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8/7/2019 Industrial Buying Behaviour
http://slidepdf.com/reader/full/industrial-buying-behaviour 1/20
THE NATURE OF INDUSTRIAL
BUYING AND BUYING
BEHAVIOUR
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PURCHASING OBJECTIVES
The purchase/materials management
objectives is defined as buying the right items
in the right quantity, at the right price, for delivery at the right time and place
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Objectives Of Pur chasing
Delivery/Availability
Product Quality
Lowest Price Services
Supplier Relationship
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Delivery/Availability
One of the prime objectives is to ensure that
purchased goods and services are available
or delivered when and where needed
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Product quality
The product quality should be consistent with
the specifications and use of the product. It is
important to ensure consistency in productquality to reduce the cost of inspection,
interruptions in production process due to
rejections, and arranging replacements of
rejected material.
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Lowest pr ice
They buyers would like to buy at the lowest
price consistent with availability and quality of
the product. The buyers consider price as animportant objective if deliver and quality
objectives are met, because low price is
meaningless, if the product is not delivered
when needed or if the quality of the product isunacceptable.
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Ser vices
The industrial buyers need many types of services accompanying the purchase of
goods.
1. Prompt and accurate information from thesuppliers
2. Application or technical assistance
3. Spare parts availability
4. Repairs and maintenance capability
5. Training if required.
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Supplier Relationship
To develop a good long-term supplier/vendor
relationship and to develop new sources of
supply.
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Per sonal objectives
Higher status
Job security
Salary increments Promotions
Social considerations
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Pur chasing Activities
The industrial purchasing activities consist of
various phases of buying-decision making
process.Robinson, Faris and Wind developed eight
phases of buying decision process in
industrial market in 1967, and called the
process Buyphases.
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Phases In Buying Decision
Process Recognition of problem or need
Determination of the application
Development of specifications
Search for and qualifications of potential suppliers. Obtaining and analyzing supplier proposals.
Evaluation of proposals and selection of suppliers.
Selection of an order routine.
Performance feedback and post-purchaseevaluation
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Recognition of a problem or
need
The recognition of a problem or need mayoriginate within the buying firm or may alsobe recognized by a smart marketer.
When the quality of material supplied byexisting supplier is not satisfactory, or thematerial is not available when required, or themachine supplied by existing supplier breaksdown too often, the buying organizationrecognizes the problem.
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Deter mination Of The Char acter istics
And Quantity Of Need Product
Once the problem is recognized within or
outside the buying organization, the next
phase is how to resolve the problem.For technical products-technical product will
suggest the general solutions
For non-technical products-user department or
purchase department may suggest solutions.
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Sear ch For And Qualifications
Of Potential Supplier s
In this phase the buying organization searches
for acceptable suppliers or vendors. The
qualifications of acceptable supplies willdepend on
1. The type of buying organisation
2. The buying situation
3. The decision making members.
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Obtaining And Analyzing Supplier
Proposals
The buying organization obtains the proposals
by sending enquiries to qualified suppliers.
A supplier proposal can be in the form of formaloffer, quotation, or a formal bid, submitted by
the supplier to the buying organization.
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Essentials Of Proposal, Bid,
Quotation Or Offer
It should include:-
1. The product specification
2. Price
3. Delivery period4. Payment terms
5. Taxes and duties applicable
6. Transportation cost
7. Cost of transit insurance
8. Any other relevant cost or free service provided
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Evaluation Of Proposals And
Selection Of Supplier s
The buying organization evaluates the
proposals of competing suppliers and selects
one or more suppliers.Further negotiations may continue with
selected suppliers on prices, payment terms,
deliveries, and so on.
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Selection Of An Order Routine
The mechanics of exchange of goods and servicesbetween a buyer and a seller is worked out. Thisinclude:-
1. Placement of orders
2. Quantity to be purchased from each supplier
3. Frequency of order placement by buyers anddelivery schedules
4. Levels of inventory needed
5. Follow up of actual delivery to ensure it to be asper delivery schedule
6. The payment terms to be adhered to by the buyer
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Per f or mance Feedback And
Post Pur chase Evaluation
A formal or informal review regarding the
performance of each supplier take place.
The user department gives a feedback on
whether the purchased item solved the
problem or not.
If not, the members of the decision making unitreview their earlier decision and decide to
give a chance to the previously rejected
supplier