Page 219 - Marketing Management

196 PART 3 CONNECTING WITH CUSTOMERS

Problem Recognition

The buying process begins when someone in the company recognizes a problem or need that can
be met by acquiring a good or service. The recognition can be triggered by internal or external
stimuli. The internal stimulus might be a decision to develop a new product that requires new
equipment and materials, or a machine that breaks down and requires new parts. Or purchased
material turns out to be unsatisfactory and the company searches for another supplier, or lower
prices or better quality. Externally, the buyer may get new ideas at a trade show, see an ad, or receive
a call from a sales representative who offers a better product or a lower price. Business marketers
can stimulate problem recognition by direct mail, telemarketing, and calling on prospects.

General Need Description and Product Specification
Next, the buyer determines the needed item’s general characteristics and required quantity. For
standard items, this is simple. For complex items, the buyer will work with others—engineers,
users—to define characteristics such as reliability, durability, or price. Business marketers can help
by describing how their products meet or even exceed the buyer’s needs.
The buying organization now develops the item’s technical specifications. Often, the company
will assign a product-value-analysis engineering team to the project. Product value analysis (PVA) is
an approach to cost reduction that studies whether components can be redesigned or standardized
or made by cheaper methods of production without adversely impacting product performance.The
PVA team will identify overdesigned components, for instance, that last longer than the product
itself. Tightly written specifications allow the buyer to refuse components that are too expensive or
that fail to meet specified standards. When HP won ISRI’s first Design for Recycling Award through
an application of PVA methods, it received this accolade:
HP has worked for many years to design products that are easier to recycle. The firm
operates several recycling facilities, which allows it to determine the most effective design
features to facilitate product recycling. HP has developed standards that integrate clear
design guidelines and checklists into every product’s design process to assess and improve
recyclability. Hewlett-Packard’s design process includes: Using modular design to allow
components to be removed, upgraded, or replaced; eliminating glues and adhesives by us-
ing, for example, snap-in features; marking plastic parts weighing more than 25g according
to ISO 11469 international standards, to speed up materials identification during recycling;
reducing the number and types of materials used; using single plastic polymers; using recy-
cled plastic; using moulded-in colours and finishes instead of paint, coatings, or plating. 34
Suppliers can use product value analysis as a tool for positioning themselves to win an account.
Regardless, it is important to eliminate excessive costs. Mexican cement giant Cemex is famed for
“The Cemex Way,” which uses high-tech methods to squeeze out inefficiencies. 35

Supplier Search
The buyer next tries to identify the most appropriate suppliers through trade directories, contacts
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with other companies, trade advertisements, trade shows, and the Internet. The move to Internet
purchasing has far-reaching implications for suppliers and will change the shape of purchasing for
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years to come. Companies that purchase over the Internet are utilizing electronic marketplaces in
several forms:
• Catalog sites. Companies can order thousands of items through electronic catalogs distrib-
uted by e-procurement software, such as Grainger’s.
• Vertical markets. Companies buying industrial products such as plastics, steel, or chemicals or
services such as logistics or media can go to specialized Web sites (called e-hubs). Plastics.com
allows plastics buyers to search the best prices among thousands of plastics sellers.
• “Pure Play” auction sites. Ritchie Bros.Auctioneers is the world’s largest industrial auctioneer,
with more than 40 auction sites worldwide. It sold $3.5 billion of used and unused equipment
at more than 300 unreserved auctions in 2009, including a wide range of heavy equipment,
trucks, and other assets for the construction, transportation, agricultural, material handling,
mining, forestry, petroleum, and marine industries. While most people prefer to bid in person
at Ritchie Bros. auctions, they are also able to bid online in real time at rbauction.com—the