Marketing Essentials

Chapter 23: Purchasing

Chapter Summaries

Section 23.1

• Organizational buyers for industrial markets purchase goods and services to use in the operations of a business. These buyers may be called purchasing managers, industrial buyers, or procurement managers. Wholesale and retail buyers purchase goods for resale.
• In the industrial market, planning purchases involves reviewing the company’s master production schedule to find out what is needed to meet sales requirements. In the resellers’ market, planning purchases involves forecasting customers’ needs.
• The six-month merchandise plan is a budget that estimates planned purchases for a six-month period. It factors in planned sales, inventory, and planned retail reductions.
• Buying for chain stores is usually centralized. All of the chain’s stores carry the same items. If a chain store wants goods that are not carried by the other stores, it can make special purchases. This is called decentralized buying.

Section 23.2

• The three types of purchase situations are new-task purchase, modified rebuy, and straight rebuy.
• The primary criteria for selecting suppliers are (1) production capabilities, (2) past experience, (3) special buying arrangements (such as consignment buying and memorandum buying), and (4) special services.
• Buyers must negotiate prices, dating terms, delivery arrangements, and discounts.
• Internet purchasing options include company Web sites, electronic exchanges, online auctions, and reverse auctions.