Types of B2B Buying Situations

In an earlier post, we have discussed the stages in B2B buying. Although similar in some regards to B2C buying situations, B2B buying situations also differ from them in several ways. However, it is not always essential that the buyers in B2B buying will go through all the same phases. To a certain extent it also depends on the type of buying situation and whether the buyer is buying for the first time or twentieth time from a supplier. Based on the buying situation, some phases might be skipped. So, if a buyer is going to buy for the first time, he will go through all the seven phases of B2B buying.

However, if the suppliers have already been selected or the business has been buying from those suppliers, then it will not go through the same phases every time it buys from the same suppliers. The need recognition phase is already completed and there is no need to search for buyers. If the suppliers are reliable and the quality and other criteria are met each time, the post purchase evaluation might also be skipped. It means when the buyer has already purchased from the same suppliers, some of the most time consuming phases can be skipped.

New-Buy:

As the name implies a new-buy situation occurs when a firm is buying a product for the first time. For example, a firm is expanding its business and planning to buy new equipment or technology for it. New-buy situations are generally the most time consuming buying situations for both the vendor and the buyer. It is because the buyer goes through all the seven phases of the B2B buying situation when buying for the first time. Starting from need recognition to vendor search, RFPs, supplier selection and so on, the buyer has to go through all the phases.

If the product or technology the firm is buying is costly or complex, it will consider several vendors which means a lot of paperwork and many bids will be solicited. However, new-buy situations are not common which means companies can keep sourcing the same product from the same vendors for years until something that is really new is needed. However, it is still likely that people involved in the buying process may be new to the situation.

For example, if a company is deciding to expand its business operations into a new market and decides to construct or lease an office there. However, the people involved in the buying situation may not be familiar with the process even if the company has successfully bought or leased office space in the past. None of those involved in the buying situation might have any previous experience in this regard. So, one can say that such a situation is a new buy for the people involved in the buying situation.

Straight Rebuy:

Straight rebuy simply means buying the same product in the same quantity from the same vendor. It means no changes to the quantity or type of the product and the company buys from the same vendor. Simply put, nothing changes in a straight rebuy situation. One business bought 500 spare parts last month and again ordered the same volume of the same product from that vendor – is an example of straight rebuy.

It is why straight rebuys are ot complex or the buyer can skip several of the phases of the B2B buying process. There will be no bid solicitation, no supplier selection or RFPs and even the post purchase evaluation can be skipped since the buyer relies on the quality provided by the supplier and the product type has not changed.

If the buyer notices something unusual like a noticeable difference in quality or delivery times, it might be a cause of concern and require evaluation. Otherwise, straight rebuys are simply rebuys without any additional steps.

Straight rebuys are profitable for sellers because the buyer does not consider any alternatives or there is no competition for the seller. The buyer would not be searching for new suppliers and therefore the seller will have a steady and reliable revenue stream without any fear of losing business to competitors.

In a straight rebuy situation, the seller would not need to focus a lot on the account since he is well acquainted with the needs of the buyer and so the seller can focus on the other new business opportunities. However, it does not imply that the seller can ignore an account in a straight rebuy. If there is a noticeable difference in the quality or delivery times, the seller’s business would be jeopardized. If the buyer does not get top quality products with reliable delivery times, he might start looking for another supplier.

Since straight rebuys can be very profitable for sellers as they do not have to do a lot of paperwork and simply provide the same product with the same quality and same quantity, sometimes sellers also make sure that such customers remain satisfied and keep ordering from him. This is especially the case, when the buyer purchases in very large volumes. The suppliers may even employ people to make sure that the large buyers are satisfied and the straight-rebuy situation continues.

Modified Rebuy:

A modified rebuy means buying the same type of product with changes or modifications. The company might have bought the product in the past and now it wants to buy the same type of product in different quantities or in a different packaging. It might also just want faster delivery of the same product or want some customizations made to that product. A modified rebuy will not necessarily involve the same seller.

For example, if a company wants the same product in different amounts and delivered faster, it might want to switch to some regional supplier that can ship the product faster. In another case, a company wants the same product and while quality is of not as much importance, it wants to reduce its costs and looks for suppliers who can provide the same product at lower costs or in larger volumes.

If a restaurant brand has been buying napkins from a seller and now wants them customized for its brand. It could ask the same seller or switch to another who can make the customizations according to its need.

What some buyers would do when they want to modify their purchases is to solicit bids regularly from other sellers so that more and more sellers compete for their business and they can select the one offering lowest costs or high quantity or the kind of customization the buyer wants. Savvy sellers are always looking for such opportunities where a modified product can solve some unmet customer need. So, they regularly visit customers seeking opportunities to turn straight rebuys into modified rebuys.

Suggested Reading: Characteristics of B2B Markets