Vendor Selection
and the Buying Process
William A. Dempsey
This paper reports the results of a study dealing with the
vendor selection process in organizational buying. Purchasing
managers in two dzflerent types of organizations assessed the
importance of vendor attributes and buyer information sources
in connection with two different buying tasks. Theoretical and
managerial implications are discussed in connection with: (I)
the relative importance of vendor attributes and buyer informa-
tion sources; and (2) the influence that different buying tasks
and different buying organizations have on the importance of
vendor attributes and information sources.
INTRODUCTION
A popular belief is that relatively little scholarly re-
search has been produced concerning industrial buying
behavior [9]. However, according to Sheth [8] this belief
is not true. Several comprehensive models of organiza-
tional buying behavior have been proposed which serve
to guide research efforts [6, 7, 10, 111. An increasing
number of scientifically conducted research studies are
being published. Yet, much work remains to be done
before a better understanding of the key variables and
Address reprint requests to: Prof. William A. Dempsey. School of Business,
Temple University, Philadelphia, PA 19122.
@ Else&r North-Holland. Inc.., 1978 Industrial Morkrting Managemrnt
their relationships can be developed. The purpose of this
article is to report the results of a study concerning the
vendor selection stage of the organizational buying pro-
cess.
THE STUDY
Scope
The scope of the study reported in this article was
confined in several ways. First, two generally described
buying tasks were used involving a new task-capital
equipment purchase and a modified-rebuy-component
material purchase. Second, the study was restricted to the
decision process stages of identifying buying altema-
tives, evaluating buying alternatives, and selecting the
supplier(s). Third, the respondents used in the study were
drawn from two types of industries or organizations-the
electronics manufacturing industry and the electric
utilities industry. Finally, the study was limited to the
viewpoint of purchasing managers. Therefore, the de-
terminants in the vendor selection process, as found in
the Sheth Model [7] such as the personal backgrounds of
buying participants, the group process of joint
decision-making, organizational factors and environmen-
tal factors all reflect the perspective of purchasing mana-
gers.
257
7, 257-267 (1978) 0019-8SOl/78/0007-0257$01.25
Research Goals
The research goals of this study involved analyzing
two sets of variables from three perspectives. The two
sets of variables studied are integral to a vendor selection
process. The first set of variables encompasses a number
of vendor attributes that buyers assess in formulating
their expectations regarding performance capabilities of
potential vendors. The vendor attributes measured in this
study are found in Table 1. The second set of variables
contains a number of buyer information sources often
mentioned in connection with vendor selections. The
information sources studied are listed in Table 3.
The two sets of variables were analyzed from three
perspectives. First, analyses of variance and regression
analyses were used on the data in an attempt to ascertain
the influence of certain independent or exogenous var-
iables on the importance of the vendor attributes and
information sources. Second, on each separate set of
variables factor analysis was used to study interrelation-
ships among the variables. The basic goal was to explore
for the number and nature of the underlying factors in the
two sets of variables. Third, canonical analysis was used
as a means to study relationships between the two sets of
data.
Data
A nationwide mail sample survey was conducted in
which purchasing executives from the electric utilities
industry and the electronics manufacturing industry were
randomly selected to serve as representatives of their
populations.
Each respondent was randomly assigned to deal with
one of two different buying tasks. One task was stated in
terms of a new-task problem involving the purchase of
capital equipment while the other problem was presented
as a modified-rebuy of a component material [6]. Both
problems were stated in general terminology. Distinc-
tions were made between the buying tasks through de-
scribed differences in: the newness of the task, the impor-
tance of the task, present information state, and the
implied number of alternatives to be considered.
The respondents were asked to rate the importance of
the twenty vendor performance attributes and the fifteen
WILLIAM A. DEMPSEY is AssIstant Professor of Marketing at
Temple University, Philadelphia. He received his D.B.A. from
the Unwerslty of Maryland, and has published in a number of
professlonal and academic journals and association proceed-
ings in the marketing area.
information sources in connection with the assigned
problem. A scale was used which ranged in degrees of
importance from “of no importance” with a value of 1 to
“Of extreme importance” with a value of 7. Respon-
dents were also asked to provide data on themselves and
their organizations.
Two mailings of the questionnaires generated a total
usable response rate of 379 out of 8 17 or 46 percent.
Statistical tests of early respondents versus late respon-
dents indicated that there was little nonresponse bias in
the data.
RESULTS
Vendor Attributes
Generally speaking, certain vendor attributes will be
more important than others in vendor selection processes.
Studies have been published which deal with measuring
the importance of vendor attributes as perceived by vari-
ous buyers in a number of buying situations [ 1, 2, 3, 5,
131. One purpose of this study was to examine the rela-
tive importance of the vendor attributes which are listed
on the left side of Table 1. The mean importance ratings
are shown in Table 1. The vendor attributes are listed in
overall descending order of importance. There were dif-
ferences in the ordering of importance. There were dif-
ferences in the ordering of importance between the
problem/industry subsamples which will be discussed
later.
As expected, the purchasers’ explicit-economically
oriented criteria (including delivery capability, quality,
price, repair service, technical capability, and past per-
formance) were the highest rated vendor attributes. High
ratings for these attributes agree with discussions found
in the general literature and published research studies.
These ratings are consistent with the generally held view
that industrial buying decisions are substantially rational
in nature. However, it must be noted that the final deter-
minant(s) in the selection of a vendor may be found
among those attributes rated at the intermediate level or
perhaps even at lower levels of importance. The moder-
ately important attributes, both implicit and explicit in
nature, will become marginally significant in situations
where the suppliers offer standardized marketing mixes
in oligopolistic markets [7, 121. Thus, expectations of
buyers regarding such vendor attributes as reputation,
financial position, bidding compliance, progress com-
munications, and attitude toward the buyer will be deci-
sive criteria when suppliers have equalled one another on

258
 TABLE 1
Vendor Attributes (Mean importance Ratings)”

Capital Equipment/New Component Material/Modified

Task Purchasing Problem Rebuy Problem Influences

Electric Electronics Electric Electronics

Variables Utilities Manufacturers Utilities Manufacturers Industry Problem Interaction

Delivery capability 6.16 6.34 6.43 6.63 x

(1.01) (0.95) (0.80) (0.63)
Quality 6.04 6.22 6.24 6.31
(1.16) (0.91) (0.93) (0.82)
Price 5.52 5.75 5.76 5.92
(1.28) (1.09) (1.14) (1.07)
Repair service 6.16 6.02 5.63 4.82 X x x
(1.14) (1.19) (1.29) (1.66)
Technical capability 5.83 6.34 5.24 4.99 x x
(1.21) (0.95) (1.28) (1.39)
Performance history 5.14 4.94 5.59 5.42 x
(1.39) (1.43) (1.16) (1.01)
Production facilities 4.94 5.43 5.12 5.66 x
(1.41) (1.29) (1.37) (1.17)
Aid and advice 5.57 5.54 5.19 4.85 x
(1.07) (1.22) (0.98) (1.34)
Control systems 5.09 4.86 5.42 5.16
(1.75) (1.73) (1.25) (1.65)
Reputation 4.77 4.94 4.99 4.51 X
(1.30) (1.22) (1.20) (1.32)
Financial position 4.89 5.16 4.55 4.57 x
(1.27) (1.12) (1.40) (I .42)
Attitude toward buyer 4.57 4.54 5.19 4.84 x
(1.71) (1.42) (1.50) (1.70)
Bidding compliance 5.07 4.42 5.16 4.49 x
(1.56) (1.57) (1.40) (1.55)
Training aids 5.21 5.37 4.68 3.61 x x x
(I .26) (1.35) (1.37) (1.56)
Progress communications 4.45 4.66 4.73 4.48
(1.36) (1.40) (1.51) (1.61)
Management and organization 4.17 4.55 4.01 4.10
(1.60) (1.41) (1.48) (1.60)
Packaging capability 4.01 4.35 4.21 4.24
(1.58) (1.58) (1.66) (1.70)
Moral/legal issues 3.83 3.89 4.27 3.88
(1.70) (1.70) (1.60) (1.84)
Geographic location 3.23 3.59 3.95 3.81 x
( 1.46) (1.60) (1.56) (1.58)
Labor relations record 3.62 3.76 3.42 3.31
(1.57) (1.60) (1.74) (1.62)
Overall subsample mean 4.91 4.97 5.02 4.78

“Ratings were based on a seven point scale ranging from a value of 1 for “of no importance” to a value of 7 for “of extreme impor-
tance.” Variables are arranged in descending order of overall average importance. Standard deviations are within parentheses.

the bases of quality, delivery, price and service. There-
fore, an industrial marketer should develop strategies to
improve the buyers’ beliefs regarding the extent to which
moderately weighted attributes are offered by the marke-
ter or the marketer’s brand. A review of the descending
order of importance for the attributes, as found in Table 1
or in other studies, indicates a rough ordering of image
building priority for marketing strategists.
ATTRIBUTE vs. ATTRIBUTE The average attribute im-
portance for each vendor attribute provides an indication
of its relative order of importance when compared with
the average importance of other attributes. However,
ranking the importance of the attributes on the basis of
average ratings may be misleading. That is, one average
figure such as 6.16 may be arithmetically greater than
another average such as 6.04 yet not really be statistically
259
different. A multiple range test was applied to the data ceived repair service and warranties, technical capability,
for each subsample in order to determine which attributes financial position, aid and advice, and training aid to be
were of greater, equal, and lesser importance as com- significantly more important in a capital equipment/new-
pared to each attribute.’ The results of the multiple range task buying situation than in a component material/
tests indicate that the importance of vendor attributes modified rebuy situation. These results imply that buyers
overlap with some other attributes in the set. For exam- are more sensitive to pre- and post-purchase services and
ple, for the capital equipment/new-task problem in Table to a vendor’s technical and financial strength when
1 the most important vendor attributes, as rated by the selecting a vendor in a capital equipment/new-task situa-
electric utilities buyers, were delivery capability (mean tion as opposed to a modified rebuy of a component
of 6.16), repair service (6.16j, quality (6.04), technical material. On the other hand, the buyers were more sensi-
capability (5.83), and aid and advice (5.57). All of these tive to prices and assured delivery (delivery capability,
means were statistically equal even though there are performance history, control systems, attitude toward
substantial arithmetic differences between them. In turn, buyer, and geographic location) in the component
the means for quality (6.04), technical capability (5.83), material/modified rebuy situation as compared to the
aid and advice (5.57), und price (5.52) are statistically capital equipment/modified rebuy situation. In terms of
equal. The rest of the mean ratings of attribute impor- an evaluation procedure, e.g., a multiattribute attitude
tance belonged to overlapping ranges of importance for model (see Ref. [4]), the relative importance weight
this subsample and for the average attribute ratings in the given the ith attribute by an industrial buyer may change
other subsamples. Therefore, care should be taken before from one buying problem to another. Such changes
one makes or accepts claims that a particular vendor should be recognized in describing variation in buying
attribute is more or less important than other attributes. behavior, in quantitatively modeling buying processes,
Unchecked suppositions based simply on ranking the and in designing marketing mixes.
averages in descending order may lead to erroneous de-
INFLUENCE OF COMPANY-SPECIFIC FACTORS The rela-
scriptions of the relative importance of vendor attributes
tive importance of four vendor attributes differed when
and the assignment of improper degrees of emphasis to
the ratings of the purchasing agents in the electric utilities
certain attributes vis a vis other attributes in guiding the
companies were compared with the ratings of purchasing
design of marketing strategies.
agents in the electronics manufacturing companies. For
INFLUENCE 0F TYPE 0F PuRcHAsE (~RO~IUCT-~PECIFIC the two buying problems combined, buyers in the electric
FACTORS) The expectations of purchasing agents re- utilities companies were significantly more sensitive to a
garding the importance of vendor attributes will probably vendor’s repair service and warranties, bidding com-
vary from one type of purchasing problem to another. pliance, and training aids than were buyers in the elec-
Analysis of variance on the data in this study provided a tronics manufacturing companies. Meanwhile, the
basis to see which attributes were weighed differently by buyers in electronic manufacturing firms gave signifi-
purchasing agents when comparisons were made between cantly greater weight to the vendors’ production facilities
the capital equipment/new-task buying problem and the
component material/modified rebuy problem.”
The relative importance of nine of the twenty vendor
attributes were significantly different between the new

“The industrial marketer

task buying problem and the modified rebuy problem.
The attributes ratings which were affected are indicated
on the right side of Table I.
The purchasing agents in this study generally per- should develop strategies
to improve the
buyers’ beliefs. ”

260
TABLE 2 hypothetical. The constructs connected with each of the
Orthogonally Rotated Vendor Attributes (Factor Loading Matrix)” vendor attributes factors and the importance for each
Factors
factor were as follows:

Variables C, c, c, c, c, Communaltles
Factors from
I. Labor relation5 record .73 .63 Table 2 Construct Importance
2. Management
and organization .7l .56 Cl Vendor Stability 5
3. Financial position .63 .4x C, Basic Economic Criteria I
4. Production facilities .s7 .35 .32 .55 C, Geographic Affinity 3
5. Moral/legal issues .55 .42 .49 C, Attendant service& 2
6. Price .72 ..59 Cj Assurance Mechanism!, 4
7. Quality .69 .34 .6X
8. Delivery capability .68 .41 .61
9. Geographic location .67 .49 The level of importance was judged by observing the
IO. Attitude toward buyer .66 .57 relative importance of those variables which had the
1 1. Performance history .51 .57 .59
highest loadings on the factors. For instance, the vendor
12. Bidding compliance .48 .41 .44
13. Packaging capability .48 .36 .44 attributes of labor relations record, and management and
14. Training aids .82 .72 organization were heavily loaded on the factor Vendor
15. Aid and advice .-I6 .65 Stability (C,), yet the mean ratings of important for those
16. Repair service .67 .40 .62
17. Technical capability .39 .61 .60
two variables were relatively low indicating that the rela-
18. Reputation .4l .31 .4x .59 tive importance of the factor was low among the five
19. Control systems .34 .62 .54 factors.
20. Progress
Lehmann and O’Shaughnessy also found that, in
communications .31 .31 .55 .54
studying four different product purchase decision situa-
“Percent of varianceamong all variables that was accounted for by the factor\ tions, five factors emerged in each of the four factor
was s77r. analyses of their seventeen supplier attributes. They
Principal-component. analysi,. varimax method. Factor cutoff at eigen-
value\ > 1.0. Only loadings 3 .30 are shown. stated

the first factor appeared to be related to operating

and prices than did their counterparts in the utilities
companies.
RELATIONSHIPS WITHIN THE VENDOR
SET One objective of this study was to explore the
interrelationships within the vendor attributes set and also
within the information sources set. Therefore, factor
analyses were performed on the two data sets. The factor
structures which emerged were not exactly the same
across the subsamples. However, for the purpose of sim-
ple exploration, there appeared to be enough similarity to
allow the data to be merged into one overall factor
analysis for each of the sets of variables. The results of
the factor analysis on the vendor attributes set are sum-
marized in Table 2.
Five factors, accounting for 57 percent of the total
variation of all the variables, emerged in the analysis of
the vendor attributes ratings. An attempt was made to
interpret the nature of the factors by envisioning a com-
mon theme for those variables which were highly as-
sociated with each factor. It should be noted that the
interpretations are exploratory in nature, i.e., the con-
structs developed in connection with the factors are
characteristics. Other factors appear to be price, ordering
convenience, reputation, technical capabilities, and sales
service [S].
ATTRIBUTES
Factors in this study which were similar are, respectively:
assurance mechanisms, basic economic criteria, geo-
graphic affinity, vendor stability, attendant services (for
Lehmann and O’Shaughnessy’s technical capabilities,
and sales service). Thus, the number and the meaning of
the factors in this study appear to be supported by at least
one other study.
The five factors appear to be logical. Factors, C,
(Vendor Stability) and C3 (Geographic Affinity) can be
viewed as bases for determining whether a vendor is
qualified as a possible source. The buyers’ perceptions of
a vendor’s labor relations, management capability, fi-
nancial position, production facilities, moral/legal issues,
reputation, and technical capability were substantially
interrelated (as seen via the loadings on CI in Table 2).
The association of those vendor attributes seems to indi-
cate a basic concern for supplier stability or integrity as a
qualifying factor. The factor, Geographic Affinity, (C,,)
reflects a preference for nearer sources of supply. The

261
high loadings on C, of geographic location, attitude to-
ward buyer, performance history, bidding compliance,
and packaging capability all reflect an underlying pro-
pensity toward local vendors. For example, geograph-
ically closer suppliers are more apt to be recognized as
potential sources, be able to compete on the basis of price
and delivery, form reciprocal agreements, and sustain
intercompany contacts. Thus, vendors are more likely to
be deemed qualified sources if they are located near the
buyer, ceteris paribus .
The other three factors, C,, C,, and C,;, appear to be
basic determinants used in making a selection of supplier
from among a qualified group of suppliers. The factor,
Basic Economic Criteria (C), was connected with the
traditional economic criteria of price, quality, delivery
capability, and performance history. Attendant Services
(C,) shows a distinct concern for product related service
capabilities offered by the competing vendors. Assurance
Mechanisms (cj) seems to reflect the buyers’ need for
supplier-buyer intercompany communications regarding
the pre-contract negotiations and the post-contract status
of the product ordered. These three factors can be viewed
as aggregate criteria which would be used in determining
which vendor offers the greatest value.
The less important factors may very well be critical
especially if they are used as screening factors. A vendor
who is perceived by a buyer as not adequately meeting
the Vendor Stability criterion will quite likely not be
further considered. Thus, even though Vendor Stability
(C,) is not on the same level of overall importance as
Basic Economic Criteria (C,), it may be a factor which
could block a vendor from being included in the final
stages of the selection process.
Another implication connected with attribute factors is
that a marketing manager may be able to improve buyers’
“Buyers in the electric utilities
companies were significantly more sensitive
to a vendor’s repair services and warranties,
bidding compliance, and training aids.”
262
attitudes toward the marketer’s company or brand by
identifying key attributes and then manipulating the mar-
keting mix to enhance the buyers’ beliefs regarding the
extent to which the key attributes are offered in his
marketing mix. A key attribute or a key variable is an
original variable which best represents a factor. It is
possible that more than one original variable may be
needed to express the essence of a factor. For example,
for Factor C, (Basic Economic Criteria) price, quality,
and delivery would all appear to be key variables. In
other instances, such as for Factor C, (Geographic Affin-
ity), one original variable such as geographic location
may suffice. In summary, factor analysis may be used to
identify a smaller set of orthogonal key attributes which
the marketer could emphasize in developing an efficient
and effective strategy.
Information Sources
The overall descending order of importance of the
fifteen information sources is shown in Table 3. The
buying firm’s purchasing records, communications with
other departments within the firm, and contacts with
salesmen are all information sources generally at the top
levels of importance. The general descending levels of
importance for information sources which are largely
under the marketer’s control is roughly: salesmen,
buyers’ visitations of vendors’ facilities, catalogs, jour-
nal advertisements, trade shows, telephone directories,
and mail advertisements. The importance ordering of
these information sources indicates an appropriate gen-
eral ordering of promotional vehicle impact which the
marketers’ should consider in designing industrial pro-
motional mixes.
As with the vendor attributes ratings, it should be
noted that multiple-range tests showed that most informa-
 TABLE 3
Importance of Information Sources (Mean Ratings)”

Capital Equipment
New Task Purchasing Component Material
Equipment Modified Rebuy Problem Influences

Electric Electronics Electric Electronics

Variables Utilities Manufacturers Utilities Manufacturers Industry Problem Interaction

Purchasing records 5.14 5.12 5.91 6.24 x

(1.25) (1.26) (1.08) (0.96)
Personal calls of salesmen 5.08 4.81 5.23 4.66 x
(1.28) (1.44) (1.32) (1.33)
Other departments 4.67 4.84 4.72 4.70
(1.50) (1.27) (1.45) (1.33)
Visiting vendor’s plant 4.25 5.72 3.62 5.00 x
(1.66) (1.26) (1.64) (1.55)
Catalogs 4.51 4.07 5.14 4.44 x
(1.50) (1.32) (1.31) (1.27)
Purchasing directories 3.70 4.48 3.87 4.94 x
(1.42) (1.29) (1.59) (1.33)
Credit and financial reports 4.25 4.58 3.75 4.17 x
(1.34) (1.37) (1.54) (1.52)
Telephone calls of salesmen 3.83 4.00 4.44 4.08
(1.48) (1.49) (1.36) (1.63)
Outside purchasing managers 3.82 3.88 3.93 3.86
(1.58) (1.59) (1.60) (1.59)
Journal articles 3.65 3.73 3.65 3.44
(1.35) (1.29) (1.28) (1.46)
Journal advertisements 3.33 3.52 3.41 3.30
(1.44) (1.41) (1.41) (1.42)
Trade shows and conventions 3.44 3.48 3.41 3.00
(1.53) (1.36) (1.39) (1.41)
Telephone directories 2.92 3.31 3.07 3.90 x x
(1.57) (1.51) (1.68) (1.68)
Local purchasing chapter 3.03 3.04 3.09 3.15
(1.62) (1.43) (1.64) (1.59)
Mail advertisements 2.95 3.00 3.07 2.91
(1.41) (1.29) (1.28) (1.29)

“Rating scale ranged from 1 (of no importance) to 7 (of extreme importance). Standard deviations are within parentheses.

tion sources were not significantly more important than
certain other information sources. For example, for the
electronics manufacturers/component material-modified
rebuy subsample, purchasing records was clearly the
most important source of information while the second
order of importance included visiting vendors’ plants,
purchasing directories, other departments, personal calls
of salesmen, and catalogs all of which are statistically
equal in importance.
The relatively high ratings of purchasing records and
information from other departments in the buying organi-
zation should be briefly reviewed. It is an advantage to be
or have been a supplier since buyers will choose from
among those suppliers which are already or will become
part of the evoked set of suppliers. Favorable prior ex-
perience with a supplier is reinforcing and this substan-
tially improves a supplier’s likelihood of being chosen
again. Needless to say, industrial marketers should strive
to be recognized and to build good relations in order to
solidify their position in future customer buying deci-
sions. Conversely, an unknown supplier will have to
work especially hard to offset the buyers’ favoring of
previously utilized sources of supply. The “other de-
partment” information source embodies the multiple in-
fluences aspect of organizational purchasing. Contacts
with other departments such as production, and engineer-
ing departments will influence the purchasing agents’
behavior.
INFLUENCE DUE TO TYPE OF PURCHASING PROB-
LEM The relative importance of seven information
sources were significantly influenced by the type of pur-

263
 TABLE 4
Orthogonally Rotated Information Sources (Factor Loading Matrix)”

Factors

Variables 11 12 13 lI Communaltles

I. Journal advertisement!, .x2 .71

?
i. Journal nrticles .76 .62
3. Mail advertisement\ .6X .S8
4. Catalogh .6O .56
5. Telephone directories -5s .48 .54
6. investigations of vendors’ facilities .73 .60
I. outside purchasing manager5 .I2 .6l
8. Credit and financial reports .64 .s2
9. Local purchasing chapter .36 .6O .49
IO. Trade shows .42 .S8 .58
I I. Personal calls of salesmen .80 .67
I?. Telephonecalls of salesmen .80 .71
13. Purchasing records .79 .64
14. other departmenta .30 .6l .Sl
IS. Purchasing directories .46 .49 .54

“Percent of variance among all variables accounted for by the factors was 59%.

chase involved. Credit and financial reports and visiting differences in the importance of certain information
vendors’ facilities were relatively more important for sources.
capital equipment/new-task purchasing situation as com- An implication for marketing managers is that the
pared to the component material/modified rebuy situa- organizational and personal characteristics of industrial
tion. On the other hand, telephone calls from salesmen, customers may be used to predict and perhaps explain the
catalogs, purchasing directories, purchasing records, and relative sensititives of different customers to various in-
telephone directories were relatively more important in formation sources. For instance, salesmen would proba-
the component material modified rebuy situation and less bly have more of an impact on buyers in the electric
important in the capital equipment/new-task situation. utilities industry than in the electronics manufacturing
These results make sense in light of the purchasing industry. On the other hand, buyers in the electronics
agents’ facing less risk and having more experience and industry are impressed by visiting the vendors’ plant
readily available information in the modified rebuy case more than buyers in the electric utilities firms. Therefore,
then in the new-task case. promotional mixes can be tailored to the types of the
customers’ organizations.
INFLUENCE DUE TO COMPANY-SPECIFIC‘ FACTORS The
RELATIONSHIPS WITHIN THE INFORMATION SOURCES
importance of six buyer information sources differed sig-
SET The results of the factor analysis on the information
nificantly when the ratings of the respondents in the elec-
sources set are summarized in Table 4.
tric utilities companies were compared with the ratings
Four factors accounted for 59 percent of variance
of the respondents in the electronics manufacturing com-
among all the information source variables. The nature of
panies. Buyers in the electric utilities organizations
the factors are hypothesized in the following constructs:
perceived that information from vendors’ salesmen and
vendors’ catalogs were signiticantly more important
Factors from Level of
than their counterparts in the electronics manufacturing Table 4 Construct Importance
firms. On the other hand, buyers in the electronics man-
ufacturing organizations gave more weight to informa- 1, Seller Oriented-External 4
Information
tion from credit and financial reports, purchasing direc- 3
Ir Buyer Oriented-External
tories, visiting vendor’s plants, and telephone directories Information
than did buyers in the electric utilities industry. Dif- l:, Salesmen 2
1, Buyer Oriented-Internal I
ferences in the organizational and personal characteristics
Information
of the respondents may explain some of the perceived

264
Two of the four fundamental categories of information, I2
and 4, appear to be buyer oriented. One buyer oriented
category included sources found outside the buying or-
ganization, which were: investigations of vendors’
facilities, outside purchasing managers, credit and finan-
cial reports, local purchasing chapter, and trade shows. A
review of the mean importance ratings of the information
sources which were loaded on I,, especially those most
heavily loaded on this factor, suggests that this informa-
tion category contained a less important pool of informa-
tion. The other buyer oriented category of information,
I,, included internal readily available sources, viz., pur-
chasing records, other departments such as production or
engineering, and purchasing directories. The Buyer
Oriented-Internal Information (2) appeared to be the
most important general pool of information. The other
ing those information sources which are controlled by
marketers. Hence, another purpose of this study was to
explore connections between vendor attributes and buyer
information sources.
Canonical analyses were performed on the two original
sets of variables and on the sets of factors as represented
by factor scores.” The results of the analysis of the
original variables were quite difficult to interpret. The
results of the canonical analysis of the factors provided a
simpler basis for exploring relationships between the two
data sets. These results are summarized in Table 5.
TABLE 5
Canonical Analysis of Vendor Evaluation Criteria and Buyer
Information Sources
Canonical loadings

two information categories, I, and 13, are seller oriented

Canomcal functions
or controled. Salesmen (I,) contained the second most Variables 1 2 3 4
important category of information as reflected in the
Predictor Set (Vendor evaluation criteria)
relatively high importance ratings of personal calls of
I. Vendor Stability Factor .64 -.67 .33
salesmen. The least important category of information 2. Economic Criteria Factor .41 .41 -.60
appeared to be Seller Oriented-External Information (I’). 3. Geographic Affinity Factor .52 .56 .62
4. Attendant Services Factor
The least important category included journal advertise-
5. Assurance Mechanism Factor -.44
ments, journal articles, mail advertisements, catalogs,
Criterion Set (Buyer information sources)
and telephone directories. The four information factors or
1. External-seller oriented .36 .82 .35
categories which emerged in the factor analysis have face 2. External-buyer oriented .55 -.78
validity, i.e., these factors conform with common sense. 3. Salesmen .49 -.85
Thus, it appears that organizational buyers have four 4. Internal sources .63 .51 -.53

basic information compartments. Specific information Canonical Correlation, R, .65 .48 .33 .I2

sources within each category may be viewed as being

alike in terms of credibility, importance and meaning.
Specific information sources not in the same category
would be dissimilar in regard to credibility, importance
and meaning. In other words, buyer information sources
within a category largely duplicate one another while
buyer information sources not in the same category do
not duplicate one another. Such a structure provides
implications for the selection of and emphasis given to
promotional mix elements in attempting to optimize
promotional impact. A greater promotional payoff should
result from making use of an additional amount of non-
duplicating effort than duplicating effort, cereris paribus.
Relationships Between the Vendor Attributes
and Information Sources Data Sets
Organizational buyers utilize information sources to
identify potential suppliers and to assess potential
capabilities of competing suppliers. Analysis of the con-
nections between these two sets of variables would aid
the formulation of marketing strategies especially regard-
Constructs were developed in connection with the ca-
nonical functions shown in Table 5. In developing a
construct for each canonical function the task involved
envisioning why certain variables from each of the two
sets are heavily loaded (both positively and negatively)
and not heavily loaded on the respective canonical var-
iates of the canonical function. In this study, loadings
with an absolute value of about .50 or higher were con-
sidered to be heavy. Loadings with an absolute value
of .30 or less were not included in Table 5. Four canoni-
cal functions were established in the canonical analysis of
the factors. Three of the canonical correlations were
significant well beyond the 5 percent level of significance
‘Canonical analysis essentially seeks to correlate one set of variables with
another set of variables. A hnear combinatton of variables producmg a
weighted sum for each set is mathematically determined so that the correlation
between the weighted sums (variates) of the sets is maxtmized. A number of
linear functions may be derived so that each one is uncorrelated with preceding
ones. Canonical loadmgs can be used to see which varrables in each of the two
sets contribute most to between set correlation.

265
while the fourth function was significant at the 7 percent
level of significance.
The first canonical function seems to involve a general
image or perception of a vendor as suggested by the
heavy loadings of Vendor Stability and Geographic Af-
finity on the first canonical variate of the Vendor Evalua-
tion Factors Set. It may be surmised that buyers would
naturally both know more about and prefer suppliers
which are located nearer to the buyer. Information
categories which are linked to the buyers’ general knowl-
edge and perception of a supplier are: External-Buyer
Oriented sources, Salesmen, and Internal Sources. Mar-
keters should obviously use their sales force and also
emphasize good past performance (as recorded in the
buyer’s performance records as an internal source) to
strengthen their firm’s general image, especially in
nearer markets.
The second canonical function was connected with
bipolar loadings of factors from both sets. One explana-
tion which fits the nature of the loadings is that buyers,
when assessing prospective suppliers, rely more and
more on External-Buyer Oriented information sources
(e.g., visiting vendor’s facilities, outside purchasing
managers, and credit reports) as distances increase be-
tween the buyers and suppliers. If the suppliers are
close-by then the buyers can rely upon Internal Sources
of information such as purchasing records. An implica-
tion for marketers attempting to extend their markets is
that they will benefit from: (1) encouraging purchasing
agents of prospective new accounts to investigate their
operating facilities; (2) encouraging purchasing agents of
existing accounts to provide favorable “word-of-mouth”
communications to other purchasing agents; and (3) im-
proving their firm’s credit ratings and financial reports.
The third canonical function appears to involve the
buyers’ concerns regarding the Basic Economic Criteria
(such as price, delivery, and quality) and Assurance
Mechanisms which were inversely related to Geographic
Affinity. This leads to the straightforward conclusion that
the shorter the distance between prospective supplier and
buyer the more likely it is that the seller will be competi-
tive regarding price, delivery capability, and maintaining
the buyer-seller communications. Internal Sources of in-
formation appears to provide information regarding the
Basic Economic Criteria whereas External-Seller
Oriented information (e.g., advertisements) appears to
bolster Geographic Affinity. An overall implication is
that trade advertising and mail advertising could improve
a marketer’s relative position if the marketer has equalled
the competitors’ basic offering in terms of price, quality
266
and delivery for a homogeneous product. Perhaps adver-
tising could be used to off-set a marketer’s relative dif-
ference in the economically oriented portion of the mar-
keting mix for a heterogeneous product.
The fourth canonical function involved the Salesmen
information source. However, the other variables were
not heavily loaded on the respective variates of the fourth
function. Thus no implications could be drawn.
The results of the canonical analysis of the factor
scores appear to conform with conventional wisdom. The
results were not startling but canonical analysis does hold
promise as a tool to structure data in future studies.
CONCLUSIONS
A number of conclusions were drawn from this study.
First, the relative importance of the vendor attributes
were investigated. The order of importance of the indi-
vidual vendor attributes compared well with the findings
of other studies and the descriptions found in basic texts.
It should be recognized that attributes of mid-level impor-
tance, which are often subjective in nature, can very well
be the ultimate determinants. Results of this study indi-
cate the descending general order of importance of ven-
dor attributes.
It was found that one must take care not to grant any
individual vendor attribute a unique position of impor-
tance. While it is true that some vendor attributes are
clearly more important than others, it is also true that
most attributes were not significantly more important
than one or more of the other attributes. Incorrect order-
ings of attribute importance affect proper descriptions of
the vendor evaluation process and perhaps the priorities
assigned to marketing and promotional mix elements.
The relative importance of some vendor attributes
were affected by the type of buying task. Thus, as ex-
pected, certain vendor attributes changed in degree of
importance from the new task to the modified rebuy task.
The results have face validity. The specific variables
which were affected and implications were discussed.
The relative importance of some vendor attributes were
also affected by the type of organization in which the
buyers were employed. That is, the level of importance
of certain variables differed significantly when buyers
perceptions in the electronics manufacturing industry
were compared with their counterparts in the electric
utilities industry. Second, it was concluded that buyers
group characteristics of expected vendor performance or
vendor attributes into five basic categories. The structure
and nature of the fi\le vendor evaluation factors varied
somewhat across buying tasks and types of organiza- 3. Dickson, Gary W., An Analysis of Vendor Selection Systems and Deci-
tions. Nonetheless, findings from this study tend to sup- sions, J. Purchasing 2, 5-17 (February 1966).

port the following constructs for five factors: (1) Vendor 4. Kotler, Philip, Marketing Management, Prentice-Hall, Inc., Englewood
Cliffs, N.J., 1976, 3rd ed., pp. 88-93.
Stability, (2) Basic Economic Criteria, (3) Geographic
5. Lehmann, Donald R., and O’Shaughnessy, John, Difference in Attribute
Affinity, (4) Attendant Services, and (5) Assurance Importance for Different Industrial Products, J. Market. 38, 3642 (April
Mechanisms. These factors may be viewed as represent- 1974).
ing five fundamental evaluation criteria. Buyers also ap- 6. Robinson, Patrick J., Faris, Charles W., and Wind, Yoram, Industrial
pear to group information sources into four categories. Buying and Creative Marketing, AIIyn and Bacon, Inc., Boston, 1967.

These four information categories were named as fol- 7. Sheth, Jagdish N., A Model of Industrial Buyer Behavior, J. Marketing
37, 50-56, (October 1973).
lows: (1) “seller dominated - external information,” (2)
8. Sheth, Jagdish N., Recent Developments in Organizational Buying Be-
buyer oriented - external information, (3) salesmen, and
havior, Working Paper, College of Commerce and Business Administra-
(4) buyer oriented - internal information. Theoretical and tion, University of Illinois, 1976.
practical implications connected with the vendor attri- 9. Webster, Frederick E., Jr., Industrial Buying Behavior: A State-of-the
butes factors and information factors were discussed. Art Appraisal, Proceedings A. M. A. (Fall Conference) 254-260, (1969).
Third, the results and interpretation of the canonical 10. Webster, Frederick E., Jr., Modeling the Industrial Buying Process, J.
Market. Res. 2, 370-376 (1965).
analyses of the factors seemed to conform with conven-
11. Webster, Frederick E., Jr., and Wind, Yoram, Organizational Buying,
tional wisdom regarding the design of communications
Prentice-Hall, Inc., Englewood Cliffs, N.J., 1972.
programs in connection with the buyers - vendor evalua-
12. Willets, Walter E., Fundamentals of Purchasing, Appleton-Century-
tion criteria and evaluation process. Crofts, New York, 1969, pp. 82-83.
13. Wind, Yoram, Green, Paul E., and Robinson, Patrick, J., The Determi-
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267