Professional Documents
Culture Documents
Block 1
Block 1
Consumer Behaviour
Acknowledgement : Parts of this course is adapted from the earlier MS-61: Consumer Behaviour
course and the persons marked with (*) were the original contributors and the profiles are as it was
on the date of initial print.
PRINT PRODUCTION
Mr. Tilak Raj
Assistant Registrar,
MPDD, IGNOU, New Delhi-110 068
May, 2022
Indira Gandhi National Open University, 2022
ISBN :
All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other means,
without permission in writing from the Indira Gandhi National Open University.
Further information about the School of Management Studies and the Indira Gandhi National Open University
courses may be obtained from the University’s office at Maidan Garhi, New Delhi-110 068.
Printed and published on behalf of the Indira Gandhi National Open University, New Delhi by the
The Registrar, MPDD, IGNOU.
Laser Typesetting : Akashdeep Printers, 20-Ansari Road, Daryaganj, New Delhi-110002
Printed at :
Course Contents
Pages
BLOCK INTRODUCTION 5
Block 1 CONSUMER BEHAVIOUR-ISSUES AND 7
CONCEPTS
Unit 4 Perceptions 77
Unit 5 Learning and Memory 87
Unit 6 Attitude and Attitude Change 103
Unit 7 Personality and Self-concept 116
Unit 8 Consumer Motivation and Involvement 133
8
Consumer Behaviour-
UNIT 1 CONSUMER BEHAVIOUR-NATURE, Nature, Scope, Models and
Application
SCOPE, MODELS AND APPLICATION
Learning outcomes
After studying this unit, you should be able to:
define consumer behaviour
describe the nature of consumer behaviour
explain the scope of consumer behavior
discuss the various models of Consumer Behaviour and explain their
applications
discuss the emergence of online buying behaviour and its implications
outline the broad areas of application of consumer behaviour in marketing
decisions
Structure
1.1 Introduction
1.2 Nature of Consumer Behaviour
1.3 Who is a Consumer?
1.4 What is a Consumer Decision?
1.5 Scope of Consumer Behaviour
1.6 Decision Process
1.7 Individual and Group Determinants of Consumer Decisions
1.8 Models of Consumer Behaviour including Online Buying Behaviour
1.9 Applications of Consumer Behaviour in Marketing
1.10 Summary
1.11 Key Words
1.12 Self-assessment Questions
1.13 Project Questions
1.14 Further Readings
1.1 INTRODUCTION
In your core course on Marketing Management MMPC-006, you have already
studied that Marketing as a function is aimed at satisfying consumer needs and wants
through the exchange process as a key to achieving organizational goals. In order
to be able to satisfy consumer needs, you need to first define who your consumers
are and what benefits do they seek,when and how they buy the products and services
being offered by you. Why do these consumers buy your brand and not that of the
competitors? How do your consumers perceive your product or service suit their
needs? After having bought your product do they feel satisfied or dissatisfied? And
how are these feelings reflected in their subsequent behavior as consumers? Seeking 9
Consumer Behaviour-Issues answers to all these questions and related issues forms the interesting field of Consumer
and Concepts
Behaviour
It is important to the survival and growth of your organization that you regularly
raise such questions and attempt to find answers to them. It is only through such
a process of questioning and seeking that you can be sure of keeping your firm
on the growth path. A thorough knowledge of your consumers and an understanding
of their behavior as consumers are essential if you wish to continue to remainin
business.
This and the following units in this course provide you insights into the complex but
extremely interesting field of consumer behaviour. After having read this unit, you
would be able to spell out who are consumers, why they behave in the manner
that they do, what influences their behaviour and how you as a marketer can utilize
your knowledge of the influencing factors in your favor. This is the most important
aspect of consumer behaviour which has practical implications for firm. Once you
have an understanding of the behaviour of consumers and know that their behaviour
can be influenced, you can initiate a number of steps to do so. This unit covers the
nature, scope and applications of Consumer behaviour.
In the digital age, internet access and use, the deep penetration of smartphones
and the ubiquitous social media have created major changes in the way people search
for goods, evaluate their alternatives and acquires products and services.
Digital age has allowed people to browse and buy items right from the palm of
their hands, without leaving their seats. The internet offers the information buyers
need to know about products via a simple search. In fact, over 56% of shoppers
in India turn to search engines before they make a purchase. Even referrals have
transitioned online in the form of reviews and testimonials. This marketing strategy
dramatically influences a prospective buyer in completing a purchase conveniently,
as more and more people believe online reviews as much as their peers.
In order for marketers to succeed in the digital age, marketers will need to develop
a clear understanding of the way people shop, and the shifting influences on consumer
decision making. We will be covering this aspect of emerging online behavior later
in this unit
As a field of study, Consumer behavior is the study of consumers and the processes
they use to choose, use (consume), and dispose of products and services, including
consumers’ emotional, mental, and behavioral responses.
However, the term consumer is a far wider term, encompassing not only the actual
buyer or customer but also all its users, i.e., consumers. There are two situations
when this distinction between consumers and customers may occur, i) when the
service or product is provided free, and ii) when the customer is not the actual
user of the product/service or is only one of the many users. The second situation
needs greater elaboration as it is of critical significance for us.
Very often, the actual customer making a purchase may not be doing so for himself
or herself. For instance, in case of a father buying a box or crayons for his four-
year old daughter, the customer is the father but the actual user or consumer is his
daughter. Another case may be where a father is buying a TV for the family members.
The father is the customer but all the family members are the consumers. The two
vital elements to remember in all consumer situations are- a) the influence on purchase
from other people and b) the roles taken on by different people in consumer behaviour
situations.
In the instance of the father buying crayons for his daughter, the latter may not
have had influence at all on the purchase; the father is the decision maker and
buyer and the daughter is the user. In case of the father buying a TV for his
family, it is quite likely that the wife and children may have exerted considerable
influence on the decision. The father is simply, the buyer, while other family
members may be influencers and all, including the father, are users. Table 1.1
presents one way of classifying the roles that people can take on in the context
of consumers behavior. 11
Consumer Behaviour-Issues Table1.1 Some Consumer Behaviour Roles and Role Description
and Concepts
Role Role Description
Initiator : The person who determines that some need or want is not
being met.
Influencer : The person who intentionally/unintentionally influences the
decision to buy the actual purchase and/or
use of product or service.
Buyer : The person who actually makes the purchase.
User : The person who actually uses or consumes the product or
service.
You will read more about the different buying roles and their influence on family
decision making in Unit10 of this course. These buying roles may vary in different
buying situations. While studying consumer behaviour we have to keep in mind all
the various consumer roles that can possibly be taken on. But in practical terms it
may be very difficult to study all these roles. Therefore, the emphasis of study is
on one role that of the buyer. The reason for this is that this is the only part of the
behavior which is overt and visible. It is only through the buyer, whom we can easily
identify, that we can attempt to study the influences exerted on the purchase by
other role players
Activity1
Name three recently bought products by you in which you are both the buyer
and user. Try and identify the influence, if any, exerted by another person in
your purchase decision
Let us go back to the example of a father, we call Mr. Bannerjee buying a TV for
his family. It is possible that the consumer behaviour involving mental processes
and activities may have taken place in the following sequence and manner.
Mr.Bannerjee’s teenage daughter, sees a smart TV at her friend’s house. She then
raises the issue of buying a smart TV to replace their existing colour TV. The family
discusses the issue and agrees that it is indeed time they bought a smart TV which
will enable them to enjoy both the cable-based channels and all digital platform-
based entertainments offered by providers like Netflix, Sony Max, Prime Video,
Hotstar and others. The next day Mr. Bannerjee discusses the matter with his friend
and colleague, Mr. Chandra. He visits Mr. Chandra’s home to see for himself the
quality of the Samsung Smart TV that he has. Mrs. Bannerjee also finds out more
about the various brands, prices and features of different brands, from her sister
who recently purchased a smart TV. Her sister has a Sony Bravia TV and
recommends the same. Meanwhile, Mr. Bannerjee’s daughter checks out the brands
of TVs that her various friends have at their respective homes and concludes that
Philips or Haier may be better choices. In the next few days, theentire Bannerjee
family makes it a point to carefully study any advertisements of Smart TVs that
appear in the newspaper, or on social media or TV. At all social occasions they
raise the question of which is the best Smart TV to buy amongst their friends and
relatives and mentally, mark the different positive and negative points of different
brands. Within two weeks, the Banerjees have collected enough information to take
a decision to buy the TV, but they need more specific information. They scour the
websites of the different manufacturers and also look at product ratings by
independent rating providers as well as customer ratings on social media. To get
the actual feel of the product they use a weekend to visit the nearby mall to see
the different TVs on display in the respective outlets.
On comparing features like price, quality of transmission, looks, features like warranty
and tech support, they finally decide to buy a Samsung Curve. The activity and
thought process which resulted in the final purchase of the TV started well before
the actual purchase and was spread over a period of two to three weeks. This
entire process forms part of consumer behaviour.
In case of the stock of regular brands of toilet soap being depleted at home, its
purchase may need no elaborate decision process or activity of comparison and
evaluation. Rather the purchase decision is a replenishment decision and almost
an automatic one.
Activity2
Recall the purchase of the last consumer durable in your family. It could be a
refrigerator, a two-wheeler or an air conditioner. Describe the decision process
and physical activities, preceding the purchase undertaken by the various member
of the family.
....................................................................................................................
....................................................................................................................
The scope of consumer behaviour has been briefly touched upon in the previous
section wherein it was explained that how consumer behaviour includes not only
the actual buyer and his act of buying but also the various roles played by different
individuals and the influence they exert on the final purchase decision. In this
section we shall define and explain the scope of study of consumer behaviour.
Let us look at the constituents of the framework briefly as they are explained in
detail in the subsequent units.
Problem recognition thus occurs when the consumer recognizes that he has an
unfulfilled need. The desire to fulfil this need triggers off the other steps of information;
search and evaluation and finally results in the purchase.
However, not all situations of problem recognition automatically led to the next step
of information search and evaluation. A consumer may recognize the need for a
vehicle to cover the long distance from his home to office and back. But if he does
not have the means to buy a vehicle for himself, then his need would remain a need,
and despite his recognition of the problem, the ensuing steps will not take place.
The constraints can be lack of availability or lack of ability to buy or even lack of
time to go through the purchase process.
Only if there are no constraints preventing further behaviour, the consumer will set
out to search for information relevant to the problem. The information search can
take place without the consumer even being aware of it or it may take the form of
a deliberate, prolonged search. To replenish the stock of tooth paste, a regular
customer knows from memory and past experience the brand, the package size he
wishes to buy, and the place from where he would like to buy. Of course, if it is a
first-time customer for toothpaste then he, would search for information from the
external environment, such as his friends, shopkeepers, and advertisements. Having
gathered the relevant information, the consumer needs to evaluate it to arrive at
the decision regarding which tooth paste best fulfils his need. You may also recall
that sometimes being exposed to an ad or seeing a new product in use, may trigger
your awareness of the need.
15
Consumer Behaviour-Issues Having arrived at the decision, the consumer sets out to make the purchase. At
and Concepts
this point the consumer has to make a choice regarding which outlet to buy from
or whether to order the product online. After the purchase when the consumer uses
the product, he either feels satisfied with it and concludes that he has made the
right decision or he feels dissatisfied and decides that his decision was not correct.
This dissatis faction-set in motion a search for alternative choices and fresh evaluation.
It is thus a continuing cycle of decision process.
Activity3
Recall the last time you purchased toilet soap, a book for your leisure reading
and a dinner at a restaurant.Try and spell out the various physical and mental
activities which you indulged at each stage of the decision process, starting
from problem recognition. (For instance, the problem recognition in case of
toilet soap occurred when you had to go on an official tour and needed
necessary toiletries to carry along. So, you write “need to pack toiletries for
travel” in front on problem recognition and under the heading toilet soap, in
the matrix given below.) Similarly, you would fill in all the details in case of the
three purchase decisions.
(Hint: After dinner at a restaurant, wherein you are satisfied with the food
and service, you may tell the manager what an enjoyable evening you had
and make a mental note of the restaurant so that the next time you decide
to visit a restaurant, you consider this as one of the possibilities. On the
other hand, if you found the food to be of poor quality and the service
slow and inefficient, you may like to make a written complaint in the customer
book. And also, you strike off this restaurant from your mental list of
alternatives.)
Marketers also try to give a distinct image or personality to their products which is
as close as possible to that of the target consumers. Raymond’s uses the image of
a complete man in a variety of settings to convey exclusivity and class. It is intended
to match the aspirational self-concept and image that would match well with the
self-concept of their target consumers.
Our motives, attitudes and personality act as filters by letting in only relevant
information and keeping all other information out. Surely, we would see the product,
hear its jingle but chances are it will not register in our minds. We will remember it
only for a short while and then forget it.
InformationProcessing
This refers to the process and activities which consumers engage in while gathering,
assimilating and evaluating information. As discussed in the previous paragraphs,
we only attend to selective information. The manner in which we assimilate and
evaluate this selective information is determined by our motives, attitudes and
personality and self-concept. Thus, the same information may be evaluated in a
different manner by two different individuals and the ensuing response may also be
very different. A half-filled glass elicits the response “a half-empty glass from, one
consumer while another reacts by saying it is”half-full”.
18
Consumer Behaviour-
Activity 4 Nature, Scope, Models and
Application
Suppose you have won Rs.50000 in a lucky draw. The following optional uses
of the money are available to you.
a. Buying a Microwave oven
b. Go on a holiday with your family/friends
c. Buy shares
d. Buy a personal computer for use in the house
e. Buy a membership to a club
f. Deposit it in a fixed deposit account.
Rank the above options in order of your preference. Try and analyze how your
personal motives, attitudes and personality affected your ranking. Now put
the same question to a colleague in your office/friend/spouse. Is their response
different fromyours?
Try and explain the response in terms of the determinants of individual behavior
explained in this section.
Social class is a group consisting of a number of people who share more or less
equal position in a society. Within a social class people tend to share same values,
beliefs, and exhibit similar patterns of behaviour and consumption. Some social classes
are ranked as higher and lower. Social classes differ from one society to another,
and their standing in society may also change over time. Social classes may be defined
by parameters such as income and occupation. The belongingness to a social class
influences decisions such as choice of residence, type of holiday, means of entertainment
and leisure.
A social group is a collection of individuals who share some common attitudes and
a sense of relationship as a result of interaction with each other. Social groups may
be primary where face-to-face interaction take place frequently, such as families,
workgroups and study groups. Secondary groups are those where the relationship
is a more formalized and less personal in nature. Examples of primary groups are
associations of professionals, members of a political party, and social groups such
as Rotary, Lions, YCWA etc.
Family Influences
The first and strongest influence on a child is that of his family and he imbibes many
behavioural patterns from other family members sub consciously. These influences
tend to stay with him even after attaining adulthood. Further, within a family many
decisions are made jointly with various members exerting different degree of influence.
The changing structure of families as the joint family system gradually gives way to
single nucleus families also influence the consumer behaviour.
Personal Influences
Each individual is influenced by the family, social class, sub-cultural and cultural
group to which he belongs, and yet has his own distinct personality which influences
his decisions and behavior as a consumer. Each decision process is the outcome
of an interplay of personal and social variables. You must also remember as noted
in the preceding paragraphs that social groups like family, and reference groups
are part of the early influences that shape personal variables like personality, self-
concept and attitudes. The process of evaluation of different products and different
brands will vary from person to person. For one, price may be the most important
parameter in making the decision to buy a water geyser, for another it is convenience,
20 and for yet another it may be the status symbol value.
Other Influences Consumer Behaviour-
Nature, Scope, Models and
Application
All other influences not covered in any of the other specific influence headings
are covered here. These may be national or regional level events, situational factors
or any other external influences. The recent pandemic and its impact on the
consumption related behavior in terms of responsible consumption, safe food habits
and spend save decisions provides a good example of how events external to
the individual may impact consumer behavior during a given period. Cricket test
matches and other sports world competitions always lead consumers to opt for
sports channels and products like firesticks to facilitate uninterrupted watching
of their favorite sports events. The hosting of Asiad matches and Commonwealth
Games within the country, coupled with India’s performance at world events like
the Tokyo Olympics in 2021 brought in their wake tremendous awareness and
interest in sports. All such-events have both temporary and permanent influences
on consumer behaviour. During the period of the event, there is increased emphasis
on buying goods and services related to the event. After the event is over, as in
case of Asiad and Commonwealth games, because the infrastructure for sports
has been created, an interest amongst the people been kindled; sporting events
are now held regularly with more people participating. All this leads to greater
consumption of sports goods, and other facilitating services
Situational variables such as product display, price reduction offers, free gift offers,
also influence consumer behaviour. Seeing an attractive offer, a free mug with a new
brand of coffee, a regular user of arival brand may be tempted to try the new brand.
As you would observe in Fig 1.1 the various factors in individual determinants and
external environment are separated by broken lines, this is done to denote the fact
that each of these specific factors influence and in turn are influenced by each other.
Further, you would notice that there is an arrow starting from external environment
and passing through individual determinants up to the decision process. This indicates
that external environmental factors do not affect the decision process directly, but
filter through individual determinants to influencethe decision process.
1. Information input
2. Information processing
3. Decision process
4. Decision process variables
5. External influences
Let us take an example to understand consumer behavior as explained by this model
As somebody who is currently dissatisfied with the way his laptop is functioning,
you come across an advertisement by a computer dealer, announcing a sale on various
Brands of computers and laptops for which his company’s the authorized agent.
This is the component of information input. This component includes all kinds of
marketing stimuli like advertisements, product displays, a point of purchase stimulus
and non-marketing stimuli like information inputs shared by friends, family or
colleagues, who may suggest a brand be used by them as an alternative to you.
Once you are exposed to this information from a variety of sources you begin to
process this information by going through the stages of exposure, attention,
comprehension, acceptance and retention of this information. You also utilize your
stored memory relevant to this purchase in processing this information and before
retaining it as actionable input for your decision process The next component, the
decision-making process, in this model, suggests that you could enter the decision-
making process at any time during your information processing stage. You could
begin contemplating the decision immediately after seeing the advertisement regarding
the sale by the dealer, or collect more information and recall inputs about your earlier
experiences from your memory and so on. The decision process is shown to comprise
of the sequential stages of problem recognition search for alternatives, alternative
evaluation, choice, and outcomes (post-purchase evaluation and behavior). Once
you arrive at the decision based on your alternative evaluation, which in turn is
impacted by both individual differences and external influences, this decision will
lead to a purchase. The outcome of the purchase could be satisfaction if the laptop
bought by you meets your expectations, or result in post purchase dissatisfaction,
if your purchase does not fully meet your expectations.These outcomes will now
become feedback and be stored in your memory to be used as reference in your
next purchase or related decision-making situation
As discussed in the foregoing paragraph, individual variables like demographics,
motives, beliefs, attitude, personality, values, lifestyle and external influences like
culture, social class and reference groups are important influences that impact the
stages of both information processing and decision making. If any of your important
reference group members like a colleague in the IT department of your office has
expressed a strong negative opinion about the after sales service of a given laptop
brand, that brand will not be considered among the alternatives that you evaluate
during your decision process.
Understanding Online Consumer Behaviour
There is no denying the fact that the widespread use of Internet on the one hand
has given huge impetus to the e-commerce activity and on the other hand has facilitated 23
Consumer Behaviour-Issues online buying to a great extent. Reports show that generation of sales globally reached
and Concepts
over USD 2,800 billion in 2018 (Digital Commerce360, 2019).
Certainly, the Covid 19 pandemic and the lockdown that disabled physical and face
to face economic activity, accelerated the adoption of online buying across the world
and India was no exception. The interesting thing to note however, is that once
the lockdown restrictions eased away, a large percentage of consumers report an
irreversible change in their buying habits as during this gap of over one year, a large
number of them got too used to the convenience of shopping from the convenience
of their homes or offices on an any time anyone basis. The vastly improved online
shopping platforms, stable and reliable payment options, and improve logistic
efficiencies have further added to the consumer convenience and improved experience,
A BCG research study on aspects of online buying behaviour in India has indeed
interesting trends among Indian buyers which are creating both challenges and
opportunities for the marketers. Let-us have a brief look at these trends that were
shared in October 2019. The study was conducted on over 4000 Indian consumers
in 2019, well before the impact of the pandemic on consumer buying really set in.
85% consumers checked at least two data points across all categories before
they made a purchase
62% consumers said that they main reason of buying a new product was
to keep up with the emerging trends
57% consumers reported using pre packaged food or shopping online to
free their time for other activities
50% consumers reported buying Indian Brands or over international Brands
in at least one category
Signaling a rise in women’s decision-making roles, 54% female consumers
were found to have the final say in more than half of the product categories
bought
In subsequent research on buying behavior in India across the different waves
of the pandemic, the agency reported the following trends in consumer
sentiment and behavior, on the basis of their study of the pandemic on
consumer sentiment and behavior released in June 2021
Accelerated growth in the adoption and engagement with social commerce
and healthier Food choices
Adoption of digital commerce, entertainment and education gaining new
heights
While the frequency of use of online Medical Services and interest in online
hobby classes has tended to wane around May 2021, use of online retailers
or E commerce, use of digital wallets, free apps like Hot star and You Tube,
paid OTT platforms and online education has tended to sustain.
a key takeaway from this research is that the COVID-19 crisis has
significantly altered the behavior of Indian consumers in several important
aspects, such as their heightened focus on health and their embrace of digital
tools and channels for making purchases.
24
The almost ubiquitous adoption of internet usage either through but even more Consumer Behaviour-
Nature, Scope, Models and
increasingly through Mobile devices has created several challenges for marketers Application
including those of an increasingly globalized and competitive marketplace. Also
challenging to the marketers is understanding of complex consumer behavior, driving
online buying and the major influences that impact such buying behavior. It is important
to understand the psychology, decision process.
While systematic research has been going on in developing models of online buying
behavior for at least a decade, we as of now do not have a comprehensive and
universally accepted model of digital consumer behavior.
The Technology Acceptance Model
This model, developed by Fred Davis tries to explain consumer tendency towards
online buying behavior by linking perceived usefulness of the technology relating
to savings in time and efficiency in spending. The ease-of-use component traces
how easily and conveniently the online shopping system works. Both perceived
usefulness and perceived ease of use influence positive attitude and behavioral
intent towards online shopping and eventually lead to users using the productor
service. The model also shows impact on external and individual variables on such
behavior.
External factors include service quality, ease of payment options, easy accessibility
and user reviews. while the individual factors are the ones already studied by you
in earlier models-and comprise personal traits and attitudes, perceived ease of the
online option, time pressures and earlier experiences of online transactions.
Fig. 1.2 : Technology acceptance model of online consumer behaviour (adapted from
Maranguniæ, N. & Graniæ, A.., 2015. Technology acceptance model: a literature review
from 1986 to 2013. Universal Access in the Information Society, 14(1), pp.81-95,
doi: 10.1007/s10209-014-0348-1.
How, in your view, the online buying behavior seems to differ from the in store buying.
26
Consumer Behaviour-
1.10 APPLICATIONS OF CONSUMER Nature, Scope, Models and
Application
BEHAVIOUR IN MARKETING
Marketing is defined as “humanactivity directed at satisfying needs and wants through
exchange processes”. Thus, the beginning of marketing lies in identifying un satisfied
human needs and wants and understanding the ensuing activity which people engage
in to fulfil these. And that, as we have described, is the realm of consumer behaviour.
Consumer behaviour and marketing practice go hand-in-hand. Trying to do the latter
without an understanding of the former is a kin to firing a shot in the dark.
Consumer behaviour has a number of applications in the area of marketing as
described in the following paragraphs.
1. Analyzing Market Opportunity: Study of consumer behaviour helps in identifying
needs and wants which are unfulfilled. This is done by examining trends in income,
consumer lifestyles and emerging influences. The trend towards increasing number
of working women, and greater emphasis on leisure and convenience have signalled
the emerging needs for household gadgets such as vacuum cleaners, washing machine
and mixer grinders. Air purifiers, smart phones and water purifiers were marketed
in response to a genuinely felt need of the people.The rapidly rising sales graph in
these categories is an indication of how well the product has satisfied the consumer’s
need.
2. Selecting the Target Market: The study of the consumer trends would reveal
distinct groups of consumers with very distinct needs and wants. Knowing who
these groups are, how they behave, how they decide to buy enables the marketer
to market products/services especially suited to their needs. All this is made possible
only by studying in depth the consumer and his purchase behaviour.
A study of potential consumers for shampoo revealed that there was a class of
consumers who can afford to use shampoo only on special occasions and who
otherwise use soap to wash their hair. Realizing the huge size of this market, companies
with leading brands launched their shampoos in small sachets containing enough
quantity for one wash and priced just at 3-5 Rupees.
3. Determining the Product Mix: Having identified the unfulfilled need slot and
having modified the product to suit differing consumer tastes, the marketer now
has to get down to the brass tacks of developing the right offer to market. He has
to determine the right mix of product, price promotion and advertising. Again,
consumer behaviour is extremely useful as it helps find answers to many perplexing
questions
Product: The marketer has the product that will satisfy hitherto unfulfilled consumer
need, but he must decide the size, shape and attributes of the product. He must
figure out whether it is better to have one single product or a number of models to
choose from. Does the product require any special kind of packaging? Does it need
any guarantee or after sales service? What associated products and services can
be offered alongside?
Maggi Noodles were first launched in the most common flavours such as masala
and capsicum. Having succeeded with these, other flavours such as garlic and 27
Consumer Behaviour-Issues sambhar were launched with the objective of appealing to specific regional tastes.
and Concepts
However, these flavours did not succeed. Recently, variants like Atta noodles and
Oats Noodles were launched. All these are attempts to modify the product by
adding special features, attributes which might enhance the product appeal to the
consumers.
The study of consumer behaviour also guides the marketer in making decisions
regarding packaging. Pan Parag was first introduced in tins. But study of consumer
behaviour revealed that people wanted smaller packing which they could conveniently
carry on their person and in response to this the individual pouches were introduced.
Further study of consumers revealed a problem with, these pouches. Once opened
and kept in the purse or pocket, the pan masala would spill out of the pouch into
the purse or pocket. To overcome this problem, Pan Parag launched a pouch with
a zip. You eat as much as you want, zip up the packet and put it in your pocket
without fear of spillage and wastage.
The study of consumer needs revealed the need for a water storage facility in the
kitchen and bathroom but which didn’t occupy floor space. In response to this need,
Sintex added the overhead indoor loft tank to their existing range of outdoor roof
top water storage tanks.
Price: What price should the marketer charge for the product? Should it be the
same as that of the competing product or lower or higher? Should the price be
marked on the product or left to the discretion of the retailer to charge what he
can from the customer? Should any price discounts be offered? What is the customer
perception of a lower or higher price? Would a lower price stimulate sales? Or is
a lower price associated with poor quality? These are the kinds of questions facing
a marketer when taking a decision regarding pricing. The marketer has to determine
the price level which makes the image of the product and which also maximizes
the sales revenue. For doing so he must understand the way his product is perceived
by consumers, the criticality of the price as a purchase decision variable and how
an increase or decrease in price would affect the sales. It is only through continuous
study of consumer behaviour in actual buying situations that the marketer can hope
to find answers to these issues.
Distribution: Having determined the product size, shape, packaging and price, the
next decision the marketer has to make is regarding the distribution channel. What.
type of outlets including the online ones should be used to sell the products? Should
it be sold through all the retail outlets or only through a selected few? Should a
mix of online and offlinebe used? Should it be sold through existing outlets which
also sell competing brands or should new outlets be selling exclusively your brand
of product be created? How critical is the location of the retail outlets from the
consumers’ viewpoint? Does the consumer look for the nearest convenient location
or is he only willing to shop from the convenience of his own home?
The answers to all these questions can only be found when the marketer has a good
understanding of the consumers’ needs which are being fulfilled by his product and
the manner in which consumers arrive at the decision to buy. Long ago, Eureka
Forbes introduced vacuum cleaners in the Indian market. It was not only launch of
a new brand, but rather a launch of a new product concept. No retail outlets were
selling vacuum cleaners, very few consumers knew much about the product and
fewer still were willing tobuy it. Under these circumstances, the company decided
28
to sell the product only through personal selling with the salesman calling on the Consumer Behaviour-
Nature, Scope, Models and
consumer at his home. Here the sales man had enough time to explain, demonstrate Application
and convince the prospective customer about the utility of the vacuum cleaner. In
a retail outlet situation, all this would just not have been possible. The retailer has
neither the time nor the detailed knowledge required to sell such a new product
concept. This distribution strategy of Eureka Forbes, based on a very fine
understanding of the consumer behaviour, has yielded good sales results. The product
concept is well accepted in the markets and today the vacuum cleaner, is also sold
through some selected retail outlets. You only have to look at the growing proliferation
of firms like Urban Company, who focus on making utility services like home cleaning,
personal grooming, furniture and carpet care services available to the consumer at
home at reasonable prices to appreciate how understanding of consumer behavior
enables new distribution opportunities.
Promotion: The marketer here is concerned with finding the most effective methods
of promotion which will make the product stand out amongst the clutter of so many
other brands, and products, which will help attain the sales objective and yet be
within the budget. This is possible only when the marketer knows who his target
consumers are,where are they located, what media do they have access to, what
is their preferred media and what role does advertising play in influencing the purchase
decision?
Today, Internet driven social, digital advertising and TV are among the most powerful
advertising media in the country. And many brands spend the greater part of their
promotion and advertising budget on these. Brands regularly advertised on these
media soon become well recognized names. But as a marketer you have to question
the suitability of any specific medium with respect to your specific product and budget.
Suppose your product is sold in only a few geographical markets you may decide
to avoid regional channels on TV, some regional print media and concentrate on
point of purchase promotion as well as hoardings.
In so many cases of industrial products, media advertising is very negligible, instead,
B-to-B digital Marketing, brochures or leaflets containing detailed product specification
and information are conveyed to the actual consumer, and sometimes followed up
by sales calls toclinch the deal. This is primarily because buyer behaviour and
informational needs of industrial buyers are very different from those of consumer
buying. You will study organizational buying behaviour in detail in Unit 3 of this block.
But you can make these decisions only when you know your consumer and understand
his behavior well.
Use in Non-profit and Social Marketing:
The knowledge of consumer behaviour is also useful in the marketing of non-profit
or social or governmental services of institutions such as hospitals, institutions, voluntary
agencies, law enforcement and tax collection agencies.
The income tax authorities have always been perceived in negative manner by the
common man who fears them and views them in a suspicious light. To overcome
this poor image, advertisements on TV, social media, and in newspapers and
magazines are regularly released,wherein a friendly, helpful image is sought to be
projected. Moreover, there is greater dissemination of information regarding the
rights and responsibilities of the tax payer.
29
Consumer Behaviour-Issues Similarly, the Covid Pandemic saw a massive effort at social marketing by
and Concepts
governments, public health agencies and responsible corporate to address the issues
of consumer awareness, protective measures and safety promoting behaviours.
The active public health and individual protection campaigns run during the various
waves of the corona pandemic, the “Swatchh Bharat and Swasth Bharat” initiatives
and other such events organized on special occasions such as India completing 75
years of Independence (Azadi ka Amrit Mahotsav), used various types of appeals
in order to motivate the maximum participation. Organizations such as Red Cross,
Blood Banks, Heart Foundation, Indian Cancer Society, Sight savers, The Kailash
Satyarthi foundation, UNICEF, etc., all use an understanding of consumer behaviour
to promote their services, encourage public participation in their activities, sell their
products (greeting cards in case of UNICEF), and to motivate people to donate,
get regular health check-ups.
Activity 8
In your own work experience, or any other consumer product organization
that you are familiar with, study the pricing, promotion and distribution of
products. Clearly state the kind of applications of the knowledge of Consumer
Behavior that was applied in these decisions.
.....................................................................................................................
.....................................................................................................................
1.11 SUMMARY
This Unit attempts to introduce you to the subject of consumer behaviour and all
that which is studied as part of this subject. Consumer behaviour comprises the
entire spectrum of activities and processes which individuals engage in when buying,
using, acquiring or disposing of goods andservices. The purchase is only one part,
the clearly observable part, of this range of activities. The focus of study in consumer
behaviour is the individual making the purchase, but sometimes he may be purchasing
on behalf of somebody else. To get a complete picture it is necessary to include
both the buyer and user in the realm of consumer behaviour. The study of consumer
behaviour is concerned with the decision process involved in a purchase. This process
may comprise physical and mental activities preceding and following the purchase
event.
During this decision process, the consumer is influenced, by a variety of factors.
These influencing variables can be broadly divided into two categories, namely,
individual determinants and external variables. These were briefly touched upon in
this Unit and shall be explained in greater detail in later units.
An understanding of consumer behaviour is of critical importance to all persons
engaged in any form of marketing activity, its importance stems from the fact that
i) behaviour of consumers can be understood, ii) the behaviour can be influenced,
and iii) the marketer can utilize these influencing variables to his advantage.
The unit also introduces you to various models of consumer behavior including those
related to online buying behavior to expose you to research based comprehensive
30 explanations of how consumers decide.
The applications of Consumer behavior to all aspects of marketing decision making Consumer Behaviour-
Nature, Scope, Models and
have been discussed. Consumer behaviour is also applicable in case of non- Application
commercial, non-profitmarketing.
1.11 KEYWORDS
Decision Process: The sequence of mental and physical activities and processes
preceding and following an actual purchase action.
Individual Determinants: The specific variables unique to each individual, which
influence his behavior as a consumer. These variables are psychological in nature
External Environment: All the variables emanating from the society within which
an individual lives and interacts and which bear a strong influence on his consumer
behaviour.
1.12 SELF-ASSESSMENTQUESTIONS
1. Given below is a list of products and services, some or all of which you would
have purchased or used in your capacity as a consumer:
i. Two-wheeler/car
ii. An expensive suit/saree/dress for a very important social occasion
iii. Printer for your home office
iv. Health insurance for your self and members of your family
v. Smartphone
vi. Members hip of a Society/Club/gym
Try to recall and identify the roles played by different people around you
ininfluencing the first-time purchase of these. Would the same roles be played
by the same people if you went in for a repeat purchase?
2. About 20 years ago, the ready-made clothes market in India was limited to
afew companies offering men’s shirts and trousers in a few instances. But today
a large of national and international brands have made available a huge range
of ready-made apparel for all age segments and socio-economic class segment.
Can you identify some key variables of individual determinants and external
environment responsible for this change?
3. What are the product and service categories where you and your family members
now do online buying more often than you do in store buying? What are the
major drivers of such behaviours?
4. What are the main benefits that consumers seek from non-store buying? Explain
by taking examples
32
Consumer Behaviour-
UNIT 2 CONSUMER BEHAVIOUR AND Nature, Scope, Models and
Application
LIFESTYLE MARKETING
Learning outcomes
After reading this unit, you should be able to:
define and illustrate the concept of lifestyle marketing
describe the role of lifestyle analysis and how it fits into other approaches
to study of consumer behaviour.
identify the characteristics of lifestyle
discuss the components of AIO inventory and VALS classification used in
Lifestyle
analyse the findings of lifestyle studies in India and apply them in your
marketing decisions
discuss current applications and trends in lifestyle marketing.
Structure
2.1 Introduction
2.2 Demographics, Psychographics and Lifestyle
2.3 Characteristics of Lifestyle
2.4 Influences on Lifestyle
2.5 Approaches to Study Lifestyle
2.6 Application of AIO Studies
2.7 Lifestyle Profiles in Indian Context
2.8 VALS System of Classification
2.9 Applications of Lifestyle Marketing
2.10 Summary
2.11 Key Words
2.12 Self-Assessment Questions
2.13 Project Questions
2.14 Further Readings
2.1 INTRODUCTION
Lifestyle marketing is a process of establishing relationships between products offered
in the market and targeted lifestyle groups. It involves segmenting the market on
the basis of lifestyle dimensions, positioning the product in a way that appeals to
the activities, interests and opinions of the targeted market and undertaking specific
promotional campaigns which exploit lifestyle appeals to enhance the market
attractiveness of the offered product. The Marketing Dictionary of Rona Ostrow
and Sweetman R.Smith describes lifestyle as “a distinctive mode of behavior centered 33
Consumer Behaviour-Issues around activities, interests, opinions, attitudes and demographic characteristics
and Concepts
distinguishing one segment of a population from another. A consumer’s lifestyle is
seen as the sum of his interactions with his environment. Lifestyle studies are a
component of the broader behavioural concept called psychographics.”
Harold W. Berkman and Christopher Gilson define lifestyle as “unified” patterns
of behaviour that both determine and are determined by consumption. The term
“unified patterns of behaviour” refers to behaviour in its broadest sense. Attitude
formation and such internal subjective activities may not be observable, but they
shape behaviour nonetheless. Lifestyle is an integrated system of a person’s attitudes,
values, interests, opinions and his overt behaviour.
Collect 10 advertisements (ads) involving the promotion of cars and find out,
how many of these ads are “playing up” the lifestyle appeal of target customers.
Identify, what lifestyles have been projected through these ads
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
General I think that having to carry cash My family is always shopping when
when you travel is quite we travel
cumbersome
Some studies have used factor analysis for revealing grouping of behaviour styles
in purchasing which can reveal how differed segment will differ in their choice of
certain products and services
Activity 2
Construct a questionnaire with about 30 AIO statements with specific reference
to smart phone buyers and users.
........................................................................................................................
........................................................................................................................
........................................................................................................................
38
Consumer Behaviour and
2.6 APPLICATION OF AIO STUDIES Lifestyle Marketing
Studying the lifestyle closely through the AIO inventory of heavy/medium/light usersof
a product has been found to be immensely useful for marketers. In the US studies
have been done regarding the heavy use of beer, eye make-up and bank credit
cards. When it was revealed that 23% of the people who drink beer consume 80%
of the beverage sold, the heavy beer user became the advertising target of the new
campaign. William Wells and Douglas Tigert used an AIO inventory to probe the
heavy user of eye cosmetics. Demographic data revealed that such women were
young, well-educated and metropolitan. But she also tended to be a heavy smoker
and more inclined than the average woman to make long distance telephone calls.
From the responses to statements, she emerged as one who fantasises about trips
around the world, and as one who wanted a very stylish home.
In a study Plummer applied to bank credit card users, males who used bank
chargecards heavily were described as urbane and active with high income level
and occupational and educational achievements. The heavy card user places high
value on personal appearance consistent with his career and lifestyle. He was found
to buy atleast three new suits a year, to belong to several organisations and revealed
contemporary attitudes and opinions.
Thus, a study of personality, lifestyle and social class gives a more comprehensive
consumer profile and not a mere physical description of demographics. Using the
AIO inventory, the Chicago based advertising agency of Needham, Harper and
Steers identified five female lifestyle groups and five male lifestyle groups. We have
Indian parallels of these types and you may try to recall the advertisements given
along side in brackets to identify the lifestyle portrayed through these characters
and decide whether they conform.
Female Lifestyle Types
1. Cathy the contented housewife (the multitasking housewife in MTR
advertisement displaying multiple breakfast options possible at the same time)
Cathy epitomises simplicity. She is devoted to her family and faithfully serves
them as mother housewife and cook. She enjoys a relaxed pace and avoids
anything which might disturb here quilibrium.
2. Candice-the chic suburbanite. (Kiara Addvani in the Myntra commercial?)
Candice is an urban Woman. She is well educated and genteel. Socializing is
an important part of her life. She is a doer, interested in sports and the outdoors,
politics and current affairs. Her life is hectic and lived at a fast clip. She is a
voracious reader and there are few magazines she does not read.
3. Eleanor-the elegant socialite. (Various models in the Lakme 9 to 5 range
campaigns?) Eleanor is a woman with style. She lives in the city because that
is where she wants to be. She likes the socio-economic aspects of the city in
terms of her career and leisure time activities. She is fashion conscious and
dresses well. She is financially secure and hence not a careful shopper. She
shops for status and style and not for price. She is a cosmopolitan woman
who has travelled abroad and wants to. 39
Consumer Behaviour-Issues 4. Mildred-the militant mother. (As an exercise, can you think of an example
and Concepts
so as to draw a comparison?)
Mildred is a woman who got married young and had children before she was
ready to raise a family. Now she is unhappy. She is frustrated and vents he
rfrustration by rebelling against the system. Television provides an ideal medium
for her to live out her fantasies.
5. Thelma-the old-fashioned traditionalist. (The elderly wife in the Swiggy ad?).
Thelma is a lady who has lived a good life. She has been a devoted wife, a
doting mother and a conscientious house wife. Even now, when most of her
children have left home, her life is centred around the kitchen. She lacks higher
education and has little appreciation for the arts or cultural activities. Her spare
time is spent watching TV.
To make these distilled profiles even more useful for segmenting markets for specific
products aimed at women, the researchers then portrayed these segments in terms
of an index of product usage. To illustrate, the following data on use of cosmetics
by the above female psychographic segment reveal very interesting information.
Figure3: VALS-2 Classification (*Description ofthe Profiles have been quoted from
Schiffman and Kanuk Vth edition PP.83 PHI.)
The principle-oriented people have been divided into 2 classes, the fulfilleds and
the believers
Believers are conservative, conventional people with concrete beliefs and strong
attachments to traditional institutions: family, church, community, and the nation. Many
Believers possess moral codes that are deeply rooted and literally interpreted. They
follow established routines, organized in large part around their families and the
social or religious organizations to which they belong. As consumers, they are
conservative and predictable, favoring American products and established brands.
Their education, income, and energy are modest but sufficient to meet the irneeds.
Fulfilleds are mature, satisfied, comfortable, reflective people who value order,
knowledge, and responsibility. Most are well educated, and in (or recently retired
from) professional occupations. They are well-informed about world and national
events and are alert to opportunities to broaden their knowledge. Content with their
careers, families, and station in life, their leisure activities tend to center on their
homes. Fulfilleds have a moderate respect for the status quo, institutions of authority,
44 and social decorum, but are open-minded about new ideas and social change. Fulfilleds
tend to base their decisions on strongly held principles and consequently appear Consumer Behaviour and
Lifestyle Marketing
calm and self-assured. Although their incomes allow them many choices, Fulfilleds
are conservative, practical consumers: they are concerned about functionality, value,
and durability in the products they buy.
The status-oriented people have been further subdivided into 4 classes, the
actualizers, the achievers, the strivers and the strugglers.
Actualizers are successful, sophisticated, active, “take-charge” people with high
self-esteem and abundant resources. They are interested in growth and seek to
develop, explore, and express themselves in a variety of ways-sometimes guided
by principle, and sometimes by a desire to have an effect to make a change. Image
is important to Actualizers, not as evidence of status or power, but as an expression
of taste, independence, and character. Actualizers are among the established and
emerging leaders in business and government, and they continue to seek challenges.
They have a wide range of interests, are concerned with social issues, and are open
to change. Their lives are characterized by richness and diversity. Their possessions
and recreation reflect a cultivated taste for the finer things in life.
Achievers are successful career and work-oriented people who like to-and generally
do-noel in control of their lives. They value structure. predictability, and stability of
over risk, intimacy, and self-discovery. They are deeply committed to their work
and their families. Work provides them with a sense of duty, material rewards, and
prestige. Their social lives reflect this focus and are structured around family, church,
and business. Achievers live conventional lives, are politically conservative, and respect
authority and the status quo. Image is important to them. As consumers, they favour
established products and services that demonstrate their success to their peers.
Strivers seek motivation, self-definition, and approval from the world around
them.They are striving to find a secure place in life. Unsure of themselves and
low on economic, social, and psychological resources. Strivers are deeply
concerned about the opinions and approval of others. Money defines success
for them, who don’t have enough of it and often feel that life has given them a
raw deal. Strivers are easily bored and impulsive. Many of them seek to be stylish.
They emulate those who have more resources and possessions, but what they
wish to obtain is generally beyond theirreach.
Strugglers’ lives are constricted. Chronically poor, ill-educated, low-skilled, without
strong social bonds, aging, and concerned about their health they are often despairing
and passive. Because they are so limited, they show no evidence of a strong self-
orientation, but are focused on meeting the urgent needs of the present moment.
Their chief concerns are for security and safety. Strugglers are cautious consumers.
They represent a very modest market for most, products and services but are loyal
to favorite brands.
The action-oriented segment comprises of two sub segments of Experiencers and
Makers.
Experiences are young, vital, enthusiastic, impulsive, and rebellious. They seek
variety and excitement, savouring the new, the off beat, and the risky. Still in the
process of formulating life values and patterns of behavior, they quickly become 45
Consumer Behaviour-Issues enthusiastic about new possibilities but are equally quick to cool. At this stage intheir
and Concepts
lives, they are politically uncommitted, uninformed, and highly ambivalent about what
they believe. Experiences combine an abstract disdain for conformity and authority
with an outsider’s awe of others’ wealth, prestige, and power. Their energy finds
an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers
are avid consumers and spend much of their income on clothing, fastfood, music,
movies, and video.
Makers are practical people who have constructive skills and value self-sufficiency.
They live in a traditional context of family, practical work, and physical recreation,
and have little interest in what lies outside that context. Makers experience the work
by working on it-building a house, raising children, fixing a car, or canning vegetables-
and have sufficient skill, income, and energy to carry out their projects successfully.
Makers are politically conservative, suspicious of new ideas, respectfulof government
authority and organized labor. but resentful of government intrusion on individual
rights. They are unimpressed by material possessions other than those with a practical
or functional purpose (e.g., tools, pickup trucks, or fishing equipment).
Activity 4
How can the VALS 2 typology be used to develop promotional strategies for?
a. A full-service premium airline
b. A chain of health resorts
Which particular segments would you target for each of these and why?
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
2.10 SUMMARY
Consumer behaviour is still a young discipline but an extremely dynamic one.
Developments in technology leading to data analytics and artificial intelligence have
enabled huge strides in our understanding of evolving consumer behavior. Lifestyle
analyses have helped marketers develop insights into how different groups of
consumers develop patterns of living in accordance with their interests, opinions,
values and demographics. Studies on lifestyles are still ongoing and facilitate the
segmentation of consumers across societies and even globally. These evolving lifestyle
profiles will keep on enhancing the use of psychographics and enable informed insights
into the behaviour of consumers to add to applications discussed in this unit, 49
Consumer Behaviour-Issues
and Concepts 2.11 KEY WORDS
Belief : a descriptive thought that a person holds abouts omething.
Attitude : an attitude describes a persons’ enduring favourable or
unfavorable cognitive evaluations, emotional feelings and action
tendencies toward some object or idea.
Lifestyle : it refers to the person’s pattern of living in the world as
expressed in his activities, interests and opinions.
2.12 SELF-ASSESSMENTQUESTIONS
1. Think about one of your female relatives (Mother, Aunt, Sister etc.) and then
examine the psychographic segments of female population described in the unit.
Into which psychographic segment does this relative belong? What lifestyle
characteristics served to select the category? Then list out how marketing appeals
for purchase of formal wear to each of the segments identified by you will vary.
2. Examine the recent television and online advertisement for ready to cook foods
and apparel to determine if the product is being positioned to a specific lifestyle
segment. Justify your inference.
3. Analyse which VALS type best describes you and then find an advertisement
in your most frequently used media that appeals to this VALS type?
4. Imagine yourself as a retailer for classy home décor. How you would use lifestyle
approach to succeed in your venture?
5. How in your view is the understanding of global lifestyles useful to an Indian
multinational with a global reach? Explain with the help of examples.
51
Consumer Behaviour-Issues
and Concepts UNIT 3 ORGANISATIONAL BUYING
BEHAVIOUR
Learning outcomes
After studying this unit, you should be able to:
define organisational buying and differentiate it from individual buying
identify and distinguish between different types of organisational customers
explain the process of organisation buying
describe and differentiate between different buying situations
analyse and utilise the influences on organisational buying behaviour
discuss the organisational structures and administrative arrangements in
relation to organisational buying
describe the models of organisational buying
Structure
3.1 Introduction
3.2 What is Organisational Buying Behaviour?
3.3 Organisational Buying Behaviour: Important Features and Typical Characteristics
3.4 Who are the Organisational Customers?
3.5 What Influences Organisational Buying?
3.6 The Organisational Buying Situations
3.7 Organisational Buying Behaviour: Some Models
3.8 The Selection of a Supplier
3.9 Recent Developments that have Impacted Organisational Buying
3.10 Summary
3.11 Key Words
3.12 Self-assessment Questions
3.13 Project Questions
3.14 Further Readings
3.1 INTRODUCTION
Mr. Kumar is purchase manager in Khyati Builders, a large construction company
located in Gurugram Haryana. In late March,The MD of the company asked Mr
Kumar to develop theproposal for buying a total of 50 desktops computers and
ten laptops to replace someold equipment and to provide the marketing staff with
modern laptops and improve organisational efficiency. His alternatives were:
a) To contact the various vendors of computer systems each unit costing
Rs. 25,000/- or
52 b) Directly deal with the companies as the order size was substantial.
In order to decide between the two alternatives, he sought the managing director’s Organisational Buying
Behaviour
permission to formulate a purchase committee comprising of the Director Technical,
Director Finance, the HR manager and himself, with the suggestion that the
recommendations of the purchase committee will be placed before the MD for his
approval before the purchase order is issued.
Based on pure economical considerations, the committee decided look for some
brands assembled in China and also looked at reasonably priced multinational brands
like HP, Dell, Acer, Lenovo etc. Apple and Microsoft were not considered on cost
considerations. The Director technical provided the technical details regarding
configuration of the proposed systems. Leading vendors and Manufacturers were
contacted to get the quotations for the items specified. Issue of an inquiry brought
in quotations from 10 vendors/ manufacturers. The screening and evaluation of
quotations took one week. The final short list included two suppliers. The criteria
used to short list were:
i) Past reputation of the manufacturer
ii) Conformance to the company specifications
iii) Delivery period
iv) After sales service and warranties
v) Systems equipped with requisite licensed software
vi) Performance guarantee
vii) Price and corporate discount being offered
Brand X was Rs. 1000 less per unit as compared to Brand Y. Brand X was an
established brand and had approximately 22% market share among business sector
in the state. Its parts manufacturing facilities were within the state and service centres
facilities were located in a nearby commercial industrial area; some 8 km away.
Brand Y, a late entrant, was being assembled in a nearby area only 2 km away.
The promoter of Brand Ywas an ex-employee of Brand X. He offered two-year
guarantee against one year warranty offered by brand X. Mr. Kumar discussed
the purchase committee recommendation with the Managing Director. The outcome
was the decision to place order on the Brand X. This news, somehow leaked. The
promoter of ‘brand Y was able to arrange a meeting with the MD of Khyati Builders
by using the social connection with a common friend and was able to convince him
on promise of excellent service support and product training, if given a chance.
This meeting led to the reversal of the decision in favour of brand Y. The entire
exercise of placing a formal order took 27 days and the new systems were installed
by early May.
While this was happening at the office. Mr. Kumar’s young son raised the demand
for replacing his old laptop, which he said was getting very slow and did not have
the capacity to install some of the new software that he needed. Based on the
experience of the son’s own friends with some of the leading brands, his own online
search that he shared with his father, the attractive deals being offered for students
by these brands and of course the comparative price positions of the different brands,
the Kumar family shortlisted some options. They then visited the city’s best Mall,
to look at the models shortlisted by them. 53
Consumer Behaviour-Issues Mr Kumar’s son was very excited about the different options but finally decided
and Concepts
to opt forbrand K that offered the best memory, speed and the preloaded original
software combination along with attractive price discounts. The entire activity from
the purchase request to the final acquisition took a total of 3 days.
What you have read just now is not fiction but a reality. You must be wondering as
to why the same person, buying the same product displayed very different buying
behaviour.
Well, if you think a little; you would recognise that in the earlier situation (Khyati
Builders), the ‘buying was on behalf. Whereas, in the latter, it was ‘buying for self
for Mr. Kumar. This ‘buying on behalf is the domain of Industrial or Organisational
Marketing. Similarly, the ‘buying for self is the domain of household or what is popularly
known as consumer marketing.
You must have also recognised that ‘buying on behalf’changes the entire complexion
of the buying exercise. And this is precisely the reason of studying organisational
buying behaviour (OBB) separately than the consumer buying behaviour (CBB).
The example of buying the computer systems by Khyati Builders, though comparatively
a simpler example amongst the vast multitude of highly complex, buying situations
of organizational buying, has many messages, and we will keep on coming back to
these. Let us now begin our learning of some important issues and concepts in the
area of organisational buying behaviour.
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
With the help of Figure 2, it will be easy for you to appreciate that this ‘ghost
organisational customer’ can have several types and forms. These could be:
Mining and Extractive Industries: Coal India Limited, ONGC, Hindustan Copper
Limited are some examples.
Material Processing Industries: Tata Steel, Steel Authority of India Limited (SAIL),
Bharat Aluminium Corporation (BALCO) are some examples.
Manufacturing of Parts and Assembly: Bharat Forge, MICO, Sundaram Clayton,
GEC, Larsen & Toubro are some amongst a very large number of part and assembly
manufacturers catering to a variety of needs.
Final Assembly: Desert Cooler Manufacturer (there are several local brands), T.V.
and computer manufacturers (Sony,Samsung,HP, Dell, HCL), Truck manufacturers
(TELCO, Ashok Leyland, Mahindra) and the like are some examples. Like
57
Consumer Behaviour-Issues components and parts manufacturers, there could be many assembly units for numerous
and Concepts
end products.
Distributors: These could be several for each product like bearings, tubes, steel,
electrical appliances and so on. The entire range on internet-based consumer
transaction has added a new domain of organisational buying activity.You can easily
imagine the mammoth range of buying that online distribution aggregators like Amazon,
Flipkart, Myntra, Meeshow would be engaging in.
Perhaps, it is now easy for you to recognise that the area of operation of what we
call as “organisational marketing” is very vast and heterogenous. In such a scenario,
a legitimate question would be the validity of generalisations in form of typical
characteristics. Thus, from the viewpoint of practice, it is imperative to study the
organisational buying behaviour for the specific product-market situation.
A second way to identify the organisational customers is to classify them into three
categories. Industrial (all manufacturing organisations), Institutional (service organisations
like universities, hospitals, hotels, distribution firms) and government (CPWD,
DGS&D, Defence and so on). Besides the ownership pattern (public, private,
government) and type of business (manufacturing, service) it is important to remember
that it is neither the size (big, medium or small) nor the products, which separates
organisational customers from household customers.
Activity 2
With respect to the purchases that you studied for Activity 1, analyse how
these organisational purchases are different from individual purchases.
Purchase I
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
Purchase II
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
c) Do you find any difference in this viewpoint of the supplier and the
organizational buyer? Comment on it.
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
62
Organisational Buying
3.6 THE ORGANISATIONAL BUYING SITUATIONS Behaviour
SOME MODELS
The central idea of knowing and understanding the buyer behavior is to anticipate
the response of a buyer for different marketing stimuli surrounded by various
environmental factors. Figure 4 is a simplified conceptual model highlighting this
relationship.
Its ability to help the marketers to anticipate the marketing effort needed
for the different buying stages in the decision making.
In spite of the above payoffs, the buy grid model is completely devoid of any predictive
ability. It addresses itself only to the ‘non-human’ factors and thus fails to bring out
the dynamics and the influences of human related or emotional factors. But in spite
of the limitations, the Buy Grid Model is a very useful conceptual framework to
comprehend the complexities of organizational buying behavior.
Activity 5
With the help of the ‘Buy Grid Model’ framework, study the buying decision
exercises in a company for the three types of buying situations. Try to identify
the composition of buying’ centers for different buy phases and try to map the
total buying center for each buying situation.
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
The Fisher's Model: Figure 6 illustrates this model. This has been named after its
author.
66
Organisational Buying
Behaviour
As you would observe, the model attempts to identify the dominant influences along
two main dimensions of any buying decision. These are product complexity and
commercial uncertainty. Consider the case of Khyati Builders. For this, the product
complexity as well as the commercial uncertainties were low, the purchase department
(Buyer Emphasis Cell 1) played the dominant role in the buying decision. It was
only after the short listing of the two options, that the top management was involved.
Fisher’s conceptualization is an outstanding example of a simple representation of
a very complex situation. In fact, it is a true representation of administrative
arrangements and provisions which a large number of organizations have made to
buy a vast heterogeneous array of products and services. The limitation, however,
is absence of predictive ability.It also fails to highlight the time dimension and the
various steps in the buying decision exercise. Similar to the buy grid model, it facilitates
in providing good insights of buying situations.
3.10 SUMMARY
Organisational buying behaviour is a complex process of decision making. A variety
of influences and factors add to this complexity. The buying behaviour of a firm
would vary for ‘new buy’ situations to ‘repeat buy’ situations. In order to comprehend
various dimensions, it may help industrial marketers to seek answers to some basic
questions like:
How does an organisation buy?
Who takes the buying decisions in an organisation?
What factors influence the buying behaviour of an organisation?
Who constitutes the organisational markets?
What evaluation criteria is used to select the vendors? 69
Consumer Behaviour-Issues The area is vast as it encompasses thousands and thousands of product market
and Concepts
situations, which in some sense may appear as unique and distinct from each other.
It is therefore suggested to relate some specific situations with the general views
discussed in this unit. This will facilitate in your comprehension of this complex diversity.
72