Multimedia Marketing/Marketing.iso/market/chapter3.7p

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SECTION 3.7  Joint Decision Making and Approaches to Exchange

INSTRUCTIONS Answer this question: "Who makes the decisions in industrial products
firms to purchase particular items?"

EXAMPLE

A university recently made a decision to purchase a particular brand
of personal computers for faculty, administrators, and staff
personnel. The decision was not easy, however, as many individuals
had a role in the decision.

The purchasing agent had the responsibility for formally making
the order. However, he did not make the decision as to what brand
to buy. Rather, he relied upon inputs from a number of parties.

The purchasing agent formed a committee, made up of staff from the
computer center, faculty, secretaries, and administrators. These
individuals were responsible for making a recommendation. In turn,
the members of the committee contacted their constituents to determine
their preferences. The faculty member on the committee, for instance,
disseminated a questionnaire among faculty ranks to provide insights
as to what brands they liked most.

The committee's decision was not easy. All members were not in accord
and it was very difficult to reach concensus on the best brand and
model. After months of negotiating, the committee finally was able
to reach agreement and proceeded to make their recommendation to the
purchasing agent.

DETAILS

Purchasing agents are generally responsible for placing orders, but
they are seldom solely responsible for making buying decisions,
especially major ones. Instead, they make joint decisions with others.

The degree of joint decision making involved with a specific purchase
is the result of both specific product and company factors. A heavy
emphasis on joint decision making is likely when time pressure is
not great, there is a high degree of risk, the product is a new
task purchase and it is a major item such as an installation.

Similarly, if the company emphasizes task force decision making,
is a small organization, and if it decentralizes authority, there
is likely to be a high degree of joint influence.

The joint decision makers are often called "the buying center",
which is the group of those individuals who are involved in
the purchasing process. The makeup of the buying center often
varies from one purchase decision to another. The members can be
categorized as follows:

1. Users--those members of the buying organization who use the
purchased products and services.
2. Buyers--those with formal responsibility and authority for
contracting with suppliers.
3.Influencers--those who influence the decision process directly
or indirectly by providing information and criteria for evaluating
alternative buying actions.
4. Deciders--those with authority to choose among alternative
buying actions.
5. Gatekeepers--those who control the flow of information into
the buying center.

Often individual members of the buying center are involved in two
or more roles. The buyer for a department store, for instance, may
take on all of the roles or may specialize in numbers two, three,
and five. By the same token, more than one member may be involved
in a single role, as when a buying committee has the responsibility
for carring out the duties involved in role four.

The marketer of industrial goods is faced with the responsibilty of
determining who plays a part in the various roles outlined above.
This is not an easy task. One means of accomplishing it is to ask
sales representatives to become involved in the buying company to
the degree that they can discover who the occupants of the center
are. Another method is to conduct marketing research designed to
identify the occupants and their roles.

PROBLEM 1

A grocery produce warehouse is in the process of deciding what brand
of forklift trucks to purchase. In this case, the user would be:

A. The company purchasing agent.
B. The forklift truck operators.
C. Supervisors on the loading dock.
D. The general manager of the warehouse.

WORKED

In a buying center made up of individuals who are charged with the
responsibility for choosing a brand of forklift trucks, the users
would be the truck operators. Their influence can be very strong.
Management of the warehouse using the trucks should realize that
company performance is highly dependent on the truck operators. If
they dislike the equipment which they are to operate or experience
difficulty in using it, warehouse performance is likely to slip.
Thus, most firms carefully consider the perceptions of these
individuals in making a decision.

ANSWER  B
INSTRUCTIONS Answer this question: "Who makes the decisions in industrial products
firms to purchase particular items?"

EXAMPLE

A university recently made a decision to purchase a particular brand
of personal computers for faculty, administrators, and staff
personnel. The decision was not easy, however, as many individuals
had a role in the decision.

The purchasing agent had the responsibility for formally making
the order. However, he did not make the decision as to what brand
to buy. Rather, he relied upon inputs from a number of parties.

The purchasing agent formed a committee, made up of staff from the
computer center, faculty, secretaries, and administrators. These
individuals were responsible for making a recommendation. In turn,
the members of the committee contacted their constituents to determine
their preferences. The faculty member on the committee, for instance,
disseminated a questionnaire among faculty ranks to provide insights
as to what brands they liked most.

The committee's decision was not easy. All members were not in accord
and it was very difficult to reach concensus on the best brand and
model. After months of negotiating, the committee finally was able
to reach agreement and proceeded to make their recommendation to the
purchasing agent.

DETAILS

In many cases there is conflict among the members of the buying
center. Conflict may take place at any point in the industrial
consumer behavior process. Members of the buying center may disagree
as to whether or not a purchase is necessary. Other points of
disagreement are the product characteristics sought, the potential
suppliers that should be considered, and the merits of each supplier.

There are various ways of resolving conflict. These include problem
solving,  persuasion, bargaining, and politicking.

Problem solving takes place when the members of the buying center
have differences of opinion regarding the merits of the suppliers
and their brands. Conflicts of this nature tend to produce an active
search for future information, consideration of information already
on hand, and a search for suppliers not previously considered.

In this case, the marketer is well-advised to determine the source
of the problem and to provide information that would resolve it
in his favor. Sales representatives are useful in this regard. A
sales representative, for instance, could talk with members of
the center and determine the nature of the conflict. Following this,
the sales representative could provide evidence of the superior
performance of his or her company.

PROBLEM 3

A sales representative works for a manufacturer of children's clothing.
The manufacturer is attempting to convince a department store to stock
the clothing, but some members of the buying committee favor the
manufacturer and others favor another. What is the sales rep to do?

A. Talk with buying center members, determine the nature of the
   conflict, and provide evidence of the quality of the company's
   clothing.
B. Choose particular members of the buying center who appear to
   favor the company's offerings and support their arguments with
   other buying center members.
C. Arrange for cooperative advertising involving the department
   store and the manufacturer.
D. Arrange for reduced prices to the department store.

A sales representative works for a manufacturer of children's clothing.
The manufacturer is attempting to convince a department store to stock
the clothing, but some members of the buying center favor the
manufacturer and others another producer.The sales rep should talk
with buying center members, determine the nature of the conflict,
and provide evidence of the quality of the company's clothing. This
is a case of problem solving, where members of the buying center differ
on the merits of alternative suppliers and their products. Sales
representatives should act as problem identifiers in searching for
reasons why conflict occurs. Then they should attempt to show how
their products can resolve the problem or problems.

ANSWER  A

INSTRUCTIONS Answer this question: "Who makes the decisions in industrial products
firms to purchase particular items?"

EXAMPLE

A university recently made a decision to purchase a particular brand
of personal computers for faculty, administrators, and staff
personnel. The decision was not easy, however, as many individuals
had a role in the decision.

The purchasing agent had the responsibility for formally making
the order. However, he did not make the decision as to what brand
to buy. Rather, he relied upon inputs from a number of parties.

The purchasing agent formed a committee, made up of staff from the
computer center, faculty, secretaries, and administrators. These
individuals were responsible for making a recommendation. In turn,
the members of the committee contacted their constituents to determine
their preferences. The faculty member on the committee, for instance,
disseminated a questionnaire among faculty ranks to provide insights
as to what brands they liked most.

The committee's decision was not easy. All members were not in accord
and it was very difficult to reach concensus on the best brand and
model. After months of negotiating, the committee finally was able
to reach agreement and proceeded to make their recommendation to the
purchasing agent.

DETAILS

A second means of handling conflict is through persuasion. Here the
members of the buying group agree on overall buying goals but differ
on what criteria to use in evaluating suppliers. It may be, for
instance, that an important goal of the buying center is to keep
costs at a low level. The purchasing agent may argue that this means
buying only those products that have a low purchase price. On the
other hand, the head engineer may feel that this goal requires
purchasing products that are ideally-suited for the production line,
thereby keeping labor and wastage costs at a minimum.

Where the conditions above prevail, the members of the buying center
tend to overcome conflict by discussing points of disagreement, rather
than by seeking information. Thus,  the purchasing agent may try to
persuade the head engineer that initial purchase costs are much
greater than production costs  and that they should be used as a
criterion.

Industrial sales representatives may be effective in influencing
the persuasion process in a way that favors their companies. If,
for instance, supplier X's product is low in initial price, a
company sales representative might side with the purchasing agent in
attempting to convince the head engineer that this criterion is more
important than others.

Bargaining is another method of overcoming conflict. It is to be
expected when conflict takes the form of fundamental differences
in buying goals. An example is where the purchasing agent wants to
keep costs low by purchasing inexpensive equipment  and the head
engineer wants to purchase high-quality equipment so that the
company might produce products that are superior in quality to
those of rivals. Under these circumstances, the parties are likely
to resort to bargaining. This involves giving in on one issue in
exchange for gaining on another.

In a bargaining situation, the purchasing agent may be willing to
forego buying from the lowest price quoter. He may insist, however,
that the extremely high price suppliers be dropped from consideration.

A common outcome of this situation is for the other members of the
buying group to let one have his or her way. They make this
concession in exchange for a favor or agreement that others will
have their way in future purchasing situations. A good stance for
the marketer is to urge those that favor her position  to grant
minor concessions for others.

Politicking takes place when the members of the buying center
disagree as to the style of decision making. They do not agree as
to the means of solving the buying problem.

When politicking occurs, personalities may enter the scene. Thus,
the purchasing agent may feel that the vendors should be carefully
evaluated in an objective manner, while the head engineer may
feel that the contract should go to Company Y because the sales
representative is a good friend. The marketer, under these
circumstances, should point out the importance of the buying
function and the need for making effective purchasing decisions.

PROBLEM 3

A computer systems sales representative has found that in a target
customer company, the computer director favors the sales
representative's systems because they are more user friendly than
are other brands. However, another important member of the buying
center favors another brand because it is lower in price. The
sales representative should:

A. Urge the computer director to make concessions to the other
   executive.
B. Point out the importance of the buying function and the need
   for making effective purchasing decisions.
C. Side with the computer director in arguing with the other
   executive about which brand is best.
D. Make a sales call on the other executive and attempt to make
   a sale to him.

WORKED

When the members of the buying center are involved in bargaining,
it is a good idea for the sales representative to urge those who
favor his position to grand minor concessions to others. A computer
sales representative who is involved in this situation can visit
with the member of the buying center who agree with him and find
out what the objections of the other important members of the
buying center are. Then he can assist in coming up with ideas as
to what minor concessions could be made. In this way, he can serve
as a valuable advisor.

ANSWER  A

INSTRUCTIONS Answer this question: "Who makes the decisions in industrial products
firms to purchase particular items?"

EXAMPLE

A university recently made a decision to purchase a particular brand
of personal computers for faculty, administrators, and staff
personnel. The decision was not easy, however, as many individuals
had a role in the decision.

The purchasing agent had the responsibility for formally making
the order. However, he did not make the decision as to what brand
to buy. Rather, he relied upon inputs from a number of parties.

The purchasing agent formed a committee, made up of staff from the
computer center, faculty, secretaries, and administrators. These
individuals were responsible for making a recommendation. In turn,
the members of the committee contacted their constituents to determine
their preferences. The faculty member on the committee, for instance,
disseminated a questionnaire among faculty ranks to provide insights
as to what brands they liked most.

The committee's decision was not easy. All members were not in accord
and it was very difficult to reach concensus on the best brand and
model. After months of negotiating, the committee finally was able
to reach agreement and proceeded to make their recommendation to the
purchasing agent.

DETAILS

There are four approaches to exchange--methods for evaluating
suppliers and entering into exchange:

1. Inspection--which involves thoroughly examining each item
being considered. Buyers often use this process for nonstandardized
items such as livestock, machinery, buildings, and airplanes.

2. Sampling--which is the inspection of a portion of a total order.
Buyers may use sampling when a large number of items are involved,
some of which may have perished in transit, such as farm produce.

3. Description--involves simply ordering items on the basis of
specifications, grades, or brands. It is based on trust when quality
is not likely to vary and when the supplier is known to be
reputable.

4. Negotiated contracts--these are usually entered when exact
specificiations have not been drawn up by the buyer. To accomodate
design changes, buyers award contracts where suppliers work on
some negotiated profit margin.

Marketers should make themselves aware of both prevailing exchange
practices and existing buyer expectations in developing strategies
for particular buyers. Marketing success is often based on
developing and furthering the trust relationships required to
simplify the target's buying and make it as trouble-free as possible.

PROBLEM 4

A manufacturer of plumbing fixtures (fittings, valves, and the like)
sold to industrial buyers is likely to enter into exchange with its
customers through:

A. Inspection of the fixtures by buyers, once they have been received.
B. Inspection of a sample of the fixtures by buyers.
C. Description, based upon specifications of buyers.
D. Negotiated contracts worked out between buyer and seller.

WORKED

The description exchange approach involves ordering items on the
basis of specifications, grades , or brands. It is based on trust
when quality is not likely to vary and when the supplier is known
to be reputable.

A manufacturer of plumbing fixtures is likely to use description.
Most of the fixtures are basically commodities with standard
specifications. Inspection or sampling is not necessary unless the
producer is totally new to buyers or has a questionable reputation.
Negotiated contracts are not needed because the buyers'specifications
normally are already determined. Description is often preferred by
both buyers and vendors because it is neither very costly nor very
time consuming

ANSWER  C