Consumer and Organizational

Buying Behavior

1
Kotler on Marketing

The most important thing is to forecast

where customers are moving, and be in
front of them.
 Objectives
 Define the consumer market and major factors
that influence consumer buying behavior.
 Understand the stages in the buyer decision

process.

 Define the business market and explain how

business markets differ from consumer markets.
 Identify the major factors that influence
business buying behavior.
 Consumers make many buying decisions
everyday and buying decision is the focal
point of the marketer’s effort.

Marketers can study actual consumer

purchases to find out what they buy, where and
how much, but learning the why’s of the
consumer buying behavior is not easy- the
answer is locked deep within the consumer’s
mind.
 Consumer Buying Behavior refers
to the buying behavior of final
consumers -individuals &
households who buy goods and
services for personal consumption.

 All these consumers make up the

consumer market.
 How do consumers respond to

various marketing efforts the

company might use?
 Model of Consumer Behavior

Marketing and Buyer’s Black Box Buyer Responses

Other Stimuli
Product Choice
Marketing Buyer Characteristics
Product Brand Choice
Price
Place Dealer Choice
Promotion
Other Buyer Decision Purchase Timing
Economic
Process
Technological Purchase Amount
Political
Cultural
 Factors Influencing Consumer Behavior

Cultural
Social
Personal Psycho-
Reference Age & Logical
Culture
Culture groups life-cycle Motivation
Occupation
Sub- Economic
Perception Buyer
Sub- Family situation
culture
culture Learning
Lifestyle
Personality Beliefs &
Roles attitudes
Social
Social & self-concept
class
class status
 Types of Consumer Buying Behavior

High Low
Involvement Involvement

Significant
differences
between Complex Variety-
brands Buying Seeking
Behavior Behavior

Few Dissonance- Habitual

differences Reducing Buying Buying
between
brands
Behavior Behavior
 Complex buying behavior
 When consumers are highly involved in a purchase and
perceive significant differences among the brands.
 Consumers may be highly involved when the product is
expensive, risky and purchased infrequently

 Marketers need to help buyers learn about product-

class attributes& their relative importance.
 They need to differentiate their brand features, by
describing them using print media with long copy.
Dissonance-Reducing buying behavior
 Occurs when consumers are highly
involved with an expensive , risky purchase
but see little differences among brands.

 Consumers might experience post purchase

dissonance when they notice certain
disadvantages of the purchased brand or hear
favorable things about brands not purchased.
 Habitual buying behavior
 Occurs under conditions of low consumer
involvement and little significant brand
difference.
 Consumers appear to have low involvement
with most low cost, frequently purchased
products.

 Ad repetition creates brand familiarity rather

than brand conviction “ consumers don’t form
strong attitudes toward a brand, they select the
brand because it’s familiar.
 Variety-seeking buying behavior
 In situations characterized by low consumer
involvement but significant perceived brand
differences.

 In such cases consumers often do a lot of

brand switching.

 Brand switching occurs for the sake of

variety rather than because of dissatisfaction.
Consumer Buying Decision Process
Purchase
Decision
Evaluation Postpurchase
of Alternatives Behavior
Information
Search
Need
Recognition
1. Need (Problem) Recognition
 Difference between the desired state and the actual
condition.
 Deficit in assortment of products.
 E.g. Hunger stimulates your need to eat.

2. Information search
 Internal search like memory.
 External search. If you need more information, friends
and relatives word of mouth can be used.
 A successful information search leaves a buyer with
possible alternatives.
 Information Search
• Family, friends,
Personal neighbors
Personal Sources
Sources
• Most effective source of
information
• Advertising, salespeople,
Commercial
Commercial Sources
Sources Internet
• Receives most
information from these
sources
Public
Public Sources
Sources • Mass Media
• Consumer-rating groups

•Handling the product

Experiential
Experiential Sources
Sources •Examining the product
•Using the product
3. Evaluation of Alternatives
Need to establish criteria for evaluation.
Product
Product Attributes
Attributes
Evaluation
Evaluationof
of Quality,
Quality,Price,
Price,&&Features
Features

Degree
Degree of
of Importance
Importance
Which
Which attributes
attributesmatter
mattermost
mostto
tome?
me?

Brand
Brand Beliefs
Beliefs
What
Whatdo
doIIbelieve
believeabout
about each
each available
availablebrand?
brand?
Total
Total Product
Product Satisfaction
Satisfaction
Based
Basedon
onwhat
what I’m
I’m looking
lookingfor,
for, how
howsatisfied
satisfied
would
wouldIIbe
bewith
witheach
eachproduct?
product?
Evaluation
Evaluation Procedures
Procedures
Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
 Evaluation of Alternatives
 Consumer May Use Careful Calculations & Logical
thinking
 Consumers May Buy on Impulse and Rely on
intuition
 Consumers May Make Buying Decisions on
their Own.
 Consumers May Make Buying Decisions Only
after Consulting Others.
 Therefore, Marketers Must Study Buyers to Find Out
How They Evaluate Brand Alternatives.
includes product, package, store, method of purchase etc.
5. Postpurchase Behavior

Satisfied Customer

Consumer’s
Expectations of Product’s Performance
&
Product’s Perceived
Performance.

Dissatisfied
Customer
 Post-Purchase Behavior
 The satisfaction or dissatisfaction that the
consumer feels about the purchase.
 Consumer’s expectations
Relationship between:  Product’s perceived
performance
The larger the gap between expectation and
performance, the greater the consumer’s
dissatisfaction.
 Cognitive dissonance is the discomfort caused by
a post-purchase conflict.
 Customer satisfaction is a key to building
profitable relationships with consumers—to keeping
and growing consumers and reaping their customer
lifetime value.
 Organizational Buying Behavior
 Comprises all the organizations that buy goods
and services for use in the production of other
products and services that are sold, rented, or
supplied to others.

 Organizational /Industrial/ buyers are those who

purchase items on behalf of their business or
organization.

 The business market is huge and involves many

more dollars and goods than do consumer markets.
  Characteristics of Business Markets
Contain fewer,
Contain fewer, but
but
larger
larger buyers
buyers

Customers are more

Customers are more
geographically
geographically concentrated
concentrated

Buyer demand isis derived

Buyer demand derived from
from
final
final consumer
consumer demand
demand
Demand is often more
inelastic

Demand often fluctuates

more, and more quickly
The nature and size of Organizational and Consumer
Markets
Model of Business Buyer Behavior
 Major Types of Organizational Buying
Situations

New
New Task
Task Buying
Buying

Modified
Modified Rebuy
Rebuy
Involved Decision
Making

Straight
Straight Rebuy
Rebuy
1. Straight Re-Purchase –
 These purchase situations involve routine
ordering.
 In most cases buyers simply reorder the
same products or services that were
previously purchased.
 In fact, many larger companies have
programmed re-purchases into an
automated ordering system that initiates
electronic orders when inventory falls below a
certain pre-determined level.
2. Modified Re-Purchase – These
purchases occur when products or
services previously considered a straight
re-purchase are for some reason now
under a re-evaluation process.

There are many reasons why a product is

moved to the status of a modified re-
purchase.
Some of these reasons include:
 End of purchase contract period,
 Change in who is involved in making the
purchase,
 Supplier is removed from an approved
suppliers list,

 Mandate from top level of organization to re-

evaluate all purchasing, or
 Strong marketing effort by competitors.
3. New Task Purchase
 As the name suggests, these purchases are ones the
buyer has never or rarely made before.
 In some ways new task purchases can be
considered as either minor or major depending on
the total cost or overall importance of the
purchase.
 For example, if faced with a major new task
purchase, which often involves complex items, such
as computer systems, buildings, robotic assembly
lines, etc., the purchase cycle from first recognizing
the need to placement of the order may be months
or even years.
Participants in the Business Buying Process

Users
Decision-
Factors
Factors Influencers
Making Unit
Situational
Situational
Unexpected
of a Buying
Unexpected

Organization Buyers
is Called Its
Attitudes
Buying
Attitudes
of
of
Center.
Others
Others Deciders
Gatekeepers
 Users - members of the organization who will use the
product or service (initiate the buying proposal and
help define product specifications).
 Influencers - help define specifications and provide
information for evaluating alternatives (Technical
personnel are particularly important influencers).
 Buyers - have formal authority to select the supplier
and arrange terms of purchase. ( their major role is in
selecting vendors and negotiating)
 Deciders have formal or informal power to select or
approve the final suppliers.
 Gatekeepers control the flow of information to
others.
Major Influences on Business Buyer Behavior
Environmental
Economic
developments Organizationa
Supply
l
Conditions Interperso
Objectives
nal Individu
Technological
Policies
al
change Authority Buyers
Age
Procedures Education
Political and Status
regulatory Job Position
Organizational Personality
developments Empathy
Structure Risk
Attitudes
Competitive Persuasivenes
Systems
Developments s

Culture and
customs
Decision making process in organizational buying
 Challenges for the future
 Gathering and interpreting information that
organizations need to meet changing
needs of consumers.
 Developing effective consumer research
methods to capture changes in trends and
lifestyles.
 Understanding consumer behavior from a
broader perspective as an important
part of life.
Thank You
for Your
Attention