The buyer obtains competing bids negotiates contracts and arranges delivery

The buyer obtains competing bids negotiates contracts

This preview shows page 17 - 19 out of 32 pages.

 = is the person who executes the purchase and handles the details of the transaction. The buyer obtains competing bids, negotiates contracts, and arranges delivery dates and payment plans.  o User =  is the member of the buying center who actually needs and uses the product.  Buying Process: - Problem recognition - General need description - Product specification - Supplier search - Solicit proposal - Select supplier - Order-routine specification - Performance review 1. Problem recognition  can result from internal or external stimuli. Internally, the company may decide to launch a new product that requires new production equipment and materials. Externally, the buyer may get some new ideas at a trade show, see an ad, or receive a call from a salesperson who offers a better product or a lower price 2. The buyer prepares a   general need description   that describes the characteristics and quantity of the needed items
Image of page 17
a. For standard items, this process presents few problems. For complex items, however, the buyer may have to work with others—engineers, users, and consultants—to define the item.  b. The buying organization next develops the item’s technical  product specifications , often with the help of a value analysis  engineering team. i. Value analysis  is   an   approach  to  cost  reduction  where components  are studied  to determine if they can be redesigned, standardized, or made with less costly methods of production. 3. Supplier search  involves compiling a list of qualified suppliers.  Proposal solicitation  is the process of requesting proposals from qualified suppliers. Supplier selection  occurs when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions. 4. Order-routine specification  is the final order with the chosen supplier; it lists all of the specifications and terms of the purchase. 5. Performance review  involves a critique of supplier performance to the purchase terms. a. The performance review may lead the buyer to continue, modify, or drop the arrangement. Digital Business Buyer behavior - E-Procurement involves online purchasing, usually through company-buying sites, or extranets - Advantages o Access to new suppliers o Lowers costs o Speeds order processing and delivery o Shares information o Sales o Service and support - Disadvantages o Can erode relationships as buyers search for new suppliers o Security Institutional markets  consist of hospitals, nursing homes, and prisons that provide goods and services to people in their care. Institutional markets are larger than you initially may believe as given in this prison example: -
Image of page 18
Image of page 19

You've reached the end of your free preview.

Want to read all 32 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes