The Changing Price Dimension in Purchasing

The performance of the industrial purchasing department must be reconsidered and re‐evaluated in the light of the recent importance found in quality orientation, persistent economic uncertainty, supply shortages and expected service commitment. There is a need to determine feasible price‐service options. The price objectives of suppliers now include impact on organisational image, and the effects of prices charged on investment, market share and profit maximisation. Pricing tactics, rather than other cost‐related concerns, are used to gain market share, so industrial buyers need to be aware of suppliers' strategies, and must also assess service levels and performance quality. This examination of the factors in purchasing strategy suggests that it must be capable of reaching to a complex environment.Both buyer and seller must re‐think (a) the value the buyer places in the product, (b) the costs incurred and (c) the price structure and behaviour of competitors.