4 nature of industrial buying
TRANSCRIPT
Nature of Industrial BuyingNature of Industrial Buying
Industrial Marketing, 2nd Edition By Krishna K Havaldar, Tata McGraw - Hill Companies
Chapter - 3
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Organizational BuyingOrganizational Buying
The buying decisions of organizations are influenced by environmental factors, organizational factors, interpersonal factors and personal factors
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Buy Phase in Industrial Buy Phase in Industrial BuyingBuying
Buying is an organizational –decision making process
There are 8 phases in the buying-decision process
In Industrial markets the buying decision making process includes observable sequential stages, understanding these phases helps in developing appropriate selling strategy
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8 phases in Industrial 8 phases in Industrial BuyingBuying
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8 phases in Industrial 8 phases in Industrial BuyingBuying
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Identify the problem•Industrial marketer identifies a problem in the buying organization and suggests how the problem is solved
Identify the problem•Industrial marketer identifies a problem in the buying organization and suggests how the problem is solved
General Need Description•Once the problem is recognized, next phase is to resolve the problem•For technical products, the technical department will suggest the solution and for non-technical, departments suggest products or service
General Need Description•Once the problem is recognized, next phase is to resolve the problem•For technical products, the technical department will suggest the solution and for non-technical, departments suggest products or service
8 phases in Industrial 8 phases in Industrial BuyingBuying
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Product Specification•Develop a precise statement of the specifications of the product or service•Selecting right suppliers, recommend alternatives on sourcing, identify core competencies of company
Product Specification•Develop a precise statement of the specifications of the product or service•Selecting right suppliers, recommend alternatives on sourcing, identify core competencies of companySupplier Search•Search of potential suppliers from vertical hubs, functional hubs, direct extranet links to major suppliers, trade journals, sales calls, catalogues, trade-shows and industrial directories and decide acceptable or qualifying suppliers
Supplier Search•Search of potential suppliers from vertical hubs, functional hubs, direct extranet links to major suppliers, trade journals, sales calls, catalogues, trade-shows and industrial directories and decide acceptable or qualifying suppliers
8 phases in Industrial 8 phases in Industrial BuyingBuying
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Analyzing Supplier Proposal•Once the qualified suppliers are decided, the buying organization obtains the Request for proposals (RFPs)•Supplier proposal or quotation of product specification, price, delivery period, payment terms, taxes and duties, freight charges and other relevant cost is enclosed in the proposal
Analyzing Supplier Proposal•Once the qualified suppliers are decided, the buying organization obtains the Request for proposals (RFPs)•Supplier proposal or quotation of product specification, price, delivery period, payment terms, taxes and duties, freight charges and other relevant cost is enclosed in the proposal
Supplier Selection•Evaluation of the proposals of competing suppliers and select suppliers•Further negotiations continue with selected suppliers on price, payment and deliveries
Supplier Selection•Evaluation of the proposals of competing suppliers and select suppliers•Further negotiations continue with selected suppliers on price, payment and deliveries
8 phases in Industrial 8 phases in Industrial BuyingBuying
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Selection of an Order Routine•Placing of orders with selected suppliers, frequency of the order placements, levels of inventory, follow up of actual delivery, delivery per schedule with quality and payment terms
Selection of an Order Routine•Placing of orders with selected suppliers, frequency of the order placements, levels of inventory, follow up of actual delivery, delivery per schedule with quality and payment terms Performance Review•Performance feedback of each supplier takes place and post-purchase evaluation
Performance Review•Performance feedback of each supplier takes place and post-purchase evaluation
Organizational Purchase Organizational Purchase SituationSituation
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Purchase SituationPurchase Situation
New TaskNew Task
Modified Rebuy
Modified Rebuy
Straight Rebuy
Straight Rebuy
Straight RebuyStraight Rebuy
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Modified RebuyModified Rebuy
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New TaskNew Task
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Is a situation the company is buying the item for the first
Is a situation the company is buying the item for the first
The buying organization will typically have had little experience with the product or service
The buying organization will typically have had little experience with the product or service
The risk involved is more, decisions may take longer time and top management is involved
The risk involved is more, decisions may take longer time and top management is involved
Participants in the BusinessParticipants in the Business Buying Process Buying Process
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InitiatorInitiator
InfluencerInfluencer
ApproverApprover
UserUserDeciderDecider
BuyerBuyer
GatekeeperGatekeeper
Participants in the BusinessParticipants in the Business Buying Process Buying Process
Participants in the organizational buying process play as many as seven different roles, namely those of initiator, influencer, approver, user, decider, buyer and gatekeeper
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Participants in the Participants in the Business Business
Buying ProcessBuying Process
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Participants in the Participants in the BusinessBusiness
Buying Process Buying Process
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•Users also play a role of initiators•Individuals who use products or services•Define specifications of needed products
•Approver endorse and agree to the purchase and also play a role of deciders
•Gatekeepers control the flow of information regarding products and services and control the buying center•Assistants or junior person of purchase managers
Key Members of Buying Key Members of Buying CenterCenter
Top Management Executives Managing Director, Presidents, Vice President or
General managers Approve purchase, decide guidelines and
purchase policy
Technical People Technical people are design engineers,
production, quality control, R& D managers Specify products, technical evaluation, feedback
on product supplied, negotiate with suppliers
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Key Members of Buying Key Members of Buying CenterCenter
Purchase/Material Department Senior executives, junior levels, purchaser officers
or assistants Coordinate with technical people, top
management, accounts as well the suppliers or vendors
Accounts/Finance for finalizing the financial approvals, mode of payment and insurance of bank guarantees
Marketing Are the influencers in the buying process
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SummarySummary The industrial marketing need to understand the purchasing
objectives and purchasing activities of the industrial buyers. The industrial buyers are influenced by both purchasing objective of the firm and personal objectives
The industrial buyers are influenced by many factors , the major factors like environmental factors, organizational factors, interpersonal factors and personal factors
There are 3 common types of buying situations include new task, modified rebuy and straight rebuy
There are 8 phases of buying decision making process include Initiator, Influencer, Approver, User, Decider, Buyer and Gatekeeper. The industrial markets should identify the key members of buying centre in each buying decision
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Questions for ReviewQuestions for Review
What is the industrial buying process?
What is the B2B buying Decision Model?
What are the possible buy situations?
What is the industrial buying center? What are the functions of the members of the buying center?
An industrial marketer wants to supply seat covers to the major auto manufacturer who has been buying from 2 suppliers on regular basis for 2 years, as per the purchase policy cannot buy from 2 suppliers? what should the industrial marketer do to change the supplier?
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END OF SESSION 4END OF SESSION 4
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