consumer buying decision-making process

The first step occurs when the consumer experiences a need or want. A problem
or gap exists between an individual’s current state and desired state.
The need can be physical, such as hunger or thirst.
It might be social, such as when a consumer visits a friend’s apartment and sees
his new HDTV and wants one as a result. Needs may be psychological in nature,
including the desire for love or protection from fear.
Marketing communications can also trigger consumer needs. The advertisement
for Skyjacker suspensions on the next page may act as a catalyst for an individual
to want a lift kit for his vehicle.
Situations Leading to Problem Recognition
 Insufficient Stock of Goods: The most common situation leading to problem recognition by a consumer
is depletion of stock of goods that he uses. If, for example, an individual runs out of necessities that he
uses, he will identify a problem to exist.

 Dissatisfaction or Discontentment with the Stock: If a consumer becomes dissatisfied with the goods
he owns or uses, he will recognize that he is having a problem. A family having a ten year’s old car may
be willing to buy a late model car. Such a feeling will lead to discontent, and as a result the family will
recognize a car related problem.

 Changes in the Environmental Characteristics:

 Changes in the Financial Status:

 Promotional Activities:

 Consumer’s Previous Decisions:

 Individual Development:

 Efforts of Consumer Groups and Governmental Agencies:

 Availability of Products:

Once a need emerges the consumer begins an internal search, mentally recalling products
that might satisfy it. Often, the individual remembers how the need was previously met. If a
particular brand was chosen and a positive experience followed, the consumer becomes
likely to repeat the purchase decision, and the information search ends. When a previous
purchase did not work out, or the consumer wishes to try something else, a more complete
internal search may commence.
Internal search
because she eliminates brands associated with negative experiences. Brands she knows
little about are also eliminated. In other words, the consumer quickly reduces the number of
potential brands.
A product with a high level of brand awareness or brand equity will likely be included in the
consumer’s set of alternatives.
External search
Following an internal search, the consumer makes a mental decision regarding an external
search. When the customer has sufficient internal information, he moves to the next step of
the decision-making process:
Individuals gather external information from a variety of sources, including friends, relatives,
experts, books, magazines, newspapers, advertisements, in-store displays, salespeople,
the internet, and social media.

The amount of time a consumer spends on an external search depends on three factors:
ability, motivation, and costs versus benefits.
Ability consists of a person’s educational level combined with the specific knowledge he has
about a product and the various brands in a specific category. They are often more willing to
visit stores or search online prior to making decisions. Consumers possessing extensive
knowledge about individual brands and product categories are better able to conduct more
involved external searches. For instance, someone who knows a great deal about digital
cameras has a more sophisticated ability to examine information about them than someone
who knows little about the technology.
Level of Motivation The degree to which an external search takes place further depends on the
customer’s level of motivation. The greater the motivation, the more time spent on an external
search. Motivation is determined by the consumer’s: • Level of involvement • Need for
cognition • Level of shopping enthusiasm
Involvement summarizes the extent to which a stimulus or task is relevant to a consumer’s
existing needs, wants, or values. When a consumer deems a product to be important, it
becomes more likely she will engage in an external search. The amount of involvement will be
determined by factors such as the cost of the product and its importance. The higher the price,
the more time an individual spends searching for information.
The need for cognition People with high needs for cognition gather more information and
search more thoroughly. The search also depends on a person’s enthusiasm for shopping.
Customers who enjoy shopping undertake more in-depth searches for goods and services.
Costs Versus Benefits Two final factors that influence an information search are the perceived
costs versus the perceived benefits of the search. Higher perceived benefits increase the
inclination to search.
The ability to reduce purchase risk becomes a benefit that many consumers seek while
examining external information. Additional information lowers the chances of making a mistake
in the purchase selection. The cost of the search consists of several items:
• The actual cost of the good or service
• The subjective costs associated with the search, including time spent and anxiety experienced
while making a decision
• The opportunity cost of foregoing other activities to search for information (for example,
going shopping instead of playing golf or watching a movie)

Evaluating alternatives : the third step in the consumer buying decision-making process.
Three models portray the nature of the evaluation process: the evoked set approach, the
multiattribute approach, and affect referral.
The evaluation of alternatives is the third step in the consumer buying
decision-making process. During this stage, consumers compare options to
make the best choice.
The third stage of the Consumer Decision Making Process, the evaluation of
alternatives takes place when a consumer establishes criteria to evaluate the most
viable purchasing option.
 Evoked set approach
A person’s evoked set consists of the brands that are considered in a purchasing
situation. Two additional components of evoked sets are part of the evaluation of
purchase alternatives:
1. The inept set consists of the brands that are part of a person’s memory which are not
considered because they elicit negative feelings.
2. The inert set holds the brands that the consumer is aware of but the individual has
neither negative nor positive feelings about the products.
an evoked set is the brands and products that consumers consider when
making a purchase decision. An inert set is the brands that consumers are
aware of but don't consider relevant enough to be in the evoked set

The Multi-attribute Approach

The key to understanding this model is noting that consumers often examine sets of
attributes across sets of products or brands. The multi-attribute model assumes that a
consumer’s attitude toward a brand is determined by:
 The consumer’s beliefs about a brand’s performance on each attribute
 The importance of each attribute to the consumer
The higher a brand is rated on attributes that are important to the consumer, the more likely
it becomes that the brand will be purchased.
The multiattribute approach may be useful for understanding high-involvement
purchases. Consumers often examine sets of product attributes across an array of
brands. The multiattribute model suggests that a consumer’s attitude toward a
brand is determined by:
• The brand’s performance on product or brand attributes
• The importance of each attribute to the consumer
The higher a brand rates on attributes that are important to the consumer, the
more likely it becomes the brand that will be purchased. Figure 3.8 notes various
products, along with some of the characteristics that affect their selection. Each
has potentially a lesser or greater value to individual consumers.
Affect Referral
With this method, a consumer chooses the brand which he or she likes the best. The
individual does not evaluate the other brands and often does not even think about which
attributes are important.
Two things explain why consumers rely on affect referral:
1. It saves mental energy.
2. The multi-attribute model may have been utilized previously. Thus, the person has
already spent a great deal of time considering various product attributes, deciding which
attributes were most critical, and reaching a decision.
affect referral : The concept of affect referral suggests that consumers choose brands they
like the best or the ones with which they have emotional connections. the consumer buys
the brand he likes the best or the one that incites positive feelings. Toothpaste, chewing
gum, soft drinks, and candy are some of the products consumers normally select in this
way. These purchases typically have low levels of involvement. They also tend to be
frequently purchased products. The affect referral model may apply to the use of artificial
sweeteners, such as Splenda, Equal, and Sweet’N Low. Previously, many consumers gave
little thought to brand selection when choosing sweeteners.
Third, at times consumers develop emotional bonds with brands. In terms of the purchase
decision, an emotional bond with a product can be the strongest and most salient factor in
the decision. Successful brands establish emotional bonds with consumers. A bond
generates brand loyalty, enhances brand equity, and reduces brand parity. Consequently,
consumers do not evaluate alternatives because of their bond with the brand. Harley-
Davidson enjoys such a bond with many of its customers. These individuals hold strong
feelings toward the company and do not even consider other alternatives. The Jeep and
Apple brands have also obtained emotional brand followers. Affect referral explains this
phenomenon.
The evaluation of alternatives often involves consumers drawing on their evoke, inept, and insert
sets to help them in the decision making process.

Evoke Set

The brands and products that consumers compare—their evoked set– represent the alternatives
being considered by consumers during the problem-solving process. Sometimes known as a
“consideration” set, the evoked set tends to be small relative to the total number of options
available. When a consumer commits significant time to the comparative process and reviews
price, warranties, terms and condition of sale and other features it is said that they are involved in
extended problem solving. Unlike routine problem solving, extended or extensive problem
solving comprises external research and the evaluation of alternatives. Whereas, routine problem
solving is low-involvement, inexpensive, and has limited risk if purchased, extended problem
solving justifies the additional effort with a high-priced or scarce product, service, or benefit
(e.g., the purchase of a car). Likewise, consumers use extensive problem solving for infrequently
purchased, expensive, high-risk, or new goods or services.

Inept Set

As opposed to the evoked set, a consumer’s inept set represent those brands that they would not
given any consideration too. For a consumer who is shopping around for an electric vehicle, for
example, they would not even remotely consider gas-guzzling vehicles like large SUVs.

Inert Set

The inert set represents those brands or products a consumer is aware of, but is indifferent to and
doesn’t consider them either desirable or relevant enough to be among the evoke set. Marketers
have an opportunity here to position their brands appropriately so consumers move these items
from their insert to evoke set when evaluation alternatives.

The Purchase Decision

After much searching and evaluating, or perhaps very little, consumers at some point have
to decide whether they are going to buy.

Anything marketers can do to simplify purchasing will be attractive to buyers. This may
include minimal clicks to online checkout; short wait times in line; and simplified payment
options. When it comes to advertising marketers could also suggest the best size for a
particular use, or the right wine to drink with a particular food. Sometimes several decision
situations can be combined and marketed as one package. For example, travel agents often
package travel tours with flight and hotel reservations.
To do a better marketing job at this stage of the buying process, a seller needs to know
answers to many questions about consumers’ shopping behaviour. For instance, how much
effort is the consumer willing to spend in shopping for the product? What factors influence
when the consumer will actually purchase? Are there any conditions that would prohibit or
delay purchase? Providing basic product, price, and location information through labels,
advertising, personal selling, and public relations is an obvious starting point. Product
sampling, coupons, and rebates may also provide an extra incentive to buy.
Actually determining how a consumer goes through the decision-making process is a
difficult research task.

Or maybe you decide to order online because you’re too busy to go to the mall.
Other decisions related to the purchase, particularly those related to big-ticket items,
are made at this point. For example, if you’re buying a high-definition television, you
might look for a store that will offer you credit or a warranty.

Post-Purchase Behaviour

However, a consumer’s feelings and evaluations after the sale are also significant to a
marketer, because they can influence repeat sales and also influence what the customer
tells others about the product or brand.

Keeping the customer happy is what marketing is all about. Nevertheless, consumers
typically experience some post-purchase anxiety after all but the most routine and
inexpensive purchases. This anxiety reflects a phenomenon called cognitive dissonance.
According to this theory, people strive for consistency among their cognitions (knowledge,
attitudes, beliefs, values). When there are inconsistencies, dissonance exists, which people
will try to eliminate. In some cases, the consumer makes the decision to buy a particular
brand already aware of dissonant elements. In other instances, dissonance is aroused by
disturbing information that is received after the purchase. The marketer may take specific
steps to reduce post-purchase dissonance. Advertising that stresses the many positive
attributes or confirms the popularity of the product can be helpful. Providing personal
reinforcement has proven effective with big-ticket items such as automobiles and major
appliances. Salespeople in these areas may send cards or may even make personal calls in
order to reassure customers about their purchase.
At this point in the process you decide whether the backpack you purchased is everything you
were expecting. Whether it is or isn’t, you will probably experience cognitive dissonance.
Typically, dissonance occurs when a buyer is questioning their decision. Consumers are more
likely to experience dissonance with products that are relatively expensive and that are
purchased infrequently.
You want to feel good about your purchase, but you don’t. You begin to wonder whether you
should have waited to get a better price, purchased something else, or gathered more
information first. Consumers commonly feel this way, which is a problem for sellers. If you don’t
feel good about what you’ve purchased from them, you might return the item and never
purchase anything from them again. Or, worse yet, you might tell everyone you know how bad
the product was. Or, you might like the product but still have doubts or be uncomfortable
because you aren’t confident that you made the best decision.

Companies do various things to try to limit dissonance. For smaller items, they might offer a
money back guarantee or they might encourage their salespeople to tell you what a great
purchase you made. How many times have you heard a salesperson say, “That outfit looks so
great on you!” For larger items, companies might offer a warranty, along with instruction
booklets, and a toll-free troubleshooting line to call or they might have a salesperson call you to
see if you need help with product. Automobile companies may offer loaner cars when you bring
your car in for service.

Companies may also try to set expectations in order to satisfy customers. Service companies
such as restaurants do this frequently. Think about when the hostess tells you that your table
will be ready in 30 minutes. If they seat you in 15 minutes, you are much happier than if they
told you that your table would be ready in 15 minutes, but it took 30 minutes to seat you.
Similarly, if a store tells you that your pants will be altered in a week and they are ready in three
days, you’ll be much more satisfied than if they said your pants would be ready in three days,
yet it took a week before they were ready.

Stage 6. Disposal of the Product

There was a time when neither manufacturers nor consumers thought much about how
products got disposed of, so long as people bought them. But that’s changed. How products
are being disposed of is becoming extremely important to consumers and society in general.
Computers and batteries, which leak chemicals into landfills, are a huge problem. Consumers
don’t want to degrade the environment if they can avoid it, and companies are becoming more
aware of this fact.

Take for example Crystal Light, a water-based beverage that’s sold in grocery stores. You
can buy it in a bottle. However, many people buy a concentrated form of it, put it in reusable
pitchers or bottles, and add water. That way, they don’t have to buy and dispose of plastic
bottle after plastic bottle, thus damaging the environment in the process.

Consumer attitudes are a combination of a consumer's beliefs, feelings, and behavioral

intentions toward a product or service. These attitudes can be favorable or unfavorable, and
they can influence a consumer's opinions and decisions.
Effective marketing communications influence consumer attitudes.

An attitude is the mental position taken toward a topic, a person, or an event that influences
the holder’s feelings, perceptions, learning processes, and subsequent behaviors.Attitudes
drive purchase decisions. A consumer holding a positive attitude toward a brand becomes
more likely to buy it. Someone who enjoys an advertisement will also be more inclined to
purchase the product.

Attitudes consist of three components: Affective, cognitive, and conative.

Affective component : feelings or emotions a person has about the object, topic, or idea.

The affective part of the attitude carries the general feeling or emotion a person attaches to
the idea. In the case of goods and services, the product, its name, and other features can all
generate emotions.

Consider your emotional reactions to the following goods and services: • Cough medicine •
Diapers • Motorcycles • Children’s toys made in China • Sports Illustrated’s annual swimsuit
issue • Condoms

What emotions and thoughts do you associate with the Craig General Hospital
advertisement shown on this page? The images in the ad and the headline “Bringing the
best in healthcare home” attempts to instill emotional feelings toward the local hospital

cognitive component: person’s mental images, belief, understanding, and interpretations of

the person, object, or issue.

Most of the time, a person first develops an understanding about an idea or object. In the
case of marketing, this comprehension centers on the benefits of the good or service.

Thoughts about the product emerge from watching or reading advertisements. Other
thoughts may result from exposure to information from other sources, such as the internet,
social media, or a friend’s referral. Eventually, these ideas become beliefs the consumer
holds about a particular product. A consumer who sees the Centric Federal Credit Union
advertisement shown on this page might notice the emphasis on fewer fees and better rates
for banking.

Conative component: holds an individual’s intentions, actions, or behavior.

Decision and action tendencies constitute the conative parts of attitudes. Therefore, when a
person feels strongly about the quality of healthcare, Craig General Hospital may be
selected. However, attitudes are not always strongly held. Some people might feel favorably
about a topic, such as green marketing, but this does not necessarily change their
purchasing behaviors.

These components may occur in various sequences.

One common sequence of events that takes place in attitude formation is:

Cognitive → Affective → Conative

.
Attitudes develop in other ways. An alternative process is: Affective → Conative → Cognitive

Advertisements and other marketing communications can first appeal to the emotions or
feelings held by consumers in order to move them to like the product and make a purchase
(the conative component). Cognitive understanding of the product comes after the
purchase. A woman viewing an ad for Platinum Motorcars may be draw to the idea of being
“pampered” by renting a luxury automobile. Emotionally, she has a desire to rent the car
and takes action. Cognitive reasoning about renting the luxury car follows the emotional
experience.
Attitudes result from third combination of the components: Conative →Cognitive →Affective
Purchases that require little thought, have a low price, or do not demand a great deal of
emotional involvement might follow this path.

While shopping for groceries, a customer may notice a new brand of cookies. The person
may have never seen the brand or flavor before, but decides for a try.

As the consumer eats the cookies, he develops a greater understanding of their taste,
texture, and other qualities.

Finally, he reads the package to learn more about contents, including how many calories
were present. He then develops feelings toward the cookies that affect future cookie
purchases.

No matter which path a consumer takes to develop attitudes, each component will be
present to some extent. Some attitudes are relatively trivial (for example, “I like pingpong,
even though I hardly ever get to play”). Others are staunchly held, such as “I hate cigarette
smoke!” Both are associated with feelings toward things, including products in the
marketplace.
Trends in the Consumer Buying Environment Studying
The environment in which consumers purchases continually changes and evolves. Several
trends in the consumer buying environment affect purchasing patterns
Trends Affecting Consumer Buying Behaviors
• Age complexity • Gender complexity • Active, busy lifestyles • Diverse lifestyles •
Communication revolution • Experience pursuits • Health emphasis
Age Complexity : Technology affects the ways children grow up. They are bombarded with
advertisements, video games, television shows, movies. Most become fashion-conscious as
preteens. Many social observers believe children “grow up” at a much earlier age. At the
other end of the spectrum, some adults refuse to grow old. They wear fashions that
resemble those worn by college students. They drive sports cars or convertibles.
Many middle-aged adults apparently do not want to age, acting like younger people and
buying products normally purchased by them.
This trend challenges marketers to try to create messages that reflect these behaviors but
do not offend or confuse more traditional middle-aged people.
Anti-oxidant medicine, beauty products, pond age miracle ,
Gender complexity :
in which the traditional roles, lifestyles, and interests of men and women have become
blurred. Many women attend college, delay marriage, and wait to start families. Some
choose to focus on moving up the corporate ladder instead of other options. Men have
become more likely to play active roles in parenting, help with household chores, and do
more of the shopping.
Since 1985, a shift in the number of men who are the primary household shopper has
occurred. Almost one-third of men are now the principal shopper. Males spend 38 percent
of all grocery dollars.14 The percentage of men who take care of household cleaning is
almost as high, 31 percent. According to Alexandra Smith, editor of Mintel Inspire, “The next
generation of men is coming of age in an era when gender roles are less rigidly defined and
men are set to become only more domestic.
Active, Busy Lifestyles :
Active lifestyles impact consumer behaviors. Economic conditions and global competition
have led many individuals to work longer hours in order to protect their jobs as corporations
are forced to downsize. Further, many people concentrate less on material possessions and
more on experiences with friends and family.
Time pressures also account for increases in sales of convenience items, such as
microwave ovens, drive-through dry-cleaning establishments, and one-stop shopping
outlets (most notably superstores). Services such as housecleaning and lawn care continue
to escalate. People on the go use smartphones and social media sites to stay in touch with
others and make sure they do not miss any messages during busy days.
Diverse Lifestyles:
More college students have moved home to live with parents. Others live with roommates of
mixed genders and ethnicities. Many delay marriage until later in life or choose to remain
single or live with a partner. Divorce and remarriage alter many family units. Remarried
divorcees represent about 10 percent of the population. Divorcees tend to develop a new
outlook on life. Members of this group, called second chancers, are usually between the
ages of 40 and 59 and often have higher household incomes. Second chancers are more
content with life than average adults. They tend to be happy with their new families but also
have a different life focus. Second chancers spend less time trying to please others and
more time seeking fuller, more enriching lives for themselves and their children or spouses.
“LGBT consumers express an unmistakable and stronger sense of brand loyalty to
companies that support their communities.” Digital ads may be especially effective with this
group, because they have a higher than average ownership of smartphones

Communication Revolution : Advances in telecommunications, primarily social media and

smartphones, influence consumers all over the world and alter the ways citizens
communicate with each other, with brands, and with companies. Many people communicate
with one another through Facebook or Twitter rather than in person or by telephone.
Emerging technologies have altered the ways brands and firms are influenced by word-of-
mouth communication. An individual who has a bad experience with a brand is not limited to
telling just a few friends and family members. A dissatisfied consumer can use social media
and Twitter and instantly be “heard” by thousands of people within hours, or even minutes.
This type of negative word-of-mouth can be devastating. Fortunately, these same
technologies can be used to engage consumers and stimulate positive endorsements. Many
companies monitor social media. Marketers listen to what consumers say and respond to
them.
Experience Pursuits Some people handle the stress of a hectic, busy lifestyle through
occasional indulgences or pleasure binges, such as expensive dinners out and smaller
luxury purchases. Pleasure pursuits include getaway weekends in resorts, short cruises, or
visit to beaches such as South Walton in Florida (see the ad is this section). These self-
rewarding activities help the consumer feel that all the work and effort is “worth it.” Instead
of buying “things,” people purchase “experiences,” which vary from visiting theme parks,
enjoying virtual reality playrooms, going to casinos, and taking exotic vacations.
Health Emphasis The U.S. population continues to age, leading to two trends: a blossoming
interest in health and in maintaining a youthful appearance. Many consumers try to develop
a balanced lifestyle with an emphasis on nutrition, exercise, and staying active.20 Recently,
Reebok launched a global marketing campaign called “Live with Fire” that reflected the
holistic benefits of exercise. Purchasing healthier foods with less sodium or a lower sugar
content are additional ways to pursue healthy lifestyles. At the same time, consumers do not
want to sacrifice convenience. Busy lifestyles mean consumers are less willing to cook from
scratch. They prefer prepared foods that can be assembled easily and cooked quickly.
Products that combine health attributes with convenience sell well.

Marketing Responses to Changing Trends in the Consumer Buying Environment:

• Monitor consumer environment for changes
• Create goods and services that are compatible with the changes
• Design marketing messages that reflect the changes

Types of Business-to-Business Sales

Business buyers make different types of purchasing decisions. The marketing team adapts
to the type of decision being made. The three categories of buying activities include a
straight rebuy, a modified rebuy, and a new task

A straight rebuy occurs when the firm has previously chosen a vendor and places a reorder.
This routine process normally involves only one or a few members of the buying center.
Often the purchasing agent (buyer) and the users of the product are the only ones aware of
a rebuy order.
The user’s role in this purchase situation will be to ask the buyer to replenish the supply.
The buyer then contacts the supplier and places the order. Little or no evaluation of
alternatives or information takes place.
These purchases often take place electronically.
Modified rebuy: the buying team considers and evaluates alternatives.
a modified rebuy purchase can be made for four different reasons.
First, when a company’s buyers are dissatisfied with the current vendor, they look for new
options.
Second, if a new company offers is perceived by a member of the buying center to be a
better buy, the purchase decision may be revisited .
A third type of modified rebuy occurs at the end of a contractual agreement. Many
organizations, as dictated by corporate policy, must ask for bids each time a contract is
written. This situation often occurs when governmental and nonprofit organizations make
purchases.
The final reason: Individuals involved in decision process have no or little experience with
the product.
for a modified rebuy is that the people in the company assigned to make the purchase might
have only limited or infrequent experience with the good or service. When a company
purchases delivery trucks, the typical time between decisions may be five to seven years.
This creates a modified rebuy situation, because many factors change over that amount of
time. Prices, product features, and vendors (truck dealerships) change rapidly.

In new task purchasing situations: the company considers a good or service for
the first time or it has been a long time since the last purchase. Further, the
product involved is one with which organizational members have no or extremely
little experience. This type of purchase normally requires input from a number of
buying center members. A considerable amount of time will be spent gathering
information and evaluating vendors. In many cases, purchasers ask vendors to
assist in identifying the required specifications.
business-to-business buying process
Consumer purchasing processes include five steps; however, two of those
steps are most important from an IMC perspective:
(1) the information search stage and
(2) the evaluation of alternatives stage. These two steps are described in
detail. Next, the consumer buying environment is described.

B2B buying process are similar to those made by individual consumers. In new
task purchasing situations, members of the buying center tend to go through
each of the seven steps as part of the buying decision-making process. In
modified rebuy or straight rebuy situations, one or more of the steps may be
eliminated.
Derived demand, which creates many business needs, is based on, linked to, or
generated by the production and sale of some other good or service.
The demand for steel used in automobile frames results from the number of cars
and trucks sold each year. When the demand for vehicles goes down during a
recession or economic downturn, the demand for steel also declines. Steel
manufacturers find it difficult to stimulate demand because of the nature of
derived demand. Purchases of raw materials used in the production of goods and
services—such as steel, aluminum, concrete, plastic, petroleum products (e.g., jet
fuel for airlines), construction materials, and others—are impacted by derived
demand.
Once a need has been recognized, the order will be placed with the current
vendor in a straight rebuy situation. When the purchase constitutes a modified
rebuy or new task, members of the buying center move to the next step.
 Fig: A Comparison of the Businessto-Business Buying Process to the Consumer Buying Process

Establishment of Specifications: In a new task purchase, the most complete

specifications are spelled out. Many times, various vendors assist the buyer in
developing clear specifications. In modified rebuy situations, managers examine
specifications to ensure they are current and meet the company’s needs. While
they occasionally change, normally most are minor alterations.

Establishment of specification- vender spelled out specifications for engine

Identification of Vendors: Once specifications have been identified, potential vendors are
located and asked to submit bids. written, formal bids are required. A vendor’s ability to
write a clear proposal often determines whether that company’s bid will succeed. Effective
proposals spell out prices, quality levels, payment terms, support services, and other
conditions requested by the company
Vendor Evaluation : Evaluations of vendors normally occur at two levels.
The first, an initial screening of proposals, narrows the field of vendors down to three to five
competitors.
As dollar values increase and the product becomes more critical, the number of individuals
from the buying center involved also rises.
The second level of evaluation occurs as the firm undertakes a vendor audit. An audit
becomes especially important when members of the company work to develop a long-term
relationship with a supplier.
Members of the audit team often include an engineer, someone from operations, a quality-
control specialist, and members of the purchasing department.
Vendor Selection: Once company officials have studied the vendors and the bids have
been considered, the final choice can be made.
The selection criteria used include quality, delivery, performance history, warranties,
facilities and capacity, geographic location, technical capability, and per-dollar value.
Purchase Negotiation of Terms: In most purchasing situations, negotiation of terms will be
a formality because the conditions have already been worked out.
Postpurchase Evaluation: In the business-to-business arena, the post-purchase phase
represents a marketing opportunity. Vendors that provide high-quality products, make
follow-up calls and offer additional services often move into a straight rebuy situation. They
avoid going through the process again because they are the chosen vendor—unless
something changes.
Dual Channel Marketing : Firms sell virtually the same goods or services to both consumers
and businesses in dual channel marketing.
The approach fits several situations. The most common scenario occurs when a product
sold in business markets is then adapted to consumer markets. New products often have
high start-up costs, including R&D expenditures, market research, and other tasks.
Businesses tend to be less price-sensitive than retail consumers, which make it logical to
approach them
first. As sales grow, economies of scale emerge. Larger purchases of raw materials
combined with more standardized methods of production make it possible to enter
consumer markets. Products including digital cameras, calculators, computers, fax
machines, and mobile phones were first sold to businesses and then later to consumers. To
make the move to the retail arena possible, prices must be lower and products need to be
user-friendly. For example, consumers often have their photos put on a CD rather than
obtaining prints. The imaging technology developed by Kodak and Intel was first sold to
various businesses and now is offered to retail customers. By forming an alliance with Intel,
Kodak brought the cost down and developed the economies of scale necessary for
consumer markets.