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MarketingManagement

6th Edition

Knowledge and Skills

J. Paul Peter•

James H. Donnelly, Jr.

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Organizational

Buying

Chapter 4

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A Model of Organizational Buying Process

Purchase-type influences

Purchase-type influences

Structural influencesStructural influences Behavioral influencesBehavioral influences

Organizational buying processOrganizational buying process

Organizational

need

Organizational

needVendor

analysis

Vendor

analysisPurchase

activities

Purchase

activitiesPostpurchase

evaluation

Postpurchase

evaluation

Figure 4-1Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

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Differences in Types of Organizational Purchases

Purchase Type

Straight rebuy

Complexity

Simple

Time Frame

Short

Number ofSuppliers

One

Applications

Frequently purchased, routine products, such as printer ribbons

Modified rebuy Medium Few Routine purchases that has changed in some way, such as air travel (new fares, flights, destinations)

Moderate

Many Expensive, seldom-purchased products, such as new location for a department store

New task

purchaseLongComplex

Figure 4-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

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Sample Vendor Analysis FormSupplier Name:_____________ Type of Product_______________Shipping Location___________ Annual Sales Dollars:___________

5 4 3 2 1 0Excellent Good Satisfactory Fair Poor N/A

Quality (45%)Defect Rates ___ ___ ___ ___ ___ ___Quality of Sample ___ ___ ___ ___ ___ ___Conformance with quality program ___ ___ ___ ___ ___ ___Responsiveness to quality problems ___ ___ ___ ___ ___ ___ Overall Quality ___ ___ ___ ___ ___ ___

Delivery (25%)Avoidance of late shipments ___ ___ ___ ___ ___ ___Ability to expand production ___ ___ ___ ___ ___ ___Performance in sample delivery ___ ___ ___ ___ ___ ___Responses to changes in order size ___ ___ ___ ___ ___ ___ Overall delivery ___ ___ ___ ___ ___ ___

Figure 4-3

SOURCE: Gilbert A. Churchill, Jr., and J. Paul Peter, Marketing: Creating Value for Customers, 2nd ed. (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p186.

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Sample Vendor Analysis FormSupplier Name:_____________ Type of Product_______________Shipping Location___________ Annual Sales Dollars:___________

5 4 3 2 1 0Excellent Good Satisfactory Fair Poor N/A

Price (25%)Price competitiveness ___ ___ ___ ___ ___ ___Payment terms ___ ___ ___ ___ ___ ___Absorption of costs ___ ___ ___ ___ ___ ___Submission of cost savings plans ___ ___ ___ ___ ___ ___ Overall price ___ ___ ___ ___ ___ ___

Technology (10%)State-of-the-art components ___ ___ ___ ___ ___ ___Sharing research & development capability ___ ___ ___ ___ ___ ___Ability and willingness to help with design ___ ___ ___ ___ ___ ___Responsiveness to engineering problems ___ ___ ___ ___ ___ ___ Overall technology ___ ___ ___ ___ ___ ___

Buyer: _______________________ Date: ____________Comments: _________________________________________________________________________

SOURCE: Gilbert A. Churchill, Jr., and J. Paul Peter, Marketing: Creating Value for Customers, 2nd ed. (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p186.

Figure 4-3

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Functional Areas and Their Key Concerns in Organizational Buying

(continued)

Functional Areas Key Concerns

Design and developmentengineering Production

Name reputation of vendor; ability of vendors to meet design specifications

Sales/marketing Delivery and reliability of purchases such that interruption and production schedules is minimizedImpact of purchased items and marketability of the company’s products

Maintenance Degree to which purchased items are compatible with existing facilities and equipment; maintenance service offered by vendor; installation arrangements offered by vendor

SOURCE: Michael H. Morris, Industrial and Organizational Marketing (Columbus, OH: Merrill Publishing, 1989), p. 81.

Figure 4-4

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Functional Areas Key Concerns

Finance/accounting Effects of purchases on cash flow, balance sheet, and income statement positions; variances in costs of materials over estimates; feasibility of make-or-buy and lease options to purchasing

Purchasing Obtaining lowest possible price at acceptable qualitylevels; maintaining good relations with vendors

Quality control Assurance that purchased items meet prescribedspecifications and tolerances, governmental regulations, and customer requirements

SOURCE: Michael H. Morris, Industrial and Organizational Marketing (Columbus, OH: Merrill Publishing, 1989), p. 81.

Figure 4-4

Functional Areas and Their Key Concerns in Organizational Buying