Consumer and Business

buying behaviour
 consumer markets, are including those individuals
and households who buy and consume goods and
services for their own personal use. They are not
interested in reselling the product or setting
themselves up as a manufacturer.
 Marketers need to understand who their customers.

Once they know who their customers are, they also

need to know as much as possible about how those
customers behave.
What is a consumer behavior?
What factors affect consumers

buy behavior?
 Consumer buying behavior
 Consumer buying behavior refers to the buying
behavior of final consumers
 Consumers make many buying decisions every day.
 Most large companies research consumer buying

decisions in great detail to answer questions about

what consumers buy, where they buy, how and
how much they buy, when they buy, and why they
buy.
 But learning about the whys of consumer buying

behavior is not so easy—the answers are often locked

deep within the consumer's head.
 Consumer purchases are influenced strongly by cultural,
social, personal, and psychological characteristics, as
shown in Figure For the most part, marketers cannot
control such factors, but they must take them into account.
 Consumer behavior is influenced by the buyer's
characteristics and by the buyer's decision process.
 Buyer characteristics include four major factors, factors can
influence the Buying decision of the buyer:
A. Cultural
B. Social
C. Personal
D. Psychological
A. Cultural
 Culture
 Sub-culture
 Social classes
B. Social
 Reference groups
 Family
 Role and status
C. Personal
 Age and life cycle stage
 Family life cycle
 Occupation
 Economic situation
 Lifestyle
 Personality and self-concept
D. Psychological
 Motivation
 Perception
 Learning
 Attitude
 Cultural Factors
 These factors exert the broadest and deepest influence

on consumer behavior which further includes culture,

sub-culture and social classes.
 Culture: it is the most basic cause of the person’s wants

and behavior.
 The society in which we grew up and the accepted

believes, values, habits and attitudes are time honored.

Failure to adjust to these differences can result in
ineffective marketing or embarrassing mistake.
 Culture is a complex set of intangibles (attitude, belief,

values, and language) or tangibles (housing, the works

of art) created by a given society.
 Sub-culture: sub-cultures are groups that exhibit
behavior patterns sufficient to distinguish them from
other groups within the same culture. These patterns
are based on factors such as race, religion, and urban-
rural identification.
 Social classes: these are society’s relatively
permanent and ordered divisions whose members
share similar values, interests, income, wealth,
education level and behavior.
B. Social Factors
 A consumer’s behavior also is influenced by social

factors, such as group, family, and social roles and status.

 Groups :-Two or more people who interact to

accomplish individual or mutual goals.

 a person’s behavior is influenced by many smaller

groups. Group that have a direct influence and to which a

person belongs are called membership groups.
 People often are influenced by reference groups to which

they do not belong. A reference group is made up of

people who influence one’s attitudes, and behaviors.
 Reference groups are important to marketing because they
influence our buying habits in a number of ways
including:
1) the desire to confirm to the groups’ norms and fit in fully.
2) The transfer of new ideas and habits.
• Thus, marketers should figure out how to reach the
opinion leaders in the relevant reference groups.
 Opinion leaders are people within the reference group

because of their special skills, knowledge, personality or

other characteristics exert much influence on other
members.
 Many marketers try to identify opinion leaders for their

products and direct marketing efforts toward them.

Family: it is a group of two or more people related by
blood, marriage or adoption living together.
 Family is the most important consumer buying

organization in society and it has been researched

extensively.
 Marketers are interested in the roles and influences

of the husband, wife, and children on the purchase

of different products. It is important to establish
exactly who is making the final decision of what to
buy.
 Role and status: a person may belong to many
groups, family, clubs, or other organizations. The
person’s position in each group can be defined in
terms of both role and status.
 A role consists of the activities people are expected

to perform according to the persons around them.

Each role carries a status- the general esteem given to
it by the society.
 People often buy products that show their status in

society.
 A buyers decision also are influenced by personal characteristics
such as the buyers age and life-cycle stage, occupation, economic
situation, life style, and personality and self concept.
 Age and life cycle stage: people change the goods and services they
buy over their life time.
 Buying is also shaped by family life cycle- the stages through which
families might pass as they mature over time.
 Occupation: a person’s occupation affects his/her buying decision.
Blue collar workers tend to buy more rugged work clothes whereas
executives buy more business suits.
 Economic situation: marketers of income sensitive goods watch
trends in personal income.
• Lifestyle: it is a summary of how we live. It embraces our activities,
interests, opinions, and aspirations.
• (work, hobbies, shopping, sports, social events), interests (food,
fashion, family, recreation), and opinions (about themselves, social
issues, business, products).
 Personality and self-concept:
• Personality combines a set of physical and mental
characteristics that reflect how a person looks, thinks,
acts, and feels.
• Personality is usually described in terms of general
traits such as self-confidence, dominance, sociability,
agreeableness etc.
• Self-concept refers to the way you see yourself. Also
it is the picture you think others have of you.
• self-esteem and self-efficacy.
 Self-esteem is a belief about one’s own worth
based on an overall self-evaluation.
 Self-efficacy : An individual's beliefs and
expectancies about his or her ability to accomplish
a specific task effectively.
 Studies of purchases show that people generally

prefer products and brands that are compatible with

their self-concept and personality.
 D. Psychological Factors
 A person's buying choices are further influenced by four

major psychological factors: motivation, perception,

learning, and beliefs and attitudes.
I. Motivation
 A person has many needs at any given time. Some are

biological, arising from states of tension such as hunger,

thirst, or discomfort. Others are psychological, arising
from the need for recognition, esteem, or belonging
 A need becomes a motive when it is aroused to a sufficient

level of intensity. A motive (or drive) is a need that is

sufficiently pressing to direct the person to seek
satisfaction.
ii. Perception: a motivated person is ready to act. How
the person acts is influenced by his/her perception of
the situation.
 People can form different perceptions of the same

stimulus because of three perceptual processes

 (1) selective attention
 (2) selective distortion and
 (3) selective retention.
• Selective attention is the tendency of people to screen out
most of the information to which they are exposed. People are
exposed to a great amount of stimuli every day but it is
impossible to them to pay equal attention to all stimuli. In
selective attention marketers have to work especially hard to
attract the consumers’ attention.
• Selective distortion is the tendency of people to interpret
information in a way that will support what they already
believe. For example, if the society distrusts a company, it
might perceive even honest advertisements from the company
as questionable. In selective distortion, marketers must try to
understand the mind sets of consumers and how they will
affect interpretations.
• Selective retention is the tendency of people to retain
information that supports their attitudes. Consumers are likely
to remember good points made about a brand they favor and to
forget good points made about competing brands.
iii. Learning: a relatively permanent change in an
individual’s behavior arising from experience.
iv. A belief is a descriptive thought that a person has
about something. Marketers are interested in the
belief that people formulate about specific products
because these believes makeup product and brand
images that affect buying behavior.
v. Attitude: attitude describes a person’s relatively
consistent evaluations, feelings, and tendencies
toward an object or idea. It put people into a frame
of mind of liking or disliking things or moving
toward or away from them.
Types of Buying Decision
Behavior
 Buying behavior differs greatly for different products.
More complex decisions usually involve more buying
participants and more buyer deliberation.
Complex Buying Behavior
 consumers go through complex buying behavior

when they perceive significant brand differences and

if products are expensive, highly self-expressive,
risky and purchased infrequently.
 Because of these factors, there is high involvement of

consumers in the decision process.

 Marketers need to help buyers learn about product

class attributes and their relative importance.

 Dissonance Reducing Buying Behavior
• The situations observed in the complex buying behavior
also appear in this type of buying behavior with the
exception of insignificant difference among different
brands. Hence, buyers may shop around to learn what is
available but buy relatively quickly.
• They may respond primarily to a good price or
convenience.
• After purchase, buyers might experience
dissonance/discomfort when they notice certain
disadvantages of the purchased product or hear favorable
things about brands not purchased.
• To relieve consumers from this dissonance, marketers’
after sales communication should provide evidence and
support to help consumers feel about the purchased
brand.
 Habitual Buying Behavior- low involvement of
consumers
 In habitual buying behavior, consumes’ low
involvement and little brand differences exist.
Consumers simply go to the store and reach for a
brand especially for low cost and frequently purchased
products.
 Consumers passively read magazines and watch TV to
receive information. buyers are not highly committed
to any brand. In advertisement marketers need to use
imagery advertisements and visual symbols because
they can be remembered easily and associated with the
brand. TV is more effective than print media.
Variety Seeking Buying Behavior- low
involvement of consumers
 Consumers choose the brand without much

evaluation, or the evaluation of the product is

during consumption. The next time buyers seek
another brand not because of dissatisfaction but
simply to try something different.
 3.1.4. The Consumers' Buying Process
 The buying process starts long before actual purchase

and continues long after purchase. Marketers need to

focus on the entire buying process. For most
purchases buyers pass through five stages. But in
some routine purchases consumers often skip or
reverse some of these stages.
1. Need Recognition/Problem Identification
 It is the first stage in which the buyer recognizes a

problem. The need can be triggered or activated by

internal stimuli (hungry and thirsty) or external
stimuli (advertising).
2. Information Search
 This is a stage in which the consumer is triggered to

search for information. If the buyer’s need is strong

they undertake an information search. The
information may be obtained from:
 Personal sources e.g. family, friends, acquaintances
 Commercial sources e.g. advertising, sales people,

dealers, packages
 Public sources e.g. mass media, consumer rating

organization
 Experimental sources e.g. handling, examining or

using the product

3.Evaluation of Alternatives
• Buyers use the information they fetched from various
sources to evaluate alternative brands in the choice set
and they rank brands according to some specifications.
For example, may consider attributes like warranty,
operating cost, style and price.
4.Purchase Decision
• It is actually buying the product. Generally the
consumers’ purchase decision will be to buy the most
preferred brand.
5. Post Purchase Decision
• Buyers take further actions after purchase based on
previous satisfaction level. The marketers’ job does not
end when the product is bought. Buyers base their
expectation on the information they receive. To this end,
sellers should promise what their brands can meet.
 Discussion point!!
• What is Business Buyer Behavior?
• What factors affecting Business

Buyer Behavior?
3.Business buyer behavior
Business buyer behavior refers to the buying behavior of
the organization that buys goods and services for use in
production of other products and services that are sold to
others.
Organizational buying behavior refers to the process of
how companies or organizations buy goods and services.
30
3.1A model of business buyer behavior
A Model of Business Buyer Behavior
 In this model, marketing and other stimuli affect the buying
organization and produce certain buyer responses.

 As with consumer buying, the marketing stimuli for business

buying consist of the four Ps: product, price, place, and
promotion.

 Other stimuli include major forces in the environment:

economic, technological, political, cultural, and competitive.

 These stimuli enter the organization and are turned into buyer
responses: product or service choice; supplier choice; order
quantities; and delivery, service, and payment terms.
 Within the organization, buying activity consists of two major
parts:
a) The buying center, made up of all the people involved in the
buying decision, and
b) The buying decision process.

 The model shows that the buying center and the buying
decision process are influenced by
i. internal organization

ii. interpersonal

iii. individual and

iv. external environmental factors.

3.2. Types of Buying Situations
There are three major types of buying situations
 Straight re-buy

 Modified re-buy

 New task

1. Straight Re-buy
 In this buying situation, the buyer reorders something without

any modifications; or A business buying situation in which the

buyer routinely reorders something without any modification
 it is usually handled on a routine basis by the purchasing firm

based on past buying satisfaction.

 Previous purchases are simply reordered to replace depleted

inventory.
 Alternative products or suppliers are not typically considered or

evaluated
 The Straight re-buy process is used to purchase inexpensive, low

risk products, frequently and relatively with minimum

comparison purchased products .
 2. Modified Re-buy
 A business buying situation in which the buyer wants to
modify product specifications, prices, terms or suppliers.
 Modified Re buy processes are used when the purchase
situation is less complex than new-task buying and more
involved than a straight re buy.

 Some information is required to reach decisions and a

limited number of alternatives may be evaluated.

 In-suppliers may become nervous and feel pressured to put

their best to protect an account. Out-suppliers may see this
as an opportunity to make a better offer and gain new
business.
 3. New Task Buying
 A business buying situation in which the buyer purchases a
product or service for the first time and most complex .
 The task requires greater effort in gathering information and
evaluating alternatives. More people are involved in the
decision-making process
 New-task buying processes are most frequently employed in
the purchase of high-cost products that the firm has not had
previous experience with.
 In the new-task situation, the buyer must decide on product
specifications, suppliers, price limits, payment terms, order
quantities, delivery times, and service terms. and different
decision participants influence each choice.
3.3 Participants in the industrial buying
process

The decision making unit of the buying organization is called

its buying center- all the individuals and groups that
participate in the business buying decision making process.
This group includes,
 the actual users of the product or service
 those who make the buying decision,
 those who influence the buying decision,

 those who do the actual buying, and

 those who control buying information.

 1 Users
Members of the buying

OPTION
organization who will actually use
the purchased product or service.

People in an organizations buying

2Influencers
center who effect the buying

OPTION
Participants in the decision; they often help define
specifications and also provide
business buying information for evaluating
process alternatives .
People in an organizations
3

OPTION
partici Buyers buying center who make
an actual purchase .
pants
People in an organization
4
OPTION
Deciders
buying center who have
formal or informal power to
select of approve the final
suppliers

5 Gatekee
People in an organizations
OPTION

buying center who control the

pers
flow of information to other.
include purchasing agents,
personal secretaries, technical
personnel
 3.4 Industrial buying process
Stage1. Anticipation or recognition of a need/problem
 someone in the company recognizes a problem or need that

can be met by acquiring a good or a service.

 Problem recognition can result from internal or external

stimuli.
 Internally, the company may decide to launch a new product

that requires new production equipment and materials. Or a

machine may break down and need new parts. Perhaps a
purchasing manager is unhappy with a current supplier’s
product quality, service, or prices.
 Externally, the buyer may get some new ideas at a trade

show, see an ad, or receive a call from a salesperson who

offers a better product or a lower price.
Stage2. General Need Description

 The stage in the business buying process in which the

company describes the general characteristics and quantity
of a needed item.
 For standard items, this process presents few problems. For
complex items, however, the buyer may need to work with
others—engineers, users, consultants— to define the item.
 The team may want to rank the importance of reliability,
durability, price, and other attributes desired in the item. In
this phase, the alert business marketer can help the buyers
define their needs and provide information about the value of
different product characteristics.
Stage3. Product specification
 The buying organization next develops the item’s technical
product specifications, often with the help of a value
analysis engineering team.
 Product value analysis is an approach to cost reduction in
which components are studied carefully to determine if they
can be redesigned, standardized, or made by less costly
methods of production.
 The team decides on the best product characteristics and
specifies them accordingly.
Stage 4.Supplier search

 Supplier search is the stage of the business buying process

in which the buyer tries to find the best vendors.
 The buyer can compile a small list of qualified suppliers by
reviewing trade directories, doing computer searches, or
phoning other companies for recommendations.
 Today, more and more companies are turning to the Internet
to find suppliers.
Stage 5: Proposal Solicitation

 The stage of the business buying process in which the buyer

invites qualified suppliers to submit proposals.
 In response, some suppliers will send only a catalog or a
salesperson.
 However, when the item is complex or expensive, the buyer
will require a detailed written proposal from each qualified
supplier.
 After evaluating the proposals, the buyer will invite a few
suppliers to make formal presentations.
 Business marketers must thus be skilled in researching,
writing, and presenting proposals.
Stage 6. Supplier Selection
 Supplier Selection is the stage of the business buying process

in which the buyer reviews proposals and selects a supplier

or suppliers.
 During supplier selection, the buying center often will draw

up a list of the desired supplier attributes and their relative

importance.
 Such attributes include product and service quality,

reputation, on-time delivery, ethical corporate behavior, honest

communication, and competitive prices.

 The members of the buying center will rate suppliers against

these attributes and identify the best suppliers.
ATTRIBUTE/ WEIGHT/ SUPPLIER’S SUPPLIER’S
FACTOR IMPORTANCE PERFORMANCE RATING
SCORE

PRICE 15 0.5 07.5

QUALITY 30 0.7 21.0

DELIVERY 25 0.6 15.0

SERVICE 20 0.7 14.0

FLEXIBILIY 10 0.4 04.0

TOTAL 100 61.5

 Stage7. 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, and warranties.
 In the case of maintenance, repair, and operating items,
buyers may use blanket contracts rather than periodic
purchase orders.
 A blanket contract creates a long-term relationship in which
the supplier promises to resupply the buyer as needed at
agreed prices for a set time period.
Stage8. Performance Evaluation and Feedback

 In the final stage of the buying process, the buyer

periodically reviews the performance of the chosen
supplier(s).
 The buyer may contact users and ask them to rate their
satisfaction.
 The performance review may lead the buyer to continue,
modify, or drop the arrangement. The seller’s job is to
monitor the same factors used by the buyer to make sure
that the seller is giving the expected satisfaction
 BUYPHASES/process Buying situations

New Task Modified Straight

Rebuy Rebuy
1. Problem Recognition Yes May Be/yes No/yes

2. Characteristics of Product Yes May Be No

3. Product Specification Yes May Be No

4. Supplier Search Yes Yes No

5. Analyzing Supplier Offers Yes Yes May Be

6. Supplier Selection Yes Yes No

7. Order – Routine Selection Yes Yes May Be

8. Post Purchase Review Yes Yes Yes

48
Two well know additional
model on factors that
affects business buyers
buying decision!!
 Environmental Variables
! Physical, Technological
! Economic, Cultural
! Political and Legal
! Labour unions
! Customer demands
! Competitive practices
! Supplier information

Organisation Variables
! Objectives and goals
! Organisation Structure
! Purchasing Policies /
Procedures
! Evaluation & reward systems
! Degree of decentralisation
Organisation Buying Decisions
Buying Centre
! Authority,
Variables Size ! Choice of Suppliers
! Key influencers ! Delay decision & get more information
! Interpersonal relationship ! Make, Lease or buy
! Communication ! Do not buy

50
 Jagdish N. Sheth Model of Industrial Buyer Behavior
In 1973, Professor Jagdish N Sheth developed the Sheth model of
Organizational Buying.
This model manly emphasis on joint decision making by two or
more individuals and psychological aspects of the decision making
individuals in the industrial buying behavior.
It includes three components and situational factors which
determine a choice of a brand or supplier in the buying decision
making process in a organization .
While the model appears complicated, it is quite useful for
examining organizational buying behavior from the perspective of:
1.The conditions that precipitate joint decision making,
2.The psychological world of the individuals involved, and
3.The inevitable conflict among those involved in the decision
process and resolution of this conflict.