The Buyers

The marketing of a product should begin from an understanding of the customers, their reasons for buying, their characteristics and habits, and their budget. Since the customers have other ways to satisfy their needs, there must also be an assessment of all the competing products in the market, and their strong and weak points. 

The main customers of three major sectors of chemical products are summarized in table 9.6 as a percentage of total sales. Drugs are oriented more towards the average 

Buyers Industrial chemicals, % Petroleum refining, % Drugs, % 

We have to put faces on the buyers before we can understand their needs and their means. The final consumers of goods and services are the individuals and households, and the other three sets of buyers are acting on behalf of the final consumers. DuPont buys oil and gas from Exxon to make fibers, which are sold to textile manufacturers and eventually to the public the state government of New Jersey buys asphalt and cement to pave roads for the public and the Asian importers buy perfume and soap for retail stores, and eventually for the public. The sale of a product depends on understanding the customer s customers.  

On the other hand, the domestic and international buyers of business and government products are hundreds of hard-nosed professional buyers, who buy in large quantities at regular intervals or by long-term contracts, who have access to technical experts with instruments to measure the quality and performance of the products, have the time and motivation to do comparison shopping, and can exert enormous influence on the sellers, including of prices and terms of payment, of product design 

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It shows concisely the existing vendor capacities for the raw material, planned expansions or new producers, demands for other uses, and demand within the analyst s company. In some cases, the report includes a wodd supply and demand balance. A key objective of a purchase profile report is to make the buyer as well informed as the marketing manager of the seller. If this is achieved, the buyer can often secure a beneficial purchase contract. 

In business transactions the parties should have a clear understanding of exactly what constitutes trade secret information and consider how the information will be used and who will retain ownership rights. If the transaction is a pure and simple sale, concerns over ownership may be meritless. However, such concerns might be weU-founded, if further research or commercial development involves similar information. It may also be necessary to consider whether the seUer should be allowed to compete against the buyer in ventures involving the same or related information. These are just some of the issues which arise with the sale of the trade secrets. 

Sugar trading is controlled by contractual agreements between buyers and sellers. The contracts set specifications and limits and detail the required tests that must be conducted. In the United States, three parties participate in the analyses of raw sugar the buyer, the seller, and the New York Sugar Trade Laboratory (NYSTL). The settiement value for polarization is determined as the average of the two closest results if all three results are equidistant, all three results are averaged. 

The overall objective of research under way as of ca 1997 is to develop a system of sale by description for fine and medium wools whereby the buyer is presented only with measured data on the principal characteristics of the raw wool, as well as an assessment of the less important characteristics by an independent skilled appraiser (8). A scheme for assessing the risk of the presence of colored fiber content in greasy wool has been proposed which depends on production parameters and on the age and sex of the sheep (5). Instmmentation and computer algorithms for the measurement of style and handle... 

A more reahstic example, in which the buyer seeks to purchase at the lowest price, is provided by the data of Table 9-30. The quantities bought vaiy according to price, but some may have been made at high prices to maintain production. 

What is the buyer s history in regard to process safety and environmental compliance ... 

The buyers of motor vehicles have been substantially positive concerning the need to have cleaner running vehicles. Although the required emission control devices and other mandated safety equipment have increased the cost of new motor vehicles, sales have not been significantly effected. The current environmental awareness and concern are evidence of the general population s new found knowledge and acceptance of both mobile and stationary source emission controls. 

Although OSHA regulations and industry standards have begun to address proteetive elothing and its proper use, the responsibility lies with the buyer for seleeting the appropriate type and style of PPE to mateh the job-speeifie hazards to proteet the worker. Wlien purehasing PPE the eonstruetion and quality of the equipment should be kept in mind as well as the regulatory standards that should be met, the eomfort and produetivity of the worker involved, and the disposability of the equipment after it has been eontaminated. The eheapest is not always the best. 

Ensuring that the policy is relevant to the expectations and needs of the organization s customers is a little more difficult. Companies need to predict what their customer expectations and needs are (now a requirement in clause 4.1.4 under Business plans). They may be beyond what they specify in contracts although they may in fact be identical to such specifications. For companies to create satisfied customers they not only need to meet requirements specified by the customer but meet national and international legislation and have consideration for the needs and expectations of society. As explained in Part 1 Chapter 1 on Quality characteristics, customers are not only the buyers but comprise several other interested parties. You need to provide a means of determining what the customer expectations and needs are and then subject the written quality policy to a review against those expectations and needs to determine if there is any conflict. As part of your business planning procedure you should indicate how you determine your customer s current and future needs and expectations. 

The purpose of the preliminary subcontractor assessment is to select credible subcontractors and not necessarily to select a subcontractor for a specific purchase. There are millions of subcontractors in the world, some of which would be happy to relieve you of your wealth given half a chance, and others that take pride in their service to customers and are a pleasure to have as partners. You need a process for gathering intelligence on potential subcontractors and for eliminating unsuitable subcontractors so that the buyers do not need to go through the whole process from scratch with each purchase. The first step is to establish the type of products and services you require to support your... 

A futures contract is an agreement that calls for a seller to deliver to a buyer a specified quantity and quality of an identified commodity, at a fixed time in the future, at a price agreed to when the contract is made. An option on a commodity futures contract gives the buyer of the option the right to convert the option into a futures contract. Energy futures and options contracts arc used by energy producers, petroleum refin-... 

In the final analysis, market price and sales volume are functions of the quality standards offered and the buyer s degree of confidence that the product will conform to the standards. Maintenance of buyer s confidence requires inspection to screen out all nonconforming products, or control over variability of quality during production and distribution to a degree where few, if any, products fail to meet the standards. Screening inspection of the finished product cannot improve quality it merely serves to segregate unacceptable from acceptable product, and results in loss of production capacity and costly waste and salvage. The second consideration provides the only sound basis for quality control in frozen food production and distribution. It operates on the old principle that an ounce of prevention is worth a pound of cure. ... 

There are no objective tests which will enable one to tell at what point mishandling in storage took place. The packer who fails to keep a record of the quality and condition of his product as it is placed in storage, of the storage conditions, and of product condition as it is loaded for shipment is exposing himself to unnecessary risk. Without such records he may find himself unable to refute unjust or misdirected claims initiated by the buyer. 

In a production line that has a relatively long run, the cost for equipment in relationship to producing the product including its financial amortization, usually is about 5% with probably maximum of 10% Plastic material cost could be at about 50% with as high as 80% for high volume production. The other costs include power, water, labor, overhead and taxes. With precision, short runs, costs could be equipmentwise at 20 to 30%, material 45 to 50%. Thus, as it is usually stated, do not buy equipment just because it cost less since more profit could occur with the more expensive equipment study what is to be purchased. Of course the reverse is possibly true. So, you the buyer, have to know what you want and are ordering to a specification properly determined based on the designed product requirements. 

We can expect drastic changes in the food packaging industry. Some will arise from new consumer needs, new or expanded food supplies and products, and new food preservation systems such as aseptic packaging. Others will result from societally based constraints such as safety in health and hazardous use (as in the child safety closure legislation) and consumer protection against fraud, misinformation, or wrongful use where the burden for awareness is no longer on the buyer but on the supplier. Other such constraints will arise from environmental concerns or material scarcities. 

In a theoretical approach to the problem of foams the first question to be formulated was of a very practical kind—why do food manufacturers make foam Is it the ease of digestion which is aimed at—or the large bulk to impress the buyer and little substance to lower costs If physical chemists knew the answer, it would have been easier for them o conclude what kind of foam is wanted and how it should be best made. 

Installation qualification (IQ). IQ demonstrates that the equipment/system has been installed correctly at the user site according to vendor standards. The vendor should install the equipment to demonstrate to the buyer that all the components are operating properly. The qualification process includes appropriate documentation of the system components, physical installation and hook-up, and a performance check to verify that the individual components operate and can communicate with each other. System component information, such as serial numbers, type of use, and user performance requirements, should be included in the metrology database for easy tracking and scheduling of maintenance and/or calibration. 

Persuade the buyer to pay by standing order if he is a regular customer. 

This includes schools, hospitals, health clubs and airlines. The farmers may either approach the buyer within the organisation or the caterer tendering for the contract. Building a strong relationship with the buyer or chef is vital in this market. Keep the buyer informed of any prediction of a shortfall or oversupply, or variation in quality. This allows them to take other action accordingly. 

The farmer should keep the distributor/wholesaler informed of production plans, and must give the buyer as much notice as possible of any change in plans. This will provide an opportunity to line up another supplier (Roos, 2002). Some wholesalers offer farmers longterm contracts which guarantee price premium for organic products over several years. 

Some sort of compromise needs to be reached. The buyer and the consumer must have the guarantee that what is called organic really is. So either the organic associations such as the Soil Association have to reduce their charges or, conceivably, the government may be asked to make a grant to cover this aspect. 

A company usually sets product standards in such a way as to minimize the purification expenses. These standards are often empirical tests to ensure that the buyer will get the same product in each shipment. Examples would be the melt index of a polymer, the boiling-point range of the product, and the maximum amount of certain impurities. Another manufacturer using a different process would want to set different standards. His method of production will be different, and so the amount and kind of impurities will be different. Sometimes this means expensive purification steps must be installed to meet the specifications set by the initial manufacturer. If this competitor could have been the initial standard-setter then these steps would not be necessaiy. 

The buyer adapts his process so he can use the first producer s products. He is not prone to switch unless the technical service department of the new manufacturer can convince him that it will save hhn money and that there are no risks involved. The fire extinguisher example given previously illustrates why the buyer is not eager to change. 

A weekly publication of McGraw-Hill. This excellent pubheation concentrates on the news and business aspects of the chemical industry. It periodically has excellent marketing and sales studies for various products. It also publishes annually a plant-site-selection issue and a Buyers Guide. The Buyers Guide lists the major producers and the source of supply for over 6,000 chemical products, and has a list of chemical trade names. It publishes, quarterly, the current financial condition of 300 companies involved in chemical processing. 

Present producers are near the buyer. This would indicate building a plant in the Midwest the New York-New Jersey-Pennsylvania area or California. California has already been eliminated. 

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