BUYING SITUATIONS It is not only products differ. Even the buying situation differs.

each time the buyer is to take a purchase decision ,it may or may not be the same as the previous one. The differentiation between the two buying situations may be caused by the absence of any or all of the following factors. 1. Awareness about competing brands in a product group. 2. Customer has a decision criteria and 3. Customer is able to evaluate and decide on his choice. Viewed against these parameters ,one may observe that it is not the product that differentiates one buying situation from another; rather it is the time that the buyer spends in learning and evaluating the alternatives or finally selecting one of them .Howard and Sheth have described these buying situations as being: 1. Routinised response behavior 2. Limited problem solving and 3. Extensive problem solving. Routinised Response Behavior or Straight Rebuy This is a buying situation characterized by the presence of all the above three criteria for differentiation .In other words, here the customers is aware of his or her choices, knows what he is looking for, as his or her decision is based on personal experience of either self or others. Generally, the customers spends little or no time choosing an alternative .Brand loyalty is relatively higher here. Moreover, this is a buying situations where a customer perceives a low risk in buying the product and/or the brand. Consider the typical shopping behavior of a housewife .She goes to the grocer or a supermarket and spends much less time in selecting her toiletries ,beverages like tea or coffee and other food products. For each time she goes to buy her familys requirements ,she generally ends up buying the same brand. Limited Problem Solving or Modified Rebuy This is a buying situation with a difference .This could be for example, introduction of a new brand or product often requiring a change in the customers decision criteria. Continuing the example of the housewife ,assume that in her next shopping cycle ,she sees a new liquid toilet soap which promises to keep her skin soft and moisturized .the brand also promises to give vitamin E, which the manufacturer claims is required in temperate conditions. The liquid toilet soap brand is available in four fragrances .The pack can be refilled every time the soap gets fully consumed .Now this introduction is likely to change her decision and may be the choice criteria. If she spends some time in evaluating the liquid toilet soap against the normal bar soap and then decides to try it, we conclude that for her it was a limited problem solving situation. As can be seen, this buying situation will often lead to a trial purchase. the customer may even decide to continue with her current product selection. generally it has been observed

that brand extension strategy help the customer to reduce the element of newness in the purchase decision. Like ,for example Unilever deciding to introduce liquid toilet soap under its most popular brand name lux. It may be remembered that customer perceives moderate risk in this situation.

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Individuals Buying Retail products

by V S Rama Rao on May 26, 2011

The most commonly thought of consumer situation is that of an individual making a purchase with little or no influence from others. However, in some cases a number of people can be jointly involved in a purchase decision. For example, planning a vacation or deciding on a new car can involve an entire family. In other cases the purchaser may just be acquiring a product for someone else who has asked for a certain item. These situations suggest that people can take different roles in what we have defined as consumer behavior. Some purchase situations involve at least one person in each of these roles, while in other circumstances a single individual can take on several roles at the same time. For example, a wife (initiator and influencer) may ask her husband (buyer) to pick up a box of corn flakes on his shopping trip because their child (user) wanted it. At another time the husband could act as the initiator, buyer and user by purchasing a gym membership for himself. When it becomes useful to consider only one role we tend to choose the role of the buyer - the individual who actually makes the purchase. This approach is useful because even when told what to purchase the buyer often makes decisions based on purchase timing, store choice, package size and other factors. Therefore, focusing on the buyer while allowing the influence of others in the purchase decision, still gives considerable flexibility while concentrating on one consumer role. An important finding states that a large number of married men are assuming a wide variety of non-traditional family roles. Not only are men increasingly pushing the shopping carts, but they are exhibiting behavior that differs from that of women. For instance, when husbands do the

grocery shopping they may well choose a brand different from the one the wife would have picked. This article introduces the basic tools of welfare economies, consumer and producer surplus and uses them to evaluate the efficiency of free markets. The forces of supply and demand allocate resources efficiently. Even though each buyer and seller in market is concerned only about his or her own welfare they are together led by an invisible hand to an equilibrium that maximizes the total benefits of buyers and sellers. A word of caution is in order. To conclude that markets are efficient we made several assumptions about how markets work. When these assumptions do not hold, our conclusion that the market equilibrium is efficient may no longer be true. First, I assumed that markets are perfectly competitive. In the world, however competition is sometimes far from perfect. In some markets, a single buyer or seller (or a small group of them) may be able to control market prices. This ability to influence prices is called market power. Market power can cause markets to be inefficient because it keeps the price and quantity away from the equilibrium of supply and demand. Second, the outcome in a market matters only to the buyers and sellers in that market. Yet, in the world the decisions of buyers and sellers sometimes affects people who are not participants in the market at all. Such side effects called externalities causes welfare in a market to depend on more than just the value to the buyers and the cost to the sellers. Buyers and sellers do not take these side effects into account when deciding how much to consume and produce the equilibrium in a market which can be inefficient from the stand point of society as a whole. Market power and externalities are examples of market failure the inability of some unregulated markets to allocate resources efficiently. When markets fail, public policy can potentially remedy the problem and increase economic efficiency. When market failure is likely then the policies which are best judged at correcting market failures should be applied. Despite the possibility of market failure the invisible hand of the market place is extraordinarily important. In many markets, the conclusion of market efficiency applies directly. Moreover our analysis of welfare economics and market efficiency can be used to shed light on the effects of various government policies. Consumer surplus equals buyers willingness to pay for a good minus the amount they actually pay for it and it measures the benefit buyers get from participating in a market. Producer surplus equals the amount sellers receive for their goods minus their cost of production, and it measures the benefit sellers get from participating in the market. An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient.

Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.

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