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Purchase Process

&
Post Purchase Behavior
Consumer Purchasing Process.

purchase - the acquisition of something for payment;


"they closed the purchase with a handshake."
It consists five steps…
 Recognition of an unsatisfied needs.
 Information Search
 Evaluation of alternatives
 Purchase decision.
 Post purchase behavior.
Key Terms

Buying Behavior
– The decision processes and acts of people involved
in buying and using products
Consumer Buying Behavior
– Buyingbehavior of people who
purchase products for personal
use and not for business purposes…
Consumer Decision-Making
Process
Need
Need Recognition
Recognition

Information
Information Search
Search
Cultural,
Cultural, Social,
Social,
Individual
Individual and
and
Psychological Evaluation
Evaluation
Psychological of
Factors
Factors of Alternatives
Alternatives
affect
affect
all
all steps
steps Purchase
Purchase

Postpurchase
Postpurchase
Behavior
Behavior
1. Need Recognition

• When a current product isn’t


Marketing helps performing properly
consumers recognize
(or create) an imbalance
• When the consumer is running
between present status
and preferred state out of an product
Preferred State
• When another product seems
superior to the one currently used….
2. The information search stage

Personal sources
An internal search involves the (friends and family)
scanning of one's memory to recall previous
experiences or knowledge concerning
solutions to the problem-- often sufficient for Public sources (rating
frequently purchased products. services like Consumer
Reports)
An external search may be necessary
when past experience or knowledge is Marketer-dominated
insufficient, the risk of making a wrong sources (advertising
purchase decision is high, and/or the cost of or sales people)
gathering information is low.

The evoked set: a group of


brands from which the buyer can
choose
Determinants of External Search
3. Evaluation of Alternatives

 Product Choice
 Brand Choice
 Dealer Choice
 Purchase Timing
 Purchase Amount….
4. Purchase

– Choosing the product or brand to be bought


based on the outcome of the evaluation
stage
– The choice of seller may affect the final
product selection.
– Factors such as terms of sale, price,
delivery, and warranties may affect the
sale….
5. Post Purchase Behaviour

?
Cognitive Dissonance
Can minimize through:
•Effective Communication
•Follow-up
•Guarantees
Warranties
Did I make a good decision? •Under promise &
•Over deliver
Did I buy the right product?

Did I get a good value?


Post - Purchase Behaviour

 Satisfaction
 Actions
 Use and Disposal….
Corporate Purchasing Process.
 All production firms have the need of
supplies of materials and services from
external sources. This makes purchasing,
one of the most significant functions of
any Production Manager.
• Purchasing function may include the purchase of
Raw Materials.
• In simple words we can say that
Purchasing is the act of exchange of goods
and services for money or money’s worth.
Definition

According to LEVIS:-
“Purchasing is the acquisition by
manufacture
of any necessary primary material
suppliers, equipments by any method
whatsoever”.
Objectives

 Purchasing items with right price.


 Purchasing items with right quality.
 Purchasing items at right time.
 Purchasing items from right source.
 Purchasing items of right quantity.
Steps Of Purchasing Procedure

The purchasing generally comprises the following


steps:
1) Recognition of the need
2) Selection of the supplier
3) Placing the purchase order
4) Follow up of the order
5) Receiving and inspection of the materials
6) Payment of the invoice
7) Maintenance of the records & Maintenance of the
vendor relations.
PURCHASE SYSTEMS

 Pre-purchase System.
 Ordering System
 Post Purchasing System.
 Pre-purchase System:
Includes making requisitions, requirement
programmes,selection of suppliers, obtain
quotations and evaluating them.

• Ordering System:
Once the decision on supplier & the rates are
finalized the order is placed with the selected
supplier. The next task is to place the Order.
Order form Contains….
 Purchase Order reference number
 Description Of materials & detailed spcs.
 Quality Required and Delivery Schedule.
 Price and Discounts.
 Shipping Instructions.
 Location Where Matls. Are to be shipped.
 Signature Of materials Manager.
 Detailed Terms Of Conditions.
Post Purchase System

 Includes follow-up procedure, receipt and


checking invoices.
 Whole sys operates in probabilistic condition.
 Once items are received, they are checked for
quality, quantity, specifications etc.
 Invoices are also checked for correct tally with
PO details.
Special Purchase Systems

 Forward Buying
 Tender Buying
 Blanket Order
 Zero Stock
 Rate Contract
Forward buying
 the purchasing period say 1 yr. will be taken in advance and
Commitment is made for qty, rate, delivery schedule by considering
availability of funds and the requirements.
 Used for public buying to avoid favourism to a specific vendor.

Tender Buying:
 Preparing Bidders list
 Advertising tenders
 Receiving bids
 Evaluating Bids
 Placing of orders with bidders with lowest cost.
Blanket Order

 Organization will enter in to agreement with its


supplies to receive items for a required qty at a
particular rate over a period of time.
Zero Stock :
 JIT and Zero inventory concept
 Suppliers near to plant are considered.
 Organization even provide technical know-how,
QC support etc. to its suppliers.
Rate Contract

 Very much used in public sector and Govt.


departments
 The suppliers are on rate contract with DGS&D
for a specific period.
 Organization can place orders to straight away
with such firms without going through the lengthy
procedure of purchasing.
Aspects Of Purchase Management

 Price forecasting
 Purchasing of capital equipments
 International purchasing
 Public buying
Price Forecasting

 Its prediction of future prices


 It helps in buying materials in right time and of right qty.
 Especially while impact of seasonal variation is present.

Methods….
 Charting method
 Moving average method
 Regression methods
 Exponential smoothing method
Purchasing Of Capital Equipments

 These are having very less frequency.


 As having huge capital outlay under fixed Over heads, a careful
ansys should be done before buying these items.
Various Approaches:
 Pay back period method
 Rate of Return method
 Present worth method
 Annual equivalent method
 Future worth method
Options

 Purchase of new equipment


 Purchased of used equipments
 Leasing
Public Buying

 Here the centralized buying concept was


promoted to satisfy the demand of the
organizations like defense, Railways, Post &
telegraphs, State govts, public sector & quasi
public bodies through DGS&D which is the
centralized purchasing organization of India.
5. Post Purchase Behaviour

?
Cognitive Dissonance
Can minimize through:
•Effective Communication
•Follow-up
•Guarantees
Warranties
Did I make a good decision? •Under promise &
•Over deliver
Did I buy the right product?

Did I get a good value?


Post Purchase Behavior
 This refers to the behavior of a consumer after purchasing a product.
They may be satisfied or dissatisfied with it. This
satisfaction/dissatisfaction will result in certain consequences.

 They first exhibits a behavior and latter tries to justify it by forming an


attitude in self justification.

 If satisfied..
He would regularly buy the product and develop a loyalty. Also there
exist positive word of mouth.

 If Dissatisfied..
He would stop buying the products, there is no loyalty building. Also
there exist negative word of mouth. He feels mental tension also.
Continue..

 If Dissatisfied..
He would stop buying the products, there is
no loyalty building. Also there exist negative
word of mouth. He feels mental tension also.
This is known as Cognitive dissonance or
Post purchase dissonance.
 It refers to the anxiety or doubts the
consumer have after making purchase.