Chapter 7 - Business markets

Question 1

Organizational buying

Answer 1

The decision making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers

Question 2

Business market characteristics

Answer 2

• Fewer, larger buyers
• Close supplier–customer relationships
• Professional purchasing
• Multiple buying influences
• Multiple sales calls
• Derived demand
• Inelastic demand - not much is affected by price change
• Fluctuating demand
• Geographically concentrated buyers
• Direct purchasing

Question 3

Buying situations: straight rebuys

Answer 3

purchasing department reorders items on a routine

Question 4

Buying situations: modified rebuys

Answer 4

Change product specifications, prices, delivery requirements

- requires additional participants on both sides.

Question 5

Purchasing/Procurement Process

Answer 5

1. Problem recognition
2. General need description
3. Product specification
4. Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order-routine specification
8. Performance review

Question 6

E-Procurement

Answer 6

Websites are organized around 2 types of hubs - vertical hubs & functional hubs

• Vertical hubs (plastics, steel, chemicals, paper)
• Functional hubs (logistics, media, advertising, energy)
• Set up direct extranet links to major suppliers
• Form buying alliances
• Set up company buying sites

Question 7

Supplier selection

Answer 7

Will specify and rank desired supplier attributes using supplier-evaluation model Looks at:
- Price
- Supplier reputation
- Product reliability
- Service reliability
- Supplier flexibility
~ Vary deeding on the buying situation