Page 99 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes
Table 4.2: Product Life Cycle Stages and the Size of DMU
Product life cycle Types of purchase Size of Key functions affecting the
stages decision situation DMU purchase decision
Introduction New task Large Engineering and R&D
Growth Modified re-buy Medium Production and top management
Maturity Straight re-buy Small Purchase function

4.5.1 Problem Recognition

The first stage of organisational buying decision involves recognising a need or problem. Just like
the consumer decision-making process, one or more people in the organisation perceive a difference
of sufficient magnitude between the desired state and the actual state of affairs. Problem recognition
may occur under a variety of internal or external circumstances such as a breakdown of an old
packaging machine, modifications to a currently manufactured product or the development of a
new product that needs different packaging equipment. The organisation may also learn about the
new packaging equipment from external sources through a visit to trade fair, an advertisement
seen in an industrial magazine, or a sales person’s call from a supplier.

4.5.2 Product Specification

In this stage, participants involved in the decision-making process assess the problem or need
and determine what is required to resolve or satisfy it. The using department must prepare the
detailed specifications of the product and communicate precisely what is needed. Product
specifications may pertain to technical attributes, quality, durability, availability, warranty and
support services etc. For complex products, besides users, technical experts and financial
executives will also be involved.

Example: In a two-wheeler auto manufacturing plant when a paint-spraying machine
breaks down, engineers, technicians and machine operators assess the situation and determine
the replacement needs. They finalise a set of attributes for a replacement machine, specify that it
must paint 25 autos per hour, change colours of paint quickly and require only one operator.
Finance executives then specify a price range for the machine.

4.5.3 Product and Vendor Search

At this stage, the organisation tries searching for possible products to solve the problem and
firms who may qualify to be suitable suppliers for those products. To collect information, the
members of the buying centre may look into company files and trade directories, contact suppliers
for information, solicit proposals from known suppliers and examine catalogues and trade
publications. Sometimes, in order to write specifications on complex products, the organisation
must start with what products and vendors currently exist or, at times, the company may decide
to make the product rather than buy it. Search efforts should generally result in a list of several
alternative products and vendors.

Example: The buying centre members of two-wheeler auto manufacturer look for paint-
spraying products that meet the laid down specifications and develop a list of paint-spraying
machines available from various vendors.

92 LOVELY PROFESSIONAL UNIVERSITY