how do business buyers make their decisions
TRANSCRIPT
HOW Do
Business Buyers MAKE DECISIONS ?
The Buy Phase
The buying decision process is divided into 8 stages called BUYPHASES.
3. Product specification
4. Supplier search
5. Proposal Solicitation
6. Supplier search
7. Order routine specification
8. Performance review
1. Problem Recognition
2. General need description
1. Problem Recognition
● A need or problem that can be solved by a product or service is identified.
● The trigger to identify this can be either internal or external.
2. General need description
● The specifications, quantity and characteristics of the new product or service is determined.
3. Product specification
● The technical specifications of the product are formulated by the buying organisation.
An approach to determine whether the components can be redesigned or standardized or made cheaply without affecting the product performance.
Product value analysis (PVA)
4. Supplier search
Buyer tries to identify the most appropriate supplier through different methods.
Trade Shows
Contact with other companies
AdvertisementsInternet
Trade Directories
E Procurement
Two types of E Hub
Functional Hub
Vertical Hub
Lead Generation
To identify good leads, the marketers must coordinate with the sales team and take coordinated, multi channel approach to the role of trusted advisor to prospective customers.
● The qualified suppliers are invited for proposals.
● Proposals are marketing documents that describe the value and benefit in customer terms.
5. Proposal Solicitation
● Using a supplier evaluation model, the buying center will specify and rank the customer attributes.
6. Supplier selection
Price pressure
● The buying center tries to negotiate with prefered suppliers for better prices and terms.
● Some suppliers impose restrictive conditions if they agree to supply at lower prices.
No. of suppliers
● Customers are increasingly reducing the number of suppliers.
● Multiple sourcing increases the threat of labour strike while single sourcing risks reduction in quality due to lesser competition.
Buyers negotiate the final order, listing the technical specifications, the quantity needed, expected time of delivery, return policies etc.
7. Order routine specification
The buyer periodically reviews the performance of the supplier.
8. Performance review
Performance review is done in the following ways:
● By contacting end users and asking for their evaluation.
● Rate the supplier on various criteria using weighted score method.
● Aggregate the cost of performance with adjusted costs of purchase.
The Buy Phase
3. Product specification
4. Supplier search
5. Proposal Solicitation
6. Supplier search
7. Order routine specification
8. Performance review
1. Problem Recognition
2. General need description
RECAP
Disclaimer:““These slides were created by Shine Ali, MEC Cochin, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow (See www.IIMinternship.com)”