2020_BEC_FlipBooks

F20_Castleberry_Selling11eFlipbook_11-6-20

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OEM Purchasers Buyers for original equipment manufacturers (OEMs) purchase goods (components, subassemblies, raw and processed materials) to use in making their products. An example of an OEM buyer is Dell. Dell may use Intel processors in its computers, making Dell the OEM. Sometimes, though, Dell sells computers to other OEM manufacturers. For exam- ple, when you use a kiosk at the airport to print your boarding pass, the computer inside it is a Dell, but the kiosk may be put together and sold by someone else. Salespeople selling OEM products need to demonstrate that their products help their customers produce products that will offer superior value. For example, Tim Pavlovich, OEM salesperson for Dell, says that one reason why Dell gets contracts like the kiosk contract is because Dell has a worldwide service team already in place and can fix the comput- ers anywhere in the world. Most OEM products are bought in large quantities on an annual contract. The purchasing department negotiates the contract with the supplier; however, engineering and production departments play a major role in the purchase deci- sion. Engineers evaluate the products and may prepare specifications for a custom design. The production department works with the supplier to make sure the OEM products are delivered "just in time," that is, exactly when needed to go into a customer's product. OEM customers are building long-term relationships with a limited number of OEM suppliers. They work closely with their suppliers to help design new products and jointly plan production schedules to keep costs low. Thus, relationship building with more than one department, such as engineering and production, in a customer firm is particularly impor- tant when selling OEM products. End Users When manufacturers buy goods and services to support their own production and operations, they are acting as end users. End-user buying situations include the purchase of capital equipment; maintenance, repair, and overhaul (MRO) supplies; and services. Capital equipment items are major purchases, such as mainframe computers and machine tools that the producer uses for a number of years. MRO supplies include paper towels and replacement parts for machinery. Services include Internet and telephone connections, employment agencies, consultants, and transportation. Because capital equipment purchases typically require major financial commitments, capital equipment salespeople need to work with a number of people involved in the purchase decision, including high-level corporate executives. These salespeople need to demonstrate the reliability of their products and their support services because an equipment failure can shut down the producer's operation. Capital equipment buying often focuses on total lifetime operating cost rather than just the initial purchase price because the equipment is used over a long period. Thus, capital equipment salespeople need to present the financial implications as well as the operating features and benefits of their products. MRO supplies and services are typically a minor expense and therefore are usually less important to businesses than are many other items. Purchasing agents typically oversee MRO buying decisions. Because they often do not want to spend the time to evaluate all suppliers, they tend to purchase from vendors who have performed well in the past, cre- ating functional relationships. Although the cost of MRO supplies is typically low, availability can be critical. For example, if you've ever had a flight delayed because maintenance had to wait for a part to come from a far-off hangar, you have experienced the importance of MRO product availability. In fact, one of the authors had a flight delayed because the maintenance person had to drive to a hardware store to buy caulk because there was an air leak around the windshield in the cockpit. The hour delay to buy a $3 tube of caulk caused 50 passengers to miss their connection, which then led to 50 interactions with passengers to rebook, costing the airline much more than the $3! RESELLERS Resellers buy finished products or services with the intention to resell them to businesses and consumers. Hormel sells precooked meats, such as pepperoni for pizza toppings, to resellers—distributors who then sell to restaurants. Other examples of resellers include McKesson Corporation, a wholesaler that buys health-care products from manufacturers 60 CHAPTER 3: Buying Behavior and the Buying Process

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