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Chapter 5 Understanding Consumer and Business Buyer Behavior

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Consumer Buying Behavior
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The buying behavior of individuals and households who buy goods and services for personal consumption
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Buyer’s Black Box
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It’s very difficult to “see” inside the consumer’s head and figure out the whys of buying behavior (that’s why it’s called the black box). Represents the Buyer’s Characteristics and Buyer’s decision processes
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Buyer’s Responses –
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Buying attitudes and preferences, Purchase behavior, what the buyer buys, when, where and how much. Brand and company relationship behavior
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Model of Buyer Behavior –
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The Environment – Buyer’s Black Box – Buyer Responses
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Factors Influencing Consumer’s behavior
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1. Cultural 2. Social 3. Personal 4. Psychological
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Cultural Factors:
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Many brands now target specific subcultures—such as Hispanic American, African American, and Asian American consumers—with marketing programs tailored to their specific needs and preferences. For example, P&G’s CoverGirl Queen cosmetics line was inspired by Queen Latifah to “celebrate the beauty of women of color.”
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Personal Factors:
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People’s buying decisions reflect and contribute to their lifestyles—their whole pattern of acting and interacting in the world. For example, Pottery Barn sells more than just home furnishings. It sells an upscale yet casual, family- and friend-focused lifestyle. An individual’s buying decisions are affected by an incredibly complex combination of external and internal influences.
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Psychological Factors:
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Motivation, Perception, Learning, Beliefs and Attitude
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Culture-
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Most basic because of person’s want and behaviors. Culture is learned from the society, family, and other institutions. Culture reflects basic values, perceptions, wants, and behaviors. Cultural shifts create opportunities for new products or may otherwise influence consumer behavior.
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Subculture:
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Groups of people with shared value systems based on common life experiences and situations.
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Major Subculture Groups in the US –
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Hispanic consumers African-American consumers Asian-American consumers Mature consumers
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Social Class –
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Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors.
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The Major American Social Classes:
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1. Upper Class A. Upper Upper B. Lower Uppers 2. Middle Class A. Upper Middle B. Middle Class 3. Working Class 4. Lower Class A. Upper Lowers B. Lower Lowers Social class is not determined by a single factor but by a combination of all of these factors. America’s different social classes show distinct brand preferences.
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Upper Uppers (1%)
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The social elite who live on inherited wealth. They give large sums to charity, own more than one home, and send their children to the finest schools.
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Lower Uppers (2%)
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Americans who have learned high income or wealth through exceptional ability. They are active in social and civic affairs and buy expensive homes, education and cars.
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Upper Middle (12%)
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Professionals, independent business owners, and corporate managers who possess neither family status nor unusual wealth. They believe in education, are joiners and highly civic minded and want the better things in life.
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Middle Class (32%)
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Average-pay white and blue-collar workers who live on the better side of town. they buy popular products to keep up with trends. Better living means owning a nice home in a nice neighbor hood with good schools.
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Working Class (38%)
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Those who lead a “working-class lifestyle”, whatever their income, school background or job. They depend heavily on relatives for economic and emotional support, advice on purchases and assistance in times of trouble.
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Upper Lowers (9%)
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The working poor. Although their living standards is just above poverty, they strive towards a higher class. However they often lack education and are poorly paid for unskilled work.
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Lower Lowers (7%)
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Visibly poor, often poorly educated unskilled laborers. They are often out of work and some depend on public assistance. They tend to live a day-to-day existence.
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Social Factors:
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Groups and Social Networks – Membership, reference and aspirational groups – Marketers attempt to reach opinion leaders within groups important to target market Opinion leaders are recruited as brand ambassadors or for buzz marketing
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Groups and Social Networks
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Online social networks allow marketers to interact with consumers
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Social Factors:
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1. Family 2. Roles and status
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Family –
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Strongly influences buying behavior Gender stereotypes for certain types of purchases are relaxing in the U.S. Children are very influential, and have substantial disposable income of their own
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Roles and status –
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Role = Expected activities Status = Esteem given to role by society
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Lifestyle:
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A person’s pattern of living as expressed in his or her activities, interests, opinions
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Personal Factors:
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People within the same subculture, social class, and occupation may have different lifestyles People buy the lifestyles represented by products or services
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PersonicX 21 Life-stage groupings –
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lets marketers see customers as they really are and target them precisely
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Personality –
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Refers to the unique psychological characteristics that distinguish a person or group Generally defined in terms of traits Can be useful in analyzing consumer behavior for certain product or brand choices Brands may also have personalities
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Motivation:
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A motive is a need that is sufficiently pressing to direct the person to seek satisfaction
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Motivation Research
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Refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Consumers often don’t know or can’t describe why they act as they do. Thus, motivation researchers use a variety of probing techniques to uncover underlying emotions and attitudes toward brands and buying situations.
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Maslow’s Hierarchy of Needs –
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1. Physiological Needs 2. Safety Needs 3. Social Needs 4. Esteem Needs 5. Self-actualization Needs
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Physiological Needs –
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Hunger, Thirst
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Safety Needs –
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Security, Protection
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Social Needs –
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Sense of Belonging, Love
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Esteem Needs –
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Self-esteem, Recognition, Status
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Self-actualization Needs –
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Self-development and realization
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Perception
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Process by which people select, organize, and interpret information to form a meaningful picture of the world
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Learning –
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Changes in an individual’s behavior arising from experience Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement Strongly impacted by the consequences of an individual’s behavior Behaviors with satisfying results tend to be repeated
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Belief –
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A descriptive thought that someone holds about something
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Attitude –
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A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea
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Buyer Decision Process –
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Need Recognition => Information Search => Evaluation of Alternatives => Purchase of Decision => Postpurchase Behavior
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Need Recognition and Information Search –
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Need recognition can be triggered by internal or external stimuli Advertising can be very helpful in stimulating need recognition Several sources of information may be used as part of the information search Personal sources Commercial sources Public sources Experiential sources
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Evaluation of Alternatives and Purchase Decision
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Evaluation process is dependent upon the specific buying situation and the individual consumers Purchase decision – Two factors may interfere with realization of purchase intentions: Attitudes of others Unexpected situational factors
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Post-Purchase Behavior
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Consumer satisfaction is a function of consumer expectations and perceived product performance Performance Expectations — Delight
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Stages in the Adoption Process –
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1. Awareness 2. Interest 3. Evaluation 4. Trail 5. Adoption
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Awareness:
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Consumer becomes aware of the product but lacks information about it
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Interest:
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Consumer seeks information about new product
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Evaluation:
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Consumer considers whether trying the new product makes sense.
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Trial:
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Consumer tries new product on a small scale to improve his or her estimate of it’s value
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Adoption:
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Consumer decides to make a full and regular use of the new product
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Adopter Categorization:
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1. Innovators (2.5%) 2. Early Adopters (13.5%) 3. Early Majority (34%) 4. Late Majority (34%) 5. Laggards (16%) New-product marketers often target innovators and early adopters, who in turn influence later adopters
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Product Characteristics That Influence the Rate of Adoption:
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1. Relative Advantage 2. Compatibility 3. Complexity 4. Divisibility 5. Communicability
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Relative Advantage:
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Is the innovation superior to existing products?
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Compatibility:
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Does the innovation fit the values and experience of the target market?
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Complexity:
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Is the innovation difficult to understand or use?
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Divisibility:
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Can the innovation be used on a limited basis?
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Communicability
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Can results be easily observed and described to others?
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Business Buyer Behavior –
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Refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others
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Business Markets
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-Involve far more dollars and items than do consumer markets Market structure and demand differs from consumer markets: -Contains far fewer but larger buyers -Business demand is derived from consumer demand -Business markets have more fluctuating demand
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Nature of the buying unit:
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-Business purchases involve more decision participants -Business buying involves a more professional purchasing effort
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Key differences exist between business and consumer buying situations:
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-Business buyers usually face more complex buying decisions -The business buying process tends to be more formalized -Buyers and sellers are much more dependent on each other in business markets
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Model of Business Buying Behavior
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The Environment => The Buying Organization => Buyer Responses
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The Environment –
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Marketing Stimuli = 4 P’s – Product, Price, Place, Promotion Other Stimuli = Economic, Technological, Political, Cultural, Competitive
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The Buying Organization (Organizational Influences)
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The Buying Center (Interpersonal and Individual Influences) => Buying Decision Process
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Buyer Responses
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Product and Service Choice, Supplier Choice, Order Quantities, Delivery Terms and Times, Service Terms, Payment
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Types of Buying Situations
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1. Straight Buy 2. Modified Rebuy 3. New Task 4. Systems (Solutions Selling)
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Straight Buy –
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Buyer routinely buys something without any modifications
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Modified Rebuy –
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Buyer wants to modify product specifications, prices, terms, or suppliers
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New Task –
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Buyer purchases a product or service for the first time
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Systems (Solutions Selling
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Becoming more common among companies
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Buying Center:
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All the individuals and units that participate in the business buying-decision process -The buying center is not a fixed or formally identified unit -It is a set of buying roles assumed by different people for different purchases
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Major Influences on Business Buyer Behavior
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Environmental, Organizational, Interpersonal, Individual
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Environmental –
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The Economy, Supply Conditions, Technology, Politics/Religion, Competition, Culture and Customs
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Organizational –
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Objective, Strategies, Structure, Systems, Procedures
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Interpersonal –
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Influence, Expertise, Authority, Dynamics
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Individual –
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Age/Education, Job Position, Motives, Personality, Preferences, Buying Style
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Stages of the Buying Process –
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Problem Recognition => General Need Description => Product Specification => Supplier Search => Proposal Solicitation => Supplier Selection => Order Routine Specifications => Performance Review
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E-Procurement (Online Buying) –
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E-Procurement presents several benefits and problems
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Online Purchasing (E-Procurement) can be implemented in many ways:
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-Reverse Auctions – Trading Exchanges – Company Buying Sites – Extranet Links with key suppliers