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CONSUMER BEHAVIOUR

&
ORGANIZATIONAL BUYING
• Marketing theory traditionally splits analysis of buyer or
customer behavior into two broad groups for analysis –
Consumer Buyers and
• Industrial Buyers
• Consumer buyers are those who purchase items for
their personal consumption .
• Industrial buyers are those who purchase items on
behalf of their business or organization .
• Businesses now spend considerable sums trying to learn
about what makes “customers tick”.
• The questions they try to understand are:
• Who buys?
• How do they buy?
• When do they buy?
• Where do they buy?
• Why do they buy?
TYPES OF CONSUMER
PURCHASE DECISIONS:
• Minor New Purchase – these purchases represent
something
• new to a consumer
• but in the customer’s mind is not a very
important purchase in terms of need, money or
other reason

• Minor Re-Purchase – these are the most routine of


all purchases and often the consumer returns
to purchase the same product without giving
much thought to other product options
MAJOR NEW PURCHASE

• Major New Purchase– these purchases are the most


difficult of all purchases
• because the product being purchased is important
to the consumer but little or no previous
experience making these decisions.
• Eg: car, house

• The consumer’s lack of confidence in making this


type of decision often (but not always) requires the
consumer to engage in an extensive decision-
making process.
Major Re-Purchase

• Major Re-Purchase - these purchase


decisions are also important to the
consumer
• but the consumer feels confident in
making these decisions since they
have previous experience purchasing
the product.
Consumer Buying Centers:
• Initiators :
• need for a product/item and in turn a supplier arises from the users.
• But there can be occasions when the top management, maintenance or the
engineering department recognise or feel the need.
• These people who “initiate” or start the buying process are called initiators.

• Influencers
• Technical personnel, experts and consultants and qualified engineers play the role
of influencers by drawing specifications of products.
• It can also be top management when the cost involved is high, benefits long term.
• Influencers provide information for strategically evaluating alternatives.

• Deciders
• Approvers:
• People who authorise the proposed actions of deciders or buyers.
• personnel from top management or finance department
• Buyers :
• formal authority to select the supplier and arrange the purchase
terms.
• They play a very important role in selecting vendors and
negotiating
• sometimes help to shape the product specifications.
• The major roles or responsibilities of buyers are
• obtaining proposals or quotes, evaluating them and selecting the supplier,
negotiating the terms and conditions, issuing of purchase orders, follow up
and keeping track of deliveries.

• Users
• Under this category come users of various products.
• If they are technically sound like the R&D, engineering who can
also communicate well, play a vital role in the buying process
BUYING BEHAVIOUR
PROCESS
ORGANIZATIONAL BUYING

• Organization buying as the decision making process


by which formal organizations establish the need for
the purchased products and services and identify,
evaluate, and choose among alternative
brands and suppliers.
• The business buyers face many decisions in making
purchase.

• Mainly there are three types of buying situations


BUYING SITUATIONS

• Straight Rebuy
• Modified Rebuy
• New task
3 BUYING SITUATIONS
• Straight Rebuy:
• The straight rebuy is a buying situation is a situation
in which the purchasing department reorders
on a routine basis .The buyer chooses
suppliers on an “approved list”.

• The modified rebuy is a buying situation in which the


buyer wants to modify product specification,
prices, delivery requirements, or other terms.

• New task: purchaser buys a product or service for


the first time . The greater the cost/risk, the
larger the no. of participants and the greater
their information search
• longer time to decision completion.
EXCHANGE PROCESS
• Exchange process involves : -
• Product / Service exchange
• Information Exchange
• Financial Exchange
SYSTEMS BUYING AND SELLING:
• Many business buyers prefer to buy a total solution to
their problem from one seller called system buying, this
practice originated with government purchases of major
weapons and communication systems. One variant of
systems selling is system contracting , where a single
supplier provides the buyer with his/her entire
requirement of MRO (maintenance, repair, operating )
supplies.
PARTICIPANTS IN BUYING PROCESS:

• Initiators: Those who request that something be


purchased.
• Users: Those who will use the product or service.
• Influencers: People who influence the the buying
decision.
• Deciders: People who decide on product
requirements or on suppliers.
• Approvers: People who authorize the action of
deciders or buyers.
• Buyers: People who have formal authority to select the
supplier and arrange and arrange the purchase
terms.
STAGES IN BUYING
PROCESS:
• Problem Recognition
• General need description and product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification:
• contract award
EVOLUTION OF MARKETING
CONCEPT
1. PRODUCTION CONCEPT

• Firm is considered as the central point

• All goods and commodities produced were sold in the market.

• Emphasis on production process, control on technical perfection

• Consumers will favour products - widely available, low in cost.

• Concentrates on achieving high production efficiency and wide distribution


coverage.

• Technologists thought that low cost due to large scales of production - right
‘Marketing Mix’ for the consumers.
2. PRODUCT CONCEPT

• Holds that consumer’s will favour products - most quality,


performance and features.
• Management in these product-oriented organizations –
focussed on making good products and improving them over
time.
• Yet, in many cases, these organizations fail in the market. Why??
• The term ‘marketing myopia’ is to be credited to Professor
Theodore Levitt - as a coloured or crooked perception of
marketing and a short-sightedness about business.
3. SALES CONCEPT

• Company cannot expect its products to get


picked up automatically by the customers.
• The company has to consciously push its
products.
• Aggressive advertising,
• high-power personal selling,
• large scale sales promotion,
• heavy price discounts and
• strong publicity and public relations

• The selling concept is thus undertaken most


aggressively with ‘unsought goods’.
• Too suffers from marketing myopia.
• Selling views business as a ‘goods producing
processes’.

• Marketing views business as a ‘customer


satisfying process’.
QUIZ

• What is Marketing?
• How are needs / wants / demands
different?
• Production Concept?
• Product Concept?
• Sales Concept?
• Marketing Myopia?
4. MARKETING CONCEPT

• Starts with the determination of consumer wants ;ends


with the satisfaction of those wants.

• Puts the consumer both at beginning and end of the


business cycle.
• “there is only one valid definition of business purpose: to create
a customer”.

• “the entire business has to be seen from point of view of


customer”.
• Every department and every worker and manager will ‘think
customer’ and ‘act customer’.
BENEFITS OF MARKETING
CONCEPT

1. Long Term success


2. Better Products
3.Boosts creativity
4. Integrated functions
5. Mostly in profits
6. Better growth of employees
7. Contributes to overall growth of the society
5. THE SOCIETAL MARKETING
CONCEPT

• It is Marketing Concept (+) Society’s


well being.
• Balancing of following three considerations
while setting marketing policies :
• Customer’s want satisfaction
• Society’s well being
• Company’s profits
THE SOCIETAL MARKETING
CONCEPT

• societal marketing concept holds that the organization’s


task is to determine the needs, wants, and interests of
target markets and to deliver the desired satisfactions
more effectively and efficiently than competitors in a way
that preserves or enhances the consumer’s and
the society’s well being.
- It addresses conflicts between consumer’s and
firm’s short run wants and long term welfare.
CONSUMER BUYING BEHAVIOR

The decision processes and purchasing


activities of people who purchase products
for personal or household use and not for
business purposes.
LEVEL OF INVOLVEMENT

An individual’s intensity of interest in a


product and the importance of the product
for that person.
CONSUMER PROBLEM SOLVING
ROUTINIZED RESPONSE BEHAVIOR

The consumer problem-solving process


used when purchasing frequently
purchased, low-cost items needing very
little search-and-decision effort.
LIMITED PROBLEM SOLVING

The consumer problem-solving process


employed when buying occasionally or
when they need to obtain information
about an unfamiliar brand in a familiar
product category.
EXTENDED PROBLEM SOLVING

A consumer problem-solving process


employed when purchasing unfamiliar,
expensive, or infrequently bought products.
IMPULSE BUYING

An unplanned buying behavior resulting


from a powerful urge to buy something
immediately.
CONSUMER BUYING
DECISION PROCESS

A five-stage purchase decision process that


includes problem recognition, information
search, evaluation of alternatives, purchase,
and postpurchase evaluation.
CONSUMER BUYING DECISION
PROCESS/POSSIBLE INFLUENCES ON THE
PROCESS
PROBLEM RECOGNITION

Difference between desired state and actual


condition.
ASPECTS OF INFORMATION SEARCH

• Internal Search
• External Search
INTERNAL SEARCH

An information search in which buyers


search their memories for information about
their products that might solve their problem.
EXTERNAL SEARCH

An information search in which buyers seek


information from sources other than memory.
EVALUATION OF ALTERNATIVES

 Consideration Set
 Evaluative Criteria
 Framing Alternatives
COGNITIVE DISSONANCE

A buyer’s doubts shortly after a


purchase about whether the decision
was the right one.
SITUATIONAL INFLUENCES

Influences resulting from circumstances, time,


and location that affect the consumer buying
decision process.
CATEGORIES OF
SITUATIONAL FACTORS

 Physical Surroundings
 Social Surroundings
 Time Perspective
 Reason For Purchase
 Buyer’s Mood/Condition
PSYCHOLOGICAL INFLUENCES

Factors that in part determine people’s


general behavior, thus influencing their
behavior as consumers.
TYPES OF PERCEPTION

1. Information Inputs
2. Selective Exposure
3. Selective Distortion
4. Selective Retention
MOTIVES

An internal energizing force that


directs a person’s behavior toward
satisfying needs or achieving goals.
MASLOW’S HIERARCHY OF NEEDS
SOURCES OF LEARNING

 Behavior Consequences
 Information Processing
 Experience
ATTITUDE

An individual’s enduring evaluation of feelings about and behavioral tendencies toward


an object or idea.
COMPONENTS OF ATTITUDE

 Cognitive- knowledge or information


 Affective- feelings or emotions
 Behavioral- actions regarding object or idea
PERSONALITY AND SELF -CONCEPT

• Personality – internal traits and behavioral tendencies


• Self-Concept – perception or view of oneself
LIFESTYLE

An individual’s pattern of living expressed


through activities, interests, and opinions.
LIFESTYLE AFFECTED BY:

• Age
• Education
• Income
• Social Class
ROLE

Actions and activities that a person in a


particular position is supposed to perform
based on expectations of the individual
and surrounding persons.
CONSUMER SOCIALIZATION

The process through which a person


acquires the knowledge and skills to
function as a consumer.
TYPES OF FAMILY
DECISIONMAKING
REFERENCE GROUP

A group that a person identifies with


so strongly that he or she adopts the
values, attitudes, and behavior of
group members.
TYPES OF REFERENCE GROUPS

1. Membership
2. Aspirational
3. Disassociative
OPINION LEADER

A member of an informal group who provides


information about a specific topic to other
group members.
EXAMPLES OF
OPINION LEADERS AND TOPICS
SOCIAL CLASS

An open group of individuals with similar


social rank.
SOCIAL CLASS
BEHAVIORAL
TRAITS/
PURCHASING
CHARACTERISTICS
CULTURE

The accumulation of values, knowledge,


beliefs, customs, objects, and concepts
of a society.
SUBCULTURES

A group of individuals whose characteristic


values (religion, etc.) and behavior patterns
are similar and different from those of the
surrounding culture.
U.S. ETHNIC SUBCULTURES

 African American
 Hispanic
 Asian American
Consumer Behaviour

• the study of how consumers acquire, consume and dispose


of goods, services, experiences and ideas.
Influences on Consumer Behaviour

• A consumer’s behaviour can be influenced by many factors:

• Group factors e.g. culture, family, friends


• Individual factors e.g. gender, age, personality
• Psychological factors e.g. perception, involvement, time pressure
A Group Factor : Culture

• Culture - a set of values, attitudes and preferences passed


on from one generation to the next.
A Group Factor : Culture

• Culture- a set of values, attitudes and preferences passed


on from one generation to the next
A Psychological Process: Perception

• Perception is the process by which an


individual selects, organizes, and
interprets information to create a
meaningful picture of the world.
The Selective Perception Process

• Selective Perception: organising & interpreting of the


information available
• Selective exposure: choosing to expose ourselves to, or
to avoid stimuli
• Selective attention: choosing to pay attention to, or to
ignore stimuli
• Selective comprehension/distortion: comprehending
stimuli in a way that fits our pre-conceptions
• Selective retention: limiting the stimuli we retain in our
memory
Selective Comprehension

Selective Retention
THE CONSUMER
DECISION MAKING PROCESS
The Consumer Decision Making
Process

• Evaluation of Alternatives
• Evaluative Criteria
• Ways to compare the alternatives

• Determinant Attributes
• Aspects on which the alternatives clearly differ

• Decision Criteria
• Decision rules
The Consumer Decision Making
Process

• The Purchase Decision


• What to purchase

• Where, when and how to pay

• Decision is not the same as actual purchase


The Consumer Decision Making
Process

• Post Purchase Evaluation


• Cognitive Dissonance: post-purchase anxiety

• Evaluation of satisfaction: did reality meet or exceed


expectations?
An impor tant psychological factor :
Involvement

• Involvement: the degree of importance and consumer


interest
WHAT HAPPENS WHEN
INVOLVEMENT IS LOW?

• Routine buying behaviour


• Very Low involvement
• Problem recognition – purchase
• Buy what we bought before
• Little time and effort
• Examples:
WHAT HAPPENS WHEN
INVOLVEMENT IS LOW?

• Routine buying behaviour


• Very Low involvement
• Problem recognition – purchase
• Buy what we bought before
• Little time and effort
• Examples:
WHAT HAPPENS WHEN
INVOLVEMENT IS MODERATE?

• Limited Problem Solving


• Moderate involvement
• Unwilling or unable to spend more than limited time and effort
• Willing to compare a few alternatives
• Use shortcuts or recommendations
• Examples
WHAT HAPPENS WHEN
INVOLVEMENT IS MODERATE?

• Limited Problem Solving


• Moderate involvement
• Unwilling or unable to spend more than limited time and effort
• Willing to compare a few alternatives
• Use shortcuts or recommendations
• Examples:
TYPES OF BUYING BEHAVIOUR

• Extended Problem Solving


• Medium to High involvement
• Willing to spend time and effort
• Careful search and evaluation of information
• Examples:
TYPES OF BUYING BEHAVIOUR

• Extended Problem Solving


• Medium to High involvement
• Willing to spend time and effort
• Careful search and evaluation of information
• Undertake all 5 stages of decision process
• Examples:
C O M PA R I S O N O F P RO B L E M - S O LV I N G VA R I AT I O N S