The document discusses consumer behavior and organizational buying. It defines consumer behavior as how individuals make decisions to spend resources on consumption items. Organizational buying refers to the decision-making process formal organizations use to identify, evaluate and select products and suppliers. The document outlines factors that influence consumer behavior such as social, cultural, personal, psychological factors and marketing factors. It also discusses the different types of buying decisions and roles involved in organizational purchases.

1. Consumer Behavior
Organizational Buying
Dr. Parveen Nagpal

2. Consumer Behavior
Consumer behavior is a study of how individuals make decision to spend their
available resources (time, money and effort) or consumption related items.
It is the study of individuals, or organizations and the processes consumers
use to search, select, use and dispose of products, services, experience, or
ideas to satisfy needs and its impact on the consumer and society
Consumer behavior involves the process and activities people engage in
when searching for, selecting, purchasing, using, evaluating and disposing of
products and services so as to satisfy their needs and desires. The activities
directly involved in obtaining, consuming and disposing of products and
services, including the decision processes that precede and follow these
actions.
The study of consumer behavior deals with basic questions related to buying
such as: what we buy, why we buy and how we buy

3. Consumer Behavior
The American Marketing Association (AMA) defines consumer behavior as
“The dynamic interaction of cognition, behavior and environmental events by
which human beings conduct the exchange aspect of their lives.
Consumer behavior is “The study of individuals, groups, or organizations and
the processes they use to select, secure, use and dispose of products,
services, experiences, or ideas to satisfy needs and the impacts that these
processes have on the consumer and society.” Behavior occurs either for the
individual, or in the context of a group (e.g., friends influence what kinds of
clothes a person wears) or an organization (people on the job make decisions
as to which services the firm should use).

4. Consumer Involvement
Marketers develop products and services, segment market and communicate
to consumers accordingly.
There are various types of buying decision processes.
As the consumer moves from a very low level of involvement with the
purchase to a high level of involvement, decision making becomes
increasingly complex.
Buyer behavior is based on the degree of buyer involvement for a particular
product or service
Buyer decision making varies with the type of buying decision.
The buyer behavior can be divided in four categories based on the degree of
buyers involvement.

5. Consumer Involvement
1. Complex Buying behavior: Consumer engages in complex buying behavior
when they are highly involved in a purchase and aware of significant
differences among brands. Consumers are highly involved in a purchase
when it is expensive, bought frequently and risky.
2. Dissonance-Reducing Buying behavior: Sometime the consumers are
highly involved but see little differences in the brands. Buyer will shop
around to learn what is available but will buy fairly quickly responding
primarily to a good price or to purchase convenience.
3. Habitual Buying behavior: Generally consumers have low involvement
with the low cost frequently purchased goods/ services.
4. Variety Seeking Buying behavior: Here consumer does a lot of brand
switching. Some buying situations are characterized by low consumer
involvement but significant brand difference and vice versa.

6. Factors Influencing Consumer Behaviour
Factors Affecting Consumer Behavior
Social Cultural Personal Psychological Marketing

7. Factors Influencing Consumer Behaviour
Social Factors
• Reference Groups: Small group of people such as colleagues at work place,
friends etc. influence values and choices of other members, expose them to
new lifestyles and create pressure to choose certain products. E.g. Mobiles
• Family: Family members influence buying decision. Parents influence
decision of children. However, nowadays, children are well informed about
products and services through social media and therefore, they influence
the buying decision of parents.
• Roles and Status: A person performs certain roles in a particular group in
the organization. E.g. Person may perform the role of senior executive in a
firm and therefore, enjoys higher status. People may purchase the products
that conform to their status, especially in the case of branded clothes, cars,
shoes etc.

8. Factors Influencing Consumer Behaviour
Cultural Factors
• Religion: may influences consumer behavior to a certain extent. E.g.
consumption of alcohol, tobacco or meat products is restricted in certain
religions
• Sub-culture: Each culture consists of sub-cultures that provide specific
identity to its members. Sub-culture includes nationalities, racial groups,
language etc.
• Social Class: Human societies exhibit social stratification, that may
sometimes take the form of a caste system where the members share
similar values, interest and behaviour.

9. Factors Influencing Consumer Behaviour
Personal Factors
• Age Factor: The age factor influence buying behavior. E.g. teenagers may
prefer trendy watches, whereas, office executives may prefer formal ones
• Gender: The consumer behavior varies across gender. E.g. girls may prefer
certain feminine colours such as pink, boys may prefer blue, brown
• Education: Highly educated persons may spend on books and personal care
products than the people with low education.
• Income Level: Normally, higher the income level, higher is the level of
spending and vice-versa.
• Status in Society: Persons enjoying higher status in society spend good
amount on luxury items such as luxury cars, luxury watches, premium
brands of clothing etc.

10. Factors Influencing Consumer Behaviour
Psychological Factors
• Learning: takes place through information and experience. E.g. when customer buys
a new brand of shampoo and is satisfied with it, he is likely to be brand loyal.
• Attitude: Tendency to respond in a given manner to a particular situation or object
or idea. Consumers may develop a positive, or negative or neutral attitude towards
certain products or brands.
• Motive: the inner drive that motivates a person to act or behave in a certain
manner. Marketer must identify the buying motives of the target customers and
influence them to respond positively.
• Perception: It is the impression, which one forms about a certain situation or object.
E.g. a student may perceive Sports Day as an important event and therefore, he/she
would make every possible effort including purchase of new shoes, jersey etc.
whereas, another student may be casual about it and therefore, would not make any
such extra efforts.

11. Factors Influencing Consumer Behaviour
Marketing Factors
Marketing-mix variables greatly influence the consumer buying behavior.
• Product: The features of the product, its uniqueness, packaging etc. should
appeal to the customers
• Pricing: Pricing is a very sensitive decision. Premium pricing strategy may
appeal to upper income customers. groups and discount pricing may appeal
to price sensitive
• Promotion: Promotion greatly influences buyer choice. The elements of
promotion mix include publicity, advertising, sales promotion, salesmanship
etc.
• Place: The number of middlemen involved, type of channels, area coverage
etc.

12. Buying Roles
For making strategic decisions, marketers have to identify the buyers who
make the final buying decisions.
1. Influencer: Several people may be involved in a particular purchase
decision, but all of them may not be consumers. A person who has
influence, whose views or advice is given weightage while taking the final
decision.
2. Gatekeepers: Family members who control the flow of information about
a product or service into the family.
3. Initiator: The person who is the first to suggest or think of the idea of
purchasing a product or service.
4. Decider: The person who finally takes the decisions of whether to buy,
what to buy, how to buy and from where to buy.

13. Buying Roles
5. Buyer: The person who actually buys the product/service after making
payments.
6. User: The person who actually uses or consumes the product or service

14. Key Psychological Processes

15. Consumer Decision Making Process
The consumer decision making process involves series of related and
sequential stages of activities.
The process begins with the recognition of an unsatisfied need or want,
that becomes a drive.
Consumer begins search for information, that gives rise to various
alternatives
Finally the purchase decision is made
Then the buyer evaluates the post purchase behavior to know the level
of satisfaction.

16. Consumer Decision Making Process

17. Characteristics of Business Marketers
Webster and Wind define organizational buying as the decision-making process by
who formal organizations establish the need for purchased products and services and
identify, evaluate and choose among alternative brands and suppliers.
• Fewer, larger buyers.
• Closer supplier – customer relationship
• Professional purchasing
• Multiple buying influences
• Multiple sales calls
• Direct purchasing
• Fluctuating demand
• Geographically concentrated buyers
• Derived demand (derived from demand of consumers)
• Inelastic demand (not very much affected by price changes)

18. Business Market versus Consumer Market
• 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, and fisheries, mining, manufacturing
construction, transportation, communication, banking, finance, insurance,
etc.
• More money and items change hands in sales to business buyers than to
consumers. Business marketers face many of the same challenges as
consumer marketers. In particular, understanding their customers and what
they value is of paramount importance
• Business marketers, however have several characteristics that contrast
sharply with that of consumer markets.

19. Buying Situations
The business buyer faces many decisions in making a purchase. The number
depends on the buying situation: complexity of the problem being solved,
newness of the buying requirement, number of people involved, and time
required.
Three types of buying situations are
• Straight Rebuy: Purchasing department reorders supplies such as office
supplies and bulk chemicals on a routine basis and chooses from suppliers
on an approved list. The suppliers make an effort to maintain product and
service quality and often propose automatic reordering systems to save
time. "Out-suppliers" attempt to offer something new or to exploit
dissatisfaction with a current supplier. Their goal is to get a small order and
then enlarge their purchase share over time.

20. Buying Situations
2. Modified Rebuy: The buyer wants to modify product specifications, prices,
delivery requirements, or other terms. The modified rebuy usually involves
additional participants on both sides. The in-suppliers become nervous and
want to protect the account. The out suppliers see an opportunity to propose
a better offer to gain some business.
3. New Task: Purchaser buys a product or service for the first time (an office
building a new security system. The greater the cost or risk, the larger the
number of participants and the greater their information gathering and
therefore the longer the time to a decision. Business buyer makes the fewest
decisions in the straight rebuy situation and the most in the new-task
situation. Over time new-buy situations become straight rebuys and routine
purchase behavior. New-task buying is the marketer's greatest opportunity
and challenge.

21. Buying Situations
The process passes through several stages: awareness, interest, evaluation,
trial, and adoption. Mass media can be most important during the initial
awareness stage; salespeople often have their greatest impact at the interest
stage, and technical sources can be most important during the evaluation
stage.
In the new-task situation, the buyer must determine product specifications,
price limits, delivery terms and times, service terms, payment terms, order
quantities, acceptable suppliers, and the selected supplier. Different
participants influence each decision, and the order in which these decisions
are made varies.
Because of the complicated selling involved, many companies use a missionary
sales force consisting of their most effective salespeople. The brand promise
and the manufacturer's brand name recognition will be important in
establishing trust and the customer's willingness to consider change.

22. Participants in Industrial Buying
Webster and Wind call the decision-making unit of buying organization the
buying center.
It consists of all those individuals and groups who participate in the purchasing
decision making process, who share some common goals and the risks arising
from the decisions.
The buying center includes all members of the organization who play any of seven
roles in the purchase decision process
1. Initiators: Users or others in the organization who request that something has
to be purchased.
2. Users: Those who will use the product or service. In many cases, the users
initiate the buying proposal and help define the product requirements
3. Influencers: People who influence the buying decision, often by helping define
specifications and providing information for evaluating alternatives. Technical
personnel are particularly important influencers.

23. Participants in Industrial Buying
4. Deciders: People who decide on product requirements or on suppliers
5. Approvers: People who authorize the proposed actions of deciders or
buyers
6. Buyers: People who have formal authority to select the supplier and
arrange the purchase terms. Buyers may help shape product specifications,
but they play their major role in selecting vendors and negotiating. In some
complex purchases buyers might include high level managers.
7. Gatekeepers: People who have the power to prevent sellers or information
from reaching members of the buying center. For example purchasing agents,
receptionists and telephone operators may prevent salespersons from
contacting users or deciders.
Several people can occupy a given role such as user or influencer, and one
person may occupy multiple roles.

24. Stages in Industrial Buying Process

25. References
1. Marketing Management: The Millennium Edition, Kotler. P, Prentice – Hall
2. Walters C. Glenn, & Bergiel Vlaise, J., (1989). Consumer behavior a
Decision Making Approach, South Western Pub.Co.
3. Schiffman Lenon G., & Kanuk Leslie Lazar (2006). Consumer behavior.
Prentice Hall of India.
4. Kotler, Philip. (2002). Marketing Management. Prentice Hall of India