Contributions of Buyers in Company Budget - Essay Example

Running Head: Fashion Buying Fashion Buying s Fashion Buying What are the key contributions by Buyers in the successful completion of the Company Budget? Buying decisions are made by individuals or group such as a family or a committee in a commercial or industrial organization. If we analyse closely there is a vast difference in consumer buying behaviour and institutional or corporate buying process. Consumer buying process involves need recognition, information search, evaluation of the alternatives and deciding upon one of the alternatives and making the purchase decision. If we further explain the process between evaluation of alternatives and purchase decision we will find that once the customer evaluates the alternatives, he makes a purchase intention, this intention can influenced by the attitudes of others like family, peers and reference groups or from unanticipated events like lower income than expected, illness etc. taking all these aspects in consideration the consumer takes his decision. Once the product is purchased the consumer will form his opinion regarding the product and services provided by the company in the post purchase period (Elliot 2003). Organizational buying behaviour. According to Elliot (2003) organizational buying behaviour is the buying behaviour of organizations that buy goods and services for use in the production of other products and services, for using the products in operational non core operation like photocopier for office management or for the purpose of reselling or renting them to others at a profit. Organizational Decision Making Units. Organizational buying decisions are most likely to be made by a committee or group of people than wholly by an individual. In an organization purchase decision making unit there are various centre of powers, which influences and finally guides the decision-making. According to Webster and Wind there are five units in an organizational buying unit -: 1. Users - the individuals most likely to be the final user of the products. They are the one who initiate the buying process; in fact they are the need recognisers. 2. Influencers - As most of the decision in an organization is made by committee or purchase department, some people acts as influencers in the group for example if for the atomisation of office communication the company have to install the latest devices the user may place the need for voice recorders or some other device but the IT department will influence which one to buy as they have the responsibility to decide in broader view of overall organization technology policy. Once the IT department gives the product specification and process, the Purchase department will evaluate the sellers. 3. Decision Makers - the decision makers are the one who took the final decision of what should be purchased and from where it should be purchased. 4. Approvers - once the decision makers took their decision it goes to the approving authority. For example if the purchase department finalized what is purchased and from whom it purchased, the order will go to finance department for approval. 5. Buyers - As the finance department approves the decision the purchase department can go ahead and purchase the communication device. 6. Gate-keepers - these members control the access to persons in DMU for example secretaries manage the work flow of purchase department head so how successful a company is at selling can sometimes depend how fast the secretary process your file for perusal. The above decision making units not necessarily have to be separate units in fact they can very well overlap too. For example the IT department can be user and influencer while purchasing an information technology product. 2. What are they key inputs by Buyers into the "Promotional Calendar" According to Brittain (2004) promotional calendar is an effective tool of promotion. A strong and well-developed yearly promotional calendar helps increase the impact of dollars spent on promotion and advertising. By comparing promotional calendars of past time with their corresponding source of funds statements, the effectiveness of past advertising campaigns can be ascertained. Media relation is an organizational function that is conducted through the media through channels such as, television, newspapers, magazines, etc. Similar to advertising and promotions, effective Media Relations often depends on designing and implementing a well-designed plan. The Media plan along with a calendar can be a very useful tool, which specifies what media methods are used and when. When discussing Media Relations, organizations must consider what type of media is most practical for them to use in terms of access and affordability, in addition to what messages are most appealing to their targeted audience. At times organizations have little or no control of the messages in the media. Regarding publicity, it is the reporters and writers not the organizations who decide what will be said. Publicity is an organizational function that includes ongoing activities to ensure that the organization has a strong public image. Activities of publicity can help the public understand the organization and its products or services. Organizations can develop many different forms of positive publicity; from promotional activities to marketing campaigns publicity is the function that organizations use to get the word out about their company. Some organizations feel that any publicity weather it is positive or negative is good publicity. Other organizations have been forced out of business due to negative publicity. Negative publicity can cost organizations thousands if not millions of dollars. Not all organizations have the ability to control the type of publicity they receive, but understanding the publicity function and formulating strategies for both positive and negative publicity the organization can protect the investment to the best of their ability. Social Responsibility is a societal function of public relations and involves organizations participating in social events. For instance, large organizations may be able to help the impact of protecting the environment (Brittain 2004). Small businesses may dedicate their money or time to a local youth organization. Either way social responsibility is a concept that reaches across all businesses both large and small. Organizations with successful social programs can benefit in many ways, including building brand loyalty, attracting and retaining high quality employees, enhancing credibility with the publics, burnishing the organizations public image, and strengthening partnerships with the stakeholders. Social responsibility helps organizations build good will within their business community. Weather the organization is located in a town of large or small proportions organizations that except social responsibility can gain credible support for business advancement. Community Relations is a societal function of public relations. The relationship that an organization has with its community can be vital to the success of that organization. Organizations can interact with the community in numerous ways, from participating in community activities to putting on events or through donations successful organizations understand that their relationship with the surrounding community is important. 3. How do Buyers translate fashion research for their customers? (whats right for the market, target customers? Quality aspects, what kind of quality that customers expect? Fashion-ability - how fashionable is it? Trendiness.) If you were to ask someone in the general population, "what is marketing", most of the people in the group would probably say that marketing involves advertising a product and then selling it. Marketing can be defined as the whole firm, taken from the customers point of view. According to Kunz (2005), marketing is "planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." Marketing is much more than selling or advertising. It involves almost every aspect of what is going on in a company. Production and marketing are both fundamental economic activities. Production involves making goods, such as manufacturing a product, and / or performing services, such as providing repair services for those products. In marketing, you must plan and coordinate a great many activities in order to reach customers and compel them to purchase, use and repurchase your product. While it is true for a business to be successful the product must sell, they do not sell themselves, and marketing is just as necessary as production (Kunz 2005). Marketing insures that the right goods and services are produced. Production and marketing work together to satisfy human needs. This strategy, if successful, will benefit your company. Marketing is an all-encompassing activity. It is something that eventually touches everyone and it dramatically affects peoples daily lives. No one in America is untouched by some form of marketing. Marketing is important to every consumer. Everyone, at one time will buy or use a product or service. Place or distribution is the location where your product is available to your customers when they want it. With this element, you develop a strategy to sell your products either directly to you customer, or indirectly through an intermediary. You must consider does your choice of distribution reach your target customers? This can be the most difficult element to conquer of the four Ps. Promotion allows you to tell your customers about your product and its benefits. Promotional methods can be newspaper, flyers, TV, radio, outdoor billboard signs, Internet advertising, and publicity events. Market research focuses on clarifying customer behaviour. Of course, marketers need to know so much and there is very little data readily available. Because of this lack of date, marketing depends heavily on many kinds of research efforts. (Gowerck 2001) All of this research will come together to help design a marketing strategy. We need to assess our customers needs, and understand those needs and wants. Customer target groups will need to be selected, and be divided into segments. You can cut up the segments any way, by age, where people live, if they hate or love to shop, if they like big band music and the list can go on and on. You must determine the similarities of your target group. Once the target group has been selected, then your market strategy can be developed. In conclusion, marketing is everything, the lifeblood of a company. Next week we will examine market segmentation and its impact on market selection, look at the importance of product and placement in developing a market strategy, and what factors influence consumers in their decisions to make a purchase. 4. What do Buyers require from "Core Suppliers" in order to get a range/ranges successfully delivered as ordered? (relationship between buyers and suppliers) Purchasing is critical to the effective management of material logistics. Positioned at the interface between the customer and the supplier, responsibility often falls on this function for managing the relationship between the customers and suppliers in the supply chain. The role of purchasing is a gateway to suppliers so that other business functions can communicate with counterpart within the supplier organizations (Leenders et al., 1994) Product quality is rapidly becoming an important competitive issue. According to Jackson (2000), there are eight basic elements of product quality. They are performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived quality. What is quality? Quality is defined as "conformance to requirements" (Jackson 2000). To maintain a high quality standard of goods, supplier quality is of paramount importance. This article put emphasis on the role and tasks of purchasing in assuring product quality from suppliers, with reference to: (1) Specification of quality requirements (2) Supplier quality audit (3) The use of appropriate contractual terms in a purchase order Purchasing has different meaning in different industries. This article first introduces different perspectives of purchasing in different industries. Then, the role and task of purchasing in the abovementioned areas will be analysed respectively. Examples are given in each area in the article. Objectives of purchasing. Purchasing has four objectives. They are right quality, competitive price, economic quantity and on-time delivery. Right quality refers to conforming specification requirement (Crosby, 1979). For competitive price, there are two aspects. One is internal competition, the other is external competition. The former can be achieved by reducing the production cost. The latter is due to highly competitive market, with reference to price comparison, historical price, shipping and payment terms etc. Third, economic quantity is crystal clear that buying quantity must lead to a lower cost of the purchase. Cost of holding inventories and cost of not holding inventories are essential consideration. Last, on-time delivery is vital to a company as there are cost and price consequence. Normally, urgent order placement is more expensive than the regular placement as late delivery for urgent one might hold up production and incur cost penalty. Purchasing in different industries. The aim of purchasing varies in different industries. In manufacturing firms, purchasing of raw materials and components is for supporting production. For original equipment manufacturer (OEM), high cost in purchasing raw materials means it should transfer the burden to its customers or cut the production cost. Besides, quality of components counts. Quality-in-quality-out is of paramount importance. If there is defect in one lot of components and it is not discovered by the staff responsible for quality control, it would be disastrous. Quality of components affects the quality of production, and hence affects customer satisfaction. In government or public organization, purchasing is used to support users need. For example, stationery is essential for every department in government. Purchasing, in this sense, means buying at a satisfactory quality with the lowest price. This can be achieved by formal tendering. According to Government Procurement Agreement, Hong Kong government has to go for an open tender for a purchase order of approximately over $1.3 million. In service sector, purchases have to match corporate image and business strategies. For a five-star hotel, the quality of commodity purchased is indispensable for its image. For example, the quality of light, mirror, water tab etc. should conform to the requirement and meet the standard. In retail sector, the purpose of purchasing is for re-sale (Varley 2005). The concept of "quality-in-quality-out" is crucial for the wholesalers and retailers. It is on the grounds that customers do not buy low quality product. Low quality, in other words, would lead to inventory or even "bad debt". It lowers the profitability of both wholesalers and retailers. Last but not least, for trading service providers, purchasing means either merchandizing from other companies or buying components for production in factory. 5. What are the key areas where Buyers & Merchandisers need to work together, with particular reference to the range plan? (range planning, financial control: product areas) The mass merchandisers have become a powerful retail force in todays market (Kunz 2005). They can use their considerable economic clout to drive sales in the fast-moving product categories, such as batteries, tires, motor oils, chemicals, car care products and more. They can be very selective in their product mix in order to attract the consumer. The automotive sector of the mass merchandiser store is not a large part of a stores inventory, but it can be a profitable niche. Buying for this niche can also be tricky. To help buyers, demographics show how many makes and models of vehicles are in an area. To reach this market, advertising sales mailers, which are printed well in advance, are able to hone in on individual markets. In this case, buying becomes an art form, because buyers have to fulfil the needs of all the stores, regardless of each stores particular needs. Sales and loss leaders are part of the marketing strategy for mass merchandisers who can set the price and standards for their particular markets. Price is an important factor in the DIY market and can be the deciding factor when attracting consumers. Mass merchandisers can be the market indicator for how well a product category sells. Price is an important factor. Loss leaders attract buyers who may contribute to add-on sales in the store. Mass merchandisers have the advertising clout to lure do-it-yourselfers to the store -- i.e., special sales on tune-up items can lure customers to the store. Mass merchants also have used in-store merchandising as a powerful sales tool. The individual auto parts store for many years was not as attuned to the intricacies of plano-gramming and how to attractively arrange a stores product mix. Mass merchants are able to use the experience of in-store merchandising to display their aftermarket products. Mass merchants can increase seasonal sales by advertising special items for winter and summer. They can also create new market niches by the force of their advertising. Mass merchandisers can also offer services that many auto retail chains cannot -and that is installation of its products, plus general vehicle maintenance and repair. Sears stores that anchor malls can help install batteries and tires. K-Mart stores have the Penske repair centres that offer similar services, as do many other mass merchandisers. (Kunz 2005) Mass merchants also have the advantage of being able to track efficiently the day-today sales of product categories. They can use this information to make changes in stock and deliveries. Being large also may have its disadvantages. Changing to meet fluctuations in market demands is probably easier in an automotive retail chain than with the auto department of a nationwide store where the auto department is just part of the overall product mix. Because of their size, mass merchandisers usually dont rely on just one supplier in a particular product category. Two or more suppliers are used to make sure that products are always available. Category management is another area where the mass merchandiser is using the skill and marketing expertise of suppliers. Suppliers relish the idea of landing the contract of the mass merchandiser, but more and more that contract has additional duties that the supplier must perform. Category management also entails a friendlier relationship between retailers and suppliers, who are essentially after the same results -- growth and more profit. Advertising can also be adjusted to meet the demands of seasonal sales and changes in market strategies. Being large can be an advantage, but it also means that mass merchandisers are the targets of other mass merchandisers and the giant auto retail chains. When the mass merchant makes adjustments in product mix and price, the ripples are usually felt throughout the aftermarket. When the market changes, the aftermarket listens. References Brittain, P. (2004), Retailing an Introduction, FT Prentice Hall Crosby, Philip B. (1979), Quality is Free: The Art of Making Quality Certain, New York: New American Library. Elliot, F. and Rider J. (2003) Retail Buying Techniques, Management Books Gowerck, H. (2001) Fashion Buying, Blackwell Science Jackson, T. and Shaw, D. (2000) Mastering Buying and Merchandising, Palgrave Kunz, G. (2005), Merchandising Theory: Principles and Practice, Fairchild Books Leenders, M.R., Nollet, J. and Ellram, L.M. (1994), "Adapting Purchasing to Supply Chain Management", International Journal of Physical Distribution & Logistics Management [IPD], Vol. 24, Issue 1, pp. 40-42. Varley, R (2005) Retail Product Management, Routledge Read More