CHAPTER THREE

CONSUMER MARKETS & BUYERS

BEHAVIOR

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 What Is Consumer Behavior?
• Consumer behavior is the study of how
buying behavior of final consumer,
individuals and households select, buy,
use, and dispose of goods, services, ideas,
or experiences to satisfy their needs and
wants.
• Consumer behavior is the mental, emotional
and physical process & activities people
engage in when searching for, selecting,
purchasing, using, evaluating & disposing
of products to satisfy their needs & desires.
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• Consumers around the world vary
tremendously in
 Age
 Income
 Educational level
 Tastes
 Preference
 Need
 In fact, not understanding your customer’s
motivations, needs, and preferences can lead to
major mistakes
 Marketers need to satisfy and understand
consumer needs or buyers behavior. 3
If customers are satisfied
 They will buy more of a company’s products
 They talk favorably about the companies
 They advice the company for improvement
 They give little attention to the companies
and their goods
 They may buy new products of the
company.

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 Who Makes Up the Market?
1. Consumer or individual or ultimate users
are those groups that purchase products
(goods & services) for their own personal
or use consumption purpose.
2. Organizational or business or industrial
buyers are those groups of buyers that purchase
products for use in making other products, for
day-to-day operation purpose.
• These include government institutions,
manufacturing companies, (wholesalers,
retailers)
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Why Do Customers Buy Products?
 To solve specific problems
 To prevent a problem from occurring
 For symbolic purpose: Emotional &
Psychological satisfaction
 Because of influence

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 PURCHASING DECISION MAKING PROCESS?

• Sometimes consumers do not engage in

the five steps purchase decision process.
• Instead, they skip or minimize one or more
steps depending on the
• level of involvement
• The personal
• Social
• Economic significance of the purchase to
the consumer.
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TYPES OF PURCHASING DECISION MAKING

1. Routine Purchasing Decision

2. Limited Problem Solving Buying Decision

3. Extended Problem Solving Buying Decision

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 1 Routine Problem Solving
• The purchase process for such item is virtually a
habit and low-involvement decision-making.
• Routine problem solving is typically the case of
low priced, frequently purchased products. It is
estimated that about 50 percent of all purchase
occasions are of this kind.
• Characteristics Routine type of decision making
 Level of information about the market is very high
 Price knowledge and experience is very high
 Frequency of purchase is very high
 Perceived risk is very low or E.g. Purchasing a
pen 9
 2. LIMITED PROBLEM SOLVING
• Limited problem solving accounts for about 38
percent of purchase occasions.
 Characteristics Limited buying decision making
 Level of information about the market is moderate
 Price knowledge and experience is moderate
 Frequency of purchase is average
 Perceived risk is also moderate
 Example
 Purchasing furniture and cloths.

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 3. EXTENDED PROBLEM SOLVING
• Firms marketing these products put significant effort into
informing and educating these customers.
• About 12 percent of purchases fall into this category.
• Characteristics of problem solving buying decision
 level of information about the market is none or very little
 Price knowledge and experience is almost none or very
little
 Frequency of purchase is very little and,
 Perceived risk is very high.
 Example for such kind of purchase decision includes buying
a house, a car and any other similar nature.

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1. Need/Problem recognition
2. Information
STAGE search DECISION PROCESSES
IN THE BUYER
3. Evaluation of alternatives
4. Purchase decision
5. Post purchase behavior

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• 5.4.1 Need Recognition
• The buying process starts with need
recognition where the buyer recognizes a
problem or need.
• The need can be triggered by internal
stimuli when one of the persons normal
needs, hunger, thirst, sex
• A need can also be triggered by external
stimuli to find out what kinds of needs or
problems arise, what brought them about
the particular product.
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 5.4.2 Information Search
• The consumer can obtain information from any
of several sources:
1. Personal Source: family, friends, neighbors, links
2. Commercial Sources: advertising, salespersons,
dealers, packages, displays
3. Public Sources: mass media, consumer rating
organizations.
• As more information is obtained and aware, the
consumers' awareness and knowledge about the
available brands and features increase.
• .
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5.4.3 Evaluation of Alternatives
• The consumer ranks brands and forms purchase
intentions
• The consumer information to arrive at brand information
and make a final judgment
• Basic concepts help explain consumer evaluation
process:
• Package of product attributes connected with their needs
• Attach different degrees of importance to different
attributes with their needs and wants
• To develop a set of brand beliefs about where each
brand image to each attribute
• The consumer's expected total product satisfaction will
vary with levels of different attributes
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• The consumer arrives at attitudes toward (through) the
 5.4.4 Purchase Decisions
• To buy most prepared brand, but two factors can
come between the purchase intention and the
purchase decision.
1. The first factor is the attitude of others
2. The second factor is unexpected situational
factors.
 Expected income
 Expected price
 Expected product benefits

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 5.4.5 Post Purchase Behavior
• After purchasing the product, the consumer will be
satisfied or dissatisfied and will engage in post
purchase behavior of interest to the marketer.
• If the product fall short of expectations, the
consumer is disappointed, if it meets
expectations, the consumer is satisfied, if
product's performance exceeds expectations, the
consumer is charmed.

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 The Five Buying Roles
• 1 The initiator, who first suggests buying
the product or service
• 2 The influencer, whose comments affect
the decision made
• 3 The decider, who ultimately makes buying
decision
• 4 The buyer, who physically makes the
purchase
• 5 The user(s), who consume(s) the product
or service.
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 What is Organizational Buying?
• Organizational buying: is the decision-making process by
which formal organizations establish the need for purchased
products and services and identify, evaluate, and choose
among alternative brands and suppliers
• The business market versus the consumer market
• The business market consists of all the organizations that
acquire goods and services used in the production of other
products or services that are sold, rented, or supplied to
others.
• The major business market are agriculture, forestry, and
fisheries; mining; manufacturing; construction; transportation;
communication; public utilities; banking, finance, and
insurance; distribution; and services.
• Consumer Markets Companies selling mass consumer goods and
services such as soft drinks, cosmetics, air travel, and athletic shoes.
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 6.4 BUYING SITUATIONS
• 6.4.1 Straight Re-buy is a buying situation in which the
purchasing department re-orders on a routing basis (e.g.
office supplies, bulk chemicals).
• 6.4.2 Modified Re-buy is a situation in which the buyer wants
to modify product specifications, prices, delivery
requirements or other related items.
• 6.4.3 New Task Buying is a buying situation in which a
purchaser buys a product or service for the first time
(example could be office building, new security system ).
• New-task buying passes through several stages;
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption 20
Participants in the Business Buying Process
1. Initiators- Users or others in the organization who request that
something be purchased.
2. Users-Those who will use the product or service.
3. Influencers-People who influence Technical information for
evaluating alternatives.
4. Deciders-People who decide on product requirements or on
suppliers.
5. Approvers- People who authorize the proposed actions of deciders or
buyers.
6. Buyers- People who have formal authority to select the supplier and
arrange the purchase terms.
7. Gatekeepers- People who have the power to prevent sellers or
information from reaching members of the buying center.
• For example, purchasing agents, receptionists, and telephone
operators may prevent salespersons from contacting users or
deciders.
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Stages Organizational Buying Process

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Stage 1. Problem recognition
 Begins when someone in the company recognizes
a problem
 Can be triggered by internal or external stimuli.
 Can stimulate problem recognition by direct mail,
telemarketing, & calling on prospects
 Internal stimuli might be that the company
decides to develop a new product and needs new
equipment and materials,
 Externally, the buyer may get new ideas at a trade
show, see an ad, or receive a call from a sales
representative who offers a better product or a
lower price 23
2. General Need Description and Product
Specification
• The buyer determines the needed item's general
characteristics and required quantity
• For complex items, the buyer will work with others
engineers, users-to define characteristics such
as reliability, durability, or price
• The buying organization now develops the item's
technical specifications.
• Product value analysis (PVA) is an approach to
cost reduction, standardized or made by cheaper
methods of production.

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• Stage 3. Supplier search
• The buyer tries to identify the most appropriate suppliers
through trade directories, contacts with other companies,
trade advertisements, trade shows, and the Internet.
• Companies that purchase over the Internet are utilizing
electronic marketplaces in several forms:
• Catalog sites: Companies can order thousands of items
through electronic catalogs
• Vertical markets: . Companies buying industrial products
such as plastics, steel. or chemicals or services such as
logistics or media can go to specialized Web sites
• Pure Play" aucton sites: Online marketplaces such as
eBay and Freemarkets.com provides online auctions for
buyers and sellers of industrial parts, raw materials,
commodities, and services
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• Spot (or exchange) markets. On spot electronic markets,
prices change by the minute.
• Private exchanges. operate private exchanges to link with
specially invited groups of suppliers and partners over the
Web.
• Buying alliances. Several companies buying the same
goods join together to form purchasing consortia such as
Transora and Covisint to gain deeper discounts on volume
purchases
• Online business buying offers several advantages:
 It shaves transaction costs for both buyers and suppliers
 reduces time between order and delivery
 consolidates purchasing systems
 more direct relationships between partners and buyers.

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• Stage 4. Proposal solicitation
• The buyer next invites qualified suppliers to submit
proposals.
• Business marketers must be skilled in researching,
writing, and presenting proposals.
• Written proposals should be marketing
documents that describe value and benefits in
customer terms.
• Oral presentations must inspire confidence and
position the company's capabilities and resources
so they stand out from the competition
• Salespeople can leverage the knowledge and
expertise of coworkers instead of working in
isolation 27
Stage 5. Supplier selection
• Before selecting a supplier, the buying center will
specify desired supplier attributes and indicate
their relative importance.
• Delivery reliability, price, and supplier reputation
are important for routine-order products.
• For procedural-problem products, such as a
copying machine, the three most important
attributes are
1. Technical service
2. Supplier flexibility
3. Product reliability.
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• Stage 6. Order routine specification
• After selecting suppliers, the buyer negotiates the
final order, listing the technical specifications, the
quantity needed, the expected time of delivery,
return policies, warranties

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Stage 7. Performance review
• The buyer periodically reviews the performance of the chosen
supplier(s) using one of three methods
1. The buyer may contact the end users and ask for their
evaluations
2. the buyer may rate the supplier on several criteria using a
weighted-score method
3. the buyer might aggregate the cost of poor performance to
come up with adjusted costs of purchase, including price.
• The performance review may lead the buyer to continue,
modify, or end a supplier relationship
• Many companies have set up incentive systems to reward
purchasing managers for good buying performance, in much
the same way that sales personnel receive bonuses for good
selling performance
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 six questions
1. What is the business market, and how does it differ
from the consumer market?
2. What are the major influences on organizational
buyers?
3. What buying situations do organizational buyers
face?
4. Who participates in the business buying process?
5. How do business buyers make their decisions?
6. How do institutions and government agencies do
their buying?

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Thank you

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