|
Learning Objectives of this chapter
are:
Ø
Meaning and Concept of Buyer and
Buyer Behavior
Ø
Importance of Understanding Buyer
Behavior
Ø
Consumer buying Decision:
Process and Determinants
Ø
Organizational buying Decision:
Process and Determinants
|
5.1 Meaning and Concept of Customers/Buyers
A buyer (also known as customer, purchaser or
client) is a person who makes a purchase from seller. Buyer may be any person
or organization who buys products or services from sellers in return for some
form of consideration or money. Buyers acquire ownership in case of products
and benefits or usage in case of service in exchange of money under the
contract of sales.
Different authors and scholars have defined buyer
differently. Some of the popular definitions given by them are as follows:
According to Kotler and Armstrong-“Buyers are the
people who make an actual purchase.”
In the words of Standton, Etzel, and Walker-“Buyers
are the people in a buying centre within an organization who interact with the
suppliers, arrange the terms of sales, and process the actual purchase order.”
In conclusion, a buyer is a person who buys products
and services from the seller in return for money. All the marketing activities
are carried out essentially for the purpose of buyer satisfaction. Buyers are
considered as the central point of every marketing activity. Buyers, hence, are
also called as the king of business.
Customer vs. Consumer: Although
customers and consumer are often used interchangeably, they are not the same.
The one who buys a product or service is a customer while the one who uses the
product is consumer. For example, if person A buys a product and gives it to
person B to consume then
·
Person A = Customer (Actual buyer)
·
Person B = Consumer (Actual user)
·
Question: At what condition, a customer is also
termed as the consumer?
|
Basis of differences
|
Customer
|
Consumer
|
|
Purpose
|
The purpose of customer may be resale or consumption.
|
The purpose of consumer is just for consumption.
|
|
Purchase of goods
|
A customer purchases the goods and services.
|
A consumer may not necessarily purchase the goods
and services.
|
|
Person
|
The one who actually buys the products and
services is customer
|
The one who actually uses or consumes the products
and services is consumer.
|
|
Role play
|
A customer can play double role as purchaser and
user.
|
A consumer can only play single role as user.
|
|
Price of products
|
A customer must pay the price of products.
|
A consumer may not pay the price of products.
|
5.2 Types/Classifications
of buyers
There are several types of customers or buyers.
Broadly they can be classified into following two types:
Fig:
Classification of Buyers
|
a) Individual
(Non-institutional) buyers: An individual
buyer (also known as non-institutional buyer) is a buyer who buys the products
and services with the intention of ultimate consumption or personal use. Such
buyers usually purchase products and services from sellers or retailers, not
for the resale purpose but for the household purposes.
Features of Individual
buyers
The
silent features of individual or non-institutional buyers are as follows:
1)
Buying
motive: Individual
buyers buy products and services for the purpose of personal or domestic use
rather than for resale purpose. The main motive behind the purchase of products
or services is for personal consumption or the consumption of the other people.
2)
Buying
Method: The buying
method of individual buyers is simple. Individual buyers do not need to follow
any legal formalities or rules of purchase. They can purchase immediately
whatever products are needed or desired.
3)
Number
of buyers and purchase quantity: Individual
buyers are larger in number but they often buy goods or services in small
quantity, not bulky quantity.
4)
Knowledge
about the market and products: Individual
buyers may or may not have sufficient knowledge about the market and products. Hence,
they can receive information about markets and products from advertising, or
from their family members, peers and relatives.
5)
Purchase
from middleman: Individual
buyers do not buy directly from producers; they buy from intermediaries such as
agents, wholesalers and retailers. Generally, they buy from local retailers or
retail institutions such as Kathamandu Mall and supermarket, etc.
b) Organizational
(Institutional) Buyers
An organizational buyer (also known as institutional buyers) is a buyer
who buys products and services with the intention of re-selling or business
purposes. Organizational buyers include producers, wholesalers, retailers,
service institutions, government institutions etc. Such buyers buy the products
or services not for personal purpose but for the reselling or business
purposes.
Features of
Organizational buyers
The silent features of organizational or
institutional buyers are as follows:
1. Buying
Motives: Organizational buyers buy the products or services
for the motive of reselling or business purposes. They do not buy for personal
use.
2. Buying
Method: The buying method adopted by organizational buyers
is very complex one because it involves a group of individuals in the buying
decision, following certain rules and regulations, and lengthy process through
proposals, quotation-requests, contract, etc.
3. Number
of buyers and purchase quantity: Although the number of organizational buyers is few
or limited, they purchase in large or bulky quantity.
4. Knowledge
of market: Organizational buyers are aware of different aspects
about markets and products. They know about products, price, place, competitive
advantage, market competition, and so on.
5. Direct
purchase: Organizational buyers buy goods or services directly
from producers or their authorized agents. First, they make contacts with
producers and then go into negotiation and finally buy the products.
6. Purchase
budget: although organizational buyers have a large amount of budget to buy
products or services, they have to follow the strict rules and regulations of
buying or within the boundaries of approved limited budget.
Question: Differentiate
between individual buyer and organizational buyer?
|
Bases of Differences
|
Individual buyer
|
Organizational buyer
|
|
1.
Buying
motives
|
Personal consumptions or domestic use purpose
|
Reselling or business use purposes
|
|
2.
Buying
method
|
Simple, no lengthy process and legal formalities
of buying
|
Complex, lengthy process and legal formalities
|
|
3.
Number
of buyers
& purchase quantity
|
Large in number but buy in small quantity
|
Few in number but buy in large or bulky quantity
|
|
4.
Mode
of purpose
|
Indirect, purchase from retailers
|
Direct, purchase from producers
|
|
5.
Market
knowledge
|
No sufficient knowledge of markets and products
|
Sufficient & specialized knowledge of markets
and products
|
|
6.
Purchase
budget
|
Personal budget boundaries
|
Organizational budget boundaries
|
5.3 Meaning and Concept
of buyer behavior
Buyer
behavior can be viewed as orderly process whereby individuals and organizations
decide what, when, where, how and from whom to buy products and services. It is
a psychological aspect so that it cannot be understood easily. No two customers
behave always in the same way. Thus, marketers should analyze the buyer behavior
very carefully. They should have knowledge, skills and abilities to understand buyers’
behaviors. It is influenced by several factors such as economic,
socio-cultural, psychological, interpersonal etc
“Buyer behavior is the decision
process and acts of customers involved in buying and using products.”- Philip
Kotler
“Buyer behavior is concerned with the activities
and actions of people (and organizations) that purchase and use economic goods
and services, including the influences on these activities and actions.”-
Cravens, Hills, and Woodruff
The
marketers should get answers to the following questions to understand buyer
behaviors.
|
Questions related to buying
|
Answers related to buying
|
|
- Who participate in buying?
|
- Participants/customers
|
|
- What do they buy?
|
- Products
or services
|
|
- Where do they buy?
|
- Buying
place
|
|
- Why do they buy?
|
- Buying
reason/motives
|
|
- When do they buy?
|
- Buying
occasions/seasons
|
|
- How do they buy?
|
- Buying
methods
|
|
- How often do they buy?
|
- Buying
frequency
|
In
conclusion, buying behavior is the acts of people involved in buying functions.
It may be viewed as orderly process whereby the individual interacts with
his/her environment for the purpose of making purchase decision of products and
services. It is a complex process. Therefore, the marketers must try to find
the answers related to above questions in order to achieve marketing
objectives.
5.4 Importance
of Understanding Buyer Behavior
Understanding
buyer behavior is very important task for the marketers as they try to fulfill
the buyer needs effectively and efficiently. The importance of understanding
buyer behavior can be described as follows:
1. Consumers’
needs satisfaction: Understanding
buyer behavior helps the marketers to accurately identify and locate the customers’
needs which may lead to want satisfaction of customers.
2. Efficient
use of resources: By
understanding buyer behavior, marketers make efficient use of available
resources such as human, financial, physical, and informational.
3. Marketing
mix development: Understanding
buyer behavior through market research helps the marketers to develop
appropriate marketing mix such as product, price, place, and promotion. They design
these four Ps as per the needs and demand of target markets and customers.
4. Identification
of market opportunities: Human
needs are unlimited. Unsatisfied needs are the great source of market opportunities.
With the help of understanding buyer behavior, organizations try to fulfill
such unsatisfied needs for market opportunities.
5. Selection
of target market: Understanding
buyer behavior is also important for market segmentation and targeting. It helps
the marketers to divide the total market into small profitable segments and target
there effectively and efficiently.
6. Product
positioning: No
organizations can make good product positioning without understanding buyer
behaviors. The product positioning is the process of identifying and creating
products’ image in the minds of consumers. It is not possible without having
the proper knowledge about the markets and consumers.
7. Improvement
of marketing strategies: Understanding
buyer behavior helps marketers to improve their marketing strategies because it
gives them stronger insight about buyers. By obtaining a view into how
consumers think, feel, and choose, marketers can use this information not only
to design marketing mix but also for improving strategies.
8. Customers’
perception: Understanding
buyer behavior is also important to know customers’ perception towards products
and services. Such perceptions may be positive or negative. If they are
positive, they should be given continuity and if they are negative, they should
be terminated by proper methods, for instance, convincing them.
5.5 Consumer
buying process
In 1968, Engle, Blackwell and Co. developed a model
that explains a general buying process of an individual buyer which is shown in
the following figure.
1. Problem
or need Recognition: The first and most important step of consumer buying
process is problem or need recognition. It is so because if there is no need, there is
no purchase. Problem or need recognition is difference between the desired
state and the actual condition. Consumers’ needs can be recognized by internal
and external stimuli as follows:
·
Internal Stimuli: Physiological
needs felt by the individuals such as hunger, thirst and sex etc. For example, if
a person feels hungry, she/he needs foods.
·
External Stimuli: It includes
neighbors, relatives, advertising etc. For example, if your neighbor buying an
LED TV may stimulate you to buy an LED TV.
Which one does motivate you:
fulfilled needs or unfulfilled needs?
2. Information
Search: After recognition of problems or needs, the consumers try to find the
products and services that may satisfy their needs. At this stage, consumers
want to know and search information regarding the product needs such as brand,
product features, prices, warranties etc. Consumers may get information from
different sources such as personal, commercial, public, and experimental
sources.
·
Personal sources: Personal
sources may include family members, relatives, friends, celebrity, and other
associates who used the concerned products.
·
Commercial Sources: Advertising, salespeople, packaging,
displays, agents/wholesalers/retailers, exhibition etc. are the major
commercial sources of information.
·
Public Sources: Government
reports, news publications, mass media, consumer rating organizations,
researchers and other consumer associates, etc. are the major sources of
information.
·
Experimental Sources: Experience of the consumers with a
product, free sample from marketers, product demonstration, and temporary
using, handling, and examining of the products are also the major sources of
information.
3. Evaluation
of Alternatives: Evaluation
of alternatives is the third stage of consumer buying process. In this stage,
information collected from different sources is used in evaluating different
alternatives and their attractiveness. While evaluating different alternatives,
different consumers use different bases such as:
·
Product attributes: Product
attributes such as quality, simplicity in use, size, price, service, warranty,
packaging, labeling, etc. are used as the bases for product evaluation. For example, when a person aims at buying a mobile,
he focuses on its features, design, brand, price etc.
·
Degree of importance: Products
have different attributes. Generally, consumers are not concerned with all
attributes of the products. They are interested only in attributes they
perceive as important. So they evaluate the products on the basis of the degree
of importance.
·
Brand beliefs: Consumers
have great belief in certain brands. Although belief may or may not be the
actual features of the products, they consider these brands as basis of
evaluation.
·
Satisfaction: Consumers
want maximum satisfaction. Thus, they choose such products and services, which
provide maximum satisfaction among alternatives.
4. Purchase
Decision: After the alternatives have been evaluated, consumers take decision to
purchase products and services. A purchase decision means selecting one best
alternative among many. However, the purchasing decision may be influenced by a
few factors such as:
·
Others’ attitude: After
evaluating the alternatives, the consumers may be ready to buy certain products
and services. However, their want is affected by others’ attitude. For example,
a house-wife made final decision to buy a costly and big refrigerator, but her
husband suggested her to buy cheap and small one. In this case, her possibility
to buy costly and big refrigerator diminishes.
·
Situational factors: Even if
customers have decided to buy certain products of certain brand and quality,
situational factors affect them whether to buy or not. When changes in
situational factors-income level, product price, expected benefits, availability,
dealer’s condition etc. - take place, they also affect the purchasing decision
of the customers.
5. Pos-purchase
Behavior: Post-purchase behavior is the final stage in the consumer decision
process when the customer assesses whether he is satisfied or dissatisfied with
a purchase. Once the products are purchased and used, it gives rise to two
conditions: Sense of satisfaction for the product and Sense
of dissatisfaction for the product. If the customers are satisfied with the products,
they buy the same brand and quality regularly, otherwise they form negative
attitude towards such products and start searching other brands.
5.6 Factors
determining consumer-buying decisions
Buying decision of individual consumers is affected
by several factors. Understanding these factors help the marketers to have a
clear idea about consumer buying behaviors so that marketers can build an
effective marketing program accordingly. The major factors affecting individual
buying behaviors are listed below:
a) Demographic
factors
Demographic factors are individual characteristics
that are used to evaluate people in a given population. Demographic factors
such as age, gender, occupation, family size, and family life cycle etc. directly
or indirectly affect the consumer buying decision in the following ways:
·
Age: A consumer’s age directly or
indirectly affects his/her buying decision. Different consumers like different
goods as per their age and decide to buy accordingly. For example, children
like dolls, youths like fashionable and attractive products, and adults like
brands.
·
Gender: Buying
behavior and decision differ between men and women. For example, while buying
the products, women buyers take long time and give more importance to price,
quality, and warranty etc. whereas men buyers take short time and give less
importance to those product attributes.
·
Occupation: Occupations
of consumers such as workers, teachers, managers, engineers etc. also influence
the buying behavior. For example, workers buy low-priced products whereas
official staffs buy high-quality products.
·
Family size: Family size
which can be small or big also affects the buying decision of an individual.
For example, buying decision is complex and a large quantity should be
purchased in big family whereas simple buying decision and less purchased
quantity can be found in small family size.
·
Family life cycle: Life cycle
of a family also influences consumers’ buying behavior. Singles, married with
no children, married with children, and old consumers have their own behaviors
towards selecting and buying goods.
b) Economic
Factors: Economic factors are concerned with
economic conditions of consumers such as personal income, family income,
liquid assets, credit facility and price level etc. which can affect the
consumer buying decision in the following ways:
·
Personal income: If the
income of an individual is high, purchasing power and willingness to buy also
become high. Therefore, individuals having high income take quick decision to
buy high quality products whereas individuals having low income take slow
decision to buy low quality products.
·
Family income: The income
of family members also affects the buying decision of each individual. If the
income of other family members increases, the purchasing power also increases
and vice-versa.
·
Liquid assets: Consumers
having high liquid assets such as bank balance, gold, silver, shares etc. have
high purchasing power and they tend to spend much more than consumers having no
or low liquid assets.
·
Credit facility: If credit
facility is available, consumers’ spending level increases. Conversely, if
there is no credit facility available then individuals’ spending level
decreases.
·
Price Level: When the
price of products and services become high in the market, consumers will stop
buying activities but they buy in large quantity when the price of the products
decreases.
c) Psychological
Factors: Psychology is a state of one’s mind which can be difficult to understand
directly. Having said that, psychological factors such as leaning, perception,
beliefs, attitudes, personality, etc. can play a great role in consumer buying
decision.
1. Learning:
The changes that come in consumers from observation, experiment and
experience is called learning. Without learning and knowing anything about
products, consumers cannot take buying decision. Theories of learning are:
-
Stimulus Response (S-R) theory: According to
this theory, consumers express responses as a result of stimulus. For example,
consumers can be stimulated by promotional activities and buy products or
services as response to the promotional activities.
-
Modern theory: Drive, cue, response and reinforcement
are the four major factors in learning. Drive stimulates consumers to buy
products or services, cue gives information how the consumers respond. If the
response is positive then reinforcement takes place, otherwise it does not.
2. Perception: Perception
is a process whereby a person derives or perceives the meaning of an object or
situation. Different persons have different perceptions so they act
differently. For example, those who have positive perception towards Coca-cola
may think that drinking a coca-cola refreshes them, and those who have negative
perception may think that it damages their health.
3. Beliefs:
A belief is a descriptive thought that an individual holds about
something. It is based on knowledge, opinion or faith. Generally, everyone
makes their buying decisions according to their belief.
4. Attitudes:
Attitudes can be
defined as evaluative statement, feelings and tendencies towards a particular
object, people and events etc. it is either positive or negative. Consumers who
have positive attitudes towards a particular product may buy it and those who
have negative attitudes may refuse to buy such product.
5. Personality:
Personality refers to the inner psychological characteristics that
determine and reflect how an individual respond to his environment. It differs
from person to person, time to time, and place to place. It also influences the
behavior of an individual consumer. It can be.
·
Traditional or dynamic
·
Self-confident or dependent
·
Introvert or extrovert
·
Aggressive or friendly
6. Motivation:
Motivation is the process that initiates, guides, and maintains
goal-oriented behaviors. Until an individual does not achieve his objectives,
he remains restless. So, whatever activities a person does, they are all the
results of motivation. It also affects the buying behavior of consumers.
Motivated consumers are easily ready to buy the products or services in
compared to unmotivated ones. Some of the most popular theories of motivation
are:
·
Maslow’s Hierarchy of needs theory
·
Hurzberg’s two-factor theory: The
two-factor theory (also known as Herzberg's motivation-hygiene theory and
dual-factor theory) states that there are certain factors in the workplace that
cause job satisfaction while a separate set of factors cause dissatisfaction,
all of which act independently of each other. It was developed by psychologist
Frederick Herzberg.
·
Two-factors of this theory are:
-
Motivators (e.g. challenging work, recognition for
one's achievement, responsibility, opportunity to do something meaningful,
involvement in decision making, sense of importance to an organization) that
give positive satisfaction, arising from intrinsic conditions of the job
itself, such as recognition, achievement, or personal growth.
- Hygiene
factors (e.g. status, job security, salary, fringe benefits, work conditions,
good pay, paid insurance, vacations) that do not give positive satisfaction or
lead to higher motivation, though dissatisfaction results from their absence.
The term "hygiene" is used in the sense that these are maintenance factors.
These are extrinsic to the work itself, and include aspects such as company
policies, supervisory practices, or wages/salary.[4][5] Herzberg often referred
to hygiene factors as "KITA" factors, which is an acronym for
"kick in the ass", the process of providing incentives or threat of
punishment to make someone do something.
·
McGragor’s theory of X and theory Y: The concept
of Theory X and Theory Y was developed by social psychologist Douglas McGregor.
It describes two contrasting sets of assumptions that managers make about their
people:
- Theory X –
people dislike work, have little ambition, and are unwilling to take
responsibility. Managers with this assumption motivate their people using a
rigid "carrot and stick" approach, which rewards good performance and
punishes poor performance.
- Theory Y –
people are self-motivated and enjoy the challenge of work. Managers with this
assumption have a more collaborative relationship with their people, and
motivate them by allowing them to work on their own initiative, giving them
responsibility, and empowering them to make decisions.
7. Life-style:
Lifestyle is the typical way of
life of an individual, group or cultures. Consumers’ lifestyles are different
according to their education, society, friendships, and other environmental
factors. Lifestyles as per consumers’ activities, interests and opinions are
different so buying behaviors also differ.
d) Socio-cultural
Factors: Socio-cultural
factors play an important role in buying decision of consumers. It directly or
indirectly influences buying decision of consumers. The following are the major
socio-cultural factors affecting the consumer buying behaviors.
·
Family: Family is a social institution or a
group of related people such as the father, mother, sons, daughters etc. Family
might be joint or nuclear. Different members of a family may play different
roles that influence the buying behavior of consumers. The major roles they
play in their family are as follows:
-
Initiator: The family member who first presents
suggestions or purposes to buy any products or services is called Initiator.
-
Influencer: The family member who influences
buying decision is called influencer. Influencer plays a major role in buying
decision.
-
Decider: The family
member (usually the head of the family) who takes final decision about what to
buy, how to buy, where to buy, and when to buy is called decider.
-
Buyer: The family member who actually purchases
the products and services is called buyer.
-
User: The members
of the family who uses the bought products or services is called user.
Family
members play different roles depending upon the nature of products or services
to be bought. For example, when it comes to buying groceries, women member
plays a key role in a family.
·
Social class: Social class
is a division of a society based on social and economic status. Social class of
consumers can be high, middle, and low. The social class can be determined by
factors such as economic conditions, lifestyle, professions, education, power,
authority etc. Buying behavior becomes
different according to social class. For example,
-
High social class: People from
this class buy high quality, prestigious, sophisticated, and famous brand of
goods. e.g. visiting to foreign countries in holidays.
-
Middle social class: Middle class
people buy middle class quality goods. e.g. visiting to local places in
holidays.
-
Low social Class: Low class
people buy lower quality, cheap products and services. E.g. no visiting to any
places.
·
Social status and roles: Each individual possesses different
status and roles in the society. A person having higher status prefers best
brands as per social status. His role depends on family, club, organization to
which he belongs. For example, a person might be a manager of the company, a
husband, father etc. Therefore, his buying behavior is influenced by different
social status and roles.
·
Culture and subculture: Culture is the set of basic values,
belief, arts, wants, behavior learned by humans as members of society from
family and other institutions. It is deeply rooted but it changes from
generation to generation. Similarly, each culture contains different
subcultures such as region, language, caste, racial group, religion etc.
Therefore, both culture and subcultures affect the buying behaviors of
consumers.
·
Reference groups: Every
individual in some way is associated with some people or other society and is
influenced by the same. These people who influence the individual buying
decision in terms of information, attitudes, pressures, etc. is called
reference group. It can be of two types:
-
Primary reference group: It consists
of people with whom an individual interacts on a regular basis such as friends,
family members, relatives, co-workers etc.
-
Secondary reference group: It consists
of people with whom an individual interacts indirectly such as political party,
celebrities, sportspeople, leaders etc.
5.7 Organizational
buying decision: Meaning and concept
Organizational
buying behavior refers to the buying behavior of business, retailers,
government bodies, and non-government institutions. Organizational behavior is
influenced by marketing stimuli and other stimuli. Generally, these stimuli
influence selection of products or services, selection of suppliers, buying
quantity, terms of payment, terms of service and terms of delivery etc. Few
buyers, close relationship between buyers and suppliers, rational buyers,
direct channel, use of certain purchase policy and rules etc. are some of the
features of organizational buying behaviors.
5.8 Organizational
buying process
Organizational buying process is a complex system
that goes through different stages. The major steps in organizational buying
process are listed below:
1. Problem
or Need recognition:
The first step of organizational buying process is need recognition in which
someone in the company recognizes a need that can be met by purchasing a
product or service. This can be recognized by internal stimuli like a company’s
decision to buy new goods and services and external stimuli like a company’s
decision to buy new goods due to trade fair and exhibition.
2. Need
Description and product specification: Need description and product specification is the second
step of organizational buying process. Once the organization recognizes its
need, it should describe its need and product specification about features of
desired products along with quantity needed has to be made as per the need.
3. Search
for suppliers: The
third step of organizational buying process is to search for qualified
suppliers. At this stage, organization prepares a list of suppliers with the
help of previous records, Internet and asking other companies for suggestion.
4. Invitation
and evaluation of proposal: This
step calls for inviting the selected suppliers for proposals. Once the
proposals are received from such potential suppliers, they are analyzed and
evaluated. The evaluation is done on the basis of different factors such as
price, quality, quantity, goodwill and services etc.
5. Supplier
selection and Purchase decision: At
this stage, the best supplier is selected on the basis of evaluation of
proposals and product attributes. After negotiating with such supplier about
price, quality, quantity, mode of payment, time of delivery and other services
etc., the organization places official order for the purchase decision.
6. Post-purchase
behavior/evaluation: The
final step of the organizational buying process is post-purchase behavior or
evaluation. In this stage, the organization reviews and checks whether the
suppliers’ performance and product attributes are matched with the
organizational needs. If they are matched as per expectation, the organization
continues with the same supplier and if not, then they shift or switch into
another suppliers.
5.9 Factors affecting organizational
buyer decisions
Organizational
buying decision is one of the technical processes that goes through a series of
logical and rational steps. A number of factors affect the organizational
buying decisions which are briefly explained as follows:
a) Environmental
Factors
Organizational
buying decision is directly or indirectly affected by a number of environmental
factors. It includes the PEST (Political-legal, Economical, Socio-cultural and
Technological) factors which are explained briefly as follows:
·
Political-legal factors: Political-legal factors affect the
organizational buying process. Political factors include political system,
political philosophy and situation, government policies etc whereas legal
factors include constitution, laws, rules and regulations etc.
·
Economic factors: Economic factors also have a major
influence on organizational buying process. The major economic factors include
level of demand (desire, willingness to pay and ability to pay for products),
economic health (prosperity, recession, recovery, etc.) and market competition
(perfect, imperfect, monopoly etc.)
·
Socio-cultural factors: Every organization exists in a
society. So every organization should
consider various social factors such as social responsibility, interest of
society and pressure groups, social values and norms etc. Indigenous or local products should be given
priority while buying although it might not be logical always.
·
Technological factors: Technology has revolutionized human
life and touched every aspect of it. In this context, organizational buying
decisions are affected by various aspects of technology such as level of
technology, pace of technology, technology transfer, and research and development
etc.
b) Organizational
Factors
Every
organization functions in a certain way and have unique factors. These factors
affect organizational buying decision in the following ways:
·
Objectives: Buying objective is determined
according to organizational objectives.
If organization’s objective is to produce quality products, the purchase
objective should also be to produce quality raw materials.
·
Policies and procedures: Goods should be purchased according to
buying policy and procedures of organization. If the organization has the
policy of buying local goods, the buyer cannot buy foreign goods. Similarly,
buying procedures should be followed as per the decision of the organization
such as buying directly through agreement or through tender.
·
Organizational structure: Organizational structure defines
buying authority, roles and responsibility of the buyer which directly affect
the buying behavior of the buyer. It can be centralized buying or decentralized
buying. If it is centralized, the purchase can only be completed as per the
order of chief executive officer and if it is decentralized, it can be done as
per instruction of the purchase department.
·
Organizational system: Organizational systems also affect the
organizational buying behaviors such as large buying system, small buying
system, JIT buying system, centralized and decentralized buying system etc.
c) Interpersonal
Factors
There is involvement of different persons in the
organizational buying process. There are interpersonal factors such as
authority, status and interest that can affect the organizational buying
behavior.
·
Authority: Organizational
structure gives authority to its personnel to order for purchase. No products
can be purchased without his/her order. Buying decision of such authority plays
an important role in buying.
·
Interest: A number of personnel are involved in
organizational buying such as users, influences, buyers, deciders, etc.
Therefore, the interests of such different persons have different interests
which directly affect the organizational behavior.
·
Status: The status of buyer also affects the
organizational buyer. The person who makes purchase and who gives order to
purchase may be different in an organization. If the status of the buyer is
high, his buying decision becomes rational and quick whereas if his/her status
is low, buying decision may be irrational and slow.
d) Individual
Factors
In
all organizations, it is the individual staffs that make buying decision.
Therefore, organizational buying decisions are affected by their individual
factors such as person’s age, education, job position, personality and risk
attitudes.
·
Age: Age of person affects organizational
buying behavior. Youngsters make quick buying decision and they often try to
find new suppliers whereas older-aged persons are slow but make rational buying
decision and they also give continuity to existing suppliers.
·
Education: Educated person can analyze good and
bad aspects of products and services. Therefore, educated person takes rational
buying decision whereas uneducated person takes buying decision at hunch.
·
Income/Job Position: The income and job position of buyers
also affect the organizational buying decision. Job position is hierarchical
status of a person in an organization which provides the authority to influence
the organizational buying decision.
·
Personality: Every person has its distinct
personality. The personality of an individual involved in buying decision
affects the selection of products and services.
·
Risk attitude: People can be risk takers or risk
averters. Risk takers are optimistic towards buying whereas risk averters are
pessimistic towards buying. Therefore, attitudes of buyers directly affect the
organizational buying behavior.
Brief Answer
Questions
1.
What
is buyer behavior? List out the any two importance of understanding buyer
behavior.
2.
List
out the buying process of individual customer.
3.
What
are the personal factors determining consumer buying behavior?
4.
What
is organizational behavior? Write any two features of organizational buying.
5.
What
is the post-purchase behavior of a consumer?
Short Answer
Questions
6.
Define
the term ‘buyer behavior’. In what ways consumer buying decisions differ from
that of organizational buying decisions.
7.
What
is consumer behavior? Explain the process of consumer buying decision.
8.
What
is organizational buying behavior? Describe the process of organizational
buying decision.
9.
How
does learning and motivation influence consumer buying decision? Describe with
example.
10. Describe how does the following
factors determine the consumer behavior:
a) Economic factors
b) Psychological factors
Comprehensive Answer
Questions
11. What is consumer behavior? Explain the
process of consumer buying decisions. Also, explain the factors determining the
consumer buying decision.
12. What is organizational behavior?
Describe the process of organizational buying decisions. Explain the factors
determining the organizational buying decision.
