Buyer behaviour

Module 3

What is Consumer Behaviour?

Consumer behaviour or Buyer behaviour is

defined as the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items. That includes what they buy, why they buy it, when they buy it, where they buy it from, how often they buy it, how often they use it, how they evaluate it after the purchase and the impact of such evaluations on future purchases

Buyer Behaviour Models

The Economic Model: It views the buyer as a rational man and his buying decisions will only be concerned with utility The Learning Model: Buyer behaviour can be influenced by manipulating the drives, stimuli and response of the buyer. This model is based on mans ability to learn, forget and discriminate The Psycho-Analytical Model: This model is based on Freudian psychology. According to this model, the individual consumer has a complex set of deepseated motives that drive him towards certain buying decisions. The buyer is viewed in a world of his own, with is hidden fears, suppressed desires and totally subjective longings. It is proposed that the buyers decision can be influenced by appealing to these hidden desires and longings.

The Sociological Model: The individual buyer is influenced by society. He is influenced by intimate groups and social classes
The Howard-Sheth Model: The buyer is analysed here as a system with stimuli as input into the system, and behaviour as output of the system. In between the inputs and outputs, there are variables affecting perception and learning.

Factors Influencing Consumer Behaviour

Cultural Factors
Culture (It is the fundamental determinant of a persons wants

and behavior) Subculture (It provides more specific identification and socialization for their members. It includes nationalities, religions etc) Social Classes (Relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior)
Social Factors Reference Groups (It consists of all the groups that have a direct or indirect influence on his/her attitudes or behavior) Family ( Family of orientation consists of parents and siblings whereas family of procreation consists of ones spouse and children) Roles and Statuses ( A Role consists of the activities a person is expected to perform and each role carries a status)

Reference Groups
Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups

 Personal Factors
Age And Stage In The Life Cycle

Occupation And Economic Circumstances Personality And Self-Concept (Personality is a set of

distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. Personality is often described in terms of such traits as selfconfidence, dominance, defensiveness, adaptability etc. Consumers often choose and use brands that have a brand personality consistent with their actual self-concept (how one views oneself), although in some cases the match may be based on the consumers ideal self-concept or even others self-concept) Lifestyle And Values ( A lifestyle is a persons pattern of living in the world as expressed in activities, interests and opinions. Consumer decisions are also influenced by core values, the belief system that underlie consumer attitudes and behaviors)

Brand Personality (Specific mix of human traits that may be attributed to a particular brand)

Sincerity Excitement Competence Sophistication Ruggedness

 Psychological Factors
Motivation (Buyers needs are normally biogenic or

physiological, and psychogenic or psychological. When they are aroused to a sufficient level of intensity they become motives, urging the buyer to seek satisfaction. Abraham Maslows Hierarchy of Needs include Physiological needs, Safety needs, Social needs, Esteem needs and Self-actualization needs) Perception (Once motivated, how the motivated buyer acts is influenced by his or her perception of the situation. That is, how the buyer receives, selects, organizes and interprets information.) Learning (Learning involves changes in buyers behaviour as a result of his experience) Beliefs and Attitudes (Beliefs may be founded on knowledge, opinion or faith. Attitudes reveal the judgements, feelings and tendencies of the buyer towards an object or idea).

Maslows Hierarchy of Needs

Perception
Selective Attention
Selective Retention Selective Distortion

 Selective Attention: It has been estimated that the

average person may be exposed to over 1,500 ads or brand communications a day. Because a person cannot possibly attend to all of these, most stimuli will be screened out- a process called selective attention Selective Distortion: It is the tendency to interpret information in a way that will fit our preconceptions. Consumers will often distort information to be consistent with prior brand and product beliefs. Selective Retention: People will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs. Because of selective retention, we are likely to remember good points about a product we like and forget good points about competing products.

Buying Motives
Buying motives are defined as all the impulses,

desires and considerations which persuade or motivate a buyer to purchase a specific product.

There are 2 different types of buying motives:

Product Motives and Patronage Motives

 Product motives are the impulses, desires and

considerations which make people buy a specific product. Product motives can be classified into emotional motives, rational motives, operational motives and socio-psychological motives.
The impulses and influences which persuade a

buyer to buy from particular shops or company explain Patronage motives. Patronage motives can also be emotional and rational.

Buying Roles
Initiator (The Initiator is the person who first

suggests or thinks of the idea of buying the particular product or service) Influencer (An influencer is a person whose views and advice carry some weight in making the final decision) Decider ( The decider is a person who ultimately determines any part of, or the entire buying decision- whether to buy, what to buy, how to buy or where to buy) Buyer (The buyer is the person who makes the actual purchase) User (The user is the person or persons who consume or use the product or service)

Types of Buyer Behavior

Types of Buyer Behavior

Complex Buying Behaviour (Consumers are highly

involved in a purchase when it is expensive, bought infrequently, risky and highly self-expresssive)
Dissonance Reducing Buyer Behaviour ( Here the

buyer will shop around to learn what is available but will buy fairly quickly because brand differences are not pronounced)
Habitual Buying Behaviour (Consumers have low

involvement with most low-cost, frequently purchased products)

Variety Seeking Buying Behaviour (Brand switching

occurs for the sake of variety rather than dissatisfcation)

Stages In the Buying Decision Process

Problem recognition Information search Evaluation of alternatives Purchase decision Postpurchase behaviour

Successive Sets Involved in Consumer Decision Making

Perceived Risk
Functional Physical Financial Social

Psychological
Time

Adoption Process
Buying decisions for new products go through different stages in

an Adoption Process. The adoption Process is defined as the mental process through which an individual passes from first learning about an innovation to final adoption, and adoption as the decision by an individual to become a regular user of the product. (Everett M Rogers, Diffusion of Innovations). The buyer go through 5 stages in the adoption process for a new product. They are:
Awareness (The buyer becomes aware of the new product) Interest ( The buyer shows interest and seeks information about

the new product) Evaluation (The buyer considers whether trying a new product will be worthwhile) Trial ( The buyer tries the new product as a sample to see how it is and whether it is worth buying it regularly) Adoption ( the buyer decides to become a regular customer of the new product)

Consumerism
Organized efforts by individuals, groups and

governments to help protect consumers from policies and practices that infringe consumer rights to fair business practices.

Father of Modern Consumer Movement

Ralph Nader

UN Guidelines for Consumer Protection

1. 2. 3. 4. Physical safety. Promotion and protection of consumers economic interests. Standards for the safety and quality of consumer goods. Distribution facilities for essential consumer goods and services. 5. Measures enabling consumers to obtain redressing of grievances. 6. Education and information programmes. 7. Measures relating to specific areas (food, water, and pharmaceuticals).

Consumer Protection Act, 1986

In the Consumer Protection Act, 1986 of India,

the following six consumer rights have been recognized which are:
Right to Safety (As stated in the Consumer

Protection Act 1986, this consumer right is defined as the right to be protected against marketing of goods and services which are hazardous to life and property) Right to Information ( This consumer right is defined as the right to be informed about the quality, quantity, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices)

 Right to Choose: The right to be assured, wherever

possible, to have access to a variety of goods and services at competitive prices Right to be Heard: The right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums. Right to Redressal: To seek redressal against unfair trade practices or unscrupulous exploitation of consumers Right to Consumer Education: The right of each Indian citizen to be educated on matters related to consumer protection and about his/her rights is the last right given by the Consumer Protection Act 1986.

What Is Organizational Buying?

Webster and Wind define organizational buying

as 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 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 industries making up the business market are agriculture, forestry, manufacturing, construction, transportation etc.

Various characteristics of Business Markets that contrast sharply with those of consumer markets:
Fewer, larger buyers

Close supplier- customer relationship

Professional purchasing Several buying influences Multiple sales calls Derived demand Inelastic demand Geographically concentrated buyers Direct purchasing

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Buying Situations
Straight Rebuy (The purchasing department reorders

on a routine basis( E.g. office supplies, bulk chemicals) and chooses from suppliers on an approved list.
Modified Rebuy (The buyer want to modify product

specifications, prices, delivery requirements, or other terms)

New task ( A purchaser buys a product or service for

the first time (e.g., office building, new security system).

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Participants in the Business Buying Process

The Buying Center (It is composed of all those individuals

and groups who participate in the purchasing decisionmaking process, who share some common goals and the risks arising from the decisions.)
Initiators ( Those who request that something be purchased.

They may be users or others in the organization.) Users ( Those who will use the product or service) Influencers (People who influence the buying decision. Technical personnel are particularly important influencers) Deciders ( People who decide on product requirements or on suppliers) Approvers ( People who authorize the proposed actions of deciders or buyers) Buyers (People who have formal authority to select the supplier and arrange the purchase terms) Gatekeepers (People who have the power to prevent sellers or information from reaching members of the buying center.)

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 Buying Center Influences Buying Center Targeting

Price-oriented customers (Transactional Selling-

Price is everything) Solution-oriented customers (Consultative Selling) Gold-standard customers (Quality Selling- They want the best performance in terms of Product Quality, assistance, reliable delivery and so on) Strategic- value customers (Enterprise selling- They want a fairly permanent sole-supplier relationship with your company)
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Factors Influencing Organizational Buyers

Environmental factors: Individual buyers are heavily

influenced by factors in the current and expected economic environment, such as the level of primary demand etc. Technological, political and competitive developments in the environment also affect the buyers. Organizational factors: Each buying organization has specific objectives, policies, procedures, organizational structure and systems. The business marketer has to know these as well as possible. Interpersonal Factors: The Buying centre usually includes several participants with different statuses, authority, empathy and persuasiveness. Individual Factors: Each participant in the buying process brings in personal motives, perceptions and preferences. These factors are further affected by personal characteristics like age, income, education, professionalism, styles, and attitudes of the members of the buying centre.

The Purchasing/Procurement Process

Purchasing Orientations
Buying Orientation Buyers are rewarded on their

ability to obtain the lowest price from he suppliers for the given level of quality and availability. Procurement Orientation- Buyers simultaneously seek quality improvements and cost reductions Supply Chain Management Orientation- Purchasing executives at the firm work with marketing and other company executives to build a seamless supply chain management system from the purchase of raw materials to the on-time arrival of finished goods to the end users.

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 Types of Purchasing Processes

Routine products ( These products have low value and

cost to the customer and involve little risk) Leverage products ( These products have high value and cost to the customer but involve little risk of supply (e.g. engine pistons) because many companies make them Strategic products ( These products have high value and cost to the customer and also involve high risk) Bottleneck products ( These products have low value and cost to the customer but they involve some risk)
Purchasing Organization and Administration

Stages in the Organizational Buying Process

Problem Recognition ( The buying process begins when

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someone in the company recognizes a problem or need that can be met by acquiring a good or service) General Need Description and Product Specification (The Buyer determines the needed items general characteristics and required quantity) Supplier Search (The buyer tries to identify the most appropriate suppliers through trade directories, contacts with other companies etc) E-Procurement Proposal Solicitation (The buyer invites qualified suppliers to submit proposals) Supplier Selection 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 and so on) Performance Review

Other Special Markets

Reseller Markets : This market consists of all the

individuals who acquire goods for the purpose of reselling or renting them to other at a profit.
Government Markets: The governmental units at

central, state or local level purchase or rent goods and services for carrying out the main functions of governance.
Institutional Markets: These form the business and

non-business markets consisting of churches, schools, colleges, hospitals etc that provide goods and services of various kinds to the general public.