Buyer's Choice Research Articles

Risk‐taking propensity in supplier choice: Differences by sex and decision frame in a simulated organizational buying context

Past research concerning decision framing has found that buyer's choices tend to be risk averse for decisions framed as a gain and risk seeking for choices framed as a loss. Attribution theory suggests that women may be less likely to take risk than men when faced with similar decision-making problems. The present study sought to determine whether there would be differences between men and women with respect to their supplier choices based on how the purchasing decision was framed. Two experiments were conducted: one using a price-based purchasing scenario and the other using a price-based and a quality-based purchasing scenario. For the price-based scenario women tended to make more risky supplier choices than men when the purchasing decision was framed as a loss, and less risky supplier choices than men when the purchasing decision was framed as a gain. No differences between the sexes were found for the quality-based scenario. © 1999 John Wiley & Sons, Inc.

Risk-taking propensity in supplier choice: Differences by sex and decision frame in a simulated organizational buying context

Past research concerning decision framing has found that buyer's choices tend to be risk averse for decisions framed as a gain and risk seeking for choices framed as a loss. Attribution theory suggests that women may be less likely to take risk than men when faced with similar decision-making problems. The present study sought to determine whether there would be differences between men and women with respect to their supplier choices based on how the purchasing decision was framed. Two experiments were conducted: one using a price-based purchasing scenario and the other using a price-based and a quality-based purchasing scenario. For the price-based scenario women tended to make more risky supplier choices than men when the purchasing decision was framed as a loss, and less risky supplier choices than men when the purchasing decision was framed as a gain. No differences between the sexes were found for the quality-based scenario. © 1999 John Wiley & Sons, Inc.

Implications of choice behaviour and preferences in niche markets

The primary purpose of this research is to compare preferences and choice behaviour at two levels of the niche market for sushi/sashimi quality summer flounder (Paralichthys dentatus). When price and quantity data are available, producer demand may be derived from consumer, retail or wholesale demand. To make informed marketing and production decisions, producers also need an understanding of buyer choice behaviour and preferences. We examined the wholesale buyer and sushi chef market levels using a conjoint choice experiment and a conditional multinomial logit model. Preferences for individual attributes and choice behaviour are discussed and compared across market levels.

A model of incentive contracts for just-in-time delivery

A mathematical model is used to analyze how to structure on-time delivery incentives in a contract between a buyer and a single supplier of raw materials when early shipments are forbidden. The buyer's choice of incentives takes the supplier's cost-minimizing response to incentives into account. The least cost incentive a buyer can select is specified by a probability of on-time delivery and an incentive scheme to achieve that probability. These optimal solutions are characterized without specifying the flow time distribution. A Method of selecting incentives that can help buyers improve on-time delivery performance is provided; however, the limitations of incentives are also considered. Achieving exactly 100% on-time delivery is shown to be non-optimal and only feasible under specific conditions. When management can not specify the shortage cost, their selection of a desired probability of on-time delivery allows for the determination of an imputed shortage cost.

Choosing a house: the effect of cost constraints on single-family house design and construction

In this study, Rapoport's concept of choice and game theory was used in order to understand the trade-offs home buyers make when choosing an affordable house. Cost is a constraint on a home buyer's choices. When people have constraints on their choices, what is most critical is what they eliminate and in what order. The attributes eliminated first are the least important to buyers; the attributes that are present in all new houses, including the least expensive, are the most important. Fifty model houses featured in The Milwaukee Journal over an eighteen-month period were analyzed. The objective was to learn how the more expensive houses differ from the less expensive houses. Size is the most important predictor of cost but even the least expensive houses are like all the others in that they have three bedrooms, one larger than the other two; two bathrooms, one with a special relationship to the bigger bedroom; two separate eating areas and a two-car garage. They are unlike the other houses in that they d...

Asset Choice and Supplier Performance in Two Organizations–US and Japanese

The problem of vertical integration is a venerable but increasingly important focus of attention in profit-seeking organizations. Over the past ten years, many industries have seen increased cooperation between buyers and suppliers to achieve more difficult goals caused by rising product market competition. In many firms, this cooperation is balanced against the putative advantages of diminishing but still substantial in-house operations. One way to compare the performance of cooperative suppliers with in-house operations is to focus on the buyer's choice of assets used to produce the inputs needed for the final product. For strategic reasons, some of these assets will be highly specialized and others standardized. The question this paper asks is whether this choice of specialized or standard assets influences the performance of the supplier, controlling for whether it is in the market or in-house. The hypothesis is that the choice of specialized assets, for strategic reasons, is associated with lower supplier conformance with the buyer's target price for the input. In other words, for these assets the supplier's price, which is higher than the buyer would have liked to pay, reflects some of the strategic value of the input to the buyer. The supplier is simply appropriating some of this value, since it can raise its price with a low threat of termination by the buyer. For standard assets, in contrast the threat of termination is omnipresent, so that the choice of assets is irrelevant for supplier price performance. The test is performed using data on both in-house operations and market suppliers from a quite large US manufacturing firm and on market suppliers to a very successful Japanese manufacturing firm. Interestingly, there is no difference between these firms in the applicability of the hypothesis. Also, in-house and market suppliers differ in price performance only for standard assets, market suppliers performing better. Organizations can therefore gain quite a bit from outsourcing the production of less specialized inputs but achieve roughly the same performance from in-house and market suppliers for more specialized inputs. This last result is controversial and should bc tested repeatedly using other micro-level data. This study therefore addresses three sides of the current debate surrounding modern questions of vertical integration. First, does the strategic value of the input make a difference in supplier performance? The answer is yes, but only for specialized inputs. Second, do in-house and market suppliers differ in their performance? The answer is yes, but only for standardized inputs. Third, do US and Japanese firms differ in the performance of their suppliers, given variation in asset specialization and strategic importance? The answer is no, at least for the two firms studied here. All caveats regarding the generalizability of results from small sample studies apply.

Battle of the books: the curriculum debate in America

Does it matter which books college students read? Indeed it does, contends the author. Atlas presents a trenchant assessment of America at its educational crossroads, and asserts that whatr in shaping Buyer's Choice

Consumer schizophrenia: Extremism in the marketplace

There's an important new pattern in buyer choice processes: consumer schizophrenia. Consumers are making decisions on what to put in their shopping carts based on mutually contradictory or antagonistic motives.

Internal analysis of market structure: Recent developments and future prospects

The predominant paradigm in marketing for explaining buyer choice behavior is that choices reflect buyer evaluations of the attributes possessed by alternatives. Internal market structure analysis seeks to recover the attributes, and the buyer evaluations of those attributes, that govern brand choices. This essay briefly reviews some of the most recent developments in internal market structure analysis and discusses prospects for further work.

The dogit model is applicable even without perfectly captive buyers

The dogit choice model is a modification of the logit model to allow for ‘captive’ or ‘perfect loyal’ buyers. This paper derives the dogit choice model from a two-period loyalty model drawn from the marketing science literature. This will prove that the dogit model can be used even when buyers are not perfectly captive (or ‘loyal’) to one choice. We also deduce an equilibrium dogit model corresponding to the equilibrium choice probabilities when buyer choices from period to period follow the two-period marketing science loyalty model.

Organizational Climate and Decision Framing An Integrated Approach to Analyzing Industrial Buying Decisions

The authors examine the ability of prospect theory to explain industrial buyer decision behavior and explore the benefits of using organizational climate as one of the factors affecting the decision-framing process of industrial buyers. They develop a conceptual model of the industrial buying decision process, hypothesizing that factors such as the organizational climate and the buyer's general orientation toward risk affect the decision frame and, subsequently, the buyer's choice. The model was tested empirically in a field experiment using a national sample of industrial buyers. The results for the experimentally manipulated factors support the hypotheses about the way industrial buyers form decision reference points, compare alternatives, and eventually make choices. The results for the organizational climate factors, which were measured rather than manipulated experimentally, are mixed.

Choice rules and sensitivity analysis in conjoint simulators

Despite the widespread use of choice simulators in commercial conjoint applications, relatively little has been written about the applicability of various types of buyer choice rules and sensitivity analyses. This paper first discusses issues related to the selection of different buyer choice rules. We then propose six types of sensitivity analyses that can be implemented in buyer choice simulators, given the usual input data of respondents’ part worths, status quo product utilities, and background data.

INSIGHTS INTO ORGANIZATIONAL BUYING

This research project suggests that the decision‐making process in organizational buying may not be as much of a group process as is presently suggested by the literature. The job of organizational buyers is profiled and the decisions that are important to a seller — the buyer's choice of vendors to request bids from and the subsequent purchase choice of the buyer — is investigated. This research suggests that the decision rules used to select buyers for consideration are independent of the decision rules used to make the final purchase choice.

Difference in Attribute Importance for Different Industrial Products

used by purchasing agents to select suppliers varies with the type of problem likely to arise in adopting the particular product, and whether such differences in choice criteria are consistent between purchasing agents in the United States and the United Kingdom. The buyer's choice criteria are the factors he uses to evaluate competitive offerings. Choice criteria are inferred to exist because industrial buyers can and do articulate their reasons for choosing one supplier rather than another.

Mathematical models of individual buyer behavior.

Several grand models of buyer choice behavior exist, differing in their relative emphasis on economic, social, and psychological factors. Some of the partial or incompatible theorizing can be cleared up through efforts to develop and compare mathematical formulations of the different assertions about buyer behavior. This paper deals with the problem of explaining how the purchasers of consumer staples make brand choices through time. The author contrasts seven models of increasing complexity, the last one involving all the previous considerations of brand loyalty, stochastic factors, the influence of the last brand purchased, learning, competitive brand features, competitive brand promotion, and word-of-mouth influence. He concludes that model complexity is necessary both to provide a norm for exposing the omissions of simpler models and as a requirement for the eventual development of useful and realistic market simulators.