1. Business Market Management 3 rd edition Understanding Firms as Customers Chapter 3

2. Section II: Understanding Value Business Market Management, 3 rd edition Chapter 3-

6. I. Understanding Purchasing Orientation Business Market Management, 3 rd edition Chapter 3-

9. Business Market Management, 3 rd edition Chapter 3- Source: Adapted from a chart by Professor Sunil Chopra, J. L. Kellogg Graduate School of Management, Northwestern University, 1999.

20. Business Market Management, 3 rd edition Chapter 3-

21. Reducing Total Cost of Ownership Business Market Management, 3 rd edition Chapter 3- TCO = Purchase Price + Product or Service’s Lifetime Expenses - Salvage or Resale Price

29. Business Market Management, 3 rd edition Chapter 3- Source: Ravi Venkatesan, “ Strategic Outsourcing: To Make or Not to Make,” Harvard Business Review (Nov.-Dec. 1992): 103. The Strategic Sourcing Process

36. Sustain High Collaborative Relationship with Select Suppliers Business Market Management, 3 rd edition Chapter 3- Value-in-Use: difference in value minus the difference in price that a supplier’s offering provides a customer firm relative to a competitive offering VIU fa = (Value f - Value a ) - (Price f - Price a ) Value-in-Use Price: monetary amount at which the customer has no preference between the supplier’s offering and the next-best alternative offering VIU Price f = Price a + (Value f - Value a )

38. Business Market Management, 3 rd edition Chapter 3- Purchasing Portfolio Matrix Leverage Items (raw materials) Criticals (new technology) Generics (MRO items) Bottleneck Items (essential spare parts) High CUSTOMER VALUE Low Low CUSTOMER RISK High

40. II. Understanding How Purchasing Works with Other Functions and Firms Business Market Management, 3 rd edition Chapter 3-

45. Buying Situations Business Market Management, 3 rd edition Chapter 3- Straight Rebuy The company has considerable buying experience and requires little or no new information about the offering Modified Rebuy Customer firm has had experience securing the product or service, but managers need to reevaluation of alternatives New task Unknown what the functional or technical specification of the offering should be

49. III. Understanding the Purchase Decision Process Business Market Management, 3 rd edition Chapter 3-

51. Business Market Management, 3 rd edition Chapter 3- Microsoft Customer Support Requirements Matrix Customer Satisfaction Surveys Service Usage Patterns Activity-Based Costing Activity-Based Planning On-Site Training Online Services Microsoft Magazines Usability Testing Supportability Testing Beta Testing Off-Line Plus WISH Lines Joint Development Projects Known Microsoft’s Understanding of Customer Requirements Unknown Known Customer's Understanding of Their Own Requirements Unknown

55. Scrutinizing Total Costs Business Market Management, 3 rd edition Chapter 3- Supplier performance Index, SPI (item) = Extended purchase price + nonperformance costs Extended purchase price

57. IV. Summary Business Market Management, 3 rd edition Chapter 3-

59. Business Market Management, 3 rd edition Chapter 3- All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall