ACCOUNT RELATIONSHIP MANAGEMENT CHAPTER 4 ACCOUNT RELATIONSHIP MANAGEMENT

ORGANIZATIONAL PURCHASING PROCESS Need Recognition Specifications Search for Suppliers Proposals Supplier Selection Performance Evaluation Repeat Purchases

NEED RECOGNITION Problem identification Needs recognized internally externally derived demand

SPECIFICATIONS Defining characteristics and quantity of items to be purchased

SUPPLIER SEARCH Purchasing department responsibility (usually)

ACQUISITION OF PROPOSALS Bid process Systems selling

SUPPLIER SELECTION Buying Centers Buying Criteria Marketing Manufacturing Research and Development General Management Purchasing Buying Criteria

PERFORMANCE EVALUATION Value analysis Focus on total costs (invoice, possession and acquisition costs) Vendor analysis Focus on vendor’s performance (delivery, reliability, quality, price, service, technical competence)

REPEAT PURCHASES Straight rebuys Modified rebuys New task

BUYING CENTER “All people involved in the buying decision” Includes: Economic Buyer User Buyer Technical Buying Influence Advocate/Coach

ECONOMIC BUYER Role: Gives final approval Characteristics: Has access to money, can release money, veto power Focus: Total organization, bottom line

USER BUYING INFLUENCE Role: to decide on how a purchase will affect job performance Characteristics: Use or supervise use of product or service Focus: The job to be performed

TECHNICAL BUYING INFLUENCE Role: To eliminate alternatives Characteristics: Focuses on quantifiable aspects of product and service; can only say “no” not “yes” Focus: Product Specifications

ADVOCATE/COACH INFLUENCE Role: Helps guide the sale Characteristics: May be inside or outside the organization; furnishes and interprets information Focus: Your success

BUILDING RELATIONSHIPS Awareness Exploration Expansion Commitment Dissolution

AWARENESS Recognition that a supplier is a viable source Selling Objectives gain attention demonstrate how needs can be satisfied

EXPLORATION Parties feel that a possibility of mutual benefit exists; limited commitment and trial. Selling Objectives gain initial acceptance build a successful relationship

EXPANSION Parties have experienced benefits of relationship and want expanded interaction Selling Objectives: Get to know customer better Look for additional ways to help client

COMMITMENT Establishing a sole or nearly sole supplier relationship Selling Objectives early supplier involvement in need process long term focus to relationship multi level interaction

DISSOLUTION Decision to limit or leave relationship Selling Objectives: look for warning signals attempt to reinitiate the relationship

DISSOLUTION--WARNING SIGNS Missing information Uncertainty about information Uncontacted buying influence New personnel to job Reorganization

ENHANCING RELATIONSHIPS Value Expectations Bargaining Trust

VALUE Perception that rewards exceed costs

EXPECTATIONS Standards of conduct and performance are established

BARGAINING Willingness to negotiate each party’s obligations.

TRUST Belief that an individual’s word can be believed and will be fulfilled Trust based on likeability competence dependability honesty customer orientation

FROM THE INTERNET Relationship Management in Action--The Alleris Group, Inc. <http://www.alleris.com/> Look at the Relationship Management Challenge Questionnaire

FROM YOUR TEXT Read all of Chapter 4, pages 168-184