chapter 6

Order-routine specification:

It includes the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies, and warranties.

Federal Business Opportunities

The ________ Web site provides a single point of entry through which commercial vendors and government buyers can post, search, monitor, and retrieve opportunities solicited by the entire federal contracting community.

Performance review

The buyer may contact users and ask them to rate their satisfaction. It may lead the buyer to continue, modify, or drop the arrangement. The seller's job is to monitor the same factors used by the buyer to make sure that the seller is giving the expected satisfaction.

Supplier search:

The buyer now conducts a supplier search to find the best vendors. The buyer can compile a small list of qualified suppliers by reviewing trade directories, doing computer searches, or contacting other companies for recommendations.

Product specifications:

The buying organization next develops the item's technical product specifications, often with the help of a value analysis engineering team.

buying center

The decision-making unit of a buying organization. includes all the units which participate in the five roles in the purchasing decision process

new task situation

buyer faces greater cost risk, larger number of decision participants and greater efforts to collect information. Buyer makes the most decision in this situation

Trading exchanges

companies work collectively to facilitate the trading process

company buying site

company post needs and sellers propose bids

Gateskeepers

control the flow of information to others. For example, purchasing agents often have authority to prevent salespersons from seeing users or deciders. They include technical personnel and even personal secretaries.

extranet links

create direct procurement accounts with key suppliers where they can buy supplies, equipments materials etc

blanket contract

creates a long-term relationship in which the supplier promises to resupply the buyer as needed at agreed prices for a set time period.

Product value analysis

is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production.

institutional market

is made up of schools, hospitals, prisons, and other institutions that provide goods and services to people in their care.

Government organizations

majro buyer of goods and services that favor low costs and domestic suppliers over foreign suppliers

E-Procurement Security Issue

providing security can be a big financial burden on a company

Derived demand

refers to business demand that ultimately comes from (derives from) the demand for consumer goods.

Supplier development

refers to systematic development of networks of supplier- partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

In ________, companies put their purchasing requests online and invite suppliers to bid for the business.

reverse auctions

Institutional markets buying objective

search for vendors who will meet or exceed certain minimum standards besides low prices

Problem recognition:

when someone in the company recognizes a problem or need that can be met by acquiring a specific product or service. It can result from internal or external stimuli.

In several major cities in the U.S, the ________ operates business service centers with staffs to provide a complete education on the way government agencies buy, the steps that suppliers should follow, and the procurement opportunities available.

General Services Administration

What are the noneconomic criteria that influence government buying?

Government buyers are asked to favor depressed business firms and areas; small business firms; minority-owned firms; and business firms that avoid race, gender, and age discrimination.

General needs description:

Having recognized a need, the buyer next prepares a general need description that describes the characteristics and quantity of the needed item. For standard items, this process presents few problems. For complex items, however, the buyer may need to work with others—engineers, users, consultants—to define the item.

If a buying center is most influenced by authority in the business buying process, it can be safely concluded that ________ factors have a major influence on its buying behavior.

Interpersonal

Why is the business buying process more formalized than the consumer buying process?

Large business purchases usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval.

E-Procurement in B-2-B

Many buyers now use the power of the Internet to pit suppliers against one another and search out better deals, products, and turnaround times on a purchase-by-purchase basis.

Organizational Influences

Objectives, strategies, structure, systems and proceedures

Why is demand in the business market mostly inelastic?

The total demand for many business products is not much affected by price changes, especially in the short run. A drop in the price of leather will not cause shoe manufacturers to buy much more leather unless it results in lower shoe prices that, in turn, increase consumer demand for shoes.

Buying center concept is a major challenge for marketers

True, because all buying units are different and the marketer must learn who does what and how

system selling or solution selling

When a company offers a complete solution to its buyers rather than having to buy from multiple suppliers. is often a key business marketing strategy for winning and holding accounts.

Users

are members of the organization who will use the product or service. In many cases, users initiate the buying proposal and help define product specifications.

Buying process for Government Organizations

ask suppliers to submit bids, sometimes will give allowances for big project and buy negotiated contracts

Advantage of selecting multiple sources of suppliers

avoid dependency

Major influences on business buyers

economic

Environmental influences

economy, environmental, politics, competition and culture

B-2-B marketing characteristic

emotions play an important role

Which of the following can help a company create direct procurement accounts with suppliers, through which company buyers can purchase equipment, materials, and supplies directly?

extranet

buyers

have formal authority to select the supplier and arrange terms of purchase. They may help shape product specifications, but their major role is in selecting vendors and negotiating. In more complex purchases, they might include high-level officers participating in the negotiations.

Deciders

have formal or informal power to select or approve the final suppliers. In routinely buying, buyers are often the deciders

Characteristics of Institutional Markets

huge, low budget and captive patrons.

Influencers

often help define specifications and also provide information for evaluating alternatives. Technical personnel are particularly important influencers.

Eight Steps in the buying process

problem recognition, general needs description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review.

Proposal solicitation

the buyer invites qualified suppliers to submit proposals. In response, some suppliers will refer the buyer to their Web sites or promotional materials or send a salesperson to call on the prospect. However, when the item is complex or expensive, the buyer will usually require detailed written proposals or formal presentations from each potential supplier.

Straight Rebuy

the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. To keep the business, "in" suppliers try to maintain product and service quality. Out suppliers try to find new ways to add value or exploit dissatisfaction so that the buyer will consider them.

modified rebuy

the buyer wants to modify product specifications, prices, terms, or suppliers. The in suppliers may become nervous and feel pressured to put their best foot forward to protect an account. out; suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business.

Supplier selection:

the buying center often will draw up a list of the desired supplier attributes and their relative importance. Such attributes include product and service quality, reputation, on-time delivery, ethical corporate behavior, honest communication, and competitive prices.