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COMPLEXITY OF THE ORGANIZATIONAL BUYING PROCESS The typical organizational purchase is much larger and more complex than the typical consumer purchase. Organiza- tions use highly trained, knowledgeable purchasing agents to make these decisions. Many other people in organizations are involved in purchase decisions, including engineers, production managers, business analysts, and senior executives. Organizational buying decisions often involve extensive evaluations and negotiations over time. The average time required to complete a purchase is five months, not counting straight rebuys, and during that period salespeople need to make many calls to gather and provide information. Bill Dunne, account executive for EIPP Solutions, recalled one particular sale that he said was a good example of the normal sales process: First, they put out an RFP (request for proposal) and had a meeting where they invited anyone who might want to bid for the business. There were eight other vendors who attended. Two weeks later, I turned in a proposal. Several days later, I got a call saying that we were finalists and that they wanted to meet. During this meeting with their CFO, COO, and CIO, they went through my proposal and asked me all types of detailed questions for more than two hours. A week after that, I gave them a tour of one of our facilities. Then I had one more meeting, this time with the President and CFO only. The next day, they informed me that I got the sale, but then we had another round of negotiations over terms and conditions. Finally, three months after issuing the RFP, they signed a contract with us. Source: Bill Dunne, account executive for EIPP Solutions As Dunne noted, though, this level of diligence in selecting a vendor was important to the buyer because it expected to remain a customer for years. The complexity of organizational purchase decisions means salespeople must be able to deal effectively with a wide range of people working for their customer and their company. For example, when selling a new additive to a food processor such as Nabisco, an International Flavors and Fragrances (IFF) salesperson may interact with advertising, product develop- ment, legal, production, quality control, and customer service people at Nabisco. The salesperson needs to know the techni- cal and economic benefits of the additive to Nabisco and the benefits to consumers. In addition, the IFF salesperson coordinates all areas of his or her own firm to assist in making the sale. The salesperson works with research and development to provide data on con- sumer taste tests, with production to meet the customer's deliv- ery requirements, and with finance to set the purchasing terms. (Working effectively within the salesperson's organization is discussed in more detail in Chapter 16.) The complexity of organizational selling is increasing as more customers become global businesses. For example, IBM began moving away from regional purchasing to global sourcing in order to unify contracts, buy in larger quantities from a smaller number of vendors, and obtain more favorable terms. 3 John Deere has a special corporate unit that works with manu- facturing plants to unify sourcing for the same reason. There's no doubt that global competitiveness is a key factor increasing the complexity of organizational buying, but global sourcing is also a key factor for achieving a sustainable competitive advantage. 4 To sell a part for use in John Deere products, you may have to call on a buyer at their headquarters, shown here in Iowa, but you'll have to service plans in Brazil, India, Germany, and France as well as across the United States. spvvk/123RF CHAPTER 3: Buying Behavior and the Buying Process 63

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