Why knowing the people and their roles in the customer organization is not enough? 2. How the novelty of buying situation (new task, modified re-buy, straight ...
Topic questions 1. Why knowing the people and their roles in the customer organization is not enough? 2. How the novelty of buying situation (new task, modified re-buy, straight re-buy) affects in the customer’s buying process? 3. How your competitive position (in-/out supplier) affects in your actions at different novelty levels? 4. How the change from transaction point of view to relationship point of view affects into the way you should work along the buying process?
Knowing the process • It is good to know the parties involved in the buying process, but it’s not enough. The marketer must also know when each role is played, and when it is the right time to influence the person.
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Steps of the buying process • Multitude of theoretical models – – – –
Problem recognition Need description Product/service specification Evaluating alternatives Proposal solicitation Order/routine specifications
Problem recognition • Initiator is active • Someone perceives a problem or need • Effect of external stimulus – Trade show – Call from a sales person
Need description • Defining the characteristics of product/service and quantity needed. • The composition of the decision making unit depends on – Complexity experts – Monetary/strategic value of procurement – Needs users? – Organization (buyers coordinating?)
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Product/service specification • Expert’s most influential stage • Detailed description of the characteristics of and requirements for the bought solution. • Based on the report the buyers are able to exclude directly the unsatisfactory alternatives.
Evaluating the alternatives • Collecting/updating the information about the potential solutions. (experts) • Rating the potential solutions based on the characteristics specified in the previous stage. • Governmental/institutional customers often have a supplier register – Credibility & reputation – Production capacity – Black lists
Shortlist of qualified suppliers (gatekeeper)
Proposal solicitation • Invitation to bid is sent to qualified suppliers • Also possible to begin negotiation directly with one supplier if: – The number of alternatives is limited – The project is complex
• Includes some specified terms: – Quantity – Delivery time – …
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Placing the order/routine specifications • Buyers playground – Decisions within the limits specified by others
• Selecting the supplier(s) and sending the order • Confirming the practical details: – – – – –
Specifications Quantity Lead time Warranty …
• If more than just a single transaction defining the order routines
The novelty of purchase/buying situations • New Task – Problem/need perceived totally different from previous experiences – Lack of well defined criteria for evaluation – Great need for new information – Less predispositions
The novelty of purchase/buying situations • Straight re-buy – Continuous requirement – Experience little need for new information – Routinized buying
• Modified re-buy – The buyer has experience of similar procurements – Buying organization feels the potential benefits of reevaluating alternatives
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The novelty of purchase
Novelty and competitive position Supplier Status Buying Situation
New Task
Straight Re-buy
”In” supplier
”Out” supplier
• Monitor changes in purchasing needs of the O. • Isolate specific needs • Participate actively in early phases of the buying process by supplying information and technical advice
• Isolate specific needs • Participate actively in early phases of the buying process by supplying information and technical advice
• Reinforce the buyer-seller relationship by meeting the O’s expectations • Be alert and responsive to changing needs of customers
• Convince the O that the potential benefits of re-examining requirements and suppliers exceed the costs of doing so • Attempt to gain position on the O’s preferred list of suppliers, even as second or third choice
Novelty and competitive position Supplier Status Buying Situation
Modified Re-buy
”In” supplier • Act immediately to remedy problems with the customer • Re-examine and respond to customer needs
”Out” supplier • Define and respond to the O’s problem with the existing supplier • Encourage the O to sample alternative offerings: offer performance guarantees
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Transactions and relationships • Transaction – Get in early and work through the phases with the active members of the DMU.
•
Relationship: – Identify and convince the deciders and experts first. – Activate the initiators.
Problem recognition Need description Product/service specification Evaluating alternatives Proposal solicitation Order/routine specifications
The case assignment 1. Complete the decision making models of the key accounts with the process description steps, roles people. 2. Define your position in business – – –
Novelty of purchase to the customer Competitive situation “in” or “out” Transaction or relationship world
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