Description
It explains buygrid framework, buying phases, buyclasses New Task, Modified Rebuy, Straight Buy. pros and cons of buy grid model
INDUSTRIAL MARKETING
Click to edit Master subtitle style
BUYGRID MODEL
1/20/13
INTRODUCTION
? In 1967, the Canadian, American and Israeli
marketing researchers, Robinson, Faris and Wind, introduced a generic conceptual model for buying processes of organisations
? They saw industrial buying not as single
events, but as organisational decision-making processes where multiple individuals
decide on a purchase
? This purchasing decision process over various 1/20/13
? This framework consists of a matrix of
buyclasses (three types of buying situations) and buyphases (eight phases of
buying decision process).
? It provides a frame of reference for dividing
the overall decision – making process into distinct segments that are useful for recognizing critical decisions and specific information requirements
1/20/13
Buying phases
Buy classes
New TaskModified Rebuy Straight Rebuy
1
2
3 4 5 6
Anticipation or recognition of problem ( need ) and a general solution Determination of characteristics and quantity of needed item Description of characteristics and quantity of needed item Search for and qualification of potential sources Acquisition and analysis of proposals Evaluation of proposals and
1/20/13
BUYGRID Framework
Buy Classes
1/20/13
BUYCLASSES: New Tasks
? The first-time buyer seeks a
information to explore alternative purchasing
solutions to his organisational problem
wide variety of
? The
greater the cost or perceived risks related to the purchase -> the greater the need for information ->
the larger the number of participants in the buying centre
? E.g. firm’s decision to
change in customer requirements may necessitate the purchase of new machinery to meet the 1/20/13
add a new machinery or
BUYCLASSES: Modified Rebuy
? The buyer wants to replace a product the
organisation uses
? The modified rebuy situation occurs most often when
the firm is displeased with the performance of present suppliers
? The decision making may involve plans to modify
the product specifications, prices, terms or suppliers as when managers of the company believe that such a change will enhance quality or reduce cost
1/20/13 ? In such circumstances, the buying centre proved
BUYCLASSES: Straight Rebuy
?The buyer routinely reorders a
product with no modifications
?The buyer retains the supplier as
long as the level of satisfaction with the delivery, quality and price is maintained
?New suppliers are considered only
1/20/13
BUYPHASES
?Based on field research, Robinson,
Faris and Wind divided the buyer purchase process into eight sequential, distinct but interrelated BUYPHASES:
1. Recognition of the organisational
problem or need;
2. Determination of the characteristics of
the item and the quantity needed;
1/20/13
1.RECOGNITION OF ORGANISATIONAL PROBLEM OR NEED
? Understand Company’s existing process ? Scout for problems/improvements
required
? Estimate the advantages of the
solution/improvements
? Such recognition may originate
within the buying organization , especially when
?Products become outmoded ?Equipment breaks down or
1/20/13
Example
? Siemens Transformer factory required Glazed copper wires which are currently manually glazed.
? They wanted to added automated
glazing set-up.
? The Plant manager identified the
improvement, & he estimated the cost savings associated with it.
? This was Qualified as a New Task
1/20/13
2. DETERMINATION OF
CHARACTERISTICS OF ITEM AND QUANTITY NEEDED
?Organizational members must
determine how the situation may be resolved
?Problem and solution alternatives
must be narrowed & analyzed
?User department tasks:
?prepare performance specs for technical
products
?Narrowing of the problem and
alternatives
1/20/13
Example
?Siemens Transformer plant manager
understood the importance of automatic glazing & he along with R&D manager & Sr. Product Engineers determined the characteristics of the machine depending on
?Quality improvement due to automatic
glazing
?Time savings
1/20/13
3. DESCRIPTION OF CHARACTERISTICS AND QUANTITY OF NEEDED ITEM
?Influencers who prepare or affect
specifications enter the purchasing process
?Influencers may change from
department heads to engineers or manufacturing department
?Influencers also begin to look outside
the firm for supplier and product information and for assistance in 1/20/13 developing product specifications
Example
?The machine will have to be
customized as no such standard machine exists
?The machine will be Abrasion
machine with draw wiring.
The characteristics will be defined
?The abrasive strength ?The product tensile strength ?The energy limitations ?Cooling & shielding specifications
1/20/13
4. SEARCH FOR AND QUALIFICATION OF POTENTIAL SOURCES
?Once solutions have been identified
and precisely described, a buying organization begins to search for alternative sources of supply, which leads to qualifications of suppliers
?Qualifications sought will vary with
?The type of buying organization ?The specific buying situation ?The buying influencers involved
1/20/13
Example
?The R&D manager & Plant manager
then scout for potential suppliers for such product (Abrasion machine with draw wiring)
?Such product provided by specialized
Product providers like
?L&T automation ?Aker Kvaerner ?Thyssenkrup ?Siemens I & S
1/20/13
5. ACQUISITION AND
ANALYSIS OF PROPOSALS
?After identifying suppliers, requests
for specific proposals are made
?In case of straight rebuy, buyers
check a catalog or contact suppliers to obtain up-to- date information about prices and deliveries
?For complex situations, need for
information is intensive
?Great deal of time is given to
1/20/13 analyzing proposals and comparing
Example
? Enquiries will be conducted by product
engineers with the potential sources
? From the appropriate responses & product
considerations, RFP/RFQ will be sent across all the suppliers
? The proposals from the suppliers will be
analyzed by the Product Design Team led by Product engineer
? This task will be qualified as Modified Re1/20/13
6. EVALUATION OF
PROPOSALS AND SELECTION OF SUPPLIERS
?Proposals of competing suppliers are
weighed and analyzed
?In case of make – or – buy decision,
proposals are compared to the cost of producing the needed item within the buying firm
?In other instances, one or more
offers are accepted from competing suppliers
?Negotiations may continue 1/20/13 on terms,
Example
?A comprehensive analysis from the
proposals will be submitted to a plant manager with recommendations purview of Plant engineer alone, evaluation of the proposals will be done with plant management meeting evaluation
?Since it’s a Big Budget buy outside
?Various parameters will be used for ?This task qualified as Straight Rebuy
1/20/13
7. SELECTION OF AN ORDER ROUTINE
?Order routines are established
?by forwarding purchase orders to the
vendors and status reports to the user department that will be needed over various time periods
?by determining the levels of inventory
?The purchase process is actually not
completed until the ordered item is delivered and accepted for use 1/20/13
Example
?After finalizing the Supplier, the Product
manager & the Design Engineer sit with the supplier’s engineer to discuss the order routine becomes the part of the team
?The procurement manager also ?Appropriately the logistics is worked out ?Also the servicing & maintenance
schedule is worked out
?Qualified as Modified Rebuy
1/20/13
8. PERFORMANCE FEEDBACK AND EVALUATION
?The final phase in the purchasing
process consists of
?a formal or informal review ?Feedback regarding product
performance and vendor performance.
?This phase involves in assessing by
the user department whether the purchased item solved the original problem
?
1/20/13
Example
?The machine performance is evaluated
on various parameters
?The machine’ s performance
conformation to the agreed upon parameters is checked made
?If any changes are required they are ?Service & maintenance issues if any are
sorted & appropriate feedback is conveyed to the company
?Can be a straight Rebuy
1/20/13
Buying phases
Buy classes
New TaskModified Rebuy Straight Rebuy
1
2
3 4 5 6
Anticipation or recognition of ? problem ( need ) and a general solution ? Determination of characteristics and quantity of needed item Description of characteristics and quantity of needed item Search for and qualification of ? potential sources Acquisition and analysis of proposals Evaluation of proposals and
?
? ?
1/20/13
BUYPHASES (CONTD.)
? As buyphases are completed, the process of 'creeping
commitment' occurs and reduces the likelihood of new suppliers gaining access to the buying situation.
? During the performance feedback and evaluation
phase, the relationship between the seller and buyer can develop into a longer term engagement.
? Buyer loyalty and customer satisfaction are primarily
determined by the sales activities during this last phase.
1/20/13
? The model explains the interaction between
PROS
buyer and seller activities given the needs of an organisation message at the right time
? It helps sales personnel deliver the correct ? The buying side of the model can be used for
both consumer & business related buying processes
? The model is based on the observation that
buyer's expectations and behaviour change according to whether the purchase is new, a modified rebuy or a straight rebuy
? The model can provide the basis for a formal
selection process (e.g. request for
1/20/13
CONS
? The organisational buying model focuses
mainly on products and not on services.
? Negligence the supplier's side influences the
customer's organisational decision process.
? The model neglects the importance of
acquisition in sales processes.
1/20/13
Buy grid model - extended
Buying situation Characteristics New task Modified rebuy Straight rebuy Buying stages 1. Recognition of a problem/need Always Always Always 2. Determination of characteristics & quantity Always Sometimes Never of products/services needed 3. Determination of the product/service Always Always Always desires and quantities needed 4. Search for potential suppliers & preliminary Always Sometimes Never evaluation of their sustainability 5. Acquisition and initial analysis of Always Sometimes Never proposals (samples) from suppliers 6. Evaluation of proposals and Always Sometimes Never selection of supplier(s) 7. Selection of an order routine Always Always Always 8. Performance, review, feedback Always Always Always and evaluation Importance of buying decision High Low Degree of interaction between High Low buyer and seller Number of criteria used in Many Few 1/20/13 supplier selection
References
? http://www.provenmodels.com/549/buygrid-framew ? Industrial buying and creative marketing
Patrick Robinson, Yoram Wind and C. W. Faris, 1967 paperMichele D. Bunn, 1993
? Organizational buying contexts and the procureme
1/20/13
Click to edit Master subtitle style
THANK YOU
1/20/13
doc_995231259.pptx
It explains buygrid framework, buying phases, buyclasses New Task, Modified Rebuy, Straight Buy. pros and cons of buy grid model
INDUSTRIAL MARKETING
Click to edit Master subtitle style
BUYGRID MODEL
1/20/13
INTRODUCTION
? In 1967, the Canadian, American and Israeli
marketing researchers, Robinson, Faris and Wind, introduced a generic conceptual model for buying processes of organisations
? They saw industrial buying not as single
events, but as organisational decision-making processes where multiple individuals
decide on a purchase
? This purchasing decision process over various 1/20/13
? This framework consists of a matrix of
buyclasses (three types of buying situations) and buyphases (eight phases of
buying decision process).
? It provides a frame of reference for dividing
the overall decision – making process into distinct segments that are useful for recognizing critical decisions and specific information requirements
1/20/13
Buying phases
Buy classes
New TaskModified Rebuy Straight Rebuy
1
2
3 4 5 6
Anticipation or recognition of problem ( need ) and a general solution Determination of characteristics and quantity of needed item Description of characteristics and quantity of needed item Search for and qualification of potential sources Acquisition and analysis of proposals Evaluation of proposals and
1/20/13
BUYGRID Framework
Buy Classes
1/20/13
BUYCLASSES: New Tasks
? The first-time buyer seeks a
information to explore alternative purchasing
solutions to his organisational problem
wide variety of
? The
greater the cost or perceived risks related to the purchase -> the greater the need for information ->
the larger the number of participants in the buying centre
? E.g. firm’s decision to
change in customer requirements may necessitate the purchase of new machinery to meet the 1/20/13
add a new machinery or
BUYCLASSES: Modified Rebuy
? The buyer wants to replace a product the
organisation uses
? The modified rebuy situation occurs most often when
the firm is displeased with the performance of present suppliers
? The decision making may involve plans to modify
the product specifications, prices, terms or suppliers as when managers of the company believe that such a change will enhance quality or reduce cost
1/20/13 ? In such circumstances, the buying centre proved
BUYCLASSES: Straight Rebuy
?The buyer routinely reorders a
product with no modifications
?The buyer retains the supplier as
long as the level of satisfaction with the delivery, quality and price is maintained
?New suppliers are considered only
1/20/13
BUYPHASES
?Based on field research, Robinson,
Faris and Wind divided the buyer purchase process into eight sequential, distinct but interrelated BUYPHASES:
1. Recognition of the organisational
problem or need;
2. Determination of the characteristics of
the item and the quantity needed;
1/20/13
1.RECOGNITION OF ORGANISATIONAL PROBLEM OR NEED
? Understand Company’s existing process ? Scout for problems/improvements
required
? Estimate the advantages of the
solution/improvements
? Such recognition may originate
within the buying organization , especially when
?Products become outmoded ?Equipment breaks down or
1/20/13
Example
? Siemens Transformer factory required Glazed copper wires which are currently manually glazed.
? They wanted to added automated
glazing set-up.
? The Plant manager identified the
improvement, & he estimated the cost savings associated with it.
? This was Qualified as a New Task
1/20/13
2. DETERMINATION OF
CHARACTERISTICS OF ITEM AND QUANTITY NEEDED
?Organizational members must
determine how the situation may be resolved
?Problem and solution alternatives
must be narrowed & analyzed
?User department tasks:
?prepare performance specs for technical
products
?Narrowing of the problem and
alternatives
1/20/13
Example
?Siemens Transformer plant manager
understood the importance of automatic glazing & he along with R&D manager & Sr. Product Engineers determined the characteristics of the machine depending on
?Quality improvement due to automatic
glazing
?Time savings
1/20/13
3. DESCRIPTION OF CHARACTERISTICS AND QUANTITY OF NEEDED ITEM
?Influencers who prepare or affect
specifications enter the purchasing process
?Influencers may change from
department heads to engineers or manufacturing department
?Influencers also begin to look outside
the firm for supplier and product information and for assistance in 1/20/13 developing product specifications
Example
?The machine will have to be
customized as no such standard machine exists
?The machine will be Abrasion
machine with draw wiring.
The characteristics will be defined
?The abrasive strength ?The product tensile strength ?The energy limitations ?Cooling & shielding specifications
1/20/13
4. SEARCH FOR AND QUALIFICATION OF POTENTIAL SOURCES
?Once solutions have been identified
and precisely described, a buying organization begins to search for alternative sources of supply, which leads to qualifications of suppliers
?Qualifications sought will vary with
?The type of buying organization ?The specific buying situation ?The buying influencers involved
1/20/13
Example
?The R&D manager & Plant manager
then scout for potential suppliers for such product (Abrasion machine with draw wiring)
?Such product provided by specialized
Product providers like
?L&T automation ?Aker Kvaerner ?Thyssenkrup ?Siemens I & S
1/20/13
5. ACQUISITION AND
ANALYSIS OF PROPOSALS
?After identifying suppliers, requests
for specific proposals are made
?In case of straight rebuy, buyers
check a catalog or contact suppliers to obtain up-to- date information about prices and deliveries
?For complex situations, need for
information is intensive
?Great deal of time is given to
1/20/13 analyzing proposals and comparing
Example
? Enquiries will be conducted by product
engineers with the potential sources
? From the appropriate responses & product
considerations, RFP/RFQ will be sent across all the suppliers
? The proposals from the suppliers will be
analyzed by the Product Design Team led by Product engineer
? This task will be qualified as Modified Re1/20/13
6. EVALUATION OF
PROPOSALS AND SELECTION OF SUPPLIERS
?Proposals of competing suppliers are
weighed and analyzed
?In case of make – or – buy decision,
proposals are compared to the cost of producing the needed item within the buying firm
?In other instances, one or more
offers are accepted from competing suppliers
?Negotiations may continue 1/20/13 on terms,
Example
?A comprehensive analysis from the
proposals will be submitted to a plant manager with recommendations purview of Plant engineer alone, evaluation of the proposals will be done with plant management meeting evaluation
?Since it’s a Big Budget buy outside
?Various parameters will be used for ?This task qualified as Straight Rebuy
1/20/13
7. SELECTION OF AN ORDER ROUTINE
?Order routines are established
?by forwarding purchase orders to the
vendors and status reports to the user department that will be needed over various time periods
?by determining the levels of inventory
?The purchase process is actually not
completed until the ordered item is delivered and accepted for use 1/20/13
Example
?After finalizing the Supplier, the Product
manager & the Design Engineer sit with the supplier’s engineer to discuss the order routine becomes the part of the team
?The procurement manager also ?Appropriately the logistics is worked out ?Also the servicing & maintenance
schedule is worked out
?Qualified as Modified Rebuy
1/20/13
8. PERFORMANCE FEEDBACK AND EVALUATION
?The final phase in the purchasing
process consists of
?a formal or informal review ?Feedback regarding product
performance and vendor performance.
?This phase involves in assessing by
the user department whether the purchased item solved the original problem
?
1/20/13
Example
?The machine performance is evaluated
on various parameters
?The machine’ s performance
conformation to the agreed upon parameters is checked made
?If any changes are required they are ?Service & maintenance issues if any are
sorted & appropriate feedback is conveyed to the company
?Can be a straight Rebuy
1/20/13
Buying phases
Buy classes
New TaskModified Rebuy Straight Rebuy
1
2
3 4 5 6
Anticipation or recognition of ? problem ( need ) and a general solution ? Determination of characteristics and quantity of needed item Description of characteristics and quantity of needed item Search for and qualification of ? potential sources Acquisition and analysis of proposals Evaluation of proposals and
?
? ?
1/20/13
BUYPHASES (CONTD.)
? As buyphases are completed, the process of 'creeping
commitment' occurs and reduces the likelihood of new suppliers gaining access to the buying situation.
? During the performance feedback and evaluation
phase, the relationship between the seller and buyer can develop into a longer term engagement.
? Buyer loyalty and customer satisfaction are primarily
determined by the sales activities during this last phase.
1/20/13
? The model explains the interaction between
PROS
buyer and seller activities given the needs of an organisation message at the right time
? It helps sales personnel deliver the correct ? The buying side of the model can be used for
both consumer & business related buying processes
? The model is based on the observation that
buyer's expectations and behaviour change according to whether the purchase is new, a modified rebuy or a straight rebuy
? The model can provide the basis for a formal
selection process (e.g. request for
1/20/13
CONS
? The organisational buying model focuses
mainly on products and not on services.
? Negligence the supplier's side influences the
customer's organisational decision process.
? The model neglects the importance of
acquisition in sales processes.
1/20/13
Buy grid model - extended
Buying situation Characteristics New task Modified rebuy Straight rebuy Buying stages 1. Recognition of a problem/need Always Always Always 2. Determination of characteristics & quantity Always Sometimes Never of products/services needed 3. Determination of the product/service Always Always Always desires and quantities needed 4. Search for potential suppliers & preliminary Always Sometimes Never evaluation of their sustainability 5. Acquisition and initial analysis of Always Sometimes Never proposals (samples) from suppliers 6. Evaluation of proposals and Always Sometimes Never selection of supplier(s) 7. Selection of an order routine Always Always Always 8. Performance, review, feedback Always Always Always and evaluation Importance of buying decision High Low Degree of interaction between High Low buyer and seller Number of criteria used in Many Few 1/20/13 supplier selection
References
? http://www.provenmodels.com/549/buygrid-framew ? Industrial buying and creative marketing
Patrick Robinson, Yoram Wind and C. W. Faris, 1967 paperMichele D. Bunn, 1993
? Organizational buying contexts and the procureme
1/20/13
Click to edit Master subtitle style
THANK YOU
1/20/13
doc_995231259.pptx