Purchasing Objective: Generally, the Purchase / Materials Management is defined as “buying the right quantity, at the right price, for delivery at the right time and place” It is the Management’s job to define what is “right” for each dimension. The objectives of the purchasing function are briefly given below. 1. Delivery / Availability:One of the prime objectives is to ensure that purchased goods and services are available or delivered as and when & where required.If not work will come to a grinding halt.This will reflect baldly on the performance of the Purchase Function. The corollary to this that is that Vendor Reliability in delivery is the most important criterion while evaluating vendors in the most of the cases . 2. Product Quality: The Product Quality should be consistent with the Specifications and use of the Product. It is important to ensure consistency in Product Quality to reduce the cost of inspection, interruptions in production process due to rejections and replacement of rejected material. Hence, product Quality is considered as one of the important objectives of purchasing.

3. Lowest Price :Subject to availability in time, with good and consistent quality, buyers would like to buy at the lowest price. 4. Supplier Relationship:To develop a good long term Supplier/ Vendor Relationship and to develop new sources of supply. 5. Services:Industrial Buyers need many types of services like prompt and accurate information from supplier, application or technical assistance, spare part availability, repairs and maintenance capability and training if required. 6. Personal Objectives:Industrial Buyers try to achieve both organizational purchase objectives and personal objectives. The Industrial Marketers should realize that it is important to satisfy not only the purchasing objectives of an Industrial Firm but also the personal objectives of the buying members.

If an Industrial Marketer identifies a problem in the buying organization and suggests how the problem could be solved. Buying is an organizational-decision making process. We will now study the above eight phases. 6. 7. Development of specifications or description of needed product. or the material is not available when required.BUY . 8. There are eight phases (or stages) in the buying decision process. or the machine supplied by the Existing Supplier breaks down too often. the buying organization recognizes the problem. PHASE 1. indicating the logical sequence of activities 1. 2.RECOGNITION OF A PROBLEM OR NEED. UNDERSTANDING THE VARIOUS PHASES OF BUYING-DECISION MAKING IS USEFUL TO AN INDUSTRIAL MARKETER AS IT HELPS IN DEVELOPING AN APPROPRIATE SELLING STRATEGY. Obtaining and analyzing supplier proposals. Selection of an order routine. .PHASES IN THE INDUSTRIAL BUYING-DECISION PROCESS. Evaluation of proposals and selection of suppliers. 5. The Recognition of a problem or need may originate within the buying firm or may also be recognized by a smart marketer. Recognition of a problem or need. Search for and qualifications of potential suppliers. Performance feed back and post-purchase evaluation. Determination of the application or characteristics and quantity of needed product. 3. 4. there will be 4 a better possibility of it being selected as a supplier. one by one. When the quality of material supplied by the existing supplier is not satisfactory.

are closely related.SEARCH FOR AND QUALIFICATIONS OF SUPPLIERS. the next phase is to resolve the problem. (R& D. the buying organization. the Technical Department. trade shows. either the User Dept or Purchase Dept may suggest product or services. yellow pages etc.DETERMINATION OF THE CHARACTERISTICS AND QUANTITY OF NEEDED PRODUCT. Phases-2 & 3. After general solution to the problem is determined in the 2nd phase. Sometimes advice is taken from experts from outside. The search for potential suppliers is based on various sources like trade journals.4: . catalogues. Once the problem is recognized within or outside the buying organization. based on experience and also quantity required to solve the problem. out side sources such as suppliers or consultants. Production or Quality Control) will suggest general solutions of the needed product. This will give a definite advantage to the marketer to incorporate his product’s specification & characteristics. reliability in delivery & service are considered.PHASE. word of mouth. sales calls. in the 3rd stage. PHASE. industrial directories. develops precise statement of the specifications or characteristic of the product or service required.2 :. 5 .DEVELOPMENT OF SPECIFICATION OF NEEDED PRODUCT. Industrial Engg.3 : . PHASES. or if required. For technical products. Industrial Marketers have a great opportunity to get involved at this stage by helping the buyer organization to develop products specification and characteristic. For non technical goods or services. generally the factors such as quality of product or service. The buying firm will try to answer questions such as: what type of product or services to be considered? What quantity of product needed & so on. During this stage the purchase dept takes the help of their technical people.

payment terms. payment terms. •For instance. •For technically complex products and services a lot of time is spent in analyzing proposals in terms of comparison on products. as the buyer may contact qualified suppliers to get the latest information on prices and delivery periods. deliveries & landed costs. deliveries etc. •For purchases of routine products or services. •The supplier’s offer should include the product specification. •Once the qualified suppliers are decided. services. price. •The decision makers may evaluate each suppliers on a set of agreed – upon attributes or factors. . delivery period.PHASES IN THE INDUSTRIAL BUYING – DECISION PROCESS PHASE 5 :. cost of transit insurance and any other relevant cost or free services provided. taxes and duties applicable transportation cost ( or fright). the buying organization obtains proposals by sending enquiries to the qualified suppliers. each supplier is evaluated on each attribute by giving a weightage ( or importance) to each attribute and using a rating scale of 100 percentage point as 6 shown in the table in the next slide. the phases 4 & 5 may occur simultaneously.EVALUATION OF PROPOSALS & SELECTION OF SUPPLIERS •The buying organization evaluates the proposals of competing suppliers and selects one or more suppliers.OBTAINING AND ANALYZING SUPPLIER’S PROPOSALS. PHASE6:. •Further negotiations may continue with selected suppliers on price.

2 = 2 57 7 .6 = 12 10 X 0.8 = 24 25 X 0. ATTRIBUTE (OF FACTOR) WEIGHT (IMPORTANCE) SUPPLIER PERFORMANCE SUPPLIER RATING ( OR SCORE) 1) 2) 3) 4) 5) 6) Quality Delivery Price Service Flexibility TOTAL 30 25 15 20 10 100 0.4 = 10 15 X 0.A SUPPLIER EVALUATION SYSTEM.2 30 X 0.8 0.6 = 9 20 X 0.6 0.4 0.6 0.

the members of the decision making unit review the earlier decision and decide to give a chance to a previously rejected supplier. •The activities include placement of purchase orders with selected suppliers.SELECTION OF AN ORDER ROUTINE:•In this stage the mechanics of exchange of goods and services between a buyer and a seller is worked out.PERFOMANCE FEED BACK AND POST PURCHASE EVALUATION •In this final phase a formal or informal review about the performance of each supplier ( or vendor) takes place. If not . the quantity to be purchased from each supplier. •The user dept gives a feed back on whether the purchased item solved the problem or not. 8 . and the payment terms to be adhered by the buyer. follow up of actual delivery to ensure it to be as per delivery schedule. levels of inventory needed. PHASE 8:. frequency of order placement by buyers and delivery schedules to be adhered to by the supplier.PHASES IN THE INDUSTRIAL BUYING – DECISION PROCESS PHASE 7:.

NEW PURCHASE ( OR NEW TASK) 2. In fact a good and quick response to customer complaints can result in good buyer – seller relationship. REPEAT PURCHASE ( OR STRAIGHT REBUY) 9 .decision making process and purchasing situations. the individual sales person should recognize that marketing effort is not over after the order is received or even after order is executed.MARKETING IMPLICATIONS:• While understanding the various phases in buying decision making process ( or buy phases). the phase of buying. CHANGE IN SUPPLIER( OR MODIFIED REBUY) 3. The Marketing Strategy to be adopted. • • • TYPES OF BUYING SITUATIONS There are three common types buying situations called buy classes 1. it is necessary to consider different types of purchases or buying situations. will depend on the type of products. • • He should monitor the feedback and evaluation process in the customer ( buyer) organization In particular the user satisfaction levels or complaints must be monitored by the Industrial Marketer so that immediate corrective actions can be taken before a major damage is done. To better understand the buying process.

the prices etc. • Minimum risk. • In the new purchase situation the buyers have limited knowledge and lack of previous experience. the suppliers.1. the risks are more. NEW PURCHASE (OR NEW TASK):• In this situation the company is buying the item for the first time. 2. and more people are involved in decision making. . • In such situations the buying firm places repeat orders on suppliers who are currently supplying such goods. decisions may take longer time. routine decision 10 • Annual rate contracts. 3. REPEAT PURCHASE (OR STRAIGHT REBUY) • The situation occurs when the buying organization requires certain products or services continuously and when such products / services have been purchased in the past. search for information about an alternate source of supply becomes necessary. • Hence they have to obtain a variety of information about the product. materials or parts. • The change in supplier may become necessary due to suggestion from technical people for additional product features. • In the new task decisions. • As a result. CHANGE IN SUPPLIER (OR MODIFIED REBUY) • A modified re buy situation occurs when the organization is not satisfied with the performance of the existing suppliers or the need arises for cost reduction or quality improvement. • When a firm decides to diversify into new products or services it necessitates the purchase of a new machine.

The most difficult buying situation occurs for a new task in buy phases of problem recognition. 1. 2. Straight Re buy situation are handled in a routine matter. 3. This is because. maximum number of decision makers and influencers are involved. . 4. An analysis of the buy-phases in relation to the buy-classes gave interesting results. Decision can 11 be taken by junior executive in the purchase dept. which are summarized below. Robinson formulated the buy grid framework which combined three types of buying situations (buy classes) with eight phases of buying decision process (buy phases). and determination of product characteristics and specification. Modified Re buy situation are not very difficult to handle. in case of modified re buy and straight re buy situations.THE BUYGRID FRAME WORK • • Understanding organizational buying becomes easier if it is divided into different buying phases ( buy phases) and these phases are analyzed under different buying situations ( buy classes). All eight phases of industrial buying process are applicable to a new buying solution however. only some of the buy phases are applicable.

Understanding the buying center roles helps the Industrial Marketer to develop an effective Marketing Strategy. it is important to understand the roles of buying-center members. BUYERS :The Major roles or responsibilities of buyers are obtaining quotation from suppliers. which could be resolved by purchase of a product or service. Often. 12 . INITIATORS :These are the individuals who first recognize a problem or need. processing purchase orders.BUYING CENTER ROLES. negotiation. • • Before identifying the individuals and groups involved in the buying decision process. supplier evaluation and selection. 2. There are six roles of buying center members. Usually they are purchase [or materials] officers & executives. 1. expediting delivery and generally implementing purchasing policies of the firm. the users of the product / service play the role of the initiators.

They may be shop floor workers. Generally for routine purchases. 4. or R & D Engineers. GATE KEEPERS:They are individuals controlling flow of information regarding products & services to the buying centre. They also control sales people’s meetings with members of buying of buying centre. They are normally assistants or junior persons in the purchase dept. senior executives are the deciders. Sometimes outside Consultants or Experts play the role of influencers by drawing specifications of products or services. 13 .3. DECIDERS:Actual buying decisions are made by the deciders. But for high value and technically complex products. Often users play the role of initiators. 6. INFLUENCERS:They influence the buying decision. maintenance engineers. They may define the specifications of the needed Product . the buyer or purchase executive may be the decider. USERS:These individuals use the product or service that is to be purchased. They may be one or more Individuals involved in the buying decisions. 5. Generally technical people have a substantial influence on purchase decisions.

performance feed back on products supplied etc. technical evaluation of offers received from suppliers. They also visit supplier's factory to assess their capabilities. TECHNICAL PERSONS:. • For purchases of high value capital equipment the top management in most firms gets involved in the supplier selection. testing facilities etc. They are generally involved in purchase policy decisions such as diversification into a new product / project. Quality Control Manger.IDENTIFYING KEY MEMBERS OF BUYING CENTRE (DICISION MAKING UNIT) 1. 14 . 2. R & D manager and Industrial Engineers. • They are generally involved in product specification or description. President. Production Manager Maintenance Manger. TOP MANAGEMENT PERSONS:• They consist of Managing Director. Director. as it may have a major impact on the firm's operations. negotiations with suppliers.(OR FUNCTIONS) • The Technical Persons are Design Engineers. Vice President and General Manager. quality. approval of Purchase Dept Annual budgets and objectives and deciding guidelines for purchase decisions.

They may be Senior Executives / Managers and also juniors like Purchase Officers or Assistants. The Marketing manger may suggest some changes / improvements in packing. Their influence on selection of suppliers is considerable. They coordinate with technical people. marketing people become influencers in the buying decision process. 5. Accounts Persons within an organization. 15 .3. 4. bank guarantees. as well as with vendors externally. financial approval of capital purchases. painting etc. BUYERS /PURCHASERS:• They are persons in purchase dept. making payments to suppliers etc. MARKETING FUNCTION:• When a purchase decision has an impact on the marketability of a firm's product. Top management. finish. ACCOUNTS / FINANCE PERSONS:• Their contribution is seen while finalizing commercial terms such as terms of payment.

16 .Models of Organizational Buying Behavior There are two models available to provide a comprehensive and integrated picture of the major factors that combine to explain organizational buying behavior. These are 1) The Webster and wind model 2) The Jagdish Sheth Model The Webster and Wind Model of Organizational Buying Behavior.

and the psychological aspects of the decision making individuals in the industrial buying behavior. Reward versus coercive power. Legitimate power.The Jagdish Sheth Model of Industrial Buyer Behavior This model emphasizes the joint decision making by two or more individuals. Avoiding – “Better let situation cool down before we act”. Collaborating – “May be we can work this one out”. Power in conflict resolution. 5. Expert Power. The model includes three components and situational factors. 4. which determine the choice of a supplier or brand in the decision making process in an organization. 7. Accommodating – “I see your point of view”. 2. Conflict – Resolution Strategies : [In Joint Decision Making] 1. Compromising – “Let us split the difference”. Coalition formation among certain buying center members. 9. 6. . 17 10. 8. 3. Competing – “Let us to it my way”.

•It minimizes the inventory. •The JIT delivery means that the buying and selling organization work together closely to reduce costs. •This goal of JIT delivery is zero inventory and excellent quality of the materials delivered by the supplier.CONTEMPORARY PURCHASE ACTIVITES JUST. and utilise the supplier’s expertise. •This ensures nil rejection at the buyer’s factory. and increases the quality and productivity. so that “all the eggs are not in one basket”. involve the supplier from the design stage.IN TIME (JIT) DELIVERY:•It means the materials arrive at the buyer’s factory exactly when needed by the buyer. 18 . SINGLE SOURCING:•Some of the Industrial Customers place orders with only one supplier. •This is against the old concept of placing orders with two or three suppliers. •However single sourcing practice makes it possible for the buying and selling organizations to work closely together.

VALUE ANALYSIS:• The objective of value analysis is to reduce cost while maintaining quality and reliability •It involves analyzing a product item by the function it performs. can a standard item be used? BUYING COMMITEE:A formalized buying center (decision making unit) is the Buying Committee. It is used in many Industrial Organizations. Institution and Government Depts. 19 . The Industrial Marketer should identify individuals in the committee. who dominate in decision making by their technical & commercial expertise. •Can the weight or thickness of the item be reduced? •Does the item has greater capacity than required? •Is unnecessary machining performed on the item? •If the item is non-standard. the value of function and alternate methods of performing the same function. •Some of the questions to be answered are given below.

easy going. competitive. optimistic. Generally. long term relationship with customers is a major business asset of an Industrial Marketer. •The second perception of the buyer depends on the reputation of the company. manipulative. profitable. •The Focus of Industrial Marketing should be on buyer-seller relationship. BUYERS AND SALES REPRESENTATIVE INTERACTION:•An important part of the buyer-seller relationship is the interaction between a member of a buyer and representative of selling organization •There are many other persons from both organizations involved in the relationship but the basic building block of relationship is based on buyer and sales representative interactions. •Development of mutually satisfying. excitable etc. which the sales Rep represents. 20 . the Sales Rep of a company with better reputation always gets a more favorable initial response from the industrial buyers. BUYER’S PERCEPTION OF SALES REPRESENTATIVE:•There are two types of perceptions held by buyers of Sales Representatives: •Talkative.BUYER SELLER RELATIONSHIP •The nature of buyer-seller relationship is an important factor which differentiates Industrial Marketing from Consumer Marketing.

IS THE INDUSTRIAL BUYER RATIONAL OR IRRATIONAL? •In most of the cases the industrial buying decisions are rational or logical. a buyer’s final decision is more and more based on subjective factors (or personal factors) such as personal treatment or favors from suppliers. that is. buyers rationalize their decision by giving formal 21 analysis and justification. in order to obtain maximum company profitability. he is also job security minded. here. Shoaf brought out two behavioral patterns of Industrial Buyers. an organization man. •As product and services. •The Industrial Buyer is likely to be a conformist. wishing to play safe and impress the boss. the organization culture demands analysis of supplier’s proposals and justification for selection of suppliers. This produces a conflict. •In industrial Buying. offered by various suppliers become more objectively alike. Even when decision is based on subjective factors. because although he wants to grow and help his company to grow. is defined as a long term and fully considered view of all possible alternatives. . But sometimes they tend to become irrational. •The word “Rational”. •In a major study based on interviews of 137 managers in 70 companies.

Interaction oriented ( social and personal interaction) III. of a buyer or seller • The style of interaction includes mannerisms. and the format used by a buyer and a seller in their communication (interaction) • There are Three styles of interactions I.BUYER SELLER RELATIONSHIP Based on the research carried out by Dr. prices . Task oriented II. Individual needs. 1. The style in which that information is exchanged. Self oriented (pre occupied with one’s self interest) 22 .services as well as . The content of information. Jagdish sheth. 2. • The content of information includes product features. the buyer seller interaction or relationships are based on the following two factors.

These needs become the starting point of their interaction. by investing in relationship marketing 23 .seller interaction focuses on pre-sales activities and during sales activities and not on post sales activities. •Today more companies are recognizing the importance of retaining existing customers. •Generally. and organizational needs to satisfy. •Both the sales person and the buyer have personal needs. The transaction oriented buyer. transaction oriented buyer-seller interactions help in creating new customers.The figure given below shows the various types of transactions based on style and content Compatible Style Incompatible Style Ideal Inefficient Compatible Transaction Transaction Content Incompatible Content Inefficient Transaction No Transaction Buyer –Seller interaction – A conceptual frame work •The buyer – seller transaction is a dyadic (two persons) interaction consisting of transaction between a buyer and a seller.

There are three approaches for developing strong customer bond. giving volume discounts or rewarding customers with free spare parts kit. depending on individual needs and wants. The second approach is to give social benefits. For example. For Example. However these benefits can be imitated by competitors and hence cannot be used to differentiate permanently. 24 . and then individualize their services . First approach is to add financial benefits to the customer relationship. supplying special equipment or service.For Example. 1. use problem solving language. 2. such as hotel booking or making travel arrangements. The company sales persons learn buyers’ needs and wants. in addition to financial benefits. The third approach is adding structural ties to financial and social benefits. 3. including solving personal problems. such as training customer’s maintenance engineers.REALTIONSHIP MARKETING The task of creating strong customer bond or loyalty is called relationship marketing.

work with customers teams. Industrial Marketers can use a number of methods to influence the existing Customers to increase the share of their business or to influence potential customers to buy their products or service The Major Methods are 1) SALES PRESENTATION 25 2) NEGOTIATION . RELATIONSHIP MARKETING FOCUSES ON MANAGING CUSTOMERS •However it is not effective in all situations. more and more companies are moving towards team selling and relationship marketing. and solve their product or process related problems. METHODS USED TO INFLUENCE INDUSTRIAL BUYERS. which focuses on closing a sale with a customer. Heavy investment in relationship marketing will pay off if it is made applicable to important and high sales potential customers who value good service •For other customers. who want lowest price. This is achieved by a single sales person. For large customers instead of transaction marketing. transaction marketing is appropriate. •The team selling includes technical and commercial persons who can visit customer’s different locations.TRANSACTION MARKETING may be described as transaction oriented buyer seller interaction.

Who are the potential customer firms 2. Industry Directory. 1. service and keep the difficult points towards the end. better than competitor.SALES PRESENTATION:Before a sales presentation is made. 3. Exhibitions or Trade Shows. Thus the key to a successful sales presentation is based on the ability of the sales person to identify and respond to customer’s needs. Telemarketing etc. an Industrial Sales Rep must plan to find out. Another important point in a good sales presentation is that a sales rep should first present positive points about his product. A good quality of sales presentation is an important factor in getting favorable first hearing and in influencing buying decision. A sales presentation should be tailored to fit the needs and expectations of the potential buyer. 26 . Direct Mailing. The source of information about new/potential customers are company sources. A sales rep should first raise the interest and identify needs of the buyer He should then show how his products & services can satisfy those needs. In a competitive situation a sales rep should show the buyer why his product or service has greater value. He should sum up advantages of his product or service & how it will satisfy the needs of the buyer. Identify the needs or problems of the potential customer firms. The above planning is required for getting orders from new customers. Get information about buying centre members in each firm. as against competitors’ claims.

which is one of the key factors for success of a business unit. and takes a long term view of their relationship •The basic marketing concept focuses on customer satisfaction or customer service.HOW TO NEGOTIATE WITH INDUSTRIAL CUSTOMERS : •Negotiation is a process that tries to maximize the benefit to both buyer and seller. The buying decisions in industries are made by professionals. •Hence sometimes decisions are partly subjective and partly objective. •However the decision makers are also human beings with certain degrees of Egos. •It is therefore necessary that the sales /marketing persons should possess the skills of negotiation in addition to the commercial and technical knowledge 27 . Likes & Dislikes. who are knowledgeable on technical and commercial aspects of buying. •Industrial customers are different from house hold consumers.

28 . quality. Without proper rapport or good relationship. it is difficult to collect the required information. Whatever may be the purpose it helps the sales/marketing persons.PURPOSE OF NEGOTIATION Purpose could be several •Could be for price increase •For getting higher share of business •For getting better payment terms. service. customer’s perceptions about company’s and competitors. CUSTOMER TRUST AND CONFIDENCE:Much before final negotiation sales/marketing persons should try & build an environment of is important to collect information about customer needs. if they have right kind of approach or style of Negotiation COLLECTION OF INFORMATION BEFORE FINAL NEGOTIATION:Before final negotiation . payment terms Customer’s style of negotiation etc. •For introducing new products etc. key decision making people . understanding and rapport with Industrial Customer at various levels. prices.

styles (1) & (2) are used predominantly. if the other side uses this style. You Lose In practice.STYLES OF NEGOTIATION There are four different styles of negotiation 1. 1. but one should recognize . for example litigation. I Win. style (3) is sometimes used and style (4) is rarely used.based on the tips given below. • It is not recommended to be used while negotiating with customers. I Win. • It may use methods from intimidation to subtle forms of manipulation. 29 . • This style is used when strong competition prevails. You Win. You Win) 3. Win-Win ( I Win . I Lose. beating competition or during election. You Lose 2. I Lose 4. You Lose style (wining at all costs): • This is a competitive approach.

YOU LOSE” style. do not reciprocate. They ignore deadlines and act as if time is of no significance to them. as follows. Thereafter. Explain why you hold your position. If you make a concession they. Stress the consequences to the customer of a failure to resolve the issue. try “problem-solving approach”. 30 . Take up an equally tough or strong position by presenting a clear but unemotional opposition to their demand. How to defend against “I WIN. The objective of the above procedure is to increase mutual respect. They start with tough demands or ridiculous offers The negotiators have little or no authority to make any concessions They raise their voice or make emotional outbursts. you defend your position. You have recognized that your customer is using this style against you. 5. with the purpose of moving the other party from “WIN-LOSE” situation to “WIN-WIN” situation. 2. 3. Seek information from the customer as to way he holds that position. In such a case.1. 2. 4. 1. or are stingy in making concessions. 3.

relatives etc. This is achieved by following the guidelines given: 1. identify the problems. during the final negotiation. Avoid defensive posture. Regular frequency of concessions (and not the size of concessions) is conducive to this style. 4. Build an environment of trust and confidence. • Here the negotiations are held for mutual satisfaction. which helps the customer to communicate easily. The emphasis during negotiation should be on “end results” or needs rather than on the on the “means”.e. Responsive to correction) if negotiation climate is favorable. . where both sides win. avoid legalistic or contractual approach. Win-Win style (I WIN. With emphasis on development of genuine Relationships based upon trust and understanding. 5. ideas and sharing information to solve the problems stated earlier. YOU WIN):• This style is generally used for customers. suppliers. rather than solutions.TYPES OF NEGOTIATION 2. 31 7. 3. 6. The initials focus. much before the final negotiation. Both sides should then work together. 2. should be on getting the agreement to the general statement of the problems. If possible. Be amenable(i. Be polite and humble. In other words initially. pooling their resources. where long term healthy relationships and mutual satisfaction are important. employees.

3. YOU WIN. I LOSE:•This style is some times used by sales/ marketing persons with demanding and highly cost-conscious Industrial Customer. 32 . who feel satisfied if they have driven the buyer to lose in the bargain. at the final stage of negotiation. but he is accepting the terms in view of the long term business relationship •Thus actually it is a “WIN WIN” situation. •Once a sales person knows such an approach by the Industrial Customer. that he has lost in the deal (although he has actually gained). where both parties win. he creates an environment.

if the other party provokes you with “childlike” emotional and immature behavior. • TIME FACTOR:• • It is important to know the industrial customer’s deadline on time. in an Industrial Relation dispute. YOU LOSE • • This style is adopted by people. It is good strategy to indicate realistic delivery time at the time of negotiations. Unemotional. or “parental” judgment and bossy behavior. In such a situation. particularly the delivery time from the date of placement of order. who are either unskilled negotiators or have philosophy of war. and Factual Attitude towards the other party. To avoid the possibility of Lose –Lose situation. I LOSE. it results in strike. both workers and managements may lose in some respect. if both workers union and management become unrealistic. we should maintain an “Adult” mental attitude which (in transactional analysis ) means a well Balanced. to maintain the customer trust and confidence and for getting 33 repeat orders in future. For example. .STYLES OF NEGOTIATION 4.

Explore the areas of common ground. Ask the customer what is the agenda. OPENING 1. who are the negotiators and their power or authority to make decisions. If he is not present. nominate a leader . BIDDING . and its value (benefit) to customer. Decide what your style or approach will be WIN-WIN or WIN-LOSE. If customers approach is cordial. If you are going to argue against customers proposals do so logically & calmly. Make concessions slowly and in small amounts. EXPLORING 1. Gather information about real needs of customer. request him to join you. continue to be polite & courteous. PREPARE AND PLAN FOR NEGOTIATION • • • • • • • • • • • • • • • • • Decide what you have to offer. State what you want to achieve & introduce your team members. make minutes of the meeting & both parties should sign the same.members with technical and commercial skills and a note taker. Identify customer’s decision maker. its cost or limit beyond which you will not make concessions . If you have a negotiating team. Be warm and positive in your opening remark. Remember. only proposals can be negotiated. what they want most.IMPORTANT POINTS ON NEGOTIATIONS: 1. Signal your intentions of WIN-WIN style. 34 While concluding. If you are in a strong position. where you both agree. 1. Search as many variables as you can & use same to get more concessions. aim high with your proposals.

SPECIAL DEALING BETWEEN BUYER & SELLER There are two kinds of special dealing between buyer & seller RECIPROCITY:•Reciprocity means reciprocal dealings between a buyer and a seller. •It is the practice of buying from one’s own customers and also using purchasing power to sell to one’s suppliers. •Reciprocity is a special case of buyer and seller Relationship and caution must be exercised to keep it at minimum level. •Many purchase mangers dislike reciprocity. and also sales managers oppose reciprocity. 35 . •The procedure involved becomes complex in practice. as it reduces chances of obtaining competitive prices.

•This is a sensitive matter. it can become effective if it is done with co-ordination and planning with the customer. become a competitor of such a customer. the important elements of customer service are installation. including availability of 36 spare parts & replacement units. Quality & other aspects are equal. customers will prefer to buy from firms which give better technical service and “ Timely Delivery”. the customer service is sometimes more important than the physical product. •For large equipment or machines. CUSTOMER SERVICE:•In Industrial Marketing. maintenance and repair. •If Prices. •The major part of customer service is “Timely Delivery” and technical service to customers.DEALING WITH CUSTOMER’S CUSTOMERS:•One of the complexities of Industrial Marketing is the need to deal with a customer’s customers. . as it may be viewed as interference in the customer’s relationship with his customers. and therefore. •The customer service supplements the sales of physical product and creates a total value for customer. •However.

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