M RahmanDecision making unit (DMU)
Business decisions are usually taken collectively. A number of people may be involved in the decision-making process and not necessarily, everyone will have the same power. Someone is the most influential, whereas someone is the least. This piece of information is very useful from a supplier’s point of view.
B2B Decision making unit
According to Kotler & Armstrong (2009), the decision-making unit of a buying organisation is called its buying centre. It includes all the individuals and units that play a role in the business purchase decision-making process. These individuals and units play any of the following roles in the purchase decision process:
Initiators
The initiators are the people who first suggest or think of the idea of buying a particular service or product. They first see the need for the service/product, and then begin the buying conversations within the organisation.
Users
These are the people in an organisations who actually use the products/services and get organisational benefits from them. According to Kotler & Armstrong (2009), the users initiate the buying proposal in many cases.
Influencers
These are the people who can influence the buying decision for a number of reasons. For example, a software engineer may influence an organisation’s decision to buy a new software and where to buy it from.
Buyers
These are the people who have formal authority to negotiate with suppliers. They negotiate and arrange terms of purchase with the suppliers. As negation is a specialist area, high level employees usually play the roles of buyers.
Deciders
These are the people who have the final say in the buying decision. They have the power and authority to select the final suppliers to move on with the buying process. For example, the finance manager in a company may decide which supplier to work with on the basis of how much money the supplier is asking for a particular product/service.
Gatekeepers
These are the people who control the flow of information to others. For example, a personal secretary may not allow the sales people from a supplier to have access to the deciders or users. Likewise, a receptionist may play the role of a gatekeeper as he/she usually maintains telephone, email, and postal communications.
B2B Decision making process (DMP)
The DMP is the description of the interactions that people in the DMU have with each other in order to make a purchase decision (Stanford University, n.d.). These interactions usually go through a number of steps before a decision is made and they could vary from one company to another.
Robinson, Faris and Wind (1965) divided the buyer purchase process into eight sequential, distinct but interrelated stages i.e. 1. Problem recognition, 2. General description of need, 3. Product specifications, 4. Supplier search, 5. Acquisition and analysis of proposals, 6. Supplier selection, 7. Selection of order routine, and 8. Performance review.
B2C Decision making process (DMP) and unit
In the B2C (Business to consumers) context, the decision-making process and unit are usually very straightforward and simple. The unit may consist of only one individual, a couple, or family members.
Example of B2C decision making unit and process
Imagine John wants to buy a can of coke for himself. So, he is the consumer, and does not need to discuss this with anyone. Likewise, he is organising a family holiday which he may have to discuss with his other half, and possibly other family members. And the final decision is taken not by John only, but by everyone involved.
Example of B2B decision making unit and process
Imagine Sylvia works in the IT department of a small company. She identifies that the company needs to buy a new computer for the new IT admin staff (Karim). She then discusses this with her line manager (Alex) who also have the responsibility to make purchase decision. Alex agreed, bought a new computer, and passed it on to Karim to use it. In this scenario, Sylvia is the initiator, Alex is the decider and buyer, and Karim is the user.
Concluding statement
Finally, the buying centre is not fixed (Kotler & Armstrong, 2009). An organisation does not need different people to play different roles. One person may play more than one role. Likewise, more than five/six people may also be required sometimes. According to Toman et.al. (2017), the number of people involved in business decision making has gone up from an average of 5.4 to 6.8 recently. In fact, different products/services, and different buying situations will decide how big a buying centre should be.
We hope the article ‘Decision making unit (DMU)’ has been helpful. You may also like reading The decision making unit for more examples and importance of the decision making unit. Other relevant articles for you are:
Decision-making – definition and types of decision-making
SWOT analysis of General Motors (GM)
Advantages and disadvantages of a private limited company
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Last update: 21 February 2021
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Further Reading/References
Kotler, P., Armstrong, G., (2009) Principles of Marketing: Global Edition, 13th Edition, USA: Pearson Education
Stanford University (n.d.) The marketing mix, DMU, and DMP, available at: https://web.stanford.edu/class/ee204/marketing_example.html (accessed 19 February 2021)
Toman, N., Adamson, B., & Gomez, C. (2017) The new sales imperative, available at: https://hbr.org/2017/03/the-new-sales-imperative (accessed 06 August 2019)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
Marjana Chowdhury