New Buy

**Buying Situations**

Purchase a product for the first time. 

ex.  New paging system in plant.

-generally open to new vendors

- no long term relationships

- specs may be fluid

Evaluation Criteria

**For Purchasing**

1) Quality

2) Service

3) Price

Federal Government

Most of the Fed Government buying is centralized, no single Fed agency contracts for all the Govt's req.s and no single buyer of any agency purchases all that the agency needs.

spends over $600 Billion/yr, largest consumer in world

Institutions

**fourth major segment**

Segment Includes schools, hospitals, solleges, and universities churches, lobor unions, fraternal organizations, civic clubs, foundations, etc.

*none business organizations*

Government

Includes 1000s of Federal, state, and local buying units.

Largest single market for goods & services in the world.

Rules of a buying center

 Initiator: person who suggests making purchase.

Influencers/evaluators: person who indluences buying decision.

Gatekeeper: Members who regulate flow of info

Decider: Person with formal or informal power to choose.

Purchaser: Person who negotiates the purchase

User: person who will ue the product.

Buying Center

All those persons in an organization who become involved in the purchase decision.

Can be engineers, contracting officers, etc.  Vary from one organization to another.

Business Services

**Business products**

Expense items that do not become part of a final product.

ex. janatorial, consulting, advertising, maintance, etc.

Supplies

**Business products**

Consumable items that do not become part of the final product. maintenance, repair or operating supplies.

ex. pens and paper

Processed Materials

**Business products**

Products used directly in manufacturing other products. Not raw material, has some processing

ex. sheet metal, chemicals, lumber, corn syrup.

Accessory Equipment

**Business products**

Goods such as portable tasks and office equipment less expensie and short lived then major equipment.

Raw Materials

**Business products**

unprocessed extractive or agricultured products, such as mineral ore, lumber, wheat, corn, fruit, vegatables, and fish.

Component Parts

**Business products**

Either finished items ready for assembly or products that need very little processing before becoming part of some other products.

Major Equipment (installations)

**Business Products**

expensive machines, main frames, blast furnaces, generators, airplanes, etc.

Are depreciated over time rather than changed as an expense in the year it is purchased.

Reciprocity

business purchasers choose to buy from their own customers.

ex. Ford engine manuf. buy Ford trucks for its truck needs.

Purchase volume

Business buy much larger quantities than consumers.

ex. Ford buys 1000s of tires at a time.

Fluctuating Demand

Demand for business products is more volitile then consumers products.

ex Plants & equipment are required every few years.

Joint Demand

Demand dependent on availability of other components of end product.

ex. Apple OS demand will continue as long as demand for Apple Computer is strong.

Inelastic Demand

Increase or decrease in price will not significantely affect demand

ex. 50% increase in car paint will not effect demand for cars.

Derived Demand

Org. buy products to be used in their customers products

ex. Harddrive demand dependent on computer demand.

Demand

Demand in Business Market

-Derived demand

- Inelastic demand

- Joint demand

- Fluctuating demand

NAICS

North American Industry Classification System

-classification for business establishments

-used by NAFTA

Resellers

Reseller market includes retail and wholesale businesses that buy finished goods and resell them for profit. sometimes called distributors.

Original Equipment Manufacturers (OEM)

Individual or organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.

Sometimes caled  "producers"

** Companies like GM that buy steel, paint, tires, and batteries.

Strategic Alliances

Called a strategic partnership is a cooperative agreement between business firms.

- licensing or distribution agreements

- joit ventures

- R&D consortia

- partnership

Business Marketing

marketing of goods and services to individual and organizations for purposes other then personal consumption.

ex. Sale of a personal computer to your college or university.

**Buying Situations**

Some change to the original good or service.  May be new color, greater strength in plastic, additional service in janatorial service.

-sometimes open to new vendors

-relationship exists

Straight Rebuy

**Buying situation**

Not looking for new information.  New order is placed on same terms as previously.

-strong relationship

-no competition