Straight Rebuy For Air Asia

i Organizational influences)

Buyer responses

Product or service choice

Supplier choice

Order quantities

Delivery terms and times

Service terms

Payment

Straight rebuy

A business buying situation in which the buyer routinely reorders something without any modifications.

Modified rebuy

A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.

New task

A business buying situation in which the buyer purchases a product or service for the first time.

Systems selling (or solutions selling)

Buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation.

The model in Figure 6.1 suggests four questions about business buyer behavior: What buying decisions do business buyers make? Who participates in the buying process? What are the major influences on buyers? How do business buyers make their buying decisions?

Major Types of Buying Situations

There are three major types of buying situations.3 At one extreme is the straight rebuy, which is a fairly routine decision. At the other extreme is the new task, which may call for thorough research. In the middle is the modified rebuy, which requires some research.

In a Straight rebuy, the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. Based on past buying satisfaction, the buyer simply chooses from the various suppliers on its list. "In" suppliers try to maintain product and service quality. They often propose automatic reordering systems so that the purchasing agent will save reordering time. "Out" suppliers try to find new ways to add value or exploit dissatisfaction so that the buyer will consider them.

In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers. The modified rebuy usually involves more decision participants than does the straight rebuy. The in suppliers may become nervous and feel pressured to put their best foot forward to protect an account. Out suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business.

A company buying a product or service for the first time faces a new-task situation. In such cases, the greater the cost or risk, the larger the number of decision participants and the greater their efforts to collect information. The new-task situation is the marketer's greatest opportunity and challenge. The marketer not only tries to reach as many key buying influences as possible but also provides help and information.

The buyer makes the fewest decisions in the straight rebuy and the most in the new-task decision. In the new-task situation, the buyer must decide on product specifications, suppliers, price limits, payment terms, order quantities, delivery times, and service terms. The order of these decisions varies with each situation, and different decision participants influence each choice.

Many business buyers prefer to buy a complete solution to a problem from a single seller instead of buying separate products and services from several suppliers and putting them together. The sale often goes to the firm that provides the most complete system for meeting the customer's needs and solving its problems. Such systems selling (or solutions selling) is often a key business marketing strategy for winning and holding accounts.

Thus, as we discovered in Real Marketing 6.1, transportation and logistics giant UPS does more than just ship packages for its business customers. It develops entire solutions to customers' transportation and logistics problems. For example, UPS bundles a complete system of services that support Nikon's consumer products supply chain—including logistics, transportation, freight, and customs brokerage services—into one smooth-running system.4

When Nikon entered the digital camera market, it decided that it needed an entirely new distribution strategy as well. So it asked transportation and logistics giant UPS to design a complete system for moving its entire electronics product line from its Asian factories to retail stores throughout the United States, Latin America, and the Caribbean. Now, products leave Nikon's Asian manufacturing centers and arrive on American retailers' shelves in as few as two days, with UPS handling everything in between. UPS first manages air and ocean freight and related customs brokerage to bring Nikon products from Korea, Japan, and Indonesia to its Louisville, Kentucky, operations center. There, UPS can either "kit" the Nikon merchandise with accessories such as batteries and chargers or repackage it for in-store display. Finally, UPS distributes the products to thousands of retailers across the United States or exports them to Latin American or Caribbean retail outlets and distributors. Along the way, UPS tracks the goods and provides Nikon with a "snapshot" of the entire supply chain, letting Nikon keep retailers informed of delivery times and adjust them as needed.

Buying center

All the Individuals and units that play a role in the purchase decision-making process.

Users

Members of the buying organization who will actually use the purchased product or service.

Influencers

People in an organization's buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives.

Buyers

The people in the organization's buying center who make an actual purchase.

Deciders

People in the organization's buying center who have formal or informal power to select or approve the final suppliers.

Gatekeepers

People in the organization's buying center who control the flow of information to others.

Participants in the Business Buying Process

Who does the buying of the trillions of dollars' worth of goods and services needed by business organizations? The decision-making unit of a buying organization is called its buying center—all the individuals and units that play a role in the business purchase decision-making process. This group includes the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information.

The buying center includes all members of the organization who play any of five roles in the purchase decision process.5

• Users are members of the organization who will use the product or service. In many cases, users initiate the buying proposal and help define product specifications.

• Influencers often help define specifications and also provide information for evaluating alternatives. Technical personnel are particularly important influencers.

• Buyers have formal authority to select the supplier and arrange terms of purchase. Buyers may help shape product specifications, but their major role is in selecting vendors and negotiating. In more complex purchases, buyers might include high-level officers participating in the negotiations.

• Deciders have formal or informal power to select or approve the final suppliers. In routine buying, the buyers are often the deciders, or at least the approvers.

• Gatekeepers control the flow of information to others. For example, purchasing agents often have authority to prevent salespersons from seeing users or deciders. Other gatekeepers include technical personnel and even personal secretaries.

The buying center is not a fixed and formally identified unit within the buying organization. It is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center will vary for different products and for different buying situations. For some routine purchases, one person—say, a purchasing agent—may assume all the buying center roles and serve as the only person involved in the buying decision. For more complex purchases, the buying center may include 20 or 30 people from different levels and departments in the organization.

The buying center concept presents a major marketing challenge. The business marketer must learn who participates in the decision, each participant's relative influence, and what evaluation criteria each decision participant uses. This can be difficult. Says one supplier of healthcare information technology solutions to large hospitals:

You have to understand what [doors] to knock on. A lot of salespeople give up on working with hospitals because they don't understand how big the business is, and you have a lot of people you have to deal with. You also have to understand that you're selling to committees, which means 10 or 20 people have to make a decision. For them to make a decision they have to have lots of meetings, and sales can [take] anywhere from six months to two years."6

For instance, A the medical products and services group of Cardinal Health sells disposable surgical gowns to hospitals. It identifies the hospital personnel involved in this buying decision as the vice president of purchasing, the operating room administrator, and the surgeons. Each participant plays a different role. The vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If analysis favors disposable gowns, then the operating room administrator compares

Buying center: Cardinal Health deals with a wide range of buying influences, from purchasing executives and hospital administrators to the surgeons who actually use its products.

competing products and prices and makes a choice. This administrator considers the gowns' absorbency, antiseptic quality, design, and cost, and normally buys the brand that meets requirements at the lowest cost. Finally, surgeons affect the decision later by reporting their satisfaction or dissatisfaction with the brand.

The buying center usually includes some obvious participants who are involved formally in the buying decision. For example, the decision to buy a corporate jet will probably involve the company's CEO, chief pilot, a purchasing agent, some legal staff, a member of top management, and others formally charged with the buying decision. It may also involve less obvious, informal participants, some of whom may actually make or strongly affect the buying decision. Sometimes, even the people in the buying center are not aware of all the buying participants. For example, the decision about which corporate jet to buy may actually be made by a corporate board member who has an interest in flying and who knows a lot about airplanes. This board member may work behind the scenes to sway the decision. Many business buying decisions result from the complex interactions of ever-changing buying center participants.

Major Influences on Business Buyers

Major Influences Business Buyers

Business buyers are subject to many influences when they make their buying decisions. Some marketers assume that the major influences are economic. They think buyers will favor the supplier who offers the lowest price or the best product or the most service. They concentrate on offering strong economic benefits to buyers. However, business buyers actually respond to both economic and personal factors. Far from being cold, calculating, and impersonal, business buyers are human and social as well. They react to both reason and emotion.

Today, most B-to-B marketers recognize that emotion plays an important role in business buying decisions. For example, you might expect that an advertisement promoting large trucks to corporate fleet buyers or independent owner-operators would stress objective technical, performance, and economic factors. A For instance, premium heavy-duty truck maker Peterbilt does stress performance—its dealers and Web site provide plenty of information about factors such as maneuverability, productivity, reliability, comfort, and fuel efficiency. But Peterbilt ads appeal to buyers' emotions as well. They show the raw beauty of the trucks, and the Peterbilt slogan—"Class Pays"—suggests that owning a Peterbilt truck is a matter of pride as well as superior performance. Says the company, "On highways, construction sites, city streets, logging roads—everywhere customers earn their living—Peterbilt's red oval is a familiar symbol of performance, reliability, and pride."

When suppliers' offers are very similar, business buyers have little basis for strictly rational choice. Because they can meet organizational goals with any supplier, buyers can allow personal factors to play a larger role in their decisions. However, when competing products differ greatly, business buyers are more accountable for their choices and tend to pay more attention to economic factors. \ Figure 6.2 lists various groups of influences on business buyers—environmental, organizational, interpersonal, and individual.7

Peterbilt Models 386 an

FROM THË INNOVATIVE VERSATILITY OF THE TO THE SPACIOUS AMD EKCONOMIC MODEL TWO CHOIOÍS OE PREMIUM. RIEL EIEÉCIEMCV.

Environmental Factors

Business buyers are heavily influenced by factors in the current and expected economic environment, such as the level of primary demand, the economic outlook, and the cost of money. Another environmental factor is shortages in key materials. Many companies now are more willing to buy and hold larger inventories of scarce materials to ensure adequate supply. Business buyers also are affected by technological, political, and competitive developments

Emotions play an important role in business buying. This Peterbilt ad stresses performance factors, such as fuel efficiency. But it also stresses more emotional factors, such as the raw beauty of Peterbilt trucks and the pride of owning and driving one. "Class Pays."

Major Influences on Business Buyer Behavior

Like consumer buying decisions in Figure 5.2, business buying decisions are affected by an Incredibly complex combination of environmental, interpersonal, and Individual influences, but with an extra layer of organizational factors thrown into the mix.

Environmental

Economic developments

Supply conditions

Technological change

Political and regulatory developments

Competitive developments

Culture and customs

Organizational

Objectives

Policies

Procedures

Organizational structure

Systems

Interpersonal I

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Responses

  • Callie
    What are the benefits of owning a peterbilt?
    8 years ago
  • semira
    How does straight rebuy affect sellers?
    4 years ago
  • sienna
    How does customer react using straight rebuy?
    6 months ago

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