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Marketing Basics - Kotler Philip

What purchasing decisions do buyers of industrial products make?

In the procurement process, the buyer of industrial goods is faced with the need to make a number of decisions. The number of decisions depends on the type of procurement situation.

BASIC TYPES OF PURCHASING SITUATIONS . There are three main types of procurement situations3. On the one hand, this is a re-purchase without changes, which requires a fairly standard everyday solution. On the other hand, this is a purchase to solve new problems, the solution of which may require in-depth research. An intermediate position between them is re-procurement with changes, the decision on which requires a certain preliminary study. Examples of these situations are presented in Fig. 40.

Three types of procurement situations for industry needs

Fig. 40. Three types of procurement situations for industry needs

Repeated purchase without changes. Repeated purchase without changes is a situation in which the buyer issues a repeated order for something without making any changes to it. So often orders, for example, for ordinary stationery are glowing. As a rule, the logistics department copes with such a situation in the working order. The buyer selects suppliers according to his list, depending on how satisfied his previously made purchases. “Selected” suppliers try to maintain the quality level of their goods and services. Often they offer to use the automatic re-ordering system so that the purchasing agent does not waste time in ordering them. Suppliers who are not included in the circle of the “chosen ones” tend to offer something new or play on customer dissatisfaction. They try, so to speak, to put their foot in the door, having completed a small order, and over time to achieve an increase in their “share of purchases”.

Re-purchase with changes. Repeated purchase with changes is a situation in which the buyer wants to make changes to it regarding the technical characteristics of the goods, prices and other delivery conditions, or to change part of the suppliers when issuing a repeated order. So, often issue repeated orders for new equipment or components. Repeated procurement with changes usually requires expanding the circle of decision makers about it. Previously, “selected” suppliers start to get nervous and are forced to do their best to keep the customer. Suppliers who are not in the circle of the “chosen ones” see this situation as an opportunity to make a better offer, thus establishing new business contacts.

Procurement for new tasks. New tasks arise for a company purchasing a product or service for the first time. In a similar situation, the company is installing the first computer system or undertaking the construction of a new plant. The higher the costs and / or degree of risk, the greater the number of participants in the decision and the greater the amount of information they need. The procurement situation for solving new problems opens up enormous opportunities for the market leader and throws him lower classes. He not only tries to make contact with as many people as possible who have a major influence on decision-making, but he also provides information and assistance. Since procurement for solving new problems involves complex commercial negotiations, many companies form so-called target sales teams from their best sellers .

KEY FACTORS TAKEN INTO ACCOUNT DURING THE PURCHASE DECISION-MAKING . The smallest number of decisions falls on the share of the buyer who makes repeated purchases without changes, the largest - in procurement situations to solve new problems. When making purchases to solve new problems, the buyer will have to determine for himself: 1 technical characteristics of the goods, 2) price limits, 3) delivery time and conditions, 4) technical maintenance conditions, 5) payment conditions, 6) order size, 7) acceptable suppliers and 8) the “selected” supplier. Each decision is influenced by different persons involved in this process, and the sequence of decision-making is decided by a complete purchase. For the first time, the government took advantage of it when purchasing the main types of weapons and communication systems. Instead of changing from case to case.

ROLE OF COMPLETE PURCHASES AND COMPLETE SALES . Many buyers prefer to solve their problem comprehensively and at once, without making many separate decisions. Such an approach to buy up the components separately, and then bring them together, it began to request proposals for contracts from general contractors, who themselves had to make up the necessary kit or the necessary system. The general contractor who received the contract is responsible for requesting proposals for the supply of individual components and completing them as a whole.

Sellers are increasingly aware of the desire of buyers for such purchases, and for their part have mastered the practice of complete sales as one of the marketing tools . Complete sale has two forms. The first is when a supplier sells a group of related products. For example, not only glue is sold, but also devices for applying and drying it. The second is when the supplier sells the production system, inventory management, distribution system and other services to satisfy the buyer’s need to ensure the smooth functioning of his business. Complete sales - the main element of an industrial marketing strategy designed to attract and retain customers. Successful use of one of these systems is described in Box 13.

Box 13. Standard Register’s success in marketing documentation forms

The company “Standard Register” is not a leader among manufacturers of business documents on orders of other companies, it is somewhere between the second and third places. However, the company's high sales figures are so stable that many consider it a leader in many areas of marketing business documentation forms.

The clientele of the company consists of 26 thousand firms of various types and sizes. The smallest customers buy only one form, and in modest quantities, and the hundred largest ones annually spend more than $ 100 million on blank forms offered by Standard Register. The company sells these forms to almost any form of documents related to goods: warehouse certificates acceptance of goods for storage, blanks of purchase certificates and invoices, blanks for computers, typewriters and textured machines, single blanks and blanks with several copies (with and without carbon paper), these self-adhesive kettles. The key to the success of the company is its ability to tailor its products and services to the needs of customers.

One of the methods of activity of the Standard Register company that is attractive to customers is the brigade service method, when two sales agents - the senior and the youngest - are engaged in the affairs of a large customer. The brigade service ensures that in the event that one sales agent falls ill or leaves work, there is always another who knows the client’s affairs as thoroughly. Another advantage is the possibility of more frequent contacts between the company's sales agents and the customer. The company "Standard Register" found that with brigade maintenance, sales tend to increase, and the consumer receives additional services. According to one of the clients of American Heritage Life, he has a salesman twice a week. Another client reports that he is visited at least three times a week. And both of them consider that the attention paid to them is one of the strong attractive features of the company Standard Register.

Among the organizations it serves, the company Standard Register is also known for its efficient system of adapting forms for individual needs of customers. This system is aimed at saving customer funds, providing him with all the necessary forms and guarantees the availability of the right forms at any time. To reduce costs, the company Standard Register, in all cases when possible, tries not to develop completely new forms, but to adapt existing ones. In addition, the company maintains a constant current record of all forms, both available at the warehouse and newly ordered and in work, broken down by each individual client. To meet customer requests, the Standard Register develops the most effective and economical individualized order delivery systems in relation to the specifics of each of them. In an effort to reach representatives of as many industries as possible, Standard Register recently placed an advertisement for its system for adapting stationery to the individual needs of customers not in an industry publication, but in the popular national magazine Business Week.

Significant marketing efforts were also focused on the hospital sector, as hospitals spend a lot of money on blank forms. To attract healthcare organizations to its clients, the Standard Register advertises in hospital publications. Announcements emphasized that the firm could help increase the hospital's cost-effectiveness by reducing paper clerical work. Specially trained salesman teams are studying medical terminology, the structure of hospital management and ways to reduce paper circulation. According to the Standard Register, it has already covered from 15% to 20% of the health care market with its services, while in the business documentation form market as a whole its share is only 7%.