Marketing Management, 16th Edition

Contract Negotiation

After selecting suppliers, the buyer negotiates the final order, which includes listing the technical specifications, the quantity needed, the expected time of delivery, return policies, and warranties. Many industrial buyers lease rather than buy heavy equipment such as machinery and trucks. The lessee gains a number of advantages: the latest products, better service, conservation of capital, and some tax advantages. The lessor often ends up with a larger net income and the chance to serve customers that could not afford outright purchase.

For maintenance, repair, and operating items, buyers are moving toward blanket contracts rather than periodic purchase orders. A blanket contract establishes a long-term relationship ...