Lesson 6 Flashcards
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.
Organizational Buying
consists of all the organizations that acquire goods and services used in the production
of other products and services that are sold, rented or supplied to others.
Business Market
Enumerate the Characteristics that contrast with consumer market
Fewer, larger buyers
Close supplier-customer relationships
Fluctuating demand
Professional purchasing
Several buying influences
Multiple sales calls
Direct purchasing
Reciprocity
Leasing
Business buyers often buy directly from manufacturers rather than through
intermediaries, especially items that are technically complex or expensive
Direct purchasing
More people typically influence business buying decisions.
Several buying influences
because of the smaller customer base and the
importance and power of the larger customers, suppliers are frequently expected to customize
their offerings to individual business customer needs
Close supplier-customer relationships
Business goods are often purchased by trained purchasing agents, who
must follow the organization’s purchasing policies, constraints and requirements.
Professional purchasing
more volatile than that for consumer goods and services (Acceleration effect)
Fluctuating demand
Buying committees consisting of technical experts and even senior management are common in the
purchase of major goods.
Several buying influences
In the case of capital equipment sales for large projects, it may take many attempts to fund a project, and the sales cycle-between quoting a job and delivering
the product-is often measured in years.
Multiple sales call
buyers selecting suppliers who also buy from them.
Reciprocity
A study by _________ found that it takes four to four and a half calls to close an average industrial sale
Mcgraw-Hill ——- Multiple sales call
instead of buying heavy equipment.
Leasing
List all the Buying Situations
Straight rebuy
Modified rebuy
New task
The purchasing department reorders on a regular basis
Straight rebuy
The purchaser buys a product or service for the first time.
New task
The buyer wants to modify product specifications, prices, delivery requirements and other terms.
Modified rebuy
The buyer chooses from suppliers on an approved list
Straight rebuy
The “in suppliers” become nervous and “out suppliers” try to offer a better deal.
Modified rebuy
The supplier makes an effort to maintain the product and
service quality and proposes “Automatic reordering system”
Straight rebuy
The “out-suppliers” attempt to
offer something new or exploit dissatisfaction with existing supplier.
Straight rebuy
is composed of all those individuals and groups who participate in the decision making process, who share some common goals and risks arising from the decisions.
Buying center
Those who will use the product or service.
Users
People who influence the buying decision. They help define specifications and provide information about alternatives.
Influencers
People who decide on product requirements or on supplies.
Deciders
people who authorize the proposed actions of deciders and buyers.
Approvers
People who have formal authority to select the supplier and arrange the purchase terms.
Buyers
People who have the power to prevent sellers or information from reaching the buying center.
Gatekeepers
What are major influences on buying behavior
Environmental
Organizational
Interpersonal
Individual
Business marketers can do little to stimulate total demand in this environment.
Environmental factors
Every organization has specific purchasing objectives, policies, procedures,
organizational structures and systems.
Organizational factors
Buying centers have several participants with different interests, authority, status, empathy and persuasiveness.
Interpersonal factors
Each buyer carries personal motivations, perceptions, preferences as influenced by
his age, income, education, job position, personality attitudes towards risk and culture.
Individual factors
They can only fight harder to maintain or gain market share.
Environmental factors
Whatever information the marketer can discover about
personalities and inter personal factors will be useful.
Interpersonal factors
Business buyers buy goods and services to make money or to reduce operating costs or to satisfy a social
or legal obligation.
The Purchasing/Procurement Process
Business buyers try to obtain the highest benefit package relation to a market offering’s costs.
Purchasing/Procurement Process
What are the Three company-purchasing orientations
Buying
Procurement
Supply management
discrete transactions, relations are arms-length and adversarial, buyer focus is short
term and tactical.
Buying
Buyers must bargain hard to maximize benefits.
Buying
Buyer seeks quality improvements and cost benefits.
Procurement
More collaboration with fewer suppliers working in close cooperation with customers.
Procurement
The goal is to establish a win-win
relationship.
Procurement
Purchasing is more of a strategic value-adding operation
Supply management
The focus is on improving value chain from raw materials to end-users.
Supply management
Enumerate the stages in buying process
- Problem Recognition
- General need description
- Product specification
- Supplier search
- Proposal solicitation
- Supplier selection
- Order-routine specification
- Performance review
The buyer determines the needed item’s general characteristics and required quantity.
General need description
begins when someone in the company recognizes a problem or need that can be met by acquiring a good or service.
Problem Recognition
Buyer tries to identify the most appropriate suppliers through trade directories,
contacts with other companies, trade advertisements, trade shows and the internet.
Supplier search
Before selecting a supplier, the buying center will specify desired supplier attributes and indicate their relative importance.
Supplier selection
To rate and identify themost attractive
suppliers, buying centers often use a supplier-evaluation model.
Supplier selection
The need may be triggered by internal or
external stimuli.
Problem Recognition
After selecting suppliers, the buyer negotiates the final order, listing the technical specifications, the quality needed, the expected time of delivery, return policies,
warranties and so on.
Order-routine specification
Often the company will assign a product-value-analysis (PVA) engineering team to the project.
Product specification
Buyer invites qualified suppliers to submit proposals
Proposal solicitation
The buyer will require a detailed written proposal from each qualified supplier.
Proposal solicitation
After evaluating the proposals, the buyer will invite a few suppliers to make formal presentations.
Proposal solicitation
The buyer periodically reviews the performance of the chose supplier
Performance review
consist of schools, hospitals, nursing homes, prisons and other institutions that must provide goods and services to people in their care.
Institutional markets
The focus is on quality and cost minimization
and profit are not objectives.
Institutional markets
