Consumer and Organizational

Buying Behavior
 Session Objectives.
• Understanding buyer behavior.
• Understanding different buying roles.
• How consumer makes purchase and what affect
their purchase?
• Understanding consumer decision process.
• Difference between consumer and organizational
buyer behavior.
• What affect organizational buying.
• Roles in organizational buying process.
 Wal – Mart Story
Wal-Mart opened its store in Latin America.
The sales have been disappointing and
questions are raised whether Wal-Mart magic
can work in Latin America. Wal-Mart designed
its store like any other Wal-Mart store in US:-
narrow aisles with a lot of merchandise, huge
parking lots, many products with red, white
and blue banners, and so on. Why did Wal-
Mart magic could not work ?
 Why Did Wal-Mart Fail ?
• Latin Americans shop with their families and
require large aisles.
• Most of them do not own cars hence require
door to door transportation service.
• Red, white and blue banners gives impression
of Yankee imperialism.
• The bottom line is Wal-Mart forgot to study
the Customer.
 Buyer Behavior
Behavior
As you look at history it’s apparent that
human behavior is much more easier to
predict than the weather.

Behavior is a mirror in which everyone shows

image.
 Buyer Behavior Defined
Consumer behavior is all psychological, social
and physical behavior of potential customers
as they become aware of, evaluate, purchase,
consume, and tell others about the products
and services.
 Buyer Behavior
• The study of buyer behavior includes the
study of:
 What they buy?
 Why they buy?
 How they buy?
 When they buy?
 How often they buy?
 From where they buy?
Factors affecting Buyer Behavior
 Cultural factors.
 Social factors.
 Personal factors
 Psychological factors.
 Cultural Factors:
 Culture
Basic cause of person’s wants and behavior.
 Sub-culture
Group of people which share values.
 Social class
It is measured as a combination of occupation,
income, education, wealth and other
variables.
Social factors.
 Reference group.
 Primary and secondary groups
 Formal and informal groups
 Membership and symbolic groups.
Family
 Roles and Status.
 Personal factors
 Age and Life cycle stage.
 Occupation.
 Income.
 Life Style.
 Psychological factors.
 Motivation.
 Perception.
 Learning beliefs and
 Attitudes.
 Consumer Decision Process

•• Need
Need Recognition
Recognition

•• Cultural,
Cultural, Social,
Social, •• Information
Information Search
Search
Individual
Individual and
and •• Evaluation
Evaluation
•• Psychological
Psychological •• of
Factors of Alternatives
Alternatives
Factors
affect
affect •• Purchase
Purchase
all
all steps
steps •• Postpurchase
Postpurchase
•• Behavior
Behavior
 Need Recognition

• When a current product isn’t

Marketing helps consumers
recognize (or create) an
imbalance between present
status and preferred state
performing properly
• When the consumer is running
out of an product

• When another product seems

superior to the one currently used
 The information search stage

An internal search involves the scanning of one's

memory to recall previous experiences or knowledge Personal sources (friends
concerning solutions to the problem-- often sufficient and family)
for frequently purchased products.

Public sources (rating

An external search may be necessary when past services like Consumer
Reports)
experience or knowledge is insufficient, the risk of
making a wrong purchase decision is high, and/or the
cost of gathering information is low. Marketer-dominated
sources (advertising or
sales people)

The evoked set: a group of brands

from which the buyer can choose
Determinants of External Search
 Consumer decision making varies with the
level of involvement in the purchasing
decision

• Extensive: problem solving occurs when

buyers purchase more expensive, less
frequently purchased products in an
unfamiliar product category requiring
information search & evaluation; may
experience cognitive dissonance.

• Limited: problem solving occurs when buyers are

confronted with an unfamiliar brand in a familiar Increase in
product category Consumer
evaluation
processes
• Routine: response behavior occurs
when buyers purchase low cost, low risk, brand
loyal, frequently purchased, low personal
identification or relevance, items with which they
are familiar.
 Factors affecting
Consumer involvement

• Previous experience: low level involvement

• Interest: high involvement
• Perceived risk of negative consequences: high involvement
• Situation: low to high due to risk
• Social visibility: involvement increases with product visibility

So…
• Offer extensive information on high involvement products
• In-store promotion & placement is important for low involvement products
• Linking low-involvement product to high-involvement issue can increase sales
 Evaluation of Alternatives
•In this stage, the consumer compares the
options identified as potentially capable of
solving the problem that initiated the decision
process.
•During this comparison process, consumers
form beliefs, attitudes, and intentions about
the alternatives under consideration.
•The goal of alternative evaluation is to gain
the information needed to make final choice.
 Evaluation of alternatives
• CAR
• Safety
• Fuel efficiency
• After sales service
• Driving comfort
• Maneuverability
• Financing options
• Resale value
• Appearance of the model**
• UBP (Unique buying proposal)

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Postpurchase Behavior
Cognitive Dissonance

?
Did I make a good decision?

Did I buy the right product?

Did I get a good value?

Can minimize through:
Effective Communication
Follow-up
Guarantees
Warranties
Underpromise & overdeliver
Sour Grapes–
a story of
cognitive dissonance

…after being unable to reach the grapes the fox said, “these grapes are
probably sour, and if I had them I would not eat them.”
--Aesop
 Cognitive Dissonance
• psychological discomfort caused by inconsistencies among a
person’s beliefs, attitudes, and actions
• varies in intensity based on importance of issue and degree of
inconsistency
• induces a “drive state” to avoid or reduce dissonance by
changing beliefs, attitudes, or behaviors and thereby restore
consistency

Applications:

Tendency to avoid information can be countered by eliciting interest,

norm of fairness, or perceive usefulness of information

Post-decision “buyer’s remorse” may be increased by importance or difficulty or

irreversibility of decision

Counter-attitudinal action, freely chosen with little incentive or justification, leads to

attitude change (e.g., new product at special low price)
 The pride of your home
• What is the latest consumer durable product you have bought for your
house?
• Whose idea was to get that product? Why did he/she feel that you needed
that product?
• Who fixed the budget? What was the procedure for fixing budget? Who
paid for the product?
• Whom did you consult before deciding?
• Why did you select the particular brand and not the other?
• Who selected the particular brand?
• Where did you buy it and why from there only?
• What is your feeling after buying and using that product?
• Any other aspects worth mention?**
• Time 15 mins. Randomly selected 3 to present.

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Initiator Influencer Payer Decider Buyer User

26 of 31
 Organization
Buying Process
 What is a Business Market?

• The Business Market - all the organizations that buy

goods and services to use in the production of other
products and services that are sold, rented, or
supplied to others.
involve many more dollars and items do consumer
markets.
 Classifications of Industrial Goods
• Raw materials
• Component parts and materials
• Installations
• Accessory equipment
• Maintenance, repair, and operating supplies
(MRO)
• Business services
Characteristics
Characteristics of
of Business
Business Markets
Markets

Market
MarketStructure
Structureand
andDemand
Demand
••Fewer,
Fewer,larger
largerbuyers
buyers
••Geographically
Geographicallyconcentrated
concentrated
••Demand
Demandderived
derivedfrom
fromconsumers
consumers
••Inelastic
Inelasticdemand
demand
••Fluctuating
Fluctuatingdemand
demand
Nature
Natureof
ofthe
theBuying
BuyingUnit
Unit
••More buyers
More buyers
••More professional purchasing
More professional purchasing
effort
effort
Types
Typesof
ofDecisions
Decisions&&the
the
Decision Process
Decision Process
••More complex decisions
More complex decisions
••Process is more formalized
Process is more formalized
••Buyer and seller are more
Buyer and seller are more
dependent
dependenton oneach
eachother
other
••Build close long-term relationships
Build close long-term relationships
with
withcustomers
customers
Organizational Buying vs. Consumer Buying

• Derived demand
• Fewer buyers
• Larger purchases
• Some geographic concentration among buyers
• Multiple buying influences
• Less likely to use middlemen
• Multiple sales calls
• Systems buying often used
 Organizational Buying vs. Consumer Buying
(cont’d)
• Professional buyers are often involved in the
purchase
• Closer buyer-seller relationships
• More rational & structured buying processes
• Reciprocity
• Leasing
• Sometimes influenced by make-or-buy options
 2. General
1. Problem 3. Product
Description
Recognition Specifications
of Need

5. Acquisition
4. Supplier Organizational and Analysis
Search Buying Process of Proposals

7. Selection
6. Supplier 8. Performance
of
Selection Review
Order Routine
Three Buying Situations

1. New task
2. Modified rebuy
3. Straight rebuy
 Three Buying Situations
1. New Task

• New task—the problem or need is totally

different from previous experiences.
– Significant amount of information is required.
– Buyers operate in the extensive problem solving
stage.
• Buyers lack well defined criteria.
• Lack strong predispositions toward a solution.
 Three Buying Situations
2. Modified Rebuy

• Modified rebuy—decision makers feel there

are benefits to be derived by reevaluating
alternatives.
– Most likely to occur when displeased with the
performance of current supplier.
– Buyers operate in the limited problem solving
stage.
• Buyers have well defined criteria.
 Three Buying Situations
3. Straight rebuy

• Straight rebuy—the problem or need is a

recurring or continuing situation.
– Buyers have experience in the area in question.
– Require little or no new information.
– Buyers operate in the routine problem solving
stage.
 Forces Influencing Organizational Buying Behavior
•Economic Outlook:
A projected change in
Domestic & Global
business conditions can •Pace of Technological
drastically alter buying Environmental
Change
plan. Forces •Global Trade Relations

•Goals, Objectives, and

Organizational Strategies
Forces •Organizational Position
Organizational of Purchasing
Buying
•Roles, relative
Behavior
Group influence, and patterns
Forces of interaction of buying
decision participants

•Job function, past

Individual experience, and buying
Forces motives of individual
decision participants
 Roles in B2B procurement – buying center
concept
• Group of people involved in the buying
process – buying center
• Webster/Wind model shows 5 different roles –
not institutionalised
• This causes probleme in identifying and
targeting the right people within the decision
process

39
Participants in the Business Buying
Process: The Buying Center

Gatekeepers Users

Buying
Buying
Deciders Center
Center Influencers

Buyers
 Buyer
• Formal authority to sign contracts
• Member of purchasing department
• Influences the vendor selection
• Not in technical details
• Main criteria: price + terms and conditions of
the contract

41
 User
• Person working with the product
• Interested in benefits and unobstructed
function of the product to buy
• Large knowhow and preconceived opinion

42
 Influencer

• A person with high technical knowledge and

practical experience

 definition of minimum requirements on

technical or company standards

43
 Gatekeeper

• Controls the flow of information within the

buying center
• Assistant of decision maker
• Influence by preparing the decision and the
relevant documents

44
 Decider

• Right to say yes or no

• Mightiest person

45
 Initiator

• Person who brings new ideas and solutions

into the company

Mag. Maria Peer 46

 Specific marketing considerations in the
industrial facilities business
• Long decision taking process
• High risk
• Complex buying center
• The specific competitive situation

Mag. Maria Peer 47

Major Elements of Organizational Buying Behavior

The behavior of
organizational buyers is
influenced by
environmental,
organizational, group,
and individual factors.