Prepared by: Pramish Shakya Gurukul CA

CHAPTER-6 BUYER BEHAVIOR ANALYSIS

Coverage:
1. Meaning of buyer behavior
2. Importance of buyer behavior
3. Stages of consumer buying process
4. Factors affecting consumer buying process
 Economic factors
 Personal factors (Demographic factors)
 Psychological factors
 Socio-cultural factors
5. Features of organizational buying behavior
6. Factors affecting organizational buying behavior
 Environmental factors
 Organizational factors
 Interpersonal factors
 Personal factors
7. Exam questions

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Introduction
Every marketer must understand their customers in order to conduct a successful marketing
campaign. Every customer is unique with unique taste, preference, need, preferred place and
purchase motive. Therefore it is very important for every marketer to know what their customers
buy, where do they buy, why do they buy and how do they buy. With this knowledge about their
customers, the marketer can plan their marketing strategy. The marketers should be well
acquainted with their customer’s behavior regarding their purchasing decision, process and
preferences. With this knowledge, they can prepare a fine tuned marketing mix that complies
with their consumer’s purchase behavior.

Meaning of buyer behavior

Buyer behavior is the study of individual or group of customers’ behavior shown during the
purchase process. It studies and analyzes how an individual customer or group of customers
search, sort and select their preferred product. This is the study of psychology of customers
regarding where, how, when and why do customers make the purchase. Customers show
different physical and psychological activities while purchasing the product. Buyer behavior
observes them and creates a marketing strategy that suits their purchasing needs.

According to Philip Kotler,”buying behavior is the decision processes and acts of customers
involved in buying and using products.”
Consumers are driven by different factors while choosing and purchasing the product. The
factors are:

 Stimuli: The acting force that generates the need for the product or service in consumer’s
mind. This drives the consumers to actually purchasing and consuming the product.
 Influences: They drive the consumer to choosing the particular product. The influences
can arise from the buyer’s personality, psychological state, socio-cultural factors and the
buyer’s decision process.
 Buyer’s response: They motivate the buyer to a particular product through its product,
brand, channel choice, purchase timing and purchase amount.
 Post purchase feedback: This provides the crucial information regarding how the
consumers dispose our product and how do they review our product regarding their
satisfaction level.

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Importance of Buyer behavior

Understanding buyer behavior is crucial and strategically important to any marketer. The
importance has been highlighted below:

1. Customer need satisfaction

The ultimate goal of any marketer is to satisfy their customer’s need. To understand what
actually satisfies the customers most, one must have clear idea about how the consumer behaves
regarding selecting and purchasing the product. How the buyer behaves while consuming the
product gives the clear idea about how the customers can be satisfied

2. Marketing mix development

Understanding buyer behavior answers some crucial answers to how, where, when and why do
customers make the purchase. This understanding allows the marketers to blend a perfect
marketing mix that totally matches the need of the customers.

3. New market opportunities

Marketers need to expand their market and move to new market opportunities. The study of
buyer behavior allows the marketers to design the perfect product supported by other marketing
mix variables for the new market. The knowledge of buyer behavior in new markets allows the
marketers to grab new opportunities.

4. . Target market selection

Every marketer segments the market into different categories according to the homogeneity in
their consumption pattern and consumption behavior. With the knowledge of buyer behavior,
marketers can select the perfect market where they can succeed. This also allows the marketers
to better satisfy their customers.

5. Product positioning
With the knowledge of how, where, when and why do consumers purchase the product,
marketers can position their product exactly as the customers would have wanted. So
understanding buyer behavior allows the marketers to better position their product so that they
can impact into the consumer’s preference.

6. Efficient resources use

Understanding buyer behavior allows the marketers to create perfect marketing mix, position
their product perfectly and hit the best target market. This insures the efficient use of the
resources and minimizes the unnecessary use of resources.

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Stages of consumer buying process

Every consumer follows a typical process to purchase the product. This behavior plays a vital
role on which products will the consumer buy, where will the consumer buy and how will the
consumer buy. Every marketer must understand this behavior in order to make sure that the
consumer chooses their product at their selling point. However, consumers do not show the same
buying pattern for all the products they purchase. They show different buying pattern for
different products that satisfy their different needs. The products can be classified into three
different categories according to the behavior they show. They are:

1. Low involvement products

These are the products which the consumer buys frequently. The consumers are well familiar
with the product and they do not spend much time while purchasing these products. They are
usually perishable products with very short life and utility.

2. High involvement products

These products are higher in price and are bought less frequently. Consumers show complex
buying behavior and take long decision making process. They go through extensive information
collection, review and opinions from experts to buy such products. They are expensive and the
decision making process depends upon the price of the product. Consumers show more concern
and show more involvement while purchasing such products.

Stages of consumer buying process

Though there is no hard and fast rule that consumers must go through these steps, but generally
consumers follow following five stages while making the purchase.

1. Need recognition
Every purchase decision starts from the need or problem that has to be satisfied and solved. The
need can get generated form a situation or the consumer may get stimulated towards certain
need. However every purchase decision starts with the identification of need.

2. Information search
After identifying the need, the consumers now starts to search for the products that can satisfy
their needs. The search can be for a particular product or the product from the alternatives of
available brands and products. The consumer searches for information regarding the product that
can best satisfy the need.

3. Evaluation of alternatives
After obtaining the information about the available products and their specifications and reviews,
the customer now evaluate each alternative to figure out the best suited product. The customer
evaluates the product attributes such as shape, size, color, brand, price, quality, performance and
warranty. The customer evaluates the product through reviews from the users, suggestions from
friends and families and the brand reputation. The customer evaluates the overall utility and
satisfaction that can be generated form the product.

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4. Purchase decision
After evaluating every alternative, the customer finally decides upon the product that best suits
them. This purchase decision may be influenced by the payment methods, warranty, and
availability of credit and after sales services. The role of salesman plays a major role in this
stage.

5. Post purchase behavior

This is the reaction the customer gives after purchasing and using the product. The consumer can
either be satisfied or dissatisfied or stay neutral to the satisfaction level. How the consumer reacts
to the product is very much crucial to the future of marketing strategy. If the consumer
experiences higher satisfaction than expected, then the customer is highly satisfied and vice
versa. A satisfied customer acts as unpaid salesman to the marketers. They promote the products
to their friends and relatives. Similarly, an unsatisfied customer is more dangerous than strongest
competitor. Their review may play a decisive role in others while choosing our product. It is
therefore, the marketers must look after the post purchase behavior of the customers and make
sure that they dispose off the product in positive mind set.
Marketers must understand this behavior of customers in order to make sure that consumer
chooses their product over the available alternatives and that they are highly satisfied with the
product.

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Factors affecting consumer buying process

Consumers are highly influenced by the environmental factors while purchasing the products.
These factors can make the consumers buy the product they do not intend to buy and reject the
product they are looking after. It is therefore, every marketer must understand these factors that
play vital role in influencing the consumers’ buying process and decision.

1. Economic factors
The economic condition of the state and the economic condition of the consumer plays an
important role in affecting the consumer’s buying decision. There are multiple economic factors
playing a decisive role in selecting the product. The factors are:
a) Level of income: The income level determines the purchasing power of the customers.
Higher income leads to higher disposable income and higher purchasing capacity and
vice versa. Customers choose the product they can afford.
b) Liquid assets: Availability of liquid assets insures high purchasing capacity. The
customer’s purchasing decision is influenced by the availability of liquid assets.
c) Savings, debt and credit availability: Saving insures higher purchase power while debt
decreases the purchasing capacity. Credit availability eases the customers to purchase
products beyond their purchasing power, thus empowering them to buy expensive
products.
d) Attitude towards spending: The spending attitude of the customer also determines the
purchasing decision of the customer. Positive attitude of the customer towards spending
encourages the customer to buy products and vice versa.
e) Economic condition: The economic condition of the state also affects the consumer’s
buying decision. A healthy economy motivates the consumer to make the purchase while
unhealthy economic condition makes the consumer reluctant to spend the money.

2. Personal factors (Demographic factors)

The consumer’s personal factors also influence the buying behavior. There are different factors
under the personal factors that determine the consumer’s buying behavior. They include:
a) Age: Consumers at different age show different taste, preference, buying habits and
processes.
b) Gender: The buying behavior varies along with the gender of the customer. They have
different need and buying preferences.
c) Family size and family life cycle: Customers living in different family sizes and in
different position in family life cycle show different buying behavior. They have different
taste, preferences, spending habit etc.
d) Occupation: Customers with different occupation and educational background show
different buying habits. Doctors are more into health and hygiene products, engineers into
safety products and they show different buying behavior accordingly.

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3. Psychological factors
The behavior shown by the customers are influenced by psychological factors such as:
a) Motivation: The inner urge that forces the customers to initiate their efforts towards
buying a product is motivation. Different customers have different motivation while
choosing the product and purchasing them. They can be motivated by different factors
such as safety, love, affection, fear, adventure etc.
b) Perception: Perception means how a customer understands and interprets their views
towards the product. This is the picture the customer portrays in their mind regarding the
product. Therefore customers behave according to their perception. They prefer and
reject the product according to their perception.
c) Learning: Customers learn from their experiences and they act accordingly. Therefore
customers behave as per the experiences they have learned.
d) Attitudes and beliefs: Customer’s attitudes lead to negative or positive feeling towards
the product or brand. Similarly their belief shows their faith towards the product. Thus
the attitude and beliefs of the customers influence the buying behavior. Customers prefer
the product to which they have positive attitude and they believe in the product.
e) Personality: Customers choose the products and purchase according to their personality.
Their life style, their likes and dislikes and how they interact with the environment
describe their personality. Customers eat, wear, and use the products according to their
personality. Their personality drives their buying behavior.
f) Life style: Life style means how people live their life or spend their time. People have
different hobbies and interests that define their lifestyle. This influences their
consumption pattern and their buying behavior.

4. Socio-cultural factors
Every consumer’s life style is highly influenced by the society they live in and the culture they
follow. Social factors include the norms they follow in the society they live in. It is the common
behavior they show in the society. The society includes:

a) Family: The core blood related group every individual lives with, is family. Every
customer is highly influenced by the norms and values of the family. The buying
behavior and consumption behavior depends upon the role they play in the family. They
can be initiator, influencer, decider, buyer and or user.
b) Reference groups: This is the core group the individual spends the time with and
follows. The customer is highly influenced by the group behavior. The likes and dislikes,
dos and don’ts are highly influenced by the behavior of the reference group.
c) Social class and status: The level of the individual in the society also influences the
buying behavior of the customer. The social class and status is determined by the wealth
and fame hold by the customer. The individual behave according to their level in the
society.

Similarly cultural factors are derived by the information, beliefs and traditions that have been
passed on from generation to generation. The cultural factors includes the values, attitudes,
beliefs, language, religion, customs, traditions and works of art and architecture. These factors
determine the behavior shown by the customer while consuming and purchasing the products.

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Features of organizational buying behavior

The buying behavior shown by the individual customer and organizational customer are
different. Individual customers purchase and consume the product for their personal use while
organizational customers purchase the product and consume it to either produce new product to
be sold to the individual customers or to provide service to the individual customers. Both types
of customers have different motive and intention for the consumption of the products. Therefore,
marketers need to handle them differently. The same marketing mix does not satisfy both types
of customers.
Organizational customers purchase the product for different use. However their end goal is to
achieve the organizational goal. They purchase for the following reasons:
 To process the product to form a new type of product.
 To assemble the product to form new product.
 To resale the product to the following channel members or to the customers.
 To consume the product in order to provide service to the customers.

The features of organizational buyers are:

I. Buyers: There are fewer buyers but their purchase quantity is large and frequent.
II. Demand: The demand of their product is inelastic in regard to the price of the
product. Their demand depends upon the demand of their product in the market by
individual customers.
III. Relationship: There is a strong relationship between buyer and seller and the seller
get exclusive preference from the buyer.
IV. Channel: The distribution channel is usually zero level channels where the buyer
buys directly from the manufacturer. If not, the channel is kept as short as possible
with minimal middlemen in between the buyer and seller.
V. Professionalism: All the dealing and negotiation are conducted by highly trained,
experienced and professional people. The deals are made in professional way where
they sign in the contract, terms and conditions, quotations etc.
VI. Buying influences: There are many participants in the buying process and they have
their own preferences. The people involved in the buying process are initiators, users,
influencers, deciders, approvers, buyers and gatekeepers. All of them have their own
priorities. Therefore highly trained and experienced salesperson should be used to
negotiate with them.
VII. Rationality: The organizational buyers purchase with the intention to gain profit.
They decide rationally. Their preferences may be value, quality or service.

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Organizational buying process

The organizational buying process includes following steps:

1. Need recognition:
The buying process starts with the identification of the need. The need can arise from deficiency,
problem or situation. The first step in the organizational buying process is figuring out the need
for specific product.

2. Product specification:
After figuring out the need, the specification of the product required to satisfy the need or solve
the problem situation is defined. The required quantity, quality, capabilities required in the
product etc are defined.

3. Supplier search:
Once the product specification is finalized, next step is to search for the suppliers who are
capable of providing the product to the organization. The supplier can be searched from internal
records where the previous suppliers who have supplied the product to the organization are
searched or they are searched from out of the organizational data base through external search.

4. Proposal evaluation:
After the suppliers are searched, the proposals from the suppliers are collected and evaluated.
The proposal includes the specification of the product, terms and conditions regarding the
delivery and payment, quoted amount or rate for the product and additional pre and post-sale
services. The organization evaluates every information mentioned in the proposal along with the
reliability and credibility of the supplier.

5. Purchase decision
After evaluating all the received proposals, the organization finalizes the best suitable supplier
and decides to purchase from the supplier. The order is placed after taking care of the terms and
conditions agreed.

6. Post purchase analysis

An analysis is conducted after the purchase of the product. The product, provided service and
other behavior of the supplier are analyzed. If they are satisfied with the provided goods and
services, then they continue the purchase from the supplier. If not, then they search for another
supplier or recommend the supplier to review their service and product.

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Factors affecting organizational buying behavior

There are different factors that affect the purchase decision or buying behavior of the
organization. The factors are described below:

1. Economic factors
The economic health of the environment and the economic health of the organization determine
the buying behavior of the organization. Different economic factors such as the level of the
demand in the market, economic health of the environment such as recession, depression,
recovery and prosperity and level of the competition in the market play vital role in how the
organization will show their behavior while purchasing the product.

2. Technological factors
The level of technology in the market also affects the buying decision of the organization. The
use of automatic machine, robotic and computer guided machines in the market affects the
purchase decision.

3. Political/legal factors
The prevailing political condition and legal system also affect the buying decision or buying
behavior of the organization. The government policies such as fiscal policy, monetary policy,
industrial policy etc and rules and regulation related with law and enforcement directs the
purchasing decision.

4. Social responsibility factors

Social responsibility refers to the organization’s responsibility towards the society it operates in.
Organizations that are socially responsible use products and machineries that do not harm or
pollute the society and are beneficial to the society. Also they purchase products that develop the
society or benefit it in some way. So the organizational buying depends upon their loyalty
towards the social responsibility.

5. Organizational factors
The organization’s own policies, objectives and procedures also determine their buying behavior.
The organization’s ultimate goal (objectives), their rules, regulations and guidelines of operation
(policy), their procedure for purchase and their organizational structure all play vital role in
determining the organization’s buying behavior.

6. Interpersonal factors
Organizational purchase involves the participation and contribution of many people. Different
people have different interests, attitudes, preferences and knowledge about the products that
organization need to purchase. The purchase is authority based. They can only purchase after the
authorized decision. They have different interests such as initiators, users, influencers, deciders,
approvers, buyers and gatekeepers. Thus the organizational buying behavior is determined by the
authority, attitude, interest, preference, status and persuasiveness of the person/persons who
is/are involved in the purchase process.

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7. Personal factors
Personal factors refer to the people who are actually involved in purchase process. People act as
per their knowledge, perception, experience and education. Therefore, their buying behavior is
highly influenced by their age, income, education, job position and personality. So their buying
behavior reflects into organizational buying behavior.
Therefore, marketers must understand the core buying behavior shown by the customers in order
to create perfect marketing mix and marketing strategy.

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Exam questions
1. How can economic factors affect the buying decision of an individual buyer? Explain
with the help of suitable examples. (5)
2. Explain the following(2)
I. Post purchase behavior
II. High involvement purchase
III. Unsought product
IV. B2B vs. B2C buying behavior
V. Importance of understanding consumer behavior
3. What is buyer behavior? How does individual buyer behavior affect buying decision for a
particular product? Explain. (2+3=5)
4. "Buyer behavior is a decision making process". Comment. (5)
5. Describe the stages of consumer buying process. (5)
6. What is buyer behavior? Explain briefly the role of age in buying decision. (2+3=5)
7. Discuss main features of organizational buying behavior.(5)

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