Systems Buying and Selling
Many business buyers prefer to buy a total solution to their problem from one seller. This practice, called systems buying, originated with government purchases of major weapons and communication systems. The government solicited bids from prime contractors; the winning contractor then bid out and assembled the system from subcomponents purchased from other contractors. Thus, the prime contractor was providing a "turnkey solution" that allowed the buyer to, in effect, turn one key and get the job done.
Sellers have increasingly recognized that buyers like to purchase in this way, and many have adopted systems selling as a marketing tool. Systems selling can take different forms. For example, many auto parts manufacturers now sell whole systems, such as the seating system, the braking system, or the door system. A variant on systems selling is systems contracting, in which a single supply source provides the buyer with all required MRO supplies (maintenance, repair, and operating supplies). This lowers the buyer's costs because the seller maintains the inventory, less time is spent on supplier selection, and the buyer enjoys price protection during the life of the contract. The seller benefits from lower operating costs because of steady demand and reduced paperwork.
Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects such as dams, steel factories, and pipelines. Project engineering firms must compete on price, quality, reliability, and other attributes to win these contracts. For example, when the Indonesian government requested bids to build a cement factory near Jakarta, a U.S. firm made a proposal that included choosing the site, designing the cement factory, hiring the construction crews, assembling the materials and equipment, and turning over the finished factory to the Indonesian government. The proposal of a Japanese bidder included all of these services, plus hiring and training the factory workers, exporting the cement, and using the cement to build roads and office buildings around Jakarta. Although the Japanese proposal was more costly, it won. This is true system selling: The firm took the broadest view of its customer's needs and positioned itself as an economic development agency.
Continue reading here: The Buying Center
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