The study looks generally at the industrial market and in particular at the process of organizational buyer behaviour. It then investigates the determinants of supplier choice and focuses on the building industry to research the particular area of supplier choice.
The problem was to determine from the wide choice criteria available to the builder which are the chief determinants of supplier choice. While economic factors such as price, delivery and range of stock have traditionally been thought to be important, this study also investigates the effect of non-commercial factors such as interpersonal relations and part experiences of buyers with suppliers.
The method chosen was to select a sample of 41 building contracts and from an interviewer administered questionnaire obtain responses which isolated the determinants of supplier choice and provided data on supplier comparisons, buyer motivations and source loyalty aspects. Computer statistical analysis was used as well as a summary of verbal impressions given by respondents. A conjoint analysis experiment was also utilised.
A significant result of the survey was found to be the strong source loyalty aspect as evidenced by the often long entrenched position of the dominant supplier. Once a strong bond was established any change of the dominant supplier was likely to be gradual.
Given this influence the main results, the chief determinants of supplier choice, were found to be delivery reliability, price and delivery speed in that order of importance. However to ensure an ongoing supplier customer relationship the building material supplier needs to provide an all round support system with a personalised sales approach on the part of inside and outside sales staff. It is especially important that the outside sales staffs make regular calls and are efficient in their presentation.