Unit 4: Buyer’s Behaviour

Buyer’s behaviour
• Behaviour differs from person to person.
• Understanding human behaviour is a
challenging process.
• So, it is a challenge for marketer to know how
customer behave. He should understand how
customer should select, buy, use and dispose
products.
• Marketer attempts to answer who, what, why,
when, where and how.
Importance of Buyer’s behaviour
1. Customer need satisfaction
2. Marketing mix development
3. New market opportunities
4. Target market selection
5. Product positioning
6. Efficient resource use
Types of buying decisions
 Consumer buying behaviour
• Consumer Buying Behaviour refers to the
buying behaviour of final consumers
-individuals & households who buy goods and
services for personal consumption.
The central question for marketers is:
• How do consumers respond to various
marketing efforts the company might use?
 Factors Influencing Consumer Behaviour

Cultural factors: Personal factors:

• Culture • Age & life-cycle
• Sub-culture stage
• Social class • Occupation
Social Factors: • Economic
• Reference group(membership, circumstances
aspiration, dis-associative) • Lifestyle
• Family • Personality & self-
• Roles and status concept
Psychological Factors
• Motivation
• Learning
• Perception(selective attention, distortion, retention)
• Beliefs and Attitudes
• Personality
• Lifestyle(pattern of living, reflected in activities,
interest, opinions)
 Buying Roles
• Initiator: The first person to suggest the idea of
buying
• Influencer: A person whose views impact the
buying decision.
• Decider: The person who decides on what, when
& where to buy the product or service.
• Buyer: The actual purchaser
• User: The person who uses/consumes the
product or service.
Stages of Consumer Buying Process
 1. Problem/ Need Recognition
From Internal Stimuli:
• Hunger
• Thirst
• Fear
From External Stimuli:
• Neighbour’s purchases
• Advertisements
• Window shopping
• Newspaper, magazines
 2. Information Search
From personal sources:
• Family
• Friends
• Neighbours
• Acquaintances
From commercial sources:
• Advertisements
• Dealers
• Salespersons
• Packaging
• displays
From Public sources:
• Mass media
• Chambers of commerce
• Consumer rating magazines
From experimental sources:
• Handling the product
• Examining the product
• Using the product
 3. Evaluation of Alternatives
Successive sets in
consumer decision
making:
• Total Set
• Awareness Set
• Consideration Set
• Decision Set
• Purchase Set
 4. Purchase Decision
Interfering factors:
• Attitude of others: Opposite and intense
opinion of family members, close friends and
acquaintances
• Unanticipated situational factors: Changes in
income, job transfer, loss of employment,
change of priority…
 5. Post purchase behaviour
Post purchase satisfaction:
• Keep the product
• Store the product
• Convert to a second use
Post purchase dissatisfaction:
• Try to return the product/take legal action
• Rent it
• Get rid of it/throw it
• Cognitive Dissonance
• When a consumer experience anxiety or
conflict over their purchase decision, it is
called cognitive dissonance.
• Marketers should reduce their anxiety through
follow-up, post purchase service and quick
handling of complaint.
 Organizational buying process
• Buying products for business use or to make other
products by business, industries, retailers, government
and non-government organizations.
Features:
• Buyer few, volume large
• Demand is influenced
• Relationship between customer and supplier is strong
• Professionalism involved
• Channel is very short
• Buying is also influenced
• rationality
 Stages in Organizational buying process

NEED RECOGNITION

PRODUCT
SPECIFICATION

SUPPLIER SEARCH

RPOPOSAL
EVALUATION

PURCHASE
DECISION

POST-PURCHASE
BEHAVIOR
 1. Need Recognition
• First step of organizational buying process is need
recognition in which someone in the company recognizes
a need that can be met by acquiring a good or a service.
• When the need or problem arises, the organization has
to take the decision whether to make or purchase the
product.
• Needs are recognized through internal stimuli and
external stimuli. For example, if the organization
recognizes the need for the purpose of expansion of
office, function, new branches are open or new product
are developed.
 2. Product specification
• At this stage of organizational buying process,
organization decides on the product and
specifies the best technical product
characteristics for needed items.
• The product or items characteristics such as
the product quantity, quality, price, method of
payment, mode of payment, delivery date,
and place design of the product.
 3. Suppliers Search
• At this stage of organizational buying process, the
buyer searches or identify possible potential
suppliers who can supply goods and services
according to their committed product
specifications.
• Buyer prepare a list of suppliers to select good
and proper suppliers.
• Internal search: company files, MKIS, purchase
department
• External search: by soliciting proposals from
known suppliers or through public notice.
 4. Proposal evaluation
• The organizational buyer evaluates the proposal
and selects the most reliable and capable
supplier who can supply products to the
organization according to the requirement.
• While evaluating process they can adopt several
criteria such as the past performance of the
suppliers, regularity, punctuality, product quality
and quantity, goodwill, price, terms and
conditions of delivery of goods, relationship with
the buyers, business efficiency and services etc.
 5. Purchase decision
• After selecting suppliers, they make purchase
decision. While make purchase decision, the
buyers should be clear or they take specific
details about the terms of sales/ credit
arrangement, technical and additional
services. Organization writes the final order
with the chosen supplier, listing, the technical
specifications, quantity needed, expected time
of delivery, return policies and warranties.
 6. Post-purchase behaviour

• Performance review or evaluation is the final

step of organizational buying process. At this
step of the business buying process, the
organization reviews supplier performance.
The organization rates its satisfaction with
suppliers and decides whether to continue,
modifies or drop them.
Factors influencing Organizational buying
decision
1. Environmental Factors
• Economic factors: Economic factors affect organizational
buying behavior. This includes level of demand and
economic health. The level of demand includes capacity
and desire for buying goods. This is affected by income
distribution and price of product. Prosperity, recession
and recovery are included in economic health. The
prosperity condition is economically good condition.
Recession is economically bad condition.
• Technological factors: Technological factors also affect
organizational behavior. This includes level of technology,
pace of technology, technology transfer etc. E-commerce
as well as information technology has got revolutionary
change. It has directly affected organizational buying
• Political and legal factors: Political and legal factors also
affect organizational buying process directly. Political
factors include political system, political situation, and
political thought, government policies etc. whereas
constitution, laws, rules and regulations etc. are
included in legal factors.
• Social responsibility: A business organization should
consider social responsibility while buying any goods or
services. Indigenous goods should be given preference
in buying and interest of society should be protected.
Interest of different pressure group of the society also
should be considered while buying goods or services.
• Competition: Competition also affects buying behavior.
This competition includes pure competition,
monopolistic competition and oligopoly competition.
2. Organizational Factors
• Objectives: Buying objective is determined according
to organizational goal. Goods should be purchased
according to organizational objective. As goods or
services need to be purchased according to
organizational goal, buying is affected by objective.
• Policies: Purchasing or buying policy also effects
organizational buying behavior. Goods should be
purchased according to buying policy of the
organization. If the organization has the policy of
buying indigenous goods, the buyer cannot buy
foreign goods. If the purchasing policy is silent in this
matter, whichever goods, foreign or indigenous, can
be purchased as desired.
• Procedures: Goods or services can be purchased directly
through agreement, or through tender, demanding
catalogue etc. Any of the method can be adopted to buy
goods or services. Whichever procedure the
organization has adopted, the buyer should follow it.
• Organizational structure: Organizational structure
defines authority and relations which directly affects
buying behavior. In some organizations, goods or
services are purchased by direct order of chief executive
while in some other organizations, goods or services are
bought through purchase department. So, buying
behavior is affected by organizational structure.
• System: Purchasing system also directly affects buying
behavior. An organization can adopt any one or more
such as centralized system, decentralized system, huge
quantity purchase system and others.
3. Interpersonal Factors
• Authority: The personnel whom the organizational structure
gives authority to order for purchase, no goods can be
purchased without his order. Buying decision of such
authority plays an important role in buying.
• Status: The persons to purchase goods or services and to
give order for purchase may be different in an organization.
As much the behavior of the person issuing purchase order
affects behavior of the buyer. If the status or level of the
buyer is high, his buying decision becomes rational and
quick. His/her behavior becomes mature.
• Interest: Users, influencers, buyers, decider and gate keeper
are involved in organizational buying process. Their interest
affects organizational buying process. As their interest
becomes different, buying process may be complicated.
4. Personal Factors
• Age: Age of person also affects selection and priority.
Younger persons make buying decision and supplier
selection quicker than older aged persons. Similarly,
the younger persons try to find new suppliers
whereas older persons try to give continuation to the
same who is supplying. So this also affects buying
process.
• Education: Education makes person able to analyze
good or bad. So, an educated person takes buying
decision rationally whereas uneducated person makes
buying decision at hit and miss/ or hunch. Educated
person selects goods or services carefully. So, buyer’s
education also affects organizational buying behavior.
• Job position: Job position also shows a person’s status.
Buyer’s position or status also affects his buying
behavior. Buyer’s status may be low or high.
• Personality: Personality of person working in an
organization may be different. Personality affects
selection of quality, brand, price etc. So, buyer’s
personality also affects organizational buying behavior.
• Risk attitude: Some can bear more risk and others like
to take less risk. The capacity and attitude to bear risk
also affect buying behavior. The buyers having the
capacity to take high risk become aggressive. But
those having less risk bearing capacity and having no
risk bearing capacity do not do so.
Global Consumer Movement & Consumer
Protection
• Consumer Moment
Why do we protect consumers?
• In simple terms, consumer protection seeks to
identify and address bad goods, bad services,
unfair practices for consumers because some
consumers cannot protect themselves.
How do we protect consumers?
• Through consumer policies (Government
sponsored policies)
• Through Education (Education is the key tool to
prevent consumer injury)
 Consumer Rights
Some of the rights of consumers are:
• Right against exploitation by unfair trade practices
• Right to protection of health and safety from goods and
services that are available to consumers.
• Right to be informed about the quality and performance
standards, ingredients of the products, possible adverse
effects etc.
• Right to be heard if there is any grievance or suggestion.
• Right to get genuine grievances redressed.
• Right to physical environment that will protect and
enhance the quality of life.
 Remedies for consumers
• Producers and sellers will not take the consumer
for granted.
• Consumerism will provide feedback for
businesses and enable producers to understand
consumer grievances, needs and wants.
• Consumerism will make the Government more
responsive to consumer interest
• Help consumer and producer to get together and
co-operate to get rid of unfair practices.
Social and consumer protection legislation

• Patent, Design and Trademark Act

• Copyright Act
• Black market and some other social crime and
punishment Act
• Food Act
• Nepal Standardizations Act
• Consumer Protection Act
• Environmental Acts