Page 599 - Business Principles and Management

Unit 6

When planning a purchase,
what decisions does a
business typically make?

PHOTO: © GETTY IMAGES/PHOTODISC.

WHEN TO PURCHASE
The types of products, the types and locations of suppliers, and other factors
such as style and price trends influence the decision about when to purchase.
For a manufacturer, raw materials and component parts must be available when
needed for production, or the business will not be able to maintain its produc-
tion schedule. Wholesalers and retailers need an adequate supply of products
when customers want to buy. Businesses often must place orders well in advance
for products to be available when their customers need them. For example, retail
clothing stores often order summer fashions in January or earlier. Whether a buyer
believes the prices of products will fall or rise also influences when product orders
are placed.

business note FROM WHOM TO PURCHASE

Part of the purchasing decision is to choose the right sup-
pliers. Businesses consider the reputation of each supplier
in such areas as dealing with customers, filling orders
Marketing uses many theories and concepts rapidly and exactly as requested, and providing necessary
from a number of other fields. These include services. Other considerations are the supplier’s price and
psychology, sociology, social psychology, and credit terms.
economic psychology. These fields help mar- Businesses must decide whether to make purchases
keters understand both individual and busi- from only one supplier or to spread the orders among
ness buying processes and motives. How can several suppliers. Most businesses concentrate their buy-
these “ologies” help marketers understand ing among a few suppliers. This practice usually devel-
the needs of their customers? What classes ops better relationships between the suppliers and the
could you take that would help improve the purchaser. Better prices, credit terms, and service are also
selling process? likely to result. However, relying on one supplier leaves
the purchaser vulnerable when that business experiences
problems.

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