Page 214 - Foundations of Marketing

Business Markets and Buying Behavior | Chapter 7 181

Marketing Debate

Supplier Diversity Goals

ISSUE: Are Supplier Diversity Goals a Good Idea? goals for working with women- and minority-owned
businesses and recently changed the rules to include
When Chrysler, New York City, and U.S. government major contracts in these goals. The city will benefit from
agencies look at potential suppliers, they take both size increased competition for $ 1 million-plus projects, and
and diversity into account. These business buyers, like the suppliers that qualify will benefit from the potential
many others, aim to devote a certain percentage of their for higher revenue and faster growth.
budgets to contracts with businesses that are small or One argument against treating suppliers differently is
that are owned by women, members of a minority, or that if business buyers change suppliers or divide spend-
military veterans. Should supplier size and diversity ing among multiple suppliers, they may lose out on large
of ownership be part of the business buying decision volume discounts. Another argument against treating
process? suppliers differently is that someone must verify whether
Chrysler, which spends $ 90 billion with suppliers
worldwide, is actively seeking to award contracts to a firm is actually owned by a woman, a member of a
minority, or a veteran—which can be time-consuming for
minority-owned businesses. The automaker also evalu- buyer and supplier. One final argument is that showing
ates current suppliers on the basis of how much busi- preference to certain suppliers might change the com-
ness they do with minority suppliers, saying that it wants petitive equation by introducing less-objective criteria
to support local communities and be representative of into the buying decision. What do you think? c
the customers it serves. New York City sets procurement

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the same level of customer loyalty that Disney does. The Disney Institute has worked with
organizations as diverse as Chevrolet and local hospitals. 11
Typical services business customers desire from suppliers are market information, inven-
tory maintenance, on-time delivery, and repair services. Business buyers may need technical
product information, data regarding demand, information about general economic conditions,
or supply and delivery information. Purchasers of machinery are especially concerned about
obtaining repair services and replacement parts quickly because inoperable equipment is
costly, both in terms of repairs and lost productivity.
Maintaining adequate inventory is critical to quality customer service, customer satisfaction,
and managing inventory costs and distribution efficiency. Furthermore, on-time delivery is cru-
cial to ensuring that products are available as needed. Reliable on-time delivery saves business
customers money because it enables them to carry only the inventory needed at any given time.
Customer expectations about quality of service have increased and broadened over time.
Using traditional service quality standards based only on manufacturing and accounting sys-
tems is not sufficient. Customers also expect to have access to communication channels that
allow them to ask questions, voice complaints, submit orders, and track shipments. Marketers
should develop customer service objectives and monitor customer service programs, striving
for uniformity of service, simplicity, truthfulness, and accuracy. Firms can observe service by
formally surveying customers or informally calling on customers and asking questions about
the service they received. Spending the time and effort to ensure that customers are satisfied
can greatly benefit marketers by increasing customer retention.
Finally, business customers are concerned about the costs of developing and maintain-
ing relationships with their suppliers. In the Cloud Cruiser advertisement, note that the focus
is on reducing costs. Cloud Cruiser guarantees that a customer will save at least 10 percent
on its cloud computing costs. By building trust with a particular supplier, buyers can reduce
their search efforts and uncertainty about prices. Business customers have to keep in mind the
overall fit of a supplier and its products with marketing objectives, including distribution and
inventory-maintenance costs and efficiency.

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