CHAPTER 4CHAPTER 4

ACCOUNT RELATIONSHIP MANAGEMENT

ORGANIZATIONAL ORGANIZATIONAL PURCHASING PURCHASING PROCESSPROCESS

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

NEED RECOGNITIONNEED RECOGNITION

Problem identification Needs recognized

internally externally derived demand

SPECIFICATIONSSPECIFICATIONS

Defining characteristics and quantity of items to be purchased

SUPPLIER SEARCHSUPPLIER SEARCH

Purchasing department responsibility (usually)

ACQUISITION OF ACQUISITION OF PROPOSALSPROPOSALS

Bid process Systems selling

SUPPLIER SELECTIONSUPPLIER SELECTION

Buying Centers Marketing Manufacturing Research and Development General Management Purchasing

Buying Criteria

PERFORMANCE PERFORMANCE EVALUATIONEVALUATION

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 PURCHASESREPEAT PURCHASES

Straight rebuys Modified rebuys New task

BUYING CENTERBUYING CENTER

“All people involved in the buying decision”

Includes: Economic Buyer User Buyer Technical Buying Influence Advocate/Coach

ECONOMIC BUYERECONOMIC BUYER

Role: Gives final approval Characteristics: Has access to

money, can release money, veto power

Focus: Total organization, bottom line

USER BUYING USER BUYING INFLUENCEINFLUENCE

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 TECHNICAL BUYING INFLUENCEINFLUENCE

Role: To eliminate alternatives Characteristics: Focuses on

quantifiable aspects of product and service; can only say “no” not “yes”

Focus: Product Specifications

ADVOCATE/COACH ADVOCATE/COACH INFLUENCEINFLUENCE

Role: Helps guide the sale Characteristics: May be inside

or outside the organization; furnishes and interprets information

Focus: Your success

BUILDING BUILDING RELATIONSHIPSRELATIONSHIPS

Awareness Exploration Expansion Commitment Dissolution

AWARENESSAWARENESS

Recognition that a supplier is a viable source

Selling Objectives gain attention demonstrate how needs can be

satisfied

EXPLORATIONEXPLORATION

Parties feel that a possibility of mutual benefit exists; limited commitment and trial.

Selling Objectives gain initial acceptance build a successful relationship

EXPANSIONEXPANSION

Parties have experienced benefits of relationship and want expanded interaction

Selling Objectives: Get to know customer better Look for additional ways to help

client

COMMITMENTCOMMITMENT

Establishing a sole or nearly sole supplier relationship

Selling Objectives early supplier involvement in

need process long term focus to relationship multi level interaction

DISSOLUTIONDISSOLUTION

Decision to limit or leave relationship

Selling Objectives: look for warning signals attempt to reinitiate the

relationship

DISSOLUTION--DISSOLUTION--WARNING SIGNSWARNING SIGNS

Missing information Uncertainty about information Uncontacted buying influence New personnel to job Reorganization

ENHANCING ENHANCING RELATIONSHIPSRELATIONSHIPS

Value Expectations Bargaining Trust

VALUEVALUE

Perception that rewards exceed costs

EXPECTATIONSEXPECTATIONS

Standards of conduct and performance are established

BARGAININGBARGAINING

Willingness to negotiate each party’s obligations.

TRUSTTRUST

Belief that an individual’s word can be believed and will be fulfilled

Trust based on likeability competence dependability honesty customer orientation

FROM THE INTERNETFROM THE INTERNET

Relationship Management in Action--The Alleris Group, Inc.

<http://www.alleris.com/> Look at the Relationship

Management Challenge Questionnaire

FROM YOUR TEXTFROM YOUR TEXT

Read all of Chapter 4, pages 168-184