Organization Buying Process: step for organization buying process

Organization Buying Process

Let's start with one example, A Company name by XYZ, they want to packaging machinery, up to now they done by their worker, but it's slow process, and they want to match increase demand they want a fully automatic machinery.

Step 1: Problem Recognition

When company face a problem or need that can be met by acquiring a good or service. As per our example, XYZ company facing problem of slow packaging. Therefore they need a automatic machinery that can match their demand in market. That can be triggered by internal or external stimuli. Other than our example, company want to start new product, expanse their production, or security reason, or sometime government rule triggering stimuli.

Step 2: General need Description and Product Specification

Now, company want to general characteristic and required quantity. If item is complex organization involve engineers, users to define characteristics such as reliability, durability, or price. As per our example, Company involve engineers to understand what  capacity required require, what will maintains cost, what will set up cost.

Now, organization develop item's technical specification. Often, the company will assign a product - value - analysis (PVA) to engineering team. Main aim of PVA is cost reduction that studies components to determine whether they can be redesigned or standardized or made by cheaper methods of production. XYZ company's PVA team will analysis the machinery's specification also work on best cheapest way to solve packaging solution.

Step 3: Supplier Search

Now, company have product description and specification, time to search supplier who meet their needs. Company can search supplier through Internet, trade directories, contact with other companies, trade advertising, and trade shows. As per our example, Company will lookout packaging machine manufacturer in their area, near city or country, they want from outside of company, collect list of suppliers

Step 4: Proposal Solicitation

Now, XYZ company, contact with suppliers and chose some suppliers and asking to submit their proposals. If item is complex or more expansive buyer asking to detail written proposal. After evaluating proposal, company invite few supplier for make formal presentations.

Step 5: Supplier Selection

At this stage, company analysis suppliers, they rate and identify the most attractive suppliers. XYZ company can be give rank to supplier on basis of Price, Supplier reputation, Product reliability, Service reliability, Supplier flexibility.

Step 6: Order-Routing Specification

XYZ, company elected a supplier, now they listing technical specifications, the quantity needed, negotiates the final order, expected time of delivery, return policies, warranties and so on.

Step 7: Performance Review

Now, company take review from end users for machinery's performance and ask for their evaluations. For XYZ company, asking or taking review or machine operator. Sometime company set up incentive systems to reward purchasing managers for good buying performance.

Reference:

Marketing Management by Philip Kotelr

Consumer Buying Behavior: Stimulus-Response Model

Consumer Buying Behavior

By analysis of Consumer Buying Behavior, Company get answer of the following question:

• why consumer make the purchases that they make?
• What factor influence consumer purchase?
• The changing factor in our society ?

Buying Decision process

Step 1: Problem recognition

Buying process start when buyer recognize problem or need triggered by internal stimuli or external stimuli. Internal Stimuli, example, Hunger, need to eat. External Stimuli, example, you see your friend's car and you think you also need a car.

Step 2: Information Search

Sources of information are:

personal: family, friends, neighbor

Commercial: Ads, Website, salespeople

Public: Mass media,

Experiential: handling, examining, using product.

Step 3: Evaluation of Alternatives

Rank/weight alternatives or resume search. May decide that you want to buy laptop, you search company which you aware, and give high rank which like, prefer or satisfied your need. If that brand not satisfied, u go back to information search phase.

Step 4: Purchase decision

After evaluation of alternative, consumer collect information for purchase, for example, where do I get laptop, where is the showrooms, they offer discount, they provide proper service. Than after consumer related attitudes of others in the role played by infomediaries who use various media channels. or second factor is unanticipated situation factors that may erupt to change the purchase intention. than after preferences and even purchase intentions are not completely reliable predictors of purchase behavior.

Step 5: Post-purchase behavior

After the purchase, the consumer might experience dissonance that stems for noticing certain disquieting features of hearing favorable things about brands and will be alert to information that supports his/her decision.

Post-purchase Satisfaction is a function of the closeness between expectations and the product's perceived performance.

Stimulus - Response Model

Marketing and environmental stimuli enter the consumer's consciousness and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions.  Major task is to understand what happens in the consumer's consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.

Segmentation Model: Types of Segmentation

Segmentation Model

Segmentation model helping tool for develop database that provide calculations and rankings for identified critical elements that are necessary for meet companies objective within a particular segment.

Company do segmentation because:

• For meet company's objective, like, sales growth and profit.
• To determine the necessary calculations,  grouping and ranking of all customers.
• To identify which of customers are most valuable in the attainment of your objectives.
• Developed and executed properly, provides a very clear understanding to the target group, What the objectives are, how the model work

Type of market segmentation

Geographic segmentation

Segmentation by Geographic criteria, Like, Nations, Stat, regions, city, etc. Demographic data with geographic data to create a more accurate profile. For example, KFC, Started to add vegetable dish in menu. With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas, in hot regions, can sell summer clothing.  Small or local merchant can sell product cording to local people preference.  

Demographic segmentation

Segmentation can be done by on basis on age, gender, occupation and education level etc. for example, sport bike target youngsters, luxurious  car target business men/ top level executives. Demographic segmentation divides markets into different life stage groups and allows for messages to be tailored accordingly.

Behavioral Segmentation

Segmentation can be done on basis of knowledge, attitude, usage rate, responses, status, etc. Marketers believe that behavior variables are the best starting point for building market segments.

Psychographic segmentation

Segmentation can be done by on basis of lifestyle, interests, opinions of customers. It considers how people spend their leisure (relaxation ). Psychographics are very important to segmentation, because psychographics identify the personal activates and targeted lifestyle the target subject endures. or image they are attempting to project.

Process of Marketing Research

Marketing Research

Step 1: Define the problem and Research Objective

• What is to be researched?
• Why is it to be research?

Working on this two question will be define research objective/problems. Purpose of research is to generating meaningful information, which will help in taking effective decision.

Step 2: Develop the research plan

Next step to generating required information. 

Data Source: Gather secondary data, primary data or both. Secondary data are data that were collected for another purpose, and already exist somewhere. Primary data are freshly gathered data for a specific purpose or for a specific research project.

Primary Data collected by:

• Observational Research: collect fresh data by observing the as the they shop or they consume product, hold informal interview sessions.
• Focus Group Research: Called five to ten people to discuss about product, service, organization spend few hours on discussion, under skilled moderator.
• Survey Research: This is one of the best descriptive research. Company conduct surveys to learn about people's knowledge, beliefs, preferences, and satisfaction. it required development of a survey instrument, usually a questionnaire, which the respondents are asked to fill up.
• Experimental Research: Most scientifically valid research. Purpose of doing experimental research is to capture cause-and-effect relationship by eliminating competing explanations of the observed findings.

Research Instruments:

• Questionnaires: Most common instrument for collect primary data. It's consists of a set of questions presented to respondents.
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• Qualitative measures: Qualitative research techniques are relatively unstructured measurement approaches that permit a range of possible responds. Their variety is limited only by creativity of the marking researcher.

Sampling Plan:

Research must design a sampling plan.  

• Sampling unit: Who should we survey?
• Sample Size: How many people we survey?
• Sampling Procedure: How should we choose the respondents?

Step 3: Collect the information

The data collection phase of marketing research is generally the most expensive and the most prone to error. Four major problem arise in survey. Some responded refuse to co-operate, Some give dishonest answer, some will not be at home and must be contacted again or replaced, some will be biased.

Step 4: Analyze the information

Researcher test different hypotheses and theories, applying sensitivity analysis to test assumption and the strength of the conclusions.

Step 5: Present the Findings

At last, researcher presents findings relevant to the major marketing decisions facing management. they are also considering ways to present research findings in as understandable and compelling a fashion as possible.

Step 6: make Decision

Research findings only provide additional information and insight the mangers. Depending on their confidence in the findings, mangers decide to use it, discard it or carry out more search.



Source: Marketing Management by Philip Kotler

Distribution Chanel: Function of Channel

Distribution Channel

Distribution Channel is a set of different independent organization(intermediate) which involve in process of making product(Service) available for customers.

Functions of channel

• gather information about current customers, competitors, and other actors and forces in the marketing environment
• Place orders with manufacturers.
• Acquire the funds to finance inventories at different levels in marketing channel.
• Assume risks connected with carrying out channel work
• Provide for the successive storage and movement of physical products.
• provide for buyers' payment of their bills through banks and other financial institutions.

Design Channel

Step1: Analyzing Customers' desired service output levels

Target customer want:

Lots size: can buying large size, a household wants a channel that permits buying a lot size of one.

Waiting and delivery time: Customer prefer faster and faster delivery channel.

Spatial convinces:  Specially for Indians, taking order on phone and give home delivery.

Product variety: Customers prefer a grater assortments because more choices increase the chance of finding what they need.

Service backup: credit service, repairs provide by channel.

Step2: Establishing Objectives and Constraints

Channel objective in terms of targeted service output level. Channel arrange like minimize total channel costs and still provide desired levels of service outputs.  Channel objective vvary with product characteristics.

Step3: Identifying and evaluating major channel alternatives

Company have to chose wild verity of channel to reach customers, Like, sales force, distributors, dealers, direct mail, telemarketing, and the internet. A channel alternative is described by three elements:  the types of available business intermediaries, the number of intermediaries needed, and the terms and responsibilities of each channel member

Role of Channel members

Retailer: Organization that sell product direct to the customer. Marketing of companies product by put holding, lift let, Brochures.

Wholesalers:  Organization that purchase product from manufacture or industrial distributors and sell to reseller. Wholesalers, bring risk, carry large stock, promote companies, match supply and demand, collect market information.

Industrial Distribution: Example include Business to Business marketing, selling product to industrial suppliers.

Why Channel Members:

Reduce exchange time: exchange time includes physical goods, payment, information.

Retailers' are more touch with customer, make relationship with customers and generate sales for companies'

Market information: They are dealing with real market, they provide information about market condition, product value, and about competitors

Cost Saving in specialization: wholesaler/retailers know what they do. They perform their task at lower cost, and they have own build market.

Wholesaling: types of wholesalers

Wholesaling

Wholesaling includes selling goods/service to re-seller. They are different from retailers, Wholesalers pay less attention to promotion, atmosphere, and location, because of they are dealing with business customer rather than final consumers. Wholesaler transaction are usually larger then retail transitions.  Wholesalers usually cover a large amount of goods than retailers. On government regulations and taxes are differently in retailers.

Why Wholesalers

Selling and promoting: wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost. they have more contacts and buyers often trust them more than they trust a distant manufacturer.

Buying and assortment building: wholesalers are able to select items and build the assortment their customer need, saving them considerable work.

Bulk breaking: wholesalers achieve saving for their customers by buying large carload lots and breaking the bulk into smaller units.

Warehousing: hold inventories. Reduce inventory costs and risks to suppliers and customers.

Transportation: wholesalers can often provide quicker delivery to buyers.

Risk Baring: Taking title and bearing the cost of theft, damage, Spoilage and obsolescence.

Types of Wholesaler

Merchant wholesalers: They are full service and limited service distributors, mill supply houses. Independently own businesses that take title to the merchandises they handle.

Full-service wholesalers: Maintain sales and sales force, carry stock, offer credit, provide management assistance.

Limited-service Wholesalers: Sell a limited line of fast-moving goods to small retailers for cash. Deliver goods to supermarkets, hospitals, restaurants, hotels.

Specialize wholesalers: For example, agricultural assemblers, petroleum bulk plants and terminals, auctions companies. 

Retailing: types of Retailing

Retailing

Retailing include sell product to final customers.

Type of Retailing:

Speciality Store: Narrow product line. Selling a specific good for example, Electronics shops, Home decor, Toys store, Gift store, medical shops, Garment shop.

Department Store: Several product lines. where you get more than one categories product, for example, Big Bazar, Reliance super, Centre mall .

Supermarket: Where customer get, large, low-cost, low margin, high volume, self-service store designed to meet total needs for food and household product

Convenience store: Small store, which you may find hear to your home. Limited line of convenience products.

Discount store: Standard or speciality merchandise: Low-price, Low-margin, high-volume stores. D-mart, Wal-mart.

Off-price retailer: factory outlets, sold at less than retail. Kolar, Apple store, Pentaloons.

Retailing also divide basis on service

Self-service: Customer chose by their own choice. all major store, like wal-mart, Big bazar.

Self-Selection: Customer find their own goods although they can ask for assistance.

Limited Service: Customer need more information and assistance. Include more shopping goods and service such as credit and merchandise-return privileges.

Full service: Salespeople are assist you in every phase of the selection process.