a summary of a useful book (415 pages) into 11 pages. I encourage people to read the summary.

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Thisis a summaryof International marketing&purchasingof industrial goodsbook (415 pages)
Industrial purchasing and marketing
Introduction
Firstly,relationshipbetween buyersandsellersinindustrial markets oftenclose. Longtermandinvolve
interactionbetweenthe twocompanies.
Secondly,interaction betweenbuyingandsellingfirmswhere eitherfirmmaybe takingthe more active
part inthe transaction.
Thirdly,the stabilityof industrial market structures,those presentasbuyersorsellersknow eachother
well andare aware of any movementsineitherthe buyingorsellingmarket.
Fourthly,the similarityof the tasksof buyersandsellers.involvedinasearchto finda suitable buyeror
seller,toprepare specifications of requirementsorofferingsandtomanipulate orattempttocontrol
the transactionprocess.
MARKETS FOR INDUSTRIALGOODS
The focusislargelyonthe managementof a single purchase.
 The way thispurchase takesplace,
 The effectsof thispurchase on the subsequentdealings withthe supplyingcompany
 Relationships betweensellersand customersare highlystable,
 longlead timesbefore industrial purchasestake place
 Complex interaction duringwhicharelationshipisestablished
 Changesinthe composition of the customerandsuppliermarketsare few andoccur relatively
slowly,aStability characteristicof industrialmarkets
BENEFITSOF STABILITY ANDOBSTACLESTO CHANGEIN INDUSTRIALMARKETS
Purchasingfirmunwillingnesstochange suppliers
1. The firmfaces problemsof searchandevaluationof suppliers
2. A purchasingfirmmust be well informedaboutapotential supplier'stechnology,administration
and commercial skills,anditstrustworthiness.
3. The costs of makinga mistake insupplier selectionbyusingasupplierthat,forexample,delivers
an unsatisfactoryproduct ordelaysindelivery,canbe costly.
4. The firmhas to be verysure of an alternative beforeitispreparedtochange suppliers.
5. Buyingcompanywill make supplierchangesrelatively rarely.
6. Whenthe buyerdoesdecide tomake a change, a numberof purchasingprocedureswillbe
used:

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a. visitthe new supplieraspart of an establishedvendorratingscheme
b. Frequently purchasedproductsthe buyerwillprobablystartwithsmall orders.
Gradually increase the orderlevel.Thus,the purchasingfirmwill,insuchasituation,
have twoor more suppliers
c. Buyingfirmwill requireconsiderable informationaboutpotential vendor;the buyeristo
value the experience he hasof those companiesfromwhomhe haspurchasedbefore.
The buyingcompanycan face problemsinproduct use,which affectits internalroutinesandthe
experience of itsstaff.These canbe reducedbystability of supplier.Forexample,some productsmay
require special handlingwhilstothers mayneedspecializedservice andmaintenance systems.The cost
and workload consequencesof achange of supplierforsuchproductsare oftenprohibitive.
1. The purchasingfirmusuallybuysalarge range of products. Thus,buyers may have to simplify
theirworkby dealingwithexistingsuppliersrather thanincurthe extrawork load(andcosts)
associatedwithsearchingforand evaluatingnew suppliers'offering.
2. problemareainsupplierchange isthatof the technological adaptationin the buyingfirm's
machineryanditsknowledge whichmaybe incurred
3. Products purchasedforuse in productionare intimatelyrelatedtothe production processitself
or to the fundamental characteristicsof the firm’sendproduct.Thus,a change inone purchased
productcan influence the wholeproductionprocessand/or the firm's productitself.
4. Components ormachinesmay have tobe changed. A purchasingfirmneedstohave extensive
technical contactswithitssuppliers'personnelinordertobe able to use their resourcesand
knowledge.These contactsmayhave takenseveral yearstodevelop. A change insuppliers
meansthat theyare lostand that new contacts have to be establishedwithassociatedcostsand
personal implications.
5. Market consistsof a small numberof buyersand sellers,action byanyone companywill be
observable byall othersandcounteractionsmay be taken.Thismakesitnecessarytoplanany
actionswithregardto the possible responseof othercompanies.These probable responseswill
militate againstchange byanyone company.
6. The purchasingfirmmay seektoreduce itscosts andincrease itsbenefitsbydevelopingstable
relationships. The more developedarelationshipis,the more attractive analternative has tobe
inorder to getattentionfromthe purchasingfirm.
7. The value of stability emphasizes the importance of events inan existingrelationshipindeter-
miningwhethernew supplierswill be considered.
8. The purchasingfirm'sunwillingnesstochange involvesapotentialsellerin several kindsof
problemsandcostsin the processof establishingitself asanew supplier.Itmustsearchfor,and
evaluate customersanddecide how muchitisprepared toinvestinestablishingarelationship
withthem.Costsare involvedin developingthe technical andinformationalcontacts .

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The sellingprocess
The selleralsohasinternal costsof change,which are similartothose of the buyer.
Examples
1. In special productdesign, new administrative routineshave tobe establishedtomeetthe
delivery requirementsorqualitystandardsof the new customer.Therefore,newrelationships
are expensivetoestablish.
2. Existingrelationships cansave costsinthe shortterm.
3. Are more predictable inthatthe sellercanexpectbetterinformationaboutthe purchasing
plansof old as comparedtonewcustomers
4. Suggestions andideascancome fromthe purchasingfirmaboutproduct developmentor
productuse.
Stability,source loyaltyand inertiaare logical consequencesof the learningprocessof bothbuyersand
sellersin relationtothe technical,commercial andsocial dimensionsof the relationship.
Industrial marketsare characterizedbystabilityandlong-lastingrelationshipsbetweenbuyingand
sellingfirms. There isalarge variationinthese relationships inbothcontentanddesign.
In some situations,theyare verycomplex,involvingmany people,functionsandhierarchical levelsin
each firm.
MarketingManagement
The issuesassociatedhandlingtenverylarge customersare totally differentcharacterfrom those of
handling1,000 small customers. Marketerslackaccurate modelsforanalyzingtheirmarketingproblems.
Alsoa lack of relevantdataexpressedina systematicwayaboutthe behaviorof otherfirmsinthe same
situation.
PurchasingManagement
The positionfacingpurchasingmanagementof single purchasingdecisions focusedmore onthe long-
termrelationships,becauseof obvious reasonsfornotchangingsupplierstoooften.
Industrial markets are characterizedbystabilityinsteadof change,longlastingrelationshipsinstead of
short business transactionsandclosenessinsteadof distance;Knowledge abouttheserelationshipsis
inadequate,todescribeandunderstandbuyer–sellerrelationshipsandthe factors influencingthem.
BASICFEATURES
A spreadof technologiesinthe relationships.The waysinwhichthe productsare usedand the
productiontechnologyof the purchasingfirm are importantdimensionsof these conditions.

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General perceptionsof Buyer–sellerrelation-shipsbetweenfirmsare conductedbyindividuals,Thus,
social and psychological factorshave importanteffectsonthe relationships. Bothgeneralized
perceptionsandattitudesto relationshipsaswell asspecificrelationships
1. the historyof the relationship;
2. whyit started;
3. itsdevelopment;
4. crises;
5. technological orotheradaptations;
6. characteristicsof the product(s) involved;
7. delivery pattern;
8. patternof contact betweenindividuals;
9. The potential alternativestothe relationship,etc
10. Data ongeneralizedperceptions
marketing and purchasing : four basic elements
1. The interaction process
2. The participants inthe interactionprocess
3. The environmentwithinwhichinteractiontakesplace
4. The atmosphere affectingandaffectedbythe interaction.
Exchange betweentwoparties: fourelementsare exchanged:
(i) Product or service exchange:oftenthe core of the exchange.Asaresult,the characteristicsof the
productor service involvedare likelytohave asignificanteffectonthe relationshipasawhole
(ii) Informationexchange:bythe degree towhichtechnical,economic,ororganizational questions
dominate the exchange. The widthanddepthof the information,Impersonal communicationisoften
usedto transferbasictechnical and/orcommercial data.Personal channelsusedforthe transferof `soft
data' concerning,the use of a product,the conditionsof an agreement,supportiveorgeneral
information
(iii) Financial exchange
(iv) Social exchange.Function inreducinguncertaintiesbetweenthe twoparties
Whenthere existsspatial orcultural distance wherethe experience of the twopartiesislimited:
1. avoidshortterm difficulties
2. Maintainingarelationshipinthe periodsbetween transactions

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3. The longtermprocessgraduallyinterlockthe two firmswitheachother.Relationship isbased
on mutual trust.Which takestime and mustbe basedon personal experience,andonthe
successful executionof the three otherelementsof exchange
The amount of moneyexchanged:
 Needlarge amountsof informational exchange orinthe complexityof the productexchanged
 Developmentof trustisdependentuponexperience inexchange of the otherthree elements
InstitutionalizingRelationships
The routinizationof these exchange episodesovertime leadstoclearexpectationsinbothpartiesof the
rolesandresponsibilities.Expectations become institutionalizedtosuchan extentthattheymaynot be
questionedbyeitherparty andmayhave more incommonwiththe traditionsof an industryora market
The communicationorexchange of information,buildsup inter-organizational contactpatterns and
role relationships.Thesecontact patternscanconsistof individualsandgroupsof people fillingdifferent
roles, operatingindifferentfunctional departmentsandtransmittingdifferentmessagesof atechnical,
commercial,orreputational nature.
These patternscan interlockthe two partiestoa greateror lesserextent .informationandsocial
exchange betweenpartiescancontinue for a considerable time withoutthere beinganexchange of
productor money.Thus, literature,specification development,and visitsbetweencompanies canoccur
before the firstorderisplacedor betweenwidelyspaced individual’orders.
These adaptationscanoccur duringthe processof a single,major transaction or overthe time of a
relationshipinvolving manyindividual transactions.The benefitsof these adaptationscanbe incost
reduction,increasedrevenue,ordifferentialcontrol overthe exchange.Adaptations mayalsobe made
inorder to modifythe overall relationship
Thus one partymay make a decisionnottoofferspecial productstoa customerout of a wishtobe
more distantlyinvolvedwiththatcustomer,ratherthanbeingclosely involvedand/orheavily
dependentonit.
The manipulationof differentaspectsof adaptationisa critical marketingandpurchasingissue.
Althoughadaptationsbyeitherpartycan occur in an unconsciousmannerasa relationshipdevelops,
The consciousstrategyinvolvedinmanyadaptations. Include modificationstoproduct, delivery;
pricing,informationroutinesandeventhe organizationitself are partof the seller'smarketingstrategy.
The buyingorganizationadaptationsinitsownproductrequirements,productionmethods,the price it
Is preparedtoaccept,its informationneedsandthe modificationof itsowndeliveryorstockingpolicies
inorder to accommodate the sellingorganization.

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The InteractingParties
The elementsof the interaction,
1. The characteristicsof the parties involved.
2. The individualswhorepresentthem.
The organizationfactors:
1. The companies'positioninthe marketasmanufacturer,wholesaler,etc
2. The products whichthe sellingcompanyoffers,
3. The productionand application technologiesof the twopartiesandtheirrelative expertisein
these areas.
TechnologyTechnical issues
Tyingthe productiontechnologyof the sellertothe applicationtechnologyof the buyerdifferences
between themgive the basicconditionsforthe interaction.Theseinfluence all the dimensionsof the
interactionprocesses;forexample,
 The requirementsforadaptations,
 mutual trustand contact patterns,
 A wide gulf of technical expertise thencloseintheirlevel of expertise.
Organizational size,structure,and strategy
The size andthe powerof the partiesgive thembasicpositionsfromwhichtointeract.
Large firmwithconsiderable resourceshasagreaterpossibilityof dominatingitscustomersor suppliers
The structure of each organizationandthe extentof centralization,specializationandformalization
influencethe interactionprocessin severalways;
1. The numberand categoriesof personswhoare involved,
a. Affectsthe proceduresof the exchange,
b. The communicationsmediaused,
c. The formalizationof the interactionandthe substance of whatisexchanged
d. The nature of product or service andthe finance thatisinvolved
In the short term, organizational structurescanbe consideredasthe frameworkswithinwhich
Interaction takesplace.
In the longerterm,itis possible thatthese organizational structuresmaybe modifiedbythe emerging
interactionprocessorindeedby individual episodes.
The strategiesof the partiesare,of course,importantinfluencingvariablesonthe relationships

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Organizational experience andactivitiesoutside it. The resultof manyothersimilarrelationships, will
equipthe company withknowledge aboutthe managementof these kindsof relationships
Level of importance attachedtoany one relationship,andthe company'scommitmenttothat
relationship.
The experienceof specificindividualsina companyas well asbythe more generalized`experience'of a
company
Experience inparticularmarketswill enable for dealinginthatmarket.Similarly,itsexperience of
international operationswill affect itswillingnessandabilitytoestablishinternational relationships.
Individualsfromeach organization are involvedin arelationship. Usually abuyeranda salesperson,
several individualsfromdifferentfunctionalareas,atdifferentlevelsinthe hierarchy,fulfillingdifferent
rolesbecome involvedininter-companypersonal interactions.
Theyexchange information,developrelationshipsandbuildupstrongsocial bonds,which influence the
decisionsof eachcompanyinthe businessrelationship.
The variedpersonalities,experience,andmotivationsof eachcompany's representativeswillmeanthat
theywill take partin the social exchange differently.
Theirreactionsinindividual episodescouldconditionthe waysinwhichthe overall,relationshipbuilds
up.Further,the role,level,andfunctionof central personsinthe interactionmayaffectthe chancesof
future developmentoccurringin the relationship.
Individual experience mayresultinpreconceptionsconcerningcertainsuppliersor customers,will affect
attitudesand behaviortowardsthose buyersorsuppliers. The experience gainedin individualepisodes
aggregatestoa total experience.Indeed,the experienceof asingle episode canradicallychange
attitudes,which maythenbe heldoveralong period.
The InteractionEnvironment
(a) Marketstructure relationship
 Nationally orinternationallywithinthe same market.
 The market as strictly national
The extentof buyeror sellerconcentrationdeterminesthe numberof alter-nativesavailable toanyfirm.
Thishas a clear bearingonthe pressure tointeractwitha certaincounterpartwithin the market.
(b) The degree of dynamismwithinarelationship
 A close relationshipincreasesthe knowledgeof the likelyactionsof the otherpartyand its
abilitytomake forecastsbasedoninside information.

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 The opportunitycostof reliance onasingle orsmall numberof relationshipscanbe veryhigh
whenexpressedin termsof the developmentsof othermarketmembers.
(c) The internationalizationof the buyingorselling market,
 Affects the firm'smotivationsindevelopinginternational relationships
 Thisin turnmay affectthe company'sorganization,inneedingsales subsidiariesoroverseas
buyingunits,the special knowledge itmayrequire,e.g.in languagesandinternational trade and
itsmore general attitudes.
(d) Positioninthe manufacturingchannel, the positionof anindividual relationship inanextended
`channel'stretchingfromprimaryproducertofinal consumer;Thus,A may sell toB, who , then
incorporatesthese componentsintoactuatorsthatare soldto C, To form the stock of distributorDand
so on.
The marketingstrategyof A may thusbe influenced byanddirectedatseveral marketsatdifferent
stagesinthe channel.ClearlyhisrelationshipwithbuyingcompanyBwill be affectedby bothA'sandB's
relationshipwithC andothersubsequentorganizations.
(e) The social system.
 Is particularlyrelevantinthe international context, attitudes, andperceptions onageneralized
level canbe an obstacle toestablishanexchange processwithacertaincounterpart. Attitudes
to the reliabilityof buyersorcustomersfroma particularcountry. Regulations andconstraints
on business. A supplierwhohasnotpreviouslydeliveredtoa certain type of customer
The Atmosphere
Routinizationand the clearexpectationswhichbecome heldbybothparties.
The relationshipis influencedbythe characteristicsof the partiesinvolvedandthe nature of the
interactionitself.
This inturn isa functionof the technologyinvolvedandthe environmentwithinwhichthe interaction
takesplace.
Organizational strategy
By consciousplanningthe overallatmosphere of the relationship.
 The power–dependencerelationshipwhichexists betweenthe companies,
 The state of conflictorco-operation
 The overall closenessordistance of the relationship
 Mutual expectations
The atmosphere isaproduct of the relationship,and itmediatesthe influence of the groupsof
variables.

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Reasonsforthe buyingand sellingfirmtodevelopahighdegree of closenesswiththeircounterpartas
well asto avoidsuch closeness.There are advantagesanddisadvantagesconnectedwithdifferent
atmospheres.
The economicdimension
 several typesof costcan be reduced by closerinteractionwithabuyingor sellingfirm.
o Transactioncost to handle distribution,negotiations,and administrationmore
efficiently.
o Production cost.A more optimal divisionof the productionprocessbetween the
supplierandthe customer
o Co-operate inthe designsoasto make the product easiertoproduce or for the
customer.
o Increased revenuesmayachievepositivegainsbybetteruse of the other'scompetence,
facilities,andotherresources.
o Newproductscan be developed valuable technical andcommercial information.
o The control to reduce uncertainty
o Improvesforecasting
o Enable eachparty to come to an understandingof eachother'spower. Perceptions of
powermay change overthe life of a relationship.The powerof organizationA overBis
directlyrelatedtothe dependenceof Bon A. The dependenceonanyone relationship
by an organizationisamajor elementin the wishtorestrictinteraction.Investmentof
time andresourcesinone relationship
SUMMARY
The short-term`Exchange Episodes'involve product–service,financial,information,andsocial exchange.
The longertermprocessesof 'Adaptations'and `Institutionalization'.
Both influencedbythe characteristicsof the organizationsandindividualstakingplace withinan
`Environment'consistingof the vertical andhorizontal marketstructure andgeneral social influences.
IMPLICATIONSFOR MANAGEMENT
Marketing Management
Two differentkindsof limitationproblems
The first problem:concernsthe marketingfirm'soverall limitationof itsactivitiesincertaintypes of
relationships.
 It isdifficultforasellertohave customerswithveryhighdemandson the qualityand
performance of the product ,
 customerswhichjustwanta standard qualityascheaplyaspossible.

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The marketingfirm,thus,hasto limititself tobe an efficientcounterpartinacertain type of relationship
and to designitstechnology, organization,andknowledge inaccordance withthis.
The secondtype of limitationare concernedwith itsindividual counterparts.The questionis,
 Shouldcustomersbe treatedinauniform, way,or
 Shouldsome customersgetspecial treatment?The special customers –oftenthose whobuy
most– getspecial services,extraattentionandsoon.
It is necessaryforthe marketingfirmtodevelopa policyonthese questions.
Handling:The long-termproblemsconcernhandlingthe power–dependence andthe co-operation–
conflictaspects.The aimisto have a controlleddevelopmentof the relationships. Sometimes-closerco-
operationandsometimesthe opposite.
The short -term problemsare primarilytodesignone'sownadaptations andtoinfluence the
counterpart'sadaptationsinorderto make exchange processes easierthatthe long- andshort-term
problemsinarelationshipcannotbe divided.
Purchasing Management
A suppliercanbe seenasan external resource bythe buyingfirm.The buyer'saim istouse these
external resourcesinanefficientway. Tobe attractive as a counterpart,the purchasingfirmalsohas to
have some internal resources.
One strategicpurchasingquestiontherefore,istofindandmaintaina balance betweenthe external
and the internal resources.
supplierscanbe usedinthe purchasingfirmto use a supplier'sabilitytodevelopanddesigna special
product,may justwantto use the supplier'sability toproduce astandardizedproductatlow cost. A
problemisthentofindthe rightcombinationof suppliers,i.e.todevelop anappropriate external
resourcesstructure.
OPERATIONALIZATION OF THE VARIABLES
Characteristicsof the InteractionProcess
Exchange Episodes
The interviewstocharacterize the productwithregardto
 Technical complexityits design,productionandperformance features.
 The deliveriestiming
 The consequences tothe customerof failure of the productto performorto be deliveredin
time.
 Data on the contacts ,frequency,form (visit,telephone,etc.) topic(price,deliveries,etc.),and
whowas contacted

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The powerdependence
 The sharesthe twopartieshadof eachother's business
 The numberandstrengthof alternatives
 the criticalityof the relationship,
 Costsand difficultiesof makingachange to anotherone
Note fromthe author:
Thank youfor yourtime and effort.Ihope youfounditrefreshing.
Bestregards
M. Akbar