The organizational buyer purchases several products. These can be categorized into three major groups.
1. Capital goods like plant and machinery, office products, etc.
2. Spare parts and components.
3. Consumables like raw material, packaging material, lubricants, etc.
We need to appreciate that the cost and risks involved varies across these product groups. It is the maximum in capital goods and minimum in consumables. Besides, consumables are repeat purchase and are often bought on a regular interval. But, spare parts and components are bought less regularly and are generally ordered only when the minimum re-order level has been reached in the store. Capital goods are bought less frequently and generally they are purchased following an expansion or diversification, or upgrading decision.
Following this pattern of purchases, one may anticipate a higher degree of vendor loyalty in the case of consumables than in capital gods, where vendor credibility in completing a project in specified time period becomes a determining factor. The Marketer needs to be aware of the fact that in consumable purchases, the customer will always look for substitutes that can help him reduce his costs.
Consider the case of a soft drink company where packaging cost is high because of the usage of glass bottles. The cost of the glass bottles is also high if one were to consider breakages. This soft drink firm will always favorably look at alternatives that will help it to reduce its packaging cost. So, plastic bottles, tetra packs and even composite cans for the juices may be considered by the company. The glass bottle manufacturer will have to continuously look at ways or means by which he could reduce the cost and pass on the benefit to the soft drink firm and other brewery firms. So, the marketer here has a dual role
1. Help customer reduce procurement costs and make him competitive, and
2. Maintain excellent relations so as to know the substitutes with which the client firm is experimenting.