Consumer

Market &
Buying
behavior
Arif Ahmed
Assistant Professor,
DOP, USTC
Customer Market Types
• Consumer Markets: Consumers who purchase goods and services for
personal use
• Business markets: buy goods and services for further processing or use in
their production processes. The industrial market consists of organizations
and the people who work for them, those who buy products or services for
use in their own businesses or to make other products
• Reseller markets: buy goods & services to sell at profit. All intermediaries
that buy finished or semi-finished products and resell them for profit are
part of the reseller market.
• Government Markets: Buy for public services. A market where the main
buyers are federal, state, and local governmental organizations. They
purchase goods or services from private businesses
• International markets or institutional markets: selling and buying from other
countries or to profit and nonprofit institutions
 Types of consumer market
 Consumer market refers to the market where people purchase
products/services for consumption and are not meant for further
sale. This market is dominated by the products which consumers
use in their daily life.
• B2C( Business to Consumer):
• The company or business sells products or services directly to the
customers. E.g.: Amazon where the vendors sell their products to
the customers.
• C2B(Consumer to Business):
• The business transaction which takes place between consumer
and business (i.,e) the customer offers products or services to the
businesses.
• The example includes when the customer provides product
reviews or comments or if he/she becomes an influencers of that
business.
 Types of Business market
• C2C(Consumer To Consumer):
• Here the business transaction will play
between two or more customers.
• A good example of C2C is classified
advertisements where the customer
sells products or services to other
customers online.
 Types of Business market
• B2B( Business to Business):
• It is the first ecommerce business type where the ecommerce
transactions happen between two businesses that are too online.
• In simple, one company will sell products or services to other
companies. (i.e.,) wholesale distributors will sell products or services
to retailers. It will sound like B2C, but B2B is different from the B2C
process.
• In the B2B business, the order and purchase process are to be clear.
• One company has to purchase every small thing from another
company to complete its full business set up.
• Normally this field includes the selling of goods that are not used by
customers. For instance, steel, company software, company’s
hardware accessories, etc.,
 Types of Business market
• B2B2C: Fusion of B2b and B2C. B2B2C stands for business to business to consumer.
• Manufacturer + Distributor + B2C Customer B2C
• Ex: Ali Express,
Evaly, B2b B2C
Samsung showroom

Manufacturer, Retailer: Small

Samsung showroom, Evaly
Examples of B2B and B2B2C Market
Comparison between Consumer market vs
Business market
 Consumer Market
• A consumer market is the very system that allows us to purchase products, goods,
and services.

• These items can be used for personal use or shared with others.

• In a consumer market, you make your own decisions about how you will spend
money and use the products you purchase.

• In this market, businesses or producers sell their products or services directly to the
final consumers.
The more people who go out and actively purchase products, the more active the
consumer market.
 Consumer Market
• Primarily there are four types of consumer markets :
• Food and beverages products
• Retail products and Consumer products
• Transportation products

• Marketing plays an important role in consumer markets by influencing

customer’s preferences and purchasing decisions .
• US is one of the biggest consumer markets in the world comprising of
325 million people, and their total contribution to the country’s GDP is
approximately 20 trillion US dollars.
• Brand loyalty of consumer plays a significant role in consumer
markets.
• Examples of these markets include clothing stores, grocery stores,
franchises and car dealerships.
Types of consumer products
• Consumer goods, also know as final goods, are those that
are consumed by the customer and are not used to make
other goods.
• There are 3 main types of consumer goods.
• Durable goods (that last longer then 3 years). For example,
fridges, microwaves, and motor vehicles are all durable
consumer goods
• Nondurable goods (that last less than 3 years). Medicine,
drink, and cigarettes are all non-durable
• Pure services (that are consumed instantly). For example:
Food, instant drinks.
• There are 4 main types of consumer goods. They are
convenience goods, speciality goods, shopping goods,
and unsought goods
 Types of consumer products
1. Convenience Products: The term ‘convenient’ means involving
little trouble or effort. So convenience products refers to those that
require little trouble or effort to purchase.
• Frequently purchased
• Easily available
• Relatively low price
• Non-durable
For example: grocery products, daily medicines, foods
• 2. Shopping Products: they are brought less frequently and
are not so easily available. Consumers take more time to
decide on what to buy and take a more deliberate effort
before making a decision. furniture, clothing, video games,
mobile phones, fridges, and other white goods
• Infrequently purchased
• Not so easily available
• Compared to other similar goods
• Greater opportunity cost
• Durable
3. Specialty Products: They have unique characteristics like
being rare, or being an original design, so are largely
incomparable to other products. For example, speciality
products include: sports cars, rare paintings, high-spec
laptops, rare ornaments, or designer clothing.
• Infrequently purchased
• Rare
• Expensive
• Durable
• 4. Unsought Products:
• Unsought products can range from new innovations to old
goods. They are simply goods that consumers do not know
about or would think to buy. Equally, they are not necessarily
goods that the consumer would want to buy.
• Unsought products often offer no direct benefit at the time of
purchase. For example, insurance is an unsought good.
• They are undesirable
• Consumers may lack of knowledge
• Infrequent purchase
• Usually purchase to prevent negative outcome
 Characteristics of consumer markets
• Demographic characteristics-
• This is the foundation for understanding consumers and include ethnicity, age,
income, gender, occupation, religion, nationality, social class, education and
social class.

• Behavioristic characteristics-
• Behavioralistic characteristic requires a lot of marketing research to find out the
product and brand loyalty level of consumers.

• How people react towards certain offers; when company offers them certain
benefits and packages. The number of times people visit the market, stores, or the
mall for the same product. It tells us the loyalty of the people towards the product
and brand. These include consumer interests in a product such as how they intend
to use it.
 Characteristics of consumer markets
• Psychographic characteristics-
• Psychographic characteristics mean values, interests, opinions, attitudes, and
activities of the consumers.

• This entails the kind of lifestyle the customer lives, their interest, opinions and
attitudes as well as personal values.

• Geographic characteristics-
• This is information regarding where the consumer lives. It includes the climate,
religion or how densely populated the geographical area is.

• For instance, a small-time seller can’t survive in a big competitive market; he

should look for the market where big companies have no interest in. There he
would have an opportunity to excel.

• In cold regions, you can’t sell summer clothes, because people won’t buy it.
The point of the matter is people living in different parts of the world have
different needs, requirements, tastes, and interests.
 Consumer Buying Process
• According to Philip Kotler, the typical buying process involves
five stages the consumer passes through described as under:
 1. Problem Identification:
• This step is also known as recognizing of unmet need.
• The need is a source or force of buying behaviour. Buying
problem arises only when there is unmet need or problem is
recognized. Need or problem impels an individual to act or to
buy the product.
• Buyer senses a difference between his actual state (physical
and mental) and a desired state. The need can be triggered
by internal or external stimuli.
• Internal stimuli include basic or normal needs – hunger, thirst,
sex, or comfort; while external stimuli include external forces,
for instance, when an individual watch a new brand car, he
desires to buy it.
 2. Information Search:
• Mostly, the consumer can try one or more of following sources of information:
• i. Personal Sources:
• They may include family members, friends, package, colleagues, and
relatives.
• ii. Commercial Sources:
• Advertising, salesmen, dealers, package, trade show, display, and exhibition
are dominant commercial sources.
• iii. Public Sources:
• Mass media (radio, TV, newspapers, magazines, cinema, etc.), consumer-
rating agencies, etc., are main public sources.
• iv. Experimental Sources:
• They include handling, examining, testing, or using the product. Selection of
sources depends upon personal characteristics, types of products, and
capacity and reliability of sources.
3. Evaluation of Alternatives:
• Following criteria are considered while evaluating alternatives:
• i. Benefits offered by the brands
• ii. Qualities, features or attributes, and performance
• iii. Price changed by various brands
• iv. History of brands
• v. Popularity, image or reputation of brands
• vi. Product-related services offered by the brands, such as after-
sales services, warrantee, and free installation
• vii. Availability of brands and dealer rating.
 4. Purchase Decision:
• This is the stage when the consumer prefers one, the most promising band, out
of several brands.
• The brand that offers maximum benefits or satisfaction is preferred.
• Simply, the most attractive brand, that can offer more benefits in relation to
price paid, is selected by comparing one brand with others. Comparison shows
superiority/inferiority of the brands.
• Three factors further affect whether buying intension result into actual
purchase.
• The first factor is attitudes of others toward the consumer’s preferred brand, and
consumer’s degree of compliance with other persons’ wishes.
• The second factor is unanticipated situational factors. Purchase intension may
change due to certain unanticipated situational factors like price hike, loss of
job, family income, major medical expenses, non-availability of the preferred
brand, or such similar factors.
• The third and the last factor is consumer’s perceived risk. Degree of risk depends
on price, attribute uncertainty, entry of a new superior product, and his self-
confidence.
 5. Post-purchase Decisions:
• Consumer buys the product with certain expectations. Though he decides
very systematically, there is no guarantee of a complete satisfaction. There
is always possibility of variation between the expected level of satisfaction
and the actual satisfaction
• Dissatisfaction can be reduced by:
• 1. Congratulating consumers for the right choice to justify their decision
• 2. Sending booklet to guide for effective use of the product
• 3. Inviting suggestions from consumers
• 4. Managing complaints by effective counseling and after-sales services
• 5. Informing about changes made in the product
• 6. Exchanging or returning amount, etc.
• 7. Marketer should also monitor how the consumers use and dispose the
product.
Factors Affecting Consumer buying
behavior
• Kotler and Armstrong (2008) classify these as:
1. Psychological (motivation, perception, learning, beliefs and
attitudes)
2. Personal (age and life-cycle stage, occupation, economic
circumstances, lifestyle, personality and self concept)
3. Social (reference groups, family, roles and status)
4. Cultural (culture, subculture, social class system).
 Maslow Need Hierarchy
• Abraham Harold Maslow was an American psychologist who
was best known for creating Maslow's hierarchy of needs
 Maslow Need Hierarchy
• SELF-ACTUALIZATION: Google employees to spend 20% of their
time pursuing innovative ideas about which they are
passionate—resulting in products and applications like
Google News, Google Alerts and Google Maps Street View.

• SELF ESTEEM: Incepta gives employees “permission” to go the

extra mile to make customers happy, empowering them to do
whatever is necessary to meet that vision.

• BELONGING: Square’s Corporate Social Responsibility team

unites Square’s employees, talent and non-profit partners to
make a difference on social issues, connected to their
industry, and their communities. Employees are inspired from
their top-down leadership to educate, take action and help
make the world a better place.

• SAFETY: CEO of Facebook, is meeting with entry-level

employees regularly. Rather than slotting people into roles
based on age and experience, Facebook values everyone's
ideas in clear and distinct ways.

• PHYSIOLOGICAL: Google has bicycles and electric cars to get

staff to meetings, gaming centers, organic gardens, and eco-
friendly furnishings. The company wants to make its
employees' lives more comfortable.
Organizational buying behavior
 Business market (b2b)
• Business markets refer to organizations, businesses or
entities that acquire products and services for use in the
production of other services and products.

• These include goods that are supplied, sold or rented to

others.

• Among major players in business markets include

fisheries, agriculture, mining, transportation, construction,
mining, communication, finance, distribution and
insurance services.

• Daraz, Amazon, Amazon, Khatunganj, Chaktai business

community etc
 Characteristics of Business Market
• Presence of fewer but larger buyers- While the buyers may be few, they often buy
in large quantities
• Geographically concentrated customers- Customers in these markets are at vast
geographical locations
• Final customer demand-driven- Since production is tailored for the final consumer,
the products are tailored towards the final consumers’ wants and needs
• Quick fluctuation in demand- Since businesses prefer to buy sat the lowest prices,
an increase in prices decreases the products purchases since high price selling
products do not sell well in the market
• Professional purchasing units- Due to the need of maintaining a high level of
professionalism, the purchasing process is very detail-oriented.
• Has a formalized buying process- The purchasing process involves following the
organization’s protocol and the complete chain of command
Organizational buying or B2B marketing
or selling
• Organizational buying behavior refers to the process of
how companies or organizations buy goods and services.
• Companies and other organizations also need goods and
services to operate, run their businesses, and produce the
offerings they provide to one another and to consumers.
• These organizations, which include producers, resellers,
government and nonprofit groups, buy a huge variety of
products including equipment, raw materials, finished
goods, labor, and other services.
• Some organizations sell exclusively to other organizations
and never come into contact with consumer buyers.
 Problem recognition

Buying Process
• Problem recognition: The first stage of the business Need Description
buying process in which someone in the company
recognizes a problem or need that can be met Value analysis
by acquiring a good or a service
• General need description: At this stage of business Supplier search (BOQ)
buying process company describes the general
characteristics and quantity of a needed item. Proposal solicitation
(Suppliers bill negotiation)
• Value analysis: An approach to cost reduction, in
which components are studied carefully to
determine if they can be redesigned, Supplier selection
standardized or made by less costly methods of
production. Order routine specification
(Work order)
• Supplier search: At this stage of the business
buying process buyer tries to find the best Performance review (Work
vendors. done certificate, allocate
money)
Organizational Buying Process
• Proposal solicitation: The stage of the business buying process in
which the buyer invites qualified suppliers to submit proposals.
• Supplier Selection: The stage of the business buying process in
which the buyer reviews proposal & selects a supplier or
suppliers
• Order-routine specification: The stage of the business buying
process in which the buyer writes the final order with the chosen
supplier(s), listing the technical specifications, quantity needed,
expected time of delivery, return policies, & warranties.
• Performance review: The stage of the business buying process in
which the buyer rates its satisfaction with suppliers, deciding
whether to continue, modifies, or drops them
 Organizational Buying Process
Company A
publish BOQ
based on raised
problem

Company
B,C,D,E, F etc.
offer Quotation
based on BOQ

Initial rejection Negotiation

of E, & F between A&B;
company A&C; A&D

Written Work-
Verbal order between Work Final bill without Return
Rejection of C & Work-done
Agreement A&B including Initial Bill commencemen guarantee Guarantee
D Company certificate
between A&B price, time t money money
frame
 Organizational buying

• For anyone involved in B2B marketing or selling, it is important to

know:
• Who will take part in the buying process?
• What criteria does each person use to evaluate prospective
suppliers?
• What level of influence does each member of the process
have?
• What interpersonal, psychological, or other factors about the
decision team might influence this buying process?
• How well do the individuals work together as a group?
• Who makes the final decision to buy?
 Factor Determining Organizational Buying
Decision
Internal Factors Interpersonal Factors

•Objectives & Policies •Authority

•Procedure •Status
•Organizational Structure •Interest

Environmental Factors Personal Factors

•Economic Factors •Age

•Technological Factors •Education
•Political & Legal Factors •Job Position
•Social responsibilities Organizational •Personality & Risk Attitude
buying
decision
 Types of buying situation
• Common types of buying situations are
1. The straight rebuy:
• The organization reorders a good or service without any modifications.
• These transactions are usually routine and may handled entirely by the
purchasing department because the initial selection of the product and supplier
already took place.
2. The modified rebuy:
• The buyer wants to reorder a product but with some modification to the product
specifications, prices, or other aspects of the order.
• In this situation, a purchasing agent may be involved in negotiating the terms for
the new order, and several other participants who will use the product may
participate in the buying decision.
3. The new task:
• When an organization considers buying a product for the first time. The number
of participants and the amount of information sought tend to increase with the
cost and risks associated with the transaction.
• For marketers, the new task is the best opportunity for winning new business
because there is no need to displace another supplier
Characteristics of buying situation
Models of buying decision process
Problem recognition
Problem recognition
Need Description

Value analysis
Information Search

Supplier search (BOQ)

Evaluation of Alternatives Proposal solicitation

(Suppliers bill negotiation)

Supplier selection
Purchase
Order routine specification
(Work order)
Performance review (Work
Post-Purchase Evaluation
done certificate, allocate
 Vroom’s expectancy theory (1964)
• In organisational behavior study, expectancy theory is a motivation theory first
proposed by Victor Vroom of the Yale School of Management in 1964.
• The expectancy theory says that individuals have different sets of goals and can
be motivated if they have certain expectations.
 Vroom’s expectancy theory (1964)
1. Expectancy
• Expectancy is the belief that if you work hard (effort) you will be able to
hit the targets (performance) that have been set for you by your
manager.
• You make this judgment based on a number of factors, including:
• »Your past experience.
• »Your confidence in your ability.
• »How difficult you perceive the target is to achieve, and whether or not
the target is under your control.
• An example of expectancy is thinking, “If I work hard I can achieve the
targets my boss has set for me”.
Vroom’s expectancy theory (1964)
2. Instrumentality
• In this variable, you’re assessing how likely you are to receive a
reward if you hit the targets that have been set for you.
• Again, you make this judgment based on a number of factors,
including:
• »Is the relationship clear between performance and reward
(outcome).
• »How much you trust the person who decides on the reward.
• »How transparent is the decision-making process around who
gets what reward?
• An example of instrumentality is thinking, “If I achieve all of the
targets set for me then I believe I will get promoted”.
Vroom’s expectancy theory (1964)
3. Valence
• So far we have a goal to hit and we understand the reward
we’ll get if we hit it. The final piece of the motivation puzzle is
valence. Valence is simply the perceived value of the reward to
you.
• This could be negative if you actively want to avoid the reward,
zero if you are unmotivated by the reward, or one if you’re
motivated by the reward.
• When it comes to valency, an employee will have to weigh up
the pros and cons, for example, “Do I want to be promoted?
Will the extra work result in even less time with my family? Is it
really worth putting in a serious effort for a whole year to receive
a promotion and a 10% pay rise?"
 Vroom’s expectancy theory (1964)

• Scenario:
• You’re the new manager of a small team with a history of
underachievement. You’re looking to get to the root cause
of this underperformance and start the team off in the right
direction under your management.
 Action
• After speaking with individual members of your team, and the team as a
whole, you realize that your team is suffering from very low morale.
• Primarily this is because they feel their targets are unrealistic, but also
because they feel that if they do work really hard to achieve something it
is the company that benefits, and not them. The team also has low trust in
management.
• This is a tricky situation to address, and one that can’t be remedied
overnight. You decide that some quick wins might be a way to begin to
turn things around and start to build your teams trust in you.
• To this end, you set targets to be hit each week. If the target is hit then
there is an immediate reward for the team – they are each given some
extra spending money for the weekend. If the target isn’t hit they don’t
get the reward.
• Using short-term rewards related to your teams performance you:
• »Keep the team focused on their performance..
• »Build your team’s trust in you by sticking to your word.