General Management: When firm is faced with unfamiliar situations not related to day to day activities, or when purchasing

decisions are likely to have major consequences on the firms operation. Purchasing: Contrary to widely held belief, purchasing is not the most central figure in the purchasing process Research indicates that purchasings dominant sphere of influence falls within phases 4,5,& 6 of the purchasing decision process- when specifications of products to be purchased have been established & suppliers qualified. They are dominant decision makers and influencers in repetitive buying situation.

Buying Center Roles

Primary Roles:Deciders Influencers Secondary role Users Buyers Gatekeepers

Model for Determining The Composition Of The Organizational Buying Center

Environment & Mission
Production Distribution service

Purchase needs
Capital Equipment Product Essential Support Essential Consumption

Buygrid Components

Continued
Dollar Value & Complexity
High Low

Time Commitment & Life Cycle

Long Short

Buying Center Membership, Procurement, & Other members

Objective In Organizational Buying

Task-Oriented Objectives:Price Services Quality Assurance of Supply Reciprocity Nontask Objectives:Social considerations, such as friendship, reputation, and mutually beneficial interactions.

Materials Requirement Planning

Under MRP a firm estimates its future sales, schedules production accordingly, and then orders parts and materials to coordinate with production schedules so that inventories will not become too large or too small To utilize MRP firms are combining functions of purchasing, transportation, inventory control, receiving and in some cases production control under one functional area referred to as materials management.

Just-in-Time Purchasing
JIT is an inventory control system which enables a manufacturer to maintain minimum inventory levels by relying on only one supplier to deliver frequent shipments

Centralized Purchasing
It is centralization of purchasing Purchasing specialist concentrate their attention on selected items, developing extensive knowledge of supply and demand condition. Places more importance on long term availability and supplier relationship.

Marketing Implications
MRP, JIT and Centralized purchasing have a definite impact on industrial marketing programs. Close buyer seller relationship will be developed through MRP and JIT.

Sheth Model of industrial buying behavior.

It helps to understand Buying Center Involvement and Interactions Patterns in organizational buying. It is useful for examining organizational buying behavior from the perspective of
1. The condition that precipitate joint decision making 2. The psychological world of the individual involved 3. Conflict among those involved in the decision process and resolution of conflict.

Joint Decision Making

Number of organizational member involved in a buying decision depends on
Characteristics of the firm The type of purchasing situation Perceived importance of the product Available resources for handling the purchase. Company specific factors (1,4) Product specific factors (2,3)

Buying Center Interaction Patterns

Size of the buying center and the amount of interaction between those involved is dependent upon
1. 2. 3. 4. Vertical involvement Lateral involvement Extensivity Connectedness

 Purchasing Situation Influence Organizational Influence Marketing Implication

.

Psychological Factors
Difference in Role orientation Difference in information Exposure Perceived Risk in the Vendor Selection Process Strategies to minimize or avoid the perceived risk:
Reduce uncertainity