Answer to Question 1
When making purchasing decisions, business customers take into account a variety of factors. Among their chief considerations are price, product quality, service, and supplier relationships. Price is an essential consideration for business customers because it influences operating costs and costs of goods sold, which affects selling price, profit margin, and ultimately the ability to compete. Most business customers try to maintain a specific level of quality in the products they buy. To achieve this goal, most firms establish standards (usually stated as a percentage of defects allowed) for these products and buy them on the basis of a set of expressed characteristics, commonly called specifications. Typical services business customers desire from suppliers are market information, inventory 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. Maintaining adequate inventory is critical to quality, customer service, customer satisfaction, and managing inventory costs and distribution efficiency. Furthermore, on-time delivery is crucial 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 traditional manufacturing and accounting systems is not sufficient. Finally, business customers are concerned about the costs of developing and maintaining relationships with their suppliers. By building trust with a particular supplier, buyers can reduce their search efforts and uncertainty about prices.
Answer to Question 2
A
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