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Industrial marketing business buying and behavior

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  • 1. Industrial Marketing
    • Organizational buying behavior
    www.a2zmba.com
  • 2.
    • Business buying behavior
    • 1. Should fit the product
    • 2. Should fit the customer profile
    • 3. Should fit the situation
    www.a2zmba.com
  • 3.
    • At Ford, purchasing manager has to understand the needs of Ford motor company
    • In turn,
    • Business Marketing Manager should understand the industrial buying behavior
    • Organizational buying behavior is a process and not just a behavior
    • This 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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  • 4. Problem Recognition –int/ext/comp Post Purchase Purchase Info Search/ Eval Need Recognition www.a2zmba.com General Need Description-VA Product Specification Supplier Search Proposal Solicitation Supplier Selection-VeA Order Routine Specification Performance Review
  • 5. www.a2zmba.com 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
  • 6.
    • 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 rebuy
    • Approach 1 – Causal
    • Approach –2 Look at others also to make sure that rebuy is not obsolete
    • 3 Modified rebuy
    • Simple modified rebuy
    • Complex modified rebuy
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  • 7. Utilities Office Supplies Bulk chemicals New vehicles Elec. Equip Consultants Computer equip. Custom furniture Installed components Buildings Weapon systems www.a2zmba.com
    • Involved Decision Making
    Modified Rebuy New Task Buying Straight Rebuy
  • 8. New Task
    • Need considerably new ( accounting – to computers)
    • No past experience
    • Extensive problem solving activity
    • Guidelines :
    • 1.Try & Participate from stage 1 (Importance of 3C)
    • 2. Buyer uncertain appropriateness of technology (MHN)
    • 3. Relationship is vital
    • 4. Buyer more willing to entertain a good technical solution over low price & assured delivery
    • 5. Buyer will respect a Techie at this stage
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  • 9. Straight rebuy
    • Effect of Technology :
    • 1. Buy-side requisition process
    • 2. Employees can indent online while company retains control over Procurement
    • 3. Ariba/ peoplesoft / oracle software is useful
    • 4. Intranet & web based commerce plays a vital role
    • Strategy Guidelines :
    • Price and Delivery
    • Communicate also to employees
    • Online 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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  • 10. 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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  • 11. Buying Grid www.a2zmba.com New Modified Straight Problem Recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specs Performance review
  • 12.
    • One of the memorable case studies – Japanese Management
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  • 13.
    • 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 professor
    • But my question now is , what will happen if I keep it for 2 minutes – nothing said a student
    • one hour ? – hands will pain
    • one day – Numb , paralysis, Hospitalization perhaps
    • Did the weight of water change? No. Then why this change
    • Students were puzzled. Put the glass down said a student.
    • Exactly that is the solution . Said the prof
    • Don’t keep the problem for too long. Dispense it.
    • Life is all about this
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