P 4-1

P 4-2 Organizational Buying Chapter 4

P 4-3 A Model of Organizational Buying Process Purchase-type influences Structural influences Behavioral influences Organizational buying process Organizational need Organizational need Vendor analysis Vendor analysis Purchase activities Purchase activities Postpurchase evaluation Postpurchase evaluation Figure 4-1 Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

P 4-4 Differences in Types of Organizational Purchases Purchase Type Straight rebuy Complexity Simple Time Frame Short Number of Suppliers 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 purchase LongComplex Figure 4-2 Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

P 4-5 Sample Vendor Analysis Form Supplier Name:_____________Type of Product_______________ Shipping Location___________Annual Sales Dollars:___________ ExcellentGoodSatisfactory Fair PoorN/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.

P 4-6 Sample Vendor Analysis Form Supplier Name:_____________Type of Product_______________ Shipping Location___________Annual Sales Dollars:___________ ExcellentGoodSatisfactory Fair PoorN/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

P 4-7 Functional Areas and Their Key Concerns in Organizational Buying (continued) Functional Areas Key Concerns Design and development engineering 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 minimized Impact 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

P 4-8 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 PurchasingObtaining lowest possible price at acceptable quality levels; maintaining good relations with vendors Quality control Assurance that purchased items meet prescribed specifications 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