Buyer Behaviour-Module 3 MM

8/2/2019 Buyer Behaviour-Module 3 MM

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Module 3

Buyer behaviour


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What is Consumer Behaviour? Consumer behaviour or Buyer behaviour is

defined as the behaviour that consumers displayin searching for, purchasing, using, evaluatingand disposing of products and services that they

expect will satisfy their needs

Consumer behaviour focuses on how individualsmake decisions to spend their availableresources (time, money, effort) on consumptionrelated items. That includes what they buy, whythey buy it, when they buy it, where they buy itfrom, 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


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Buyer Behaviour Models The Economic Model: It views the buyer as a rational man and his buyingdecisions will only be concerned with utility

The Learning Model: Buyer behaviour can be influenced by manipulating thedrives, stimuli and response of the buyer. This model is based on mans ability tolearn, 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 deep-seated motives that drive him towards certain buying decisions. The buyer isviewed in a world of his own, with is hidden fears, suppressed desires and totallysubjective longings. It is proposed that the buyers decision can be influenced byappealing to these hidden desires and longings.

The Sociological Model: The individual buyer is influenced by society. He isinfluenced by intimate groups and social classes

The Howard-Sheth Model: The buyer is analysed here as a system with stimulias input into the system, and behaviour as output of the system. In between theinputs and outputs, there are variables affecting perception and learning.


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Factors Influencing ConsumerBehaviour Cultural Factors

Culture (It is the fundamental determinant of a persons wantsand behavior)

Subculture (It provides more specific identification andsocialization for their members. It includes nationalities,

religions etc) Social Classes (Relatively homogeneous and enduring

divisions in a society, which are hierarchically ordered andwhose 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 whereasfamily of procreation consists of ones spouse and children)

Roles and Statuses ( A Role consists of the activities a person isexpected to perform and each role carries a status)


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Reference Groups

Membership groups

Primary groups

Secondary groups

Aspirational groups

Dissociative groups


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Personal Factors Age And Stage In The Life Cycle

Occupation And Economic Circumstances

Personality And Self-Concept (Personality is a set ofdistinguishing human psychological traits that lead to relatively

consistent and enduring responses to environmental stimuli.Personality is often described in terms of such traits as self-confidence, dominance, defensiveness, adaptability etc.Consumers often choose and use brands that have a brandpersonality consistent with their actual self-concept (how oneviews oneself), although in some cases the match may be

based on the consumers ideal self-concept or even othersself-concept)

Lifestyle And Values ( A lifestyle is a persons pattern of livingin the world as expressed in activities, interests and opinions.Consumer decisions are also influenced by core values, thebelief system that underlie consumer attitudes and behaviors)


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

Sincerity

Excitement

Competence

Sophistication

Ruggedness


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Psychological Factors Motivation (Buyers needs are normally biogenic or

physiological, and psychogenic or psychological. Whenthey are aroused to a sufficient level of intensity theybecome motives, urging the buyer to seek satisfaction.Abraham Maslows Hierarchy of Needs includePhysiological needs, Safety needs, Social needs,Esteem needs and Self-actualization needs)

Perception (Once motivated, how the motivated buyeracts is influenced by his or her perception of thesituation. That is, how the buyer receives, selects,

organizes and interprets information.) Learning (Learning involves changes in buyersbehaviour as a result of his experience)

Beliefs and Attitudes (Beliefs may be founded onknowledge, opinion or faith. Attitudes reveal thejudgements, feelings and tendencies of the buyer

towards an object or idea).


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Maslows Hierarchy of Needs


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Perception

Selective Attention

Selective Retention

Selective Distortion


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Selective Attention: It has been estimated that theaverage person may be exposed to over 1,500 ads orbrand communications a day. Because a personcannot possibly attend to all of these, most stimuli willbe screened out- a process called selective attention

Selective Distortion: It is the tendency to interpretinformation in a way that will fit our preconceptions.Consumers will often distort information to beconsistent with prior brand and product beliefs.

Selective Retention: People will fail to register muchinformation to which they are exposed in memory, butwill tend to retain information that supports theirattitudes and beliefs. Because of selective retention,we are likely to remember good points about a

product we like and forget good points aboutcom etin roducts.


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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


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Product motives are the impulses, desires andconsiderations which make people buy a specificproduct. Product motives can be classified intoemotional motives, rational motives, operational

motives and socio-psychological motives.

The impulses and influences which persuade abuyer to buy from particular shops or company

explain Patronage motives. Patronage motivescan also be emotional and rational.


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Buying Roles Initiator (The Initiator is the person who first

suggests or thinks of the idea of buying theparticular product or service)

Influencer (An influencer is a person whose views

and advice carry some weight in making the finaldecision)

Decider ( The decider is a person who ultimatelydetermines any part of, or the entire buying

decision- whether to buy, what to buy, how to buyor where to buy)

Buyer (The buyer is the person who makes theactual purchase)

User (The user is the person or persons whoconsume or use the product or service)


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Types of Buyer Behavior


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Types of Buyer Behavior Complex Buying Behaviour (Consumers are highly

involved in a purchase when it is expensive, boughtinfrequently, risky and highly self-expresssive)

Dissonance Reducing Buyer Behaviour ( Here the

buyer will shop around to learn what is available butwill buy fairly quickly because brand differences arenot pronounced)

Habitual Buying Behaviour (Consumers have low

involvement with most low-cost, frequently purchasedproducts)

Variety Seeking Buying Behaviour (Brand switchingoccurs for the sake of variety rather than

dissatisfcation)


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Stages In the Buying DecisionProcess

Problem recognition

Information search

Evaluation of alternatives

Purchase decision

Postpurchase behaviour


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Successive Sets Involved in ConsumerDecision Making


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Perceived Risk

Functional

Physical

Financial

Social

Psychological

Time


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Adoption Process Buying decisions for new products go through different stages inan Adoption Process. The adoption Process is defined as the

mental process through which an individual passes from firstlearning about an innovation to final adoption, and adoption as the decision by an individual to become a regular user of theproduct. (Everett M Rogers, Diffusion of Innovations).

The buyer go through 5 stages in the adoption process for a newproduct. 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)


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Consumerism Organized efforts by individuals, groups and

governments to help protect consumers frompolicies and practices that infringe consumerrights to fair business practices.


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Father of Modern ConsumerMovement

Ralph Nader


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UN Guidelines for Consumer Protection

1. Physical safety.

2. Promotion and protection ofconsumers economic interests.

3. Standards for the safety and quality of consumer goods.

4. 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, andpharmaceuticals).


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Consumer Protection Act, 1986 In the Consumer Protection Act, 1986 of India,

the following six consumer rights have beenrecognized which are:

Right to Safety (As stated in the Consumer

Protection Act 1986, this consumer right is definedas the right to be protected against marketing of

goods and services which are hazardous to life andproperty)

Right to Information ( This consumer right isdefined as the right to be informed about the

quality, quantity, purity, standard and price of goodsor services, as the case may be so as to protect theconsumer against unfair trade practices)


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Right to Choose: The right to be assured, whereverpossible, to have access to a variety of goods andservices at competitive prices

Right to be Heard: The right to be heard and to beassured that consumers interests will receive dueconsideration at appropriate forums.

Right to Redressal: To seek redressal againstunfair trade practices or unscrupulous exploitation ofconsumers

Right to Consumer Education: The right of eachIndian citizen to be educated on matters related toconsumer protection and about his/her rights is thelast right given by the Consumer Protection Act 1986.


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What Is Organizational Buying? Webster and Wind define organizational buying

asthe decision-making process by which formalorganizations establish the need for purchasedproducts and services and identify, evaluate, and

choose among alternative brands and suppliers. The business market consists of all the

organizations that acquire goods and servicesused in the production of other products or

services that are sold, rented, or supplied toothers. The major industries making up thebusiness market are agriculture, forestry,manufacturing, construction, transportation etc.


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Fewer, larger buyers Close supplier- customer relationship

Professional purchasing

Several buying influences Multiple sales calls

Derived demand

Inelastic demand

Geographically concentrated buyers

Direct purchasing

Various characteristics of Business Markets thatcontrast sharply with those of consumer markets:

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Straight Rebuy (The purchasing department reorderson a routine basis( E.g. office supplies, bulkchemicals) and chooses from suppliers on anapproved list.

Modified Rebuy (The buyer want to modify productspecifications, prices, delivery requirements, or otherterms)

New task ( A purchaser buys a product or service forthe first time (e.g., office building, new securitysystem).

Buying Situations

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The Buying Center (It is composed of all those individualsand groups who participate in the purchasing decision-making process, who share some common goals and therisks 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.)

Participants in the Business BuyingProcess

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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- Theywant the best performance in terms of ProductQuality, assistance, reliable delivery and so on)

Strategic- value customers (Enterprise selling- Theywant a fairly permanent sole-supplier relationshipwith your company)

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Factors Influencing OrganizationalBuyers

Environmental factors: Individual buyers are heavilyinfluenced by factors in the current and expected economicenvironment, such as the level of primary demand etc.Technological, political and competitive developments inthe environment also affect the buyers.

Organizational factors: Each buying organization has

specific objectives, policies, procedures, organizationalstructure and systems. The business marketer has to knowthese as well as possible.

Interpersonal Factors: The Buying centre usually includesseveral participants with different statuses, authority,empathy and persuasiveness.

Individual Factors: Each participant in the buying processbrings in personal motives, perceptions and preferences.These factors are further affected by personalcharacteristics like age, income, education,professionalism, styles, and attitudes of the members of

the buying centre.


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Purchasing Orientations Buying Orientation Buyers are rewarded on their

ability to obtain the lowest price from he suppliers for thegiven 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 othercompany executives to build a seamless supply chainmanagement system from the purchase of raw materials

to the on-time arrival of finished goods to the end users.

The Purchasing/ProcurementProcess

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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 valueand cost to the customer but involve little risk of supply

(e.g. engine pistons) because many companies makethem

Strategic products ( These products have high value andcost 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


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Problem Recognition ( The buying process begins whensomeone in the company recognizes a problem or need that canbe met by acquiring a good or service)

General Need Description and Product Specification (The Buyerdetermines the needed items general characteristics andrequired quantity)

Supplier Search (The buyer tries to identify the most appropriatesuppliers through trade directories, contacts with othercompanies etc)

E-Procurement

Proposal Solicitation (The buyer invites qualified suppliers tosubmit proposals)

Supplier Selection Order-Routine Specification (After selecting suppliers, the buyer

negotiates the final order, listing the technical specifications, thequantity needed, the expected time of delivery, return policiesand so on)

Performance Review

Stages in the Organizational BuyingProcess

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Other Special Markets Reseller Markets : This market consists of all the

individuals who acquire goods for the purpose ofreselling or renting them to other at a profit.

Government Markets: The governmental units atcentral, state or local level purchase or rent goodsand services for carrying out the main functions ofgovernance.

Institutional Markets: These form the business andnon-business markets consisting of churches,schools, colleges, hospitals etc that provide goods

and services of various kinds to the general public

Buyer Behaviour-Module 3 MM

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