Chapter 6 book Flashcards
(20 cards)
Organisational buying
The process by which organisations establish the need for purchased products/services and choose among alternative brand and suppliers to buy.
Occurs within the business market and differs from the consumer market.
The business market
Consists of all the organisations that acquire goods and services that are used in the production of other product/services that are sold to others
Some business market characteristics (5)
- Fewer, larger buyers
- Closer supplier-customer relationship
- Inelastic demand
- Fluctuating demand
- Geographically concentrated buyers
The institutional market
Consists of schools, hospitals, nursing homes and other institutions that provide goods and services to people.
What are the three types of buying situations?
in business markets
- Straight rebuy (reorder on routinely basis)
- Modified rebuy (a change by the buyer in product specs, prices, delivery req’s or other terms)
- New task (first time buyers)
What is system buying?
Buying a total problem from a single seller.
What does MRO stand for?
Maintenance, repair and operating
What are the 7 possible roles in the purchase decision process? (in business markets)
- Initiators (request a product)
- Users (those who will use the product)
- Influencers
- Deciders
- Approvers
- Buyers (have formal authority for selection)
- Gatekeepers (people like purchase agents or receptionists who have power to prevent sellers or information from reaching the rest)
7 stages in the buying process (in business markets)
- Problem recognition
- General need/product description
- Supplier search
- Proposal solicitation (Invite qualified suppliers to submit proposals)
- Supplier selection
- Order-routine specification (Negotiating the final order once suppliers are selected)
- Performance review (periodically)
Which 4 forces can influence a relationship between business partners? (in business markets)
- The availability of alternatives
- Importance of supply
- Complexity of supply
- Supply market dynanism
The 8 categories of buyer-supplier relationships (in business markets)
- Basic buying and selling
- Bare bones
- Contractual transaction
- Customer supply
- Cooperative systems
- Collaborative
- Mutually adaptive
- Customer is king
Bare bones
This relationship requires more adaption by the seller and less cooperation and information exchange
Contractual transaction
These exchanges are defined by formal contract and generally have low levels of trust, cooperation and interaction
Customer supply
In this situation, competition rather than cooperation is the dominant form of governance.
Cooperative systems
The partners are united in operation ways, but neither demonstrates structural commitment through legal means or adaption
Collaborative
Much trust and commitment lead to true partnership
Mutually adaptive
Buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation
Customer is king
The seller adapts to meet the customers needs without expecting much adaption or change in exchange.
Vertical coordination
The process of ensuring that each successive stage in the production, processing, and marketing of a product is appropriately managed and interrelated to the next.
Opportunism
It is some form of cheating or undersupply relative to an implicit or explicit contract.
It is a concern because firms must devote resources to control and monitor supply which otherwise could be allocated to more productive purposes.
