Industrial marketing business buying and behavior
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Transcript of Industrial marketing business buying and behavior
Industrial Marketing
Organizational buying behavior
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Business buying behavior
1. Should fit the product 2. Should fit the customer profile3. Should fit the situation
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At Ford, purchasing manager has to understand the needs of Ford motor company In turn,Business Marketing Manager should understand the industrial buying behaviorOrganizational buying behavior is a process and not just a behaviorThis process has several stages , each stage expected to yield a decision. Though this is not a binding for all procurements, this model (cited ahead) provides an important insight
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Problem Recognition –int/ext/compProblem Recognition –int/ext/comp
General Need Description-VAGeneral Need Description-VA
Product SpecificationProduct Specification
Supplier SearchSupplier Search
Proposal SolicitationProposal Solicitation
Supplier Selection-VeASupplier Selection-VeA
Order Routine SpecificationOrder Routine Specification
Performance ReviewPerformance ReviewPostPost
PurchasePurchase
PurchasePurchase
InfoInfoSearch/Search/
EvalEval
NeedNeedRecognitionRecognition
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1.Problem recognition VA
Internal – HS production equipment. Canon drum
External – Euro II norms.Competitor – Turbo charger
( Advertisement – Xerox on overdrive)
2.General description of need
Production manager work with purchasing manager on characteristics of HS equipment( Move from Blurred to clear vision)
3.Product Specifications
Experienced production managers assist procurement manager in developing detailed specs. They will refer some literature of course.
4.Supplier Search Identify a set of possible sources to supply this HS (High speed) equipment
5.Acquisition and analysis of proposals
Obtain offers and analyze. Use vendor analysis technique
It may be necessary to evaluate Make/Buy
6.Supplier selection Negotiation with two finalists at least
7.Selection of order routine
Job is over only on delivery. Follow purchasing guidelines, delivery, payment terms etc
8.Performance Review
Bad – could lead to modified rebuy. Good – would lead to straight rebuy
Organizations with significant experience in buying will approach the problem quite differently.They will separate the situation in to three distinct categories:
1 New Task(also strategic new task)
2 Straight rebuyApproach 1 – Causal Approach –2 Look at others also to make sure that rebuy
is not obsolete3 Modified rebuy
Simple modified rebuyComplex modified rebuy
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In
volv
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Mak
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Modified RebuyModified RebuyModified RebuyModified Rebuy
New Task BuyingNew Task BuyingNew Task BuyingNew Task Buying
Straight RebuyStraight RebuyStraight RebuyStraight Rebuy
UtilitiesOffice SuppliesBulk chemicals
New vehiclesElec. EquipConsultantsComputer equip.
Custom furnitureInstalled componentsBuildingsWeapon systems
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New Task1. Need considerably new ( accounting – to computers)2. No past experience3. Extensive problem solving activityGuidelines :1.Try & Participate from stage 1 (Importance of 3C)2. Buyer uncertain appropriateness of technology (MHN)3. Relationship is vital4. Buyer more willing to entertain a good technical solution over low
price & assured delivery5. Buyer will respect a Techie at this stage
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Straight rebuyEffect of Technology :1. Buy-side requisition process2. Employees can indent online while company retains control over
Procurement3. Ariba/ peoplesoft / oracle software is useful4. Intranet & web based commerce plays a vital roleStrategy Guidelines:Price and DeliveryCommunicate also to employeesOnline enabling
In Supplier : Reinforce relationship / meet the expectations / keep the eyes and ears open.Out Supplier: Persuade decision maker to look at alternatives. Stress on your superiority if it is of relevance
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Modified rebuy
When would the buyer modify ? Displeased with the existing supplier Trifle change in the requirement / technology / product. Strategy
Guidelines:In Supplier : Know the factors that led to modifications.
Address these if you can. Out Supplier: Know the factors that led to modifications.
Out perform and give better solution.
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Buying Grid
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New Modified Straight
Problem Recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routine specs
Performance review
One of the memorable case studies – Japanese Management
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A prof began his class by holding up a glass with some water in it. He held it up for all to see and asked the students How much do you think this glass weighs?50 100 125 gms . Students answered.I wouldn’t know unless I weigh it . Said the professorBut my question now is , what will happen if I keep it for 2 minutes – nothing said a studentone hour ? – hands will painone day – Numb , paralysis, Hospitalization perhapsDid the weight of water change? No. Then why this changeStudents were puzzled. Put the glass down said a student.Exactly that is the solution . Said the profDon’t keep the problem for too long. Dispense it.Life is all about this
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