A C T A U N I V E R S I T A T I S L O D Z I E N S I S FO L IA OECONOMICA 17, 1982
A . G . W o o d s i d e *
BUYING BEHAVIOR IN M A RK ETIN G CH AN N ELS IN THE UN ITED STA TES
In th e U nited S tates, m ost re c e n t rese a rc h on m ark e tin g channel beh av io r has been focused on pow er, conflict, an d control b etw een m em b ers w ith in specific ch an n el s y s t e m s F e w rese a rc h re p o rts a re av ailable on ex ploring th e decision processes used b y chan n el m em bers w hen b uying fro m o th er chan n el m em bers. E ven less is k n ow n on th e effects of m ark e tin g effo rts or m an u fa ctu rers on th e b u y in g processes of w holesalers and retailers.
Som e exam ples of th e b u y in g processes of rese lle rs fro m th e m a r-k etin g ch an n el lite ra tu re a re p rese n ted in th is article. T he goals of th e a rticle are to suggest some te n ta tiv e g en eralizations of re se lle r b u ying beh av io r and how reseller b uying behavior m ay be im proved.
T hus, th e focus is on th e b u ying behavior of resellers. R esellers are persons an d organizations w ho b u y an d sell goods in essen tially th e sam e form , fo r exam ple, w holesalers, su p erm ark ets, and d e p a rtm e n t stores. R esellers also include persons a n d organizations w ho change th e fo rm of th e p ro d u ct th e y b u y and sell to u ltim a te consum ers, for exam ple, re sta u ra n ts, re p a ir shops, and d en tists.
F ive key questions can be asked to u n d e rsta n d th e b uying b eh a-vio r of resellers. Each question includes several subquestions. Each of th e five questions is re la te d to each o th er — stu d y in g an sw ers to
* P rof. D r, U n iv ersity o f S o u th -C aro lin a, C olum bia (USA).
1 F o r exam ple, see. A. I. E. A n s a r y, R. A. R o b i c h e a u x, A T h eo ry
o f C ha n n el C ontrol. R e v isite d , „ J o u rn a l of M a rk e tin g ” J a n u a r y 1974, Vol. 38,
p, 2 7; R. F. L u s c h , Sources o f P ow er: T h eir Im p a c t on In te rc h a n n e l C
on-flic t, „ J o u rn a l of M a rk e tin g R e sea rch ” N o v em b er 1961, Vol. 13, p. 382—390;
I. F. W i 1 k i n s on, T h e Sources o f P ow er in C hannels o f D istrib u tio n , [In:]
F o undations o f M a rketin g C hannels, A . G. W oodside, J. T. S im s, D. M. L ew ison,
one question leads to stu d y in g an sw ers to others. T he five key questions are listed below:
1. C h o i c e o f s u p p l i e r s . W ho are th e su p p liers of a reseller? How does a su pplier become „app ro v ed ” by th e reseller to be a supplier? How does a su p p lier become „ap p ro v ed ” by th e reseller to be a supplier? use to select suppliers?
2. C r i t e r i a f o r p r o d u c t s e l e c t i o n . W hat c riteria does a reseller use to ev aluate a pro d u ct? Is one criterio n m ore im p o rtan t th an o th ers o r does th e re se lle r w eigh th e c riteria equally? How m any c rite ria does a rese lle r use to ev alu ate a product?
3. P r o c e s s o f b u y i n g . W hat a re th e steps (stru ctu re) invol-ved in b u ying by a reseller? How does th e re se lle r first le a rn about a new pro d u ct w hich he considers resellin g ’ Does h e e v alu ate one new pro d u ct a t a tim e or several a t once? Does th e rese lle r actively search for new p ro d u cts and suppliers? If yes, w h a t pro ced u re is used to search? W hat len g th of tim e is involved fo r each step in th e b uying process?
4. P e r s o n s a n d d e p a r t m e n t s . How m an y persons are involved d ire c tly in th e b u ying process? Do th e persons involved have d iffe re n t roles in th e buying process (is th e person who searches fo r in fo rm atio n d iffe re n t or th e sam e perso n w ho decides to buy th e p ro -duct)? Is a „buying co m m ittee” used in th e b u ying process? W hat is the pow er of each perso n involved in th e buying process?
5. M a r k e t i n g c o m m u n i c a t i o n s . W hat are th e effects on resellers of m ark etin g a tte m p ts to influence th e re s e lle r’s beliefs, a tti-tudes, and behavior? W hich m ark e tin g variab les (advertising, price, and sales persons for instance) are m ost and least effective in influencing buying behavior of resellers?
A few research studies have been com pleted to help le a rn th e an s-w ers to th ese five key questions. H os-w ever, before providing g eneral an sw ers to th e questions some exam ples of specific b uying beh av io r of resellers a re exam ined. T hree exam ples are p rovided in some detail. E xam ples of an sw ers to all five key questions in rese lle r b uying b eh avior are not provided in eaceh exam ple. H ow ever, you w ill lik ely d e -velop te n ta tiv e an sw ers to all th e questions, a fte r read in g th e th re e exam ples.
1. M A RK ETIN G AND BUYING A POLY U NSA TURA TED SALAD D RESSING
The first exam ple is focused on m ark etin g and buying of a poly-u n sa tpoly-u ra te d salad d ressing th e tra d e (m an poly-u factpoly-u rers and b ro k ers to su p e rm a rk e t m anagers).
T he sales p rese n tatio n and b u ying behavior for th e new salad d re -ssing w as observed by a rese a rc h e r in 1965 2. T he Ju d so n C om pany is th e m an u fa c tu re r a tte m p tin g to intro d u ce th e product. T he Ju dson C om pany w as one of th e c o u n try ’s m ajo r su p p liers of packaged grocery products. It m ain tain ed a larg e d irect sales force as w ell as a n etw o rk of b ro k ers (food b ro k ers a re in d ep en d en t firm s paid a com m ission by th e m an u fa c tu re r for p ro d u cts sold to su p erm ark ets) for c e rtain pro ducts. Judson w as an ex cep tionally stro n g fam ily b ran d and w as id en -tified w ith only selected Ju d so n C om pany products.
The com pany’s new p ro ducts w ere Ju d so n p o ly u n sa tu ra ted F ren ch and Iita lian salad dressings m ade w ith a sun flo w er oil base. T he F ren ch d ressin g carried a suggested re ta il price to u ltim a te custom ers of 37 с to 39 c; th e Ita lia n w as 10 с higher. T hese prices w ere ab o u t 10 с p e r bo ttle h ig h er th an m ajo r b ran d conventional dressings. Ju d so n in ten d ed to co n cen trate its sales sto ry on th e p o ly u n sa tu ra ted h e a lth •aspects w hich w ere th en of c u rre n t m edical and p o p u lar in terest.
The dressings had been in test m a rk e t for eight m onths w hen th e decision was m ade to intro d u ce th em on a national scale. O bservations of th e in tro d u ctio n w ere m ade in a larg e m etro p o litan m ark e t w hich w as in th e second stage of a th re em o n th n ational expansion. Sales p re -se n ta tio n s w ere ob-served in th re e firm s; in terv iew s w ere held w ith
b u y ers of th re e ad ditional firm s.
T he P ro d u ct Proposition. T he Ju d so n dressings w ere backed by a stro n g in tro d u c to ry p ro g ram in relatio n to th e size of th e salad d ressin g categ o ry and th e specialized n a tu re of th e products. In tro -d u c to ry spen-ding (by Ju-dson) (one year) w as bu-dg ate-d a t ap p ro x im a-te ly $ 1,750,000 on a n atio n al basis, or ab o u t 37% of p ro jeca-ted sales. T his ra te of ex p e n d itu re eq u alled alm ost $ 1.50 p e r case.
The consum er program , w hich consisted of n e tw o rk d ay tim e and p rim e tim e television, n atio n al m agazine (R eader’s Digest) and local spot television, w as w ell designed in term s of coverage, ad a p ta tio n to local sales p o tentials, and coordination w ith in tro d u c to ry d ire c t sales efforts. The spot television (about 40% of th e in tro d u c to ry budget) was p lan n ed as a flexible su p p lem en t to n atio n al ad v ertisin g e ffo rt w hich w as p ro jected on a su stain in g basis. The p rin cip al ad v ertisin g appeal, w hich was cen tered on th e h ealth aspects of p o ly u n sa tu ra ted fats, w as em phasized to th e point of „ev ery th in g we can leg ally sa y ”. T h ere w as no consum er prom otion (e.g., couponing) p lanned for th e introduction.
* T h e case ex am p le is a d a p te d fro m N. H. B o r d e n , Jr., A cceptance o f
P rin cip al tra d e elem en ts (offer to su p e rm a rk e ts to influence su p e r-m ark e t r-m an a g e rs’ decision to bu y to resell) of th e p ro d u ct proposition w ere local n ew sp ap er ad v ertisin g and a doubled b u ying allow ance (special in tro d u c to ry reduced price) if bo th dresssing v a rie tie s w e re purchased. M ajor m ark e ts w e re budgeted one 1800-line n ew sp ap er a d v e rtise m e n t w hich th e sales force could use as a lev e r in pressing fo r im m ediate tra d e acceptances.
Ju d so n p ro d u ct m an ag em en t an ticip ated som e tra d e resistan ce to accepting bo th dressing v arieties. To co u n ter th is problem th e y o ffered to double th e m inim um sta n d a rd allow ances if bo th v arieties w ere p u r-chased. To reduce th e cost of th is offer, how ever, th e re g u la r e ig h t- -w eek allow ance period w as halved. As th e re a d e r m ig h t an ticip ate, th ese tactics aroused som e n egative tra d e reactio n s; before th e n a tio -nal expansion w as over (but before th e stu d y observations w ere m ade) th e „double fo r bo th v a rie tie s” o ffer w as dropped.
T rade m argins w ere designed to be ab o u t av erag e fo r th e categ o ry if th e p ro d u cts w ere priced a t suggested levels. In line w ith Ju d so n practice, th e dressings ca rrie d w arehouse g u a ra n tee s on sale an d price.
S a l e s a n d c o m m u n i c a t i o n s s t r a t e g y . Ju d so n p ro d u ct and sales m an ag em en t did not prescrib e a tig h tly k n it com m unications stra te g y fo r th e salad dressings. S alesm en w ere in stru cte d by a v e ry com plete (20-page) sales m em o ran d u m and a long sales m eetin g w hich covered p rac tic a lly all aspects of th e p ro d u ct concept, th e m ark et, p rio r testin g , and th e in tro d u c to ry program . T he salesm en w ere p u t in th e position of selecting from th is p leth o ra of in fo rm atio n w h a t th e y w a n -ted to cover and em phasize in th e ir sales p resen tatio n s. T he u n d erly in g assum ption of th is approach ap p ears to be th a t salesm en a re co m p eten t to p u t to g eth e r a com m unications stra te g y w ith o u t th e help of precise suggestions or specific guidelines fro m p ro d u ct or sales m anagem ent. L a n c aste r m an ag em en t (one of Ju d so n ’s com petitors) took alm o st th e opposite appro ach to in stru ctin g th e ir sales force.
S u p e r m a r k e t r e a c t i o n . D espite rela tiv e ly poor sales com m u n ication (at least w ith resp ect to th e d etails of th is p a rtic u la r p ro -d u ct proposition) th e p ro -d u cts w ere accepte-d. O ne of th e su p e rm a rk e ts bought only one v ariety , how ever; th e doubled b u ying allow ance fo r b uying b o th sizes w as not a su fficien t inducem ent.
T he p rim a ry reason fo r b u ying cited by b u y ers w as th e s tre n g th of advertising, y e t th e ad v ertisin g p ro g ram w as p ro b ab ly th e one aspect of th e proposition th e y w ere lea st in fo rm ed on w h en th e y bought. To te st th is contention, th e rese a rc h e r asked tw o of th e b u y ers (during th e follow up interview ) to estim ate th e spot TV schedule on th e p ro -ducts. One b u y e r estim ated 50 spots p e r w eek; th e o th er th o u g h t th a t
30 spots p er w eek w as reasonable. (The a ctu al n u m b er scheduled w as th re e to five p er week). B oth b u y ers questioned w ere ex p erien ced m en in larg e firm s. T he h ig h ly o v erestim ated responses suggest th e absence of a n y specific or sophisticated c rite ria b y w hich to judge th e probable size of a d v ertisin g cam paigns rela tiv e to p ro d u ct categ o ry and th e
ove-rall m edia plan. T he responses also suggest th a t th e b u y ers expected h e a v y a d v ertisin g com paigns from Ju d son; all indications w ere th a t th e tra d e w as fav o rab ly disposed to w a rd th e com pany, its salesm en, and p a st ad v ertisin g cam paigns.
S u m m a r y . P ro b ab ly th e m ost d o m in an t in flu en ce in th e accep-tan ce of th e p o ly u n sa tu ra ted dressings w as th e good re p u ta tio n th a t T h e Ju dson Com pany enjoyed w ith th e trade. The favorable tra d e a ttitu d e s to w ard th e com pany and its sales rep re sen ta tiv e s influenced tra d e percep tio n s of th e p ro d u ct proposition (p rim arily a d v ertisin g ele-m ents). T hese fav o rab le a ttitu d e s overcaele-m e th e re la tiv e ly poor w ritte n and sales com m unications th a t lim ited consideration of som e aspects of th e program . T he p rin cip al concern of th e b u y ers, and th e ir m easu re o f p ro d u ct acceptability, ap p eared to be w h e th e r th e p ro d u ct proposi-tio n g en erally conform ed w ith usual Ju d so n practice.
2. SU PE R M A R K E T BU YING COM M ITTEES
T he second exam ple is based on th e com position an d d e lib eratio n o f b uying com m ittees. B uying com m ittees a re tw o or m ore persons w ho m eet face-to-face to m ake b u y in g decisions. T he use of fo rm al bu y in g com m ittees is a com m on practice am ong food rese lle rs — for b o th su p e rm a rk e t chains and food w holesalers. In one stu d y , 71 p e r-c e n t of th e su p e rm a rk e t r-chains and w holesalers w ho responded to a su rv e y had form al b u ying com m ittees 3.
A m ajo r ac tiv ity of such buying com m ittees is deciding w h e th e r or n o t to add th e tho u san d s of new p ro d u ct offerings p rese n ted b y m an u fa c tu re rs each year. T his decision is v e ry im p o rta n t since (1) new p ro -d u c ts are th e m ost p ro fitab le item s for su p e rm a rk e ts, (2) only about
10 p ercen t of th e m ore th a n 8,000 new pro d u cts p er y e a r can be accep-te d because of cost, consum er acceptance, an d sh elf space lim itations, a n d (3) it’s difficu lt to m ake co rrect decisions (40 p e rc e n t or m ore new p ro d u cts accepted a re dro p p ed w ith in th e first 12 m o n th s 4.
* E. M o o n e y , T h e B u yin g C om m ittee. V ig ila n t or V igilante, „ S u p e rm a rk e -tin g ” 1972, Vol. 27, p. 48—57.
* N e w Ite m s in th e Food In d u s tr y , „ P ro g re ssiv e G ro c e r” 1967, Vol. 46, p. 55—
W ho a re included on b u ying com m ittees? T he com position of b u y in g com m ittees does v a ry for d iffe re n t firm s b u t 5 to 7 persons a re lik ely to be p rese n t for m ost m eetings of th e com m ittee. The gro cery b u y e r and head b u y e r are m em bers of n e a rly all food b u ying com m ittees. O th er m em bers of th e buying com m ittee are listed in Table 1. D istrict m an ag ers (supervisors of several sto re m anagers) a re u n lik ely to b e m em bers of buying com m ittees, as show n in T able 1 only 6 p e rc e n t
T a b l e 1 C om position of food b u y in g co m m ittees
Committee member Percent reporting membership
Grocery Buyer 96
Head buyer 90
Deli, dairy and frozen foods buyers 61
Non-food buyers 39
Merchandise managers 36
Sales managers 36
Ad manager 26
District manager or store supervisor 6
Number of Firms 79
S o u r c e : D e v e l o p e d f r o m E d M o o n e y : T h e B u y i n g C o m -m i t t e e : V i g i l a n t от V i g i l a n t e , „ S u p e r -m a r k e t i n g ” , V o l. 27, p . 50.
w ere m em b ers in one study. In d iv id u al sto re m em b ers are ra re ly m em -bers of buying com m ittees; su p e rm a rk e t chain b uying com m ittees ex ist a t th e division level w ith 10 to 40 stores in a division.
M an u factu rers and th e ir b ro k ers do not a tte n d b u ying com m ittees. T hey m ake sales calls to a b u y e r or o th e r m em b ers of th e b uying com m ittee. U sually th e m a n u fa c tu re r’s salesperson or b ro k er has 15 m i-n u tes or less to p rese i-n t th e sales m essage oi-n a i-new p r o d u c t5.
Since b u ying com m ittees could easily consider over 100 n ew item s p e r w eek, bu y ers h earin g sales p resen tatio n s do n ot alw ays com m uni-cate in fo rm atio n on new p ro ducts to th e b u ying com m ittee. C om m ittees serve as a b u ffe r b etw een b u y ers and salespersons, com m ittees give bu y ers a m eans to resist sales effo rts and a good excuse fo r avoiding involvem ent and com m itm ent w ith th e salesperson.
B uying com m ittees often serve as a checking or co rro b o ratin g function r a th e r th a n as an actu al decision-m aking function. In one study, th e responsible b u y e r’s in clin atio n or recom m endation w as h ig h ly im p o rta n t and in flu e n tial to th e com m ittee decision.
„Indeed, th e b u y e r w as th e k ey to th e decision. The com m ittee ge-n e ra lly w e ge-n t aloge-ng w ith th e b u y e r’s wishes. Also, it w as ev id ege-n t th a t
a g rea t deal of control over th e com m ittee decision la y in th e h an d s of th e b u yer; he w as in th e position of deciding w h a t to com m unicate and how to com m unicate to th e com m ittee, and th u s e x e rted considerable influence on th e decision” 6.
Thus, th e b u y er is often a g atek eep er of th e am o u n t and ty p e of inform ation w hich th e buying com m ittee receives. T he b u ying com m ittee serves a ratify in g fu n ctio n in th e decision process b y giving approval or vetoing th e decision recom m ended by th e buyer.
B uying c riteria of th e com m ittees. B uying com m ittees are not likely to re fe r to w ritte n c riteria d u rin g th e ir delib eratio n s b u t th e y do ten d to ask th e sam e ty p e of questions fo r ev alu atin g m an y new food p ro -ducts. B uying c riteria are th e a ttrib u te s or factors considered in m aking th e decision of w h e th e r or not to purchase.
T h ree key b uying c riteria a re used by b uying com m ittees. These c riteria a re expressed in th e follow ing questions:
1. Does th e item look like it w ill sell?
2. Is th e m an u fa c tu re r going to a d v ertise and prom ote th e p ro d u ct stro n g ly enough to m ake acceptance d esirab le or necessary?
3. A re th e deal term s (p rim arily m arg in and allow ance) in line w ith th e category and exp erien ce w ith th e m a n u fa ctu rer? 7
S urp risin g ly , such c riteria as co nform ity to a p red e term in e d p lan of su p e rm a rk e t m an ag em en t and p o ten tial p ro fita b ility of th e new item a re not lik ely to be m ajo r factors and a re often n ot considered in d eli-beratio n s of b uying com m ittees 8.
W h eth er or not th e p ro d u ct w ill sell is u su ally decided on th e basis of in tu itio n , p rio r ex p eriences of th e b u y er, and by inspecting th e sam -ple offered fro m th e m an u fa ctu rer. T he process of u sing th is criterio n u su ally involves less th a n one m inute. T his ju d g em en t w as not n e-cessarily superficial of w ith o u t v alue — „it seem s safe to assum e th a t a w ealth of p rio r ex p erien ce cam e into p lay on m an y decisions” 9.
S tro n g m a n u fa c tu re r ad v ertisin g su p p o rt is lik ely to be th e m ost im p o rta n t criterio n in th e decision on w h e th e r or not to add a specific new p r o d u c t10. H ow ever, th is criterio n in te rac ts w ith th e percep tio n of th e b u y e r to w ard the m a n u fa c tu re r’s rep u tatio n . If th e b u y e r perceives
" B o r d e n , op. cit., p. 199. 7 B o r d e n, op. cit., p. 203.
8 B o r d e n , op. cit., p. 203; B. M o n t g o m e r y , N e w P roduct D istribution.
A n A n a ly sis o f S u p e r m a r k e t B u y e r D ecisions, „ J o u rn a l of M a rk e tin g R e se a rc h ”
1975, Vol. 12, pp. 255—264. • B o r d e n , op. cit., p. 205.
18 D. G. H i e m a n, L. A. R o s e n s t e i n, D eliberations o f a C hain G rocery
th e m an u fa ctu re r as h aving a tra c k record of sev eral successful n ew pro d u ct in tro d u ctio n s, th e m a n u fa c tu re r is lik ely to be perceived as h aving p lan n ed heav y ad v ertisin g e x p e n d itu re s in m edia d ire c te d to gaining consum er acceptance even w h en th is m ay not be tru e. H ow ever, if th e m a n u fa c tu re r is considered to have a w eak rep u ta tio n on in tro -ducing new p ro ducts successfully, th e b u y e r is likely to closely ev alu ate th e ad v ertisin g su p p o rt p lan of th e m an u fa ctu rer.
A c o m p o s i t e o f b u y i n g c r i t e r i a a n d d e c i s i o n p r o -c e s s e s . S everal b u ying -c riteria dis-cussed and some n ot dis-cussed are show n in F ig u re 1. T he fig u re is a com posite of how decisions m ay occur in su p e rm a rk e t buying of new products. W hile th e w ay questions a re linked to g eth e r varies from one su p e rm a rk e t b uying com m ittee to an o th er, th e several studies review ed in th is c h a p te r suggest th a t F i-gu re 1 is closely rela te d to th e actu al b u ying process.
Notice in F ig u re 1 th a t (1) if th e m a n u fa c tu re r’s rep u ta tio n is stro n g and (2) th e p ro d u ct is considered to be sig n ifican tly new , th e p ro d u ct is accepted by th e su p erm ark et. O nly tw o c riteria are used: rep u ta tio n and new ness. H ow ever, if th e m a n u fa c tu re r’s re p u ta tio n is considered average (diam onds 4 to 2) or w eak (diam onds 4 to 9), th e n additional c riteria are used to reach a decision.
A c c e p t
N
A c c e p t
Fig. 1. A C om posite D ecision P rocess of S u p e rm a rk e t B u y ing1 D ecisions 1) i s m a n u f a c t u r e r 's r e p u t a t i o n s t r o n g ? 2) I s p r o d u c t s i g n i f i c a n t l y n e w ? 3) I s t h e m a n u -f a c t u r e r p l a n n i n g -f r e e s a m p l e s o r c o u p o n o -f -f e r s t o c o n s u m e r s ? 4) I s m a n u f a c t u r e r ’s r e p u -t a -t i o n a v e r a g e ? 5) I s a d v e r -t i s i n g p r o g r a m m o d e r a -t e o r h e a v y ? 6) I s v o lu m e p o -t e n -t i a l o f p r o d u c t c a t e g o r y h ig h ? 7) I s t h e q u a l i t y o f t h e s a l e s p r e s e n t a t i o n s t r o n g ? 8) D o m o s t c o m p e t i n g s u p e r m a r k e t s c a r r y t h e p r o d u c t ? 9) I s a d v e r t i s i n g s u p p o r t s tr o n g ? S o u r c e ; A d a p t e d f r o m D . B . M o n t g o m e r y , N e w P r o d u c t D i s t r i b u t i o n : A n A n a l y s i s o f S u p e r m a r k e t B u y e r D e c is io n s „ J o u r n a l o f M a r k e t i n g R e s e a r c h ” , V o l. 12, p . 26
The research evidence suggests th a t th e su p e rm a rk e t buying deci-sions are not com pensatory. T h at is, th e p ro d u ct is not ev alu ated for five or six a ttrib u te s w ith a low score on one a ttrib u te com pensated possibly by a high score or an o th e r a ttrib u te . Instead, b u y ers ap p ear to com bine th e ir experience in deciding if th e p ro duct w ill sell w ith th e m a n u fa c tu re r’s rep u tatio n , and prom otional su p p o rt plan n ed by th e m an u fa ctu rer in a noncom pensatory m anner.
3. BUYING BEH A V IO R IN A D EPA RTM EN T S T O R E «
W hich m a n u fa c tu re r’s pro d u ct lines should a d e p a rtm e n t sto re c a rry in its electrical appliance d e p a rtm e n t? One m odel of how this question was an sw ered by m anagers in one d e p a rtm e n t sto re is th e focus of th e th ird exam ple of buying beh av io r of resellers.
The m odel is a d escription of th e b uying beh av io r for electrical appliance pro d u ct lines of m an u factu rers. A p ro d u ct line is a rela te d group of p ro ducts offered by a m an u fa ctu rer, for exam ple, a line of toasters. All p ro ducts in one p ro d u ct line u su ally have th e sam e b rand nam e. The m odel is show n in F ig u re 2.
T he m odel has tw o basic p a rts: developing th e w orking list show n on th e left side of F ig u re 2 and key questions to use for deciding w h e -th e r or not to c a rry a specific pro d u ct line.
Notice in F ig u re 2 th a t p ro d u ct lines w hich th e b u y e r c arries or m ay c a rry a re arran g ed into lists. Five lists are show n in th e figure:
1. The w orking list. 2. Consider adding list. 3. Do not c a rry list. 4. C a rry list.
5. C onsider dropping list.
P ro d u ct lines end up in one of tw o places: th e c a rry list or th e do not c a rry list. The w orking list, consider adding list, and consider dropping list are co n stru cted as in te rn a l steps in th e buying process.
W hat c riteria are used fo r deciding w hich p ro d u ct lines to add or drop? Notice th a t serv eral cutoff step s or questions occur in th e model. F irst, gross m arg in (last y e a r’s sales m ultip lied by m arkup) is used as th e b u y e r’s p rim a ry c riterio n for ran k in g lines. P ro d u ct lines ran k ed below th e top 10 or 15 m ay not receive fu rth e r consideration th ey are cutoff from fu rth e r processing.
Second, look a t th e first diam ond in F ig u re 2, „Do I now c a rry this
11 B. on W. F. M a s s y , J. D. S a v a s, Logical Flow M odels fo r M a rketing
A n a lysis, „ J o u rn a l of M a rk e tin g 1’ 1964, Vol. 8, p. 30—37.
lin e?” If yes, th e b u y er m ay q u ickly place th e line in th e c a rry list a fte r asking only tw o m ore questions. If no, th e b u y er will ask several questions and th en place th e line in th e consider adding list w hich m eans additional questions will be asked later. Thus, previous e x p e rien -ce w ith c a rry in g th e pro d u ct line is an im p o rta n t buying criterio n .
The n e x t to the last diam ond in F ig u re 2 is m ost im p o rta n t fo r new p ro d u ct lines placed in th e consider adding list. The question asked in this diam ond is, „Have I decided to c a rry enough lines to a tta in m y sales volum e and m ark u p goals?” If ad ditional lines are needed (the a n sw er to th e question is no), th e best p o ten tial new line is com pared w ith th e best of th e old lines on th e consider to drop list and the one w ith th e h ig h est gross m arg in is chosen. Thus, sales volum e and m a rk -up goals of th e b u y e r are an im p o rta n t class of b uying criteria.
F o u rth , notice th a t p o ten tial new lines m u st include satisfacto ry service by th e m an u fa ctu rer and m u st not be stro n g in discount houses w hich com pete w ith th e d e p a rtm e n t stores. The discount house question does not come up in ev alu atin g c u rre n tly carried products, alth o u g h service considerations rem ain im p o rtan t. E xceptions are m ade w hen th e lines a re needed for com parison purposes (trad in g u ltim ate consu-m ers up or down).
T hus, th e follow ing c riteria are im p o rta n t in deciding th e outcom es of th e b u ying process for electrical appliances for th e d e p a rtm e n t store:
1. Gross m arg in com parisons. 2. P revious experience.
3. Sales volum e and m ark u p goals.
4. Need of line fo r com parisons by consum ers. 5. Q u ality of m a n u fa c tu re r’s service.
6. S tre n g th of line in discount houses.
Thus, a lim ited n u m b er of c riteria is used by th e b u y ers in th is d e-p a rtm e n t sto re for deciding w h e th e r or n ot to c a rry a e-p ro d u ct line of electrical appliances.
W hile only one m odel is described h ere, o th er evidence ex ists to co rro b o rate th a t th e b uying process of resellers can be described w ith a useful degree of accuracy and th e process includes a lim ited n u m b er (5 ± 2) criteria 12.
12 See R. M. C y e r t, J. G. M a r c h , C. G. M o o r e , A M odel o f R etail
O rdering and Pricing b y a D ep a rtm e n t Store, [In:] Q u a n tita tiv e T ech n iq u es in M arketing A n a ly sis H om ew ood, R. E. F ra n k , A. A. K u eh n , W. F. M assy (eds.),
Illin o is 1962, p. 502—522; J. S. B e r e n s , A Decision M a trix A pproach to S u p p lier
Selection, „ J o u rn a l of R e ta ilin g ” 1971— 1972, Vol. 47; D. H. G r a n b o i s, A p p li-cations o f A ttitu d e Research in th e D istrib u tio n C hannel, [In:] M oving A Head W ith A ttitu d e Research, Y. W ind, M. G. G re en b e rg (eds.), C hicago 1978, p. 123—
A N S W E R IN G K E Y Q U E S T IO N S O N B U Y IN G B E H A V IO R O F R E S E L L E R S
Now th a t th e buying behaviors of a few resellers have been d escri-bed, le t’s consider some an sw ers to th e questions asked e a rlie r in th is chapter.
C h o i c e o f s u p p l i e r s . E stablished resellers are u n lik ely to search for suppliers. S u p p liers are lik ely to v isit rese lle rs to m ake sales p resen tatio n s. T he opposite ty p e of behavior is ex h ib ited by u ltim ate consum ers and re ta ile rs for m ost consum er products.
M an u factu rers, w holesalers, and b ro k ers are su p p liers of resellers. A w h o lesaler is both a b u y e r an d a reseller. B rokers are resellers b u t not b u y ers of products.
S u p p liers become approved w hen th e reseller agrees to b uy or accept th e su p p lie r’s products fo r resale. A rese lle r lim its th e n u m b er of p ro -d u c t lines of -d ifferen ct su p p liers to 15 or less.
The rep u ta tio n of th e su p p lier and th e p ro d u ct proposition are th e m ost im p o rta n t c riteria of resellers in ev alu atin g suppliers. T he pro d u ct p roposition includes th e p ro d u ct itself, ad v ertisin g su p p o rt, and th e tra d e deal (price, tra d e m argin, and in tro d u c to ry allow ances).
C r i t e r i a f o r p r o d u c t s e l e c t i o n . R esellers use a lim ited n u m b er (5 ± 2) of c riteria to decide w h e th e r or not to b uy a product. P rev io u s experience w ith th e supplier, gross m arg in provided, stre n g th of su p p lier advertising, and b u y e r in tu itio n are im p o rta n t c riteria. One or tw o c riteria ten d to be m ore im p o rta n t th a n o th er criteria. See T able 2 for fu rth e r details.
P r o c e s s o f b u y i n g . T he b uying process includes th re e step s or m ore. T he process s ta rts w ith a personal sales p rese n tatio n by a su p p lier for new products. F or established products, th e process s ta rts
T a b l e 2 K ey q u estio n s a n d an sw er s in b u y in g b eh a v io r of m a rk e tin g ch an n els
Key question Answer
Choice of Suppliers \
Who are the suppliers of a reseller? Manufacturers or other resellers.
How does a supplier become „approved?” Through a personal sales presentation and product purchase.
How many suppliers does a reseller use? Less than 10 or 15 depending within a product category.
What criteria does a reseller use to Reputation of supplier and product
Criteria for product selection What criteria does a reseller use to
evaluate a product?
Is one criterion more important than others?
How many criteria does a reseller use?
Previous experience with a supplier, gross margin, strength of supplier advertising, potential sales volume, intuition. Yes, previous product sales success, or supplier reputation, newness, or advertising support.
5 ± 2
How many persons are involved directly in the buying process?
Persons and departments
If product is new in supermarkets, 5 to 7 persons; less for product purchased pre-viously.
Do persons involved have different roles in the buying process?
Is a buying committee used? What is the power of each person
involved in the buying process?
Yes. Person acquiring information may be different than evaluator or decision maker. Most likely, yes, for new products. Merchandise buyer in supermarkets and senior buyer in department stores are likely to have most power.
Marketing communications What are the effects on resellers of
marketing communications? Which marketing variables are most
important, least important?
Process What are the steps involved in buying
by a reseller?
How does the reseller first learn about a new product?
Does he evaluate one new product at a time or several at once?
Does the reseller actively search for new products and suppliers?
What length of time is involved for each step in the buying process?
Gain awareness, convince buyer to formally consider product.
Supplier reputation and advertising support, intuition, and trade margin are more impor-tant than competition and guality of sales presentation.
of buying
1. Personal sales presentations by suppliers. 2. Buyer decides whether or not to consider. 3. Formal consideration by buying committee. Personal sales presentation.
Sequentially for supermarkets but in combination for department stores. Unlikely
1. Sales presentation by supplier is 15 mi-nutes or less.
2. Buyer consideration is one minute or less. 3. Formal consideration varies depending
upon if a sequential or combination rule is used.
w ith in v en to ry control no tify in g p u rch asin g of th e need to reo rd e r due to stock depletion.
T he b u y e r decides w h e th e r or not to fo rm ally consider new p ro -ducts. If th e b u y er decides to fo rm ally consider, sam ples of th e p ro d u ct and a b rief w ritte n re p o rt on th e p ro d u ct are p rese n ted to a buying com m ittee.
The buying com m ittee ev alu ates new p ro d u cts one a ta tim e in su -p e rm a rk e t buying b u t m ay ev alu ate 10 to 15 in com bination in d ep a rtm e n t sto re buying. H ow ever, lim ited research evidence exists c u rre n -tly to know th e ev alu atio n pro ced u re used m ost often by d e p a rtm e n t sto re b u y ers or o th er resellers. See T able 2 for additional d etails on th e buying process of resellers.
P e r s o n s a n d d e p a r t m e n t s . A to tal of 5 to 7 persons are lik ely to discuss new p ro d u ct offerings in su p e rm a rk e t buying, few er people are likely to be involved in d e p a rtm e n t store buying. H ow ever, a b uying com m ittee of 2 to 7 persons is m ost often used in deciding to bu y new products.
M a r k e t i n g c o m m u n i c a t i o n s . M ark etin g com m unications b y m an u fa ctu rers are im p o rta n t in tw o im p o rta n t w ays. 1) P erso n al sales p resen tatio n s by su p p liers produce aw aren ess am ong rese lle rs of new p ro d u ct offerings. 2) The ad v ertisin g su p p o rt provided by the su p p lier (m an u factu rer, for exam ple) is a c riterio n used in ev alu atin g the new product. The ad v e rtise m e n t and new s sto ry on Jo rd ach e designer jean s is one exam ple of th e influence of such a d v ertisin g su p p o rt on tra d e (retailer) b u ying behavior.
Jo rd ach e took a big risk successfully. The com pany used a d v e rti-sing su p p o rt to build a „consum er fran ch ise”, th a t is, to get consum ers to ask for Jo rd ach e w hen b u ying jean s in stores. T he h eav y regional ad v ertisin g pro g ram also produced th e belief am ong rese lle rs th a t J o r -dache jeans w ere m an u factu red by an established com pany. Thus, the firm bu ilt an alm ost in sta n t fav o rab le rep u ta tio n in th e tra d e (am ong re ta il store buyers).
H ow ever, th e Jo rd ach e cam paign w as v e ry risk y since th e com pany w as unknow n in itia lly to bo th consum ers and resellers. T im ing and speed in gaining approval as a su p p lier and th e n d eliv e ry w as critical or th e consum er franchise m ight have quickly disap p eared as consum ers becam e fru s tra te d w ith being u n ab le to buy th e jeans. (Ask yourself, how m any stores w ould you be w illing to v isit to find Jo rd ach e jeans? A nsw er, ex cep t for th e m ost a rd e n t shoppers, tw o or th re e stores w ould be visited before an o th e r b ran d of desinger jeans w ould "be bought).
a sh o rt tim e period to gain e n try into consum ers and resellers long term m em ories.
4. IM PROV IN G RESELLER BUYING BEHAVIOR
Can we reduce th e tim e and effo rt necessary in new p ro d u ct buying in su p erm ark ets? Can successful b u y ers be d iffe re n tia te d from u nsuc-cessful b u y ers am ong resellers? If so, how are th e tw o groups d iffe-ren t? How can we le a rn of im p rovem ents needed in behavior in buying and selling in th e trad e? S everal au th o rs h ave developed p rescrip tiv e m odels fo r im proving buying behavior of resellers 13. Such m odels in clu -de th e follow ing step -b y -step approach to su p p lier selection:
1. D eterm ine w h a t decision c riteria th e re ta ile r deem s re le v a n t in a given su p p lier-selectio n situation.
2. Use th e m ethod of paired com parisons to ra n k -o rd e r each c ri-terion.
3. Decide upon th e group of su p p liers w hose lines will be considered fo r possible addition on th e sto re ’s assortm ent.
4. C om pare each su p p lier w ith ev ery o th er su p p lier b y m eans of th e paired com parison tech n iq u e so as to d eterm in e how w ell each com pares w ith ev ery o th er relativ e to each ran k -o rd ered criteria.
5. Using a decision m atrix , develop a score for each su p p lier based upon th e re su lts of Steps 2 and 4.
6. Choose th e h ig h est-ra n k ed su p p lier for inclusion in th e firm ’s asso rtm en t M.
An exam ple using th is p rescrip tiv e m odel is show n in Table 3. The first c riterio n in Table 3 is „su p p lier can fill o rd e r” w hich is w eighed by a valu e of 6. S u p p lier A is ra te d 3 on th is criterio n w ith ratin g s of 0 for low to 4 for high. S u p p lier A’s ra tin g is m u ltiplied by the w eight of the first c riterio n to produce a score ( 3 x 6 = 18) as show n in th e first cell of T able 3. T he o th er cells are com puted in a sim ilar m anner.
T he to ta l scores are show n a t th e bottom of T able 3.
S u p p lier С has th e h ig h est sum m ed score of 52. Thus, su p p lier С w ould be selected.
Such a m odel suggests th a t rese lle rs should use a com pensatory decision rule. F o r exam ple, su p p lier C’s high ra tin g on c riterio n 1
’* For exam ple, see J. S. B e r e n s, A Decision M a trix A pproach to S u p p lie r
Selection, „ J o u rn a l of R e ta ilin g ” 1971—1972, Vol. 47, p. 47—53; W. D. K e l l n e r , E valuation o f S u p p lie r P erform ances, [In:] T o w a rd S c ie n tific M a rke tin g S. A.
G rey ser (ed.), Chicago 1963, p. 508—512. 14 B e r e n s, op. cit., p. 49—50.
T a b l e 3 A S am ple of th e Decision M atrix A p proach to V ender Selection
Criteria Criteria Weight (Step 2) Supplier A Supplier В Supplier С Supplier D Supplier E
1. Supplier can fill
reorders* 6 3 18 2 12 4 24 1 6 0 0 2. Markup is adequate 4 2 8 4 16 3 12 0 0 1 4
3. Customers ask for
the line 1 1 1 2 2 4 4 3 3 0 0
4. Supplier’s line has singnificant changes from season to season
2 3 6 4 8 2 4 1 2 0 0
5. Supplier’s line contri-butes to fashion leadership 5 2 10 1 5 0 0 3 15 4 20
6. Supplier’s line is out
to fit customers well 2 1 2 0 0 3 6 4 8 2 4 7. Supplier advertises
line in local media 1 0 0 1 1 2 2 4 4 3 3
Supplier total scores 45 44 52 38 31
• T h e c r i t e r i a o f c o lu m n 1 o f t h e t a b l e w e r e f o u n d b y t h e a u t h o r to b e o f i m p o r t a n c e i n t h e s e l e c t i o n o f f a s h i o n m e n 's w e a r i n t h e s t u d y n o t e d i n f o o t - n o t e 4 o f t h i s a r t i c l e .
S o u r c e - J . S. B e r e n s , A D e c is io n M a t r i x A p p r o a c h to S u p p l i e r S e le c tio n . „ J o u r n a l o f R e t a i l i n g ” 1971-1972, V o l. 47, p. 52.
(w eighed 6) com pensated for this su p p lie r’s poor ra tin g on criterio n 5 (w eighed 5).
The steps in th e p rescrip tiv e m odel w ould have to be a d ju ste d if a noncom pensatory decision ru le w as p refe rre d by th e reseller. F o r exam ple, it th e rese lle r insisted th a t only su p p liers w ere considered w ith a ratin g of 2 or h ig h er on th e tw o m ost im p o rta n t c rite ria
(crite-ria 1 and 5 in Table 3), th e n all su p p liers w ould be elim inated except for su p p lier A. Thus, d ifferen t su p pliers m ight be chosen depending upon th e decision ru le used.
A n im p o rtan t point to consider is th a t th e tim e and effo rt could likely be reduced if resellers fo rm ally used a p rescrip tiv e m odel w he-th e r or n ot he-th e m odel was com pensatory or noncom pensatory. Also, he-th e accuracy of m aking th e best buying decision w ould be lik ely as high or h ig h er th an using an inform al decision rule. R esellers should consider using a form al p rescrip tiv e model, a t least as a first cut for elim in atin g su p p lier and p ro d u ct choices w hen m an y such decisions need to be m ade, for exam ple, in deciding to accept new food p ro ducts by su p e r-m arkets.
One ex am ple of such a p rescrip tiv e m odel has been tested for new p ro d u ct selections by su p e rm a rk e ts 15. This m odel is show n in th e follo-w ing E quation (1):
У = — 071 + .669 (supplier advertising),
+ .021 (tim e discount on payables to suppliers), -f- .018 (num ber of com peting item s stocked), + .003 (gross p ro fit percentage),
w h ere у = p ro duct acceptance (scale 1 for accept, 0 for not accept). S u p p lier ad v ertisin g could have th e valu e of 0, for no ad v ertisin g , or 1, for su p p lier advertising. The tim e discount or payables is th e nu m -ber of days the su p e rm a rk e t has to pay the su p p lier and still receive a sm all discount (2%, for exam ple) for p ro m p t paym ent. The tim e d i-scount could be 0, 10, or 20 days. T he n u m b er of com peting item s could be 0, 1, 2, 3, 4, or 5 or m ore for su p e rm a rk e t products. The gross p ro -fit p ercen tag e could be 10, 20, 30, 40, or 50 percent.
A ssum ing a decision ru le to accept new p ro ducts w hen у w as equal or g re a te r th an .50, the use of E quation (1) w ould resu lt in th e decision to accept a pro d u ct having th e follow ing characteristics:
su p p lier ad v ertisin g = 1,
tim e d iscount on payables = 20,
n u m b er of com peting item s stocked = 0, gross p ro fit = .30.
H ere, у = .649. T he calculation for th is new pro d u ct is shown below.
у = — .071 + .669 (1) + .021 (20) — .018 (0) + .003 (.30) = — .071 + .669 + .042 — 0 + .009
= .649.
15 R. H. H e e l e r , M. J. K e a r n e y , J. M e h a f f y , M odeling S u p e rm a r k e t
Equation (1) and th e p rescriptive m odel for su p p lier selection are exam ples of tw o decision ru le s for p rescrip tiv e buying choices of r e -sellers. Each reseller w ould need to develop and te st his own form al p rescrip tiv e m odel if he w a n ted to consider using such an approach.
One rese a rc h e r developed and applied th e p rescrip tiv e m odel show n in E quation (1) to 67 decisions in accepting or reje ctin g new su p e rm a rk e t products. A to tal of 25 of th e p ro ducts w ere accepted and 42 re -jected. This research er w ro te th e follow ing observations: „E xam ination of th e prediction scores for all 67 cases show ed th a t a cu to ff value of у = .13 could be used to elim in ate 50% of unaccepted p ro d u cts w ith m inim al risk of elim in atin g an y p ro ducts w hich w ould ev e n tu a lly have been accepted. If sim ilar cutoffs w ere developed for non g ro cery item s and all incom ing p ro ducts w ere screened a t th e P ro d u c t P re se n ta tio n S h eet stage, 3,837 out of 8,750 incom ing p ro ducts could be elim inated from m anagem ent consideration, a saving of 1,900 m an ho u rs p er y e a r (Based on 1/2 an h o u r p er p ro d u ct p rese n tatio n and ev alu atio n )” 16.
T he w eights or coefficients show n in E quation 1 for th e four c ri-teria w ere calculated using m u ltip le regression analysis. T he w eights could have been estim ated using a d iffe re n t m ethod, such as asking th e su p e rm a rk e t b u y ers to assign a w eight of 0 to 1.0 to each a ttrib u te re flecting th e a ttrib u te s im portance w hen deciding on accepting or re je -cting new products.
5. SUMM ARY
The stu d y of th e b u y in g beh av io r of resellers includes answ ering five rela te d questions:
1. How are su p p liers selected?
2. W hat c riteria are used for p ro d u ct selection? 3. W hat are th e steps in th e buying process?
4. W hat persons and d e p a rtm e n ts a re d ire c tly involved in th e buying process?
5. W hat is th e effect of d iffe re n t m ark etin g com m unications on re -seller buying behavior.
Each of these five questions w ere an sw ered in th e article follow ing a review of th re e exam ples of th e buying behavior of resellers.
T rade b u y ers can im prove th e ir buying behavior in reducing th e ti-me and effo rt in ev alu atin g p ro ducts by using p rescrip tiv e decision m o-dels. Exam ples of tw o such prescrip tiv e m odels w ere presented.
A. G. W oodside
PO STĘPO W A N IE SPRZEDAW CY W KA NA ŁA CH M ARKETINGOW YCH W STANACH ZJEDNOCZONYCH
A naliza stra te g ii zakupów dokon y w an y ch przez pośred n ik ó w w y m ag a odpo-w iedzi na pięć zasadniczych p y tań :
1) J a k ie są k ry te ria w y b o ru dostaw ców ? 2) Ja k ie są k ry te ria do b o ru p ro d u k tó w ? 3) J a k p rzebiega proces zak u p u ?
4) K tó re osoby i działy firm y p o średniczącej są bezpośrednio zaan g ażo w an e w proces zakupu?
5) J a k a je st skuteczność różn y ch d ziałań m ark etin g o w y ch podejm o w an y ch przez d ostaw ców z p u n k tu w idzenia stra te g ii zakupów p o śred n ik a?
Na k ażde z tych p y ta ń udzielono odpow iedzi w a rty k u le w o p arciu o trzy p rzy k ła d y strateg ii zakupów pośredników .
P o śred n icy m ogą polepszyć sw ą stra te g ię poprzez zm n iejszen ie czasu i w y siłku w ocenie p ro d u k tó w po słu g u jąc się w ty m celu n o rm aty w n y m i m odelam i d e -cyzyjnym i. P rz y k ład y ta k ic h dw óch m odeli zam ieszczono w arty k u le .
