Consumer Buying Process & Organizational buying

behavior

Marketing ManagementA South Asian Perspective, 13th ed

Marketing Management By: Rafana. Kazi

What Influences Consumer Behavior?

Cultural FactorsCultural Factors

Social FactorsSocial Factors

Personal FactorsPersonal Factors

Marketing Management By: Rafana. Kazi

What is Culture?

Culture is the fundamental determinant of a person’s wants and behaviors

acquired through socialization processes with family and other key

institutions.

Marketing Management By: Rafana. Kazi

Subcultures

Nationalities Nationalities

ReligionsReligions

Racial groupsRacial groups

Geographic regionsGeographic regions

Marketing Management By: Rafana. Kazi

Social Classes

Upper uppersLower uppersUpper middlesMiddle class

Working classUpper lowersLower lowers

Marketing Management By: Rafana. Kazi

Characteristics of Social Classes

• Within a class, people tend to behave alike

• Social class conveys perceptions of inferior or superior position

• Class may be indicated by a cluster of variables (occupation, income, wealth)

• Class designation is mobile over time

Marketing Management By: Rafana. Kazi

Social Factors

Referencegroups

Social roles

Statuses

Family

Marketing Management By: Rafana. Kazi

Reference Groups

Membership groupsMembership groups

Primary groupsPrimary groups

Secondary groupsSecondary groups

Aspirational groupsAspirational groups

Dissociative groupsDissociative groups

Marketing Management By: Rafana. Kazi

Roles and Status

What degree of status is associated with various occupational roles?

Marketing Management By: Rafana. Kazi

Personal Factors

Age

Values

Life cyclestage

Occupation

Personality

Self-concept

Wealth

Lifestyle

Marketing Management By: Rafana. Kazi

The Family Life Cycle

Marketing Management By: Rafana. Kazi

Brand Personality

SinceritySincerity

ExcitementExcitement

CompetenceCompetence

SophisticationSophistication

RuggednessRuggedness

Marketing Management By: Rafana. Kazi

Lifestyle Influences

Multi-tasking

Time-starved

Money-constrained

Marketing Management By: Rafana. Kazi

(Lifestyles of Health and Sustainability) Market Segments

• Sustainable Economy

• Healthy Lifestyles

• Ecological Lifestyles

• Alternative Health Care

• Personal Development

Marketing Management By: Rafana. Kazi

Model of Consumer Behavior

Marketing Management By: Rafana. Kazi

Key Psychological Processes

Motivation

MemoryLearning

Perception

Marketing Management By: Rafana. Kazi

Motivation

Freud’sTheory

Behavioris guided by subconsciousmotivations

Maslow’sHierarchyof Needs

Behavioris driven by the lowest, unmet need

Herzberg’sTwo-Factor

Theory

Behavior isguided by motivating

and hygienefactors

Marketing Management By: Rafana. Kazi

Perception

Selective Attention

Subliminal Perception

Selective Retention

Selective Distortion

Marketing Management By: Rafana. Kazi

State Farm Mental Map

Marketing Management By: Rafana. Kazi

Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

PostpurchaseBehavior

Marketing Management By: Rafana. Kazi

Problem Recognition

Marketing Management By: Rafana. Kazi

Sources of Information

Personal

ExperientialPublic

Commercial

Marketing Management By: Rafana. Kazi

Successive Sets Involved in Consumer Decision Making

Marketing Management By: Rafana. Kazi

Sales and ProductLife Cycle

Marketing Management By: Rafana. Kazi

Stages between Evaluation of Alternatives and Purchase

Marketing Management By: Rafana. Kazi

Non-Compensatory Models of Choice

• Conjunctive

• Lexicographic

• Elimination-by-aspects

Marketing Management By: Rafana. Kazi

Perceived Risk

FunctionalFunctional

PhysicalPhysical

FinancialFinancial

SocialSocial

PsychologicalPsychological

TimeTime

Marketing Management By: Rafana. Kazi

Rural Consumer Behaviour

• Rural consumers are more brand loyal• Restrictions on consumption• Collective consumption behaviour: for

family rather than individual• Seasonality of consumption based on

seasonality of agricultural production/income

• Specific patterns in the five-stage buying decision process

Marketing Management By: Rafana. Kazi

Other Theories of Consumer Decision Making

Involvement• Elaboration

Likelihood Model• Low-involvement

marketing strategies

• Variety-seeking buying behavior

Decision Heuristics• Availability• Representativeness• Anchoring and

adjustment

Marketing Management By: Rafana. Kazi

Mental Accounting

• Consumers tend to…

• Segregate gains

• Integrate losses

• Integrate smaller losses with larger gains

• Segregate small gains from large losses

Marketing Management By: Rafana. Kazi

What is Organizational Buying?

Organizational buying refers to 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.

Marketing Management By: Rafana. Kazi

Top Business Marketing Challenges

• Expand understanding of customer needs• Compete globally as China and India

reshape markets• Master analytical tools and improve

quantitative skills• Reinstate innovation as an engine of growth• Create new organizational models and

linkages

Marketing Management By: Rafana. Kazi

Characteristics of Business Markets

• Fewer, larger buyers

• Close supplier-customer relationships

• Professional purchasing

• Many buying influences

• Multiple sales calls• Derived demand• Inelastic demand• Fluctuating demand• Geographically

concentrated buyers• Direct purchasing

Marketing Management By: Rafana. Kazi

Buying Situation

Straight rebuyStraight rebuy

Modified rebuyModified rebuy

New taskNew task

Marketing Management By: Rafana. Kazi

Systems Buying and Selling

Turnkey solution desired;

bids solicited

Primecontractors

Second-tiercontractors

System subcomponents

assembled

Marketing Management By: Rafana. Kazi

The Buying Center

InitiatorsInitiators

UsersUsers

InfluencersInfluencers

DecidersDeciders

ApproversApprovers

BuyersBuyers

GatekeepersGatekeepers

Marketing Management By: Rafana. Kazi

Of Concern to Business Marketers

• Who are the major decision participants?

• What decisions do they influence?

• What is their level of influence?

• What evaluation criteria do they use?

Marketing Management By: Rafana. Kazi

Sales Strategies

Small Sellers

Large Sellers

Key Buying Influencers

MultilevelIn-depthSelling

Marketing Management By: Rafana. Kazi

Stages in the Buying Process: Buyphases

• Problem recognition• General need description• Product specification• Supplier search• Proposal solicitation• Supplier selection• Order-routine specification• Performance review

Marketing Management By: Rafana. Kazi

Methods of e-Procurement

• Websites organized using vertical hubs

• Websites organized using functional hubs

• Direct extranet links to major suppliers

• Buying alliances

• Company buying sites

Marketing Management By: Rafana. Kazi

Vendor Analysis

Marketing Management By: Rafana. Kazi

Handling Price-Oriented Customers

Limit quantity purchasedLimit quantity purchased

Allow no refundsAllow no refunds

Make no adjustmentsMake no adjustments

Provide no servicesProvide no services

Marketing Management By: Rafana. Kazi

Methods for Researching Customer Value

• Internal engineering assessment

• Field value-in-use assessment

• Focus-group value assessment

• Direct survey questions

• Conjoint analysis• Benchmarks• Compositional

approach• Importance ratings

Marketing Management By: Rafana. Kazi

Order Routine Specification

Stockless purchase plans

Vendor-managedinventory

Continuous replenishment

Marketing Management By: Rafana. Kazi

Establishing Corporate Trust and Credibility

Expertise

LikeabilityTrustworthiness

Marketing Management By: Rafana. Kazi

Trust Dimensions

Transparent

Product/ServiceQuality

Incentive

Partnering

Cooperating Design

Product Comparison

Supply Chain

Pervasive Advocacy

Marketing Management By: Rafana. Kazi

Factors Affecting Buyer-Supplier Relationships

Availability of alternatives

Supply marketdynamism

Complexity ofsupply

Importance ofsupply

Marketing Management By: Rafana. Kazi

Categories of Buyer-Seller Relationships

• Basic buying and selling

• Bare bones• Contractual

transaction• Customer supply

• Cooperative systems

• Collaborative• Mutually adaptive• Customer is king

Marketing Management By: Rafana. Kazi

What is Opportunism?

Opportunism is some form of cheating or undersupply relative to

an implicit or explicit contract.

Marketing Management By: Rafana. Kazi

Marketing of Farm Output from Rural Areas

• Contract Farming – Pepsi

• Procuring from Cooperatives – Amul

• Use ICT for procurement – ITC