same four purchase situations that are faced by consumers (Minor New Purchase, Minor Repurchase, Major New Purchase, Major Repurchase), marketers targeting business buyers often see little value in pursuing business customers undertaking minor purchases (e.g., small orders) compared to consumer marketers who may actively pursue such customers. Consequently, while minor purchases certainly do occur in the business market, especially within small businesses, few suppliers choose to direct significant selling efforts to this type of purchase due to the low potential for generating enough revenue to offset marketing expense. Instead, suppliers focus on purchase situations that offer greater opportunity. For this reason, the types of business purchase decisions of interest to marketers are:

Straight Repurchases

These business purchase decisions involve routine ordering. In most cases, buyers simply reorder the same products or services that were previously purchased. In fact, many larger companies have programmed repurchases into an automated ordering system that initiates electronic orders when inventory falls below a certain predetermined level. For the supplier benefiting from the repurchase, this situation is ideal since the purchaser is not looking to evaluate other products. For competitors, who are not getting the order, it may require extensive marketing efforts to persuade the buyer to consider other product or service options.

Modified Repurchases

These purchases occur when products or services previously considered a straight re-purchase are now under a re-evaluation process.  There are many reasons why a product is moved to the status of a Modified Repurchase.  Some of these reasons include: end of purchase contract period, change in who is involved in making the purchase; supplier is removed from an approved suppliers list; mandate from top level of organization to re-evaluate all purchasing; or strong marketing effort by competitors.  In this circumstance, the incumbent supplier faces the same challenges they may have faced when they initially convinced the buyer to make the purchase.  For competitors, the door is now open and they must work hard to make sure their message is heard by those in charge of the purchase decision.

New Task Purchases

As the name suggests, these purchases are ones the buyer has never or rarely made before.  In some ways, New Task Purchases can be considered as either minor or major depending on the total cost or overall importance of the purchase.  In either case, the buyer will spend considerably more time evaluating alternatives.  For example, if faced with a major New Task Purchase involving a complex items, such as computer systems, buildings, robotic assembly lines, etc., the purchase cycle from first recognizing the need to placement of the order may be months or even years. For marketers, the goal when selling to a buyer facing a New Task Purchase is to make sure to be included in the set of evaluated products as discussed in Step 2 of the business purchasing process.