Consumer Behavior

Consumer Buying Behavior

What is Marketing?
Definitions

Marketing is the social process by which individuals and

groups obtain what they need and want through creating
and exchanging products and value with others. (Philip
Kotler)

Marketing is not only much broader than selling; it is not

a specialized activity at all. It encompasses the entire
business. It is the whole business seen from the point of
view of the final result, that is, from the customer’s point
of view. (Peter Drucker).

Marketing consists of actions taken to build and

maintain desirable exchange* relationships. (Philip
Kotler and Gary Armstrong)

* Exchange here is defined as the act of obtaining a desired object from someone by offerning something in return.
What is Marketing?
Understanding Marketing
Management
Understanding Marketing Management

Is Marketing Management all about promoting the Product?

Is Marketing all about making the communications about your products?

Marketing is all about understanding the requirement from the customers and
delivering the products which will meet their requirement
 So What is Marketing Then?
Attract new customers by promising better value to them

Grow current customers by ensuring that

they are constantly delighted
Marketing is all about
delivering Value
Benefits – Cost = Value
Understanding Value
Starbucks Delivers Unique Value Through
Superior Experience
Value Delivery-Virgin Atlantica
Virgin Atlantica-Starbucks Delivers
Customer Focused Unique Value Through
Airline Superior Experience

➢ Virgin Atlantica- brought many innovations to the industry of airlines.

➢ It offered premium economy class that offers more leg space and broader seat
width at slightly higher price and provides a good travel experience thereby
making him a loyal customer.
 Starbucksof Delivers
Typical AV advertisement Unique Value Through
Virgin Atlantica- Superior Experience

VA picks me from home,

Hands over my boarding pass at my car window, I go straight to a VA lounge

In flight, I can get my hair cut done, shoes polished

I am asked how I want my mean, and when I want it, served accordingly

When I get off, I am picked up

I don’t have to queue for the taxi in a strange place

Oh! That’s slightly higher fare which is immaterial!....

McDonald’s Goes Veg-Only
 Starbucks
Giving the Customer What heDelivers
want’s. Unique Value Through Superior Experience

➢ In 1996 when McDonald’s entered India for the first time, It eschewed the trademark of beef
burgers.

➢ It indianised its whole offerings and made it suitable for the local needs and tastes with the menu
including McAloo Tikki burgers, Mcveggies, Potato wedges etc.

➢ McDonald’s has been this flexible with its menu in India as it was anle to see that giving value to
customers.
 Starbucks
Giving the Customer What heDelivers
want’s. Unique Value Through Superior Experience

➢ McDonald’s earnestly started wooing the vast vegetarians and non beef segments and vegetarian
fare now accounts for more than half of its menu and sales.

➢ Sixteen years later after the entry into Indian market McDonald’s open its pure vegetarian
restaurants in Katra in the state of Jammu,Vishno Devi and also one near golden temple Amritsar.

➢ McDonald’s maintains a separate food lines for veg throughout procurement, cooking and serving.

➢ McDonald’s has seen that such a value delivery is in the interest of both the customers and the
chain.
Consumer Behavior
 Who is a consumer?

Consumer is somebody who plays an act in the consumption process.

Consumer can be referred to both the household consumption and also
the organization consumption.
Has behaviour of customers changed ?
Roles of consumer

Initiator Influencer

Decider Buyer

User
Buying Roles of Consumers

➢The Initiator
– the person who decides to start the buying process.
➢The Influencer
– the person who tries to convince others they need the product.
➢The Decider
– the person who makes the final decision to purchase.
➢The Buyer
– the person who is going to write you the check.
➢The User
– the person who ends up using your product, whether he had a say in the buying process or
not.
Roles of consumer
Roles of consumer
So consumer behavior is all about understanding
why consumer buy any product?
According to Schiffman and Kanuk:

The behaviour that consumers display in searching for,

purchasing, using, evaluating, and disposing of products and
services."
Consumer Behavior
Defining Consumer Behavior
Consumer behavior is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services

Searching for
Product or What to buy
Information

Disposing Purchasing How often to buy Why to buy

Evaluating Using From where to buy When to buy

Knowledge of consumers needs, wants, beliefs and culture will
impact on the consumer buying behavior.
Consumer shopping behavior patterns
Consumer shopping behavior patterns
Consumer Involvement
Consumer Involvement
Changes in Modern Customers

Collectivism Individualism
Consumer Behavior
Factors Impacting Consumer Behavior
Factor Impacting Consumer Behavior are varied and constantly evolving.

Increased aspiration levels

Changing shape of Income
Media driving change
distribution

Increasing comfort with Consumer Changing shape of age

technology Behavior distribution

Metamorphosis in Rural Sophisticating of middle

India Growth of self employed class
Media driving change
Changing shape of Income
distribution
Increasing comfort with
technology
Growth of self employed
Showrooming vs Webrooming
Boom for Online Shopping
Rural customers are becoming brand conscious

Good exposure to the media

Increase in agricultural output

Getting educated

Innovative pricing for rural customers

Recent Trends in Market

➢ Increase in online Marketing

➢ Use of collaborative endorsement has gone up

➢ Increase in the sales promotion activities

➢ Increase demand for eco-friendly products

 Product

Consumer
Promotion Place
Behaviour

Price
Product
Godrej Chotukool
Godrej Chotukool
Price
Promotion
Place
Consumer Behavior
Factors Impacting Consumer Behavior
Interaction between Marketer and Buyer Response

Influencing Factors

Buyer response
Stimuli Product choice
Buyer Black Box
Product Brand choice
Buyer characteristics
Price Dealer choice
Buyer decision process
Place Purchase timing
Promotion Purchase amount

Influencing Factors
Consumer Behavior
Influencing Factors

Cultural Influences
Culture
Subculture
Social Class

Psychological Influences
Social Influences
Motivations
Reference Groups
Perceptions Buyer Family
Learning
Roles and Status
Beliefs & Attitudes
Personal Influences
Age & Life-cycle
Occupation
Economic Situation
Lifestyle
Personality
Consumer Behavior
Influencing Factors

Cultural Influences
Culture
Subculture
Social Class

Psychological Influences
Social Influences
Motivations
Reference Groups
Perceptions Buyer Family
Learning
Roles and Status
Beliefs & Attitudes
Personal Influences
Age & Life-cycle
Occupation
Economic Situation
Lifestyle
Personality
Consumer Behavior
Culture

Culture is a set of values, roles,

behaviors, traditions, customs
and perceptions followed by a
group of individuals cultures
changes from time to time.
Consumer Behavior
Culture

Culture is not static; it is continuously evolving,

synthesizing old ideas with new ones
Consumer Behavior
Culture

The impact of culture is hard to identify

Culture offers order, direction, and guidance

to people

Culture is dynamic

Culture is shared

Culture is learned.
There are several unlucky numbers in Japanese. Traditionally, 4 is unlucky because it is sometimes
pronounced shi, which is the word for death. Sometimes levels or rooms with 4 don't exist in hospitals or
hotels. Particularly in the maternity section of a hospital, the room number 43 is avoided because it can
literally mean "stillbirth". (死産 - shizan: 死 - death/to die and 産 - childbirth/produce). In cars and racing,
number 42 which sounds like shini (死に – to death) and 49, which sounds like shiku (敷く – to run over)
are avoided.When giving gifts such as plates, they are normally in sets of three or five, never four.
Number 9 is sometimes pronounced ku — with the same pronunciation as agony or torture. Combs (kushi)
are rarely given as presents as the name is pronounced the same as 9 4.
In India make up is not usually worn on a daily basis by women
and wearing heavy make up is considered as heavily dressed
where as in US do wear make up on daily basis .
The consumption of sea food is more in the eastern part
of Asia including China and Japan which impacts their
food habit.
Lobster flavored chips.
Prawns toppings on the Pizza
In terms of housing the western people prefer
privacy where the Indians prefer lot of pride in
their home décor.
Miller beer endorse it by showing women in their ads in US and
European market, where in India it is illegal to show liquor ads
In US the stores like Walmart Costco and Safeway offers One
stop solution for any consumer needs including milk to egg to
bicycles to the adventure tents. They enjoy easy of shopping
experience buying all their products under one roof for a
month or week
In India consumers prefer vendor buying on day to day basis
In china people usually travel by foot or cycle hence Walmart offers free bus shuttle
services and also free home delivery.
Considering the freshness of sea food requirement the Walmart in China
offers the fish, turtle, prawns and octopus alive.
Coco-cola uses vending machines in US and the bottles are designed accordingly where in the other
parts of the world the design of the bottles are been tweaked.
Consumer Behavior
Sub- Culture

A distinct group that exists, as a

segment, within a larger and more
complex society

A sub-division based on a unifying

characteristic

Members share patterns that are

distinct and different from the larger
national culture
Consumer Behavior
Sub- Culture

Social class : people having the same social,

economic, or educational status

➢Roles performed by different people valued

differently

➢Consumer behaviour changes with change in

social class
Consumer Behavior
Influencing Factors

Cultural Influences
Culture
Subculture
Social Class

Psychological Influences
Social Influences
Motivations
Reference Groups
Perceptions Buyer Family
Learning
Roles and Status
Beliefs & Attitudes
Personal Influences
Age & Life-cycle
Occupation
Economic Situation
Lifestyle
Personality
Consumer Behavior
Reference Groups

A reference group is a collection of

people that we use as a standard of
comparison for ourselves regardless of
whether we are part of that group

Used to evaluate the relative worth or

desirability of our appearance,
thoughts, feelings, and behavior and
to judge the appropriateness of our
appearance and behavior
Consumer Behavior
Family

A group of two or more people, related

by blood or adoption who stay together.
Joint or nuclear

Influence of family extends across

product categories. Joint decision making
the norm as there will be multiple users
of the product
Consumer Behavior
Influencing Factors

Cultural Influences
Culture
Subculture
Social Class

Psychological Influences
Social Influences
Motivations
Reference Groups
Perceptions Buyer Family
Learning
Roles and Status
Beliefs & Attitudes
Personal Influences
Age & Life-cycle
Occupation
Economic Situation
Lifestyle
Personality
 Consumer Behavior
Age & Life Cycle Stage

Pre Teens Teenagers Early working life

The Age and Stage of Life-Cycle greatly

influences the Purchase and
Consumption decisions and behavior Mid Working Life Late working Life Old age 60+
Occupation
Consumer Behavior
Economic Factors
Consumer Behavior
Lifestyle

Lifestyle is the persons’ pattern of living in the world as

expressed in activities, interests, and opinions

Lifestyle portrays the “whole person” interacting with

his or her environment

Lifestyle helps marketers to classify products

according to the activities interest, and opinion
Consumer Behavior
Personality

Personality refers to unique

psychological characteristics that lead to
relatively consistent and lasting
response to the environment

Each person’s unique personality

influences his or her buying behavior.
Personality is usually described in terms
of traits like self-confidence, autonomy
or defensiveness
Consumer Behavior
Personality : Brand Personality

The idea that brands also have personalities and

consumers are likely to choose brands whose
personality matches their own

A set / mix of human traits or characteristics that

can be attributed to a brand

Cues attributes as well as the basic benefits a

brand delivers

Can become a huge point of difference as it is

difficult to copy personality
Consumer Behavior
Personality : Brand Personality
Consumer Behavior
Influencing Factors

Cultural Influences
Culture
Subculture
Social Class

Psychological Influences
Social Influences
Motivations
Reference Groups
Perceptions Buyer Family
Learning
Roles and Status
Beliefs & Attitudes
Personal Influences
Age & Life-cycle
Occupation
Economic Situation
Lifestyle
Personality
Consumer Behavior
Motivation

Needs can be of various types. Biological needs

arising from a state of tension like hunger or
thirst

Psychological needs arise from the need for

recognition, esteem or belonging

Motivation is the driving force within

individuals which impels them to action

This force, is produced by a state of tension

which exists as a result of an unsatisfied need
Consumer Behavior
Motivation : Theories of Motivation
Consumer Behavior
Motivation : Theories of Motivation
Abraham Maslow
Maslow sought to explain why people are
driven by particular needs at particular
times

His belief was that human needs are

arranged in a hierarchy from the most
pressing needs at the bottom to the least
pressing need at the top.

A person tries to satisfy the most

important need first. Only when that need
is satisfied, it will stop being a motivator
and the person will then try to satisfy the
next most important need
Consumer Motivation – Types of Needs
Maslow’s Hierarchy of Needs
Products catering to each need

Consumer Behaviour. Motivation 103

Consumer Behavior
Perception

All of you in this room, are

receiving the same stimulus.
However all of you, receive,
organize and interpret this
sensory information in your own
individual ways

Perception is the process by

which people select, organize and
interpret information to form a
meaningful picture
Consumer Behavior
Learning

Learning describes changes in an individual’s

or consumer’s behavior arising from
experience. Most human behavior is learnt
Consumer Behavior
Beliefs

Marketers are interested in beliefs that

people have about certain products or
services as these beliefs affect buying
behavior

A belief is a descriptive thought that a

person has about something. May be
based on real knowledge, opinion or
faith
Consumer Behavior
Attitude

Attitude is a settled or
a fixed way of thinking
or feeling, about
something
Buying Behavior
Buying Behavior
Types of Buying Behavior

High Involvement Low Involvement

differences
Significant

between
Brands

Variety Seeking Buying

Complex Buying Behavior
Behavior.
Few differences
between
Brands

Dissonance Reducing Buying

Habitual Buying Behavior
Behavior
Comparison of problem-solving variations
Buying Decision Making Process
Buying Behavior
Buyer Decision Making Process

1. Need 5. Post
2.Information 3. Evaluation 4. Purchase
Recognition Purchase
Search of alternatives Decision Behavior

Buyer recognizes Information is Post Information The Purchase The marketers job
the problem or received from search, consumers decision is largely does not end with
need which is Personal Sources evaluate dependent on: Purchase. Post
triggered by (family & friends); alternatives on the purchase, the
internal stimuli Commercial basis of either - Brand consumer can be
(hunger, thirst etc.) sources (ads); rational, or the - Attitude of satisfied, delighted
or by external Public sources influence of family others or dissatisfied. The
stimuli (ad, family (mass media) or and friends etc. - Situational customer life cycle
etc.) experiential Sometimes, there factors value depends on
sources (examining is no evaluation - Buyer’s the customer’s
the product) done at all. personality Post Purchase
Behavior
 Consumer Decision Process Model

Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Need Recognition

Need: the difference between what a person perceives to be the ideal versus the actual state
of affairs.
Consumers recognize needs and seek to fulfill them, or sometimes seek to solve their
problems.
Knowing consumers’ needs, helps firms develop products and marketing programs to reach
them more effectively (itch and scratch).
 Need Recognition

➢Communicating a need and raising consumer

awareness of need or problem
➢Example :Special needs of baby teeth
 Need Recognition

Environmental Influences
-Culture
-Social Class
-Personal Influence
-Family
M -Situation
E
M Need Recognition

O Individual Differences
-Consumer Resources
RY -Motivation
-Knowledge
-Attitudes
-Personality, Values,
and Lifestyle

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Search For Information

Internal search: retrieving knowledge from memory.

External search: collecting information from peers, family, and the marketplace

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Information Searches

Internal Process of recalling past information stored in the

memory.

External Process of seeking information in the outside

environment.

Chapter 4 Version 3e 121

 Information Searches

Internal Information Search

◆ Recall information in memory

External Information search

◆ Seek information in outside

environment

◆ Non-marketing controlled
◆ Marketing controlled
Chapter 4 Version 3e 122
 Search: Information Processing

Exposure Attention Comprehension Acceptance Retention

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Pre-purchase Evaluation of Alternatives

The process of evaluating alter-natives identified from search, which leads to product
or brand most likely to satisfy the consumer
Can use new or preexisting evaluations stored in memory
Evaluative criteria: standards and specifications used to compare different products and
brands

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Steps Involved in Selecting the Alternatives

Successive Sets Involved in Selecting Alternatives

 Evaluation of Alternatives

Evoked Set

Evaluation of Products

Analyze product attributes

Use cutoff criteria

Rank attributes by importance

Purchase!
Chapter 4 Version 3e 126
 PURCHASE

Phase to Decide to Buy or Not to Buy

 PURCHASE

➢Purchase decisions involve choosing a form of retailing, a specific

retailer, and a particular product and brand

➢Purchase decisions involve choosing a form of retailing, a specific

retailer, and a particular product and brand

➢Purchase intention can change during the purchase stage--it can be

influenced by factors such as in-store promotions, discounts, or stock-
outs
 Consumption

➢The process of using the product or service purchased

➢Consumption can either occur immediately or be delayed

➢Consumers may use products as intended or as they choose, especially when

instructions are not included or not read

➢How consumers use a product affects satisfaction with product

 Post-consumption Evaluation

➢Satisfaction: when expectations are met or exceeded by perceived performance

➢Dissatisfaction: when performance falls short of expectations
Consumption is an important determinant of satisfaction
➢Cognitive dissonance: questioning decision (post-purchase regret)
➢Emotion affects evaluation
 Divestment (Disposal)

➢How consumers dispose of the packaging or product after use

➢Options include:
Disposal
Remarketing or reselling
Recycling
➢Consumers’ environmental concerns about divestment may affect product choice
Divestment (Disposal)

Mentadent sells toothpaste in a

dual-chambered pump, which
can be filled with refills and
reused rather than thrown away
each time

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Need Recognition
NEED IS TO BUY A NEW LAPTOP
Search of information
Evaluation of alternatives
PURCHASE
Consumption/usage
POST CONSUMPTION EVALUATION
DIVESTMENT
Need Recognition
NEED IS TO BUY A lunch box
Search of information
Evaluation of alternatives
PURCHASE
Consumption/usage
POST CONSUMPTION EVALUATION
DIVESTMENT
 Divestment (Disposal)

➢How consumers dispose of the packaging or product after use

➢Options include:
Disposal
Remarketing or reselling
Recycling
➢Consumers’ environmental concerns about divestment may affect product choice
Buying Decisions
 Involvement and Problem-Solving Variations

Routine Limited Extensive

Response Decision Decision
Behavior Making Making

Less More
Involvement Involvement
 When to use Routine Response Behavior

▪ Little involvement in selection

process
▪ Frequently purchased low cost
goods
▪ May stick with one brand
▪ Buy first/evaluate later
▪ Quick decision
Examples for Routine Response Behavior
 When to use Limited Decision Making

▪ Low levels of involvement

▪ Low to moderate cost goods

▪ Evaluation of a few alternative brands

▪ Short to moderate time to decide

Examples for Limited Decision Making
 When to use Extensive Decision Making

▪ High levels of involvement

▪ High cost goods

▪ Evaluation of many brands

▪ Long time to decide

▪ May experience cognitive

dissonance
 Types of Decision Processes

Extended Midrange Limited

Problem Solving Problem Problem
(EPS) Solving Solving
(LPS)

High Low

Degree of Complexity

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Consumer Decision Process Continuum: Repeat Purchases

Limited Habitual
Extended Midrange
Problem Problem
Problem Solving Problem Solving
Solving Solving

High Low

Degree of Complexity

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Types of Decision Processes

Initial Purchase
Extended Problem Solving (EPS):
Often occurs with expensive items or can be
fueled by doubts and fears
Importance in making the “right decision”
All seven consumer decision making stages
are often activated
Dissatisfaction is often vocal

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Types of Decision Processes

Initial Purchase
Limited Problem Solving (LPS):
Consumers don’t have motivation, time, or
resources to engage in EPS
Little search and evaluation before purchase
More common among low involvement or
lower price items
Often accompanied by a feeling of indifference
toward choice

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
 Types of Decision Processes

Repeat Purchase
Repeated Problem Solving
Habitual Decision Making
Impulse Buying
Unplanned, spur-of-the-moment action triggered
by in-store display or promotion (least complex
form of LPS)
Variety Seeking
Brand shifts
Can be triggered because bored with current
brand or because of special offer
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Factors Influencing Problem Solving Extent

Degree of Involvement (High-Low)

Personal Factors (self-image, health, beauty or physical
condition)
Product Factors (is there perceived risk in purchasing a
particular brand or product?)
Situational Factors (is the product purchased for
personal use or as a gift?)

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Factors Influencing Problem Solving Extent

Degree of Involvement (High-Low)

Perceptions of differences among alternatives

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Factors Influencing Problem Solving Extent

Time Availability
How much time is available to devote to solving the
problem?
How quickly does the decision need to be made?
Consumers’ Mood State
How people feel at a particular moment of time
Mood can reduce or increase length and complexity of
decision process

Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc. All rights reserved.
Business Markets
Business Markets
Characteristics of Business Markets (B2B)
Business buyer refers to organisations that buy goods or services for use the production of other goods or
services that are sold, rented or supplied to others. It also includes wholesaling or retailing firms which acquire
goods with an objective of reselling or renting it to others at a profit.

Marketing
Nature of
structure &
buying unit
demand

Types of
decisions and
the decision
process
Business Markets
Characteristics of Business Markets (B2B)
Marketing Structure and Demand
Business markets have fewer but
larger buyers
Derived Demand : demand is
dependent on demand for the
final product
Fluctuating Demand : demand for
B2b markets fluctuates more than
in consumer markets.
Demand is more in-elastic and is
not affected by Short-term price
Customer are more
Geographically concentrated
Nature of Buying ‘Unit’
While in Consumer markets, the
consumer often makes the
decision individually, in the B2B
market, it is a ‘buying unit that
makes the decision.
It is a more professional buying
approach
Decision making process
Business buyers face more
complex buying decisions as
techinical, environmental and
internal factors come into play
while making the decision.
More formalized buying process
as proper rules & procedures are
involved and complex technical
specs are detailed and intense
product tests are done.
Buyers and sellers work closely to
form long term relationships and
strategic alliances are formed
between them
Business Markets
Types of Buying Situations
While business buying is tough, complex and process driven, it still operates with a template. There are three
major types of buying situations when it comes to business buying

Re-ordering a product without modifications. Handled on a routine basis by

purchaser. Automatic re-ordering systems are implemented so as to save on re-
Straight Rebuy
ordering time.

The buyer modifies product specs, prices, terms or suppliers. Thus involves more
Modified decision participants than straight rebuy. It is an opportunity for new vendors to
Rebuy gain entry into the company with better offers

A company buying a product or service for the first time faces a new task situation.
This involves decision on product specs, suppliers, price limits, payment terms,
New Task order quantity, delivery and service terms. The greater the risk / cost the larger
will be the number of decision participants and greater and efforts to collect
information
Business Markets
The Buying Center
The decision making unit of a buying organization is called its buying center. Participants include individuals or
units in the organization who play a role in the purchase decision process.

Buying Center – 5 Roles

User Influencer Buyer Decision Maker Gate keeper

End of module
Annexure
 Business buying process
New Task
Problem General need Product
recognition description specification

Supplier Proposal Supplier search

selection solicitation

Order-routine Performance
specification review
 Problem
recognition
Begins when someone Can arise from internal
recognised that a or external stimuli.
problem or need can be Internal : Machine
met by acquiring a breakage. External :
product or service Product with additional
features offered to the
company
General need
description
Buyer prepares a For complex items, the
general need buyer may have to work
description which with others – engineers,
details the features and users consultants to
quantity of the needed define the item
item
Buyer may want to rank
A smart marketer can the importance of
help a buyer define
crucial parameters like
their needs and provide reliability, durability,
information about price and other desired
product characteristics attributes
 Product Supplier search
specification
The buying company Value analysis is a way Buyer initiates a Trade directories, online
develops the item’s to reduce cost.. All the supplier search to find search or references
technical product components checked the best vendors. used to select suppliers
requirement, with the for standardisation or
help of the value redesign to reduce cost
analysis engineering Newer the buying task
team The tem finalises the and more complex and
best characteristics of costly the item higher
By showing buyers a
the product and will be the time spent
new way of making an
specifies the same. A by the buyer to search
item, seller can convert seller can leverage value
straight rebuy into a for the supplier
analysis to his
new task & win the a/c advantage
 Proposal Supplier
solicitation selection
The buyer invites Proposals need to be Members of the buying This can be based on
qualified suppliers to treated a s marketing centre review all the desired supplier
submit proposals documents and not as proposals and select a attributes and their
technical documents. supplier/s. relative importance
Should make the
marketer’s company Buyer may negotiate Key supplier attributes
standout with selected suppliers sought are : quality, on-
for price and terms. time delivery, ethics,
Buyers also may prefer honest communication,
multiple suppliers to competitive prices,
reduce dependency or repair capabilities,
risk & ensures that they technical aid and
add value reputation
 Order-routine Performance
specification review
The buyer prepares an Buyers may also use Here the buyer reviews Review can translate
order-routine specs doc, blanket contracts (BC) the performance of the into continuation,
with the chosen rather than regular POs. supplier modification or
supplier, which details BCs create LT termination
the specs, quantity, relationships where the
delivery timelines, supplier agrees to supply
return policies, at a fixed price for a
warranties etc etc defined time period

BCs translate into single BC eliminates the

source buying and locks process of negotiation
the supplier to the and reduces in low
buyer inventory & carrying
costs
The eight stage model gives a simple view of the business
buying decision process. In reality, the actual process is
extremely complex with many variables.

In a straight or modified rebuy situation, it is possible that

some stages can be bypassed. Each organisation buys in
its own way and each buying situation is extremely
unique
In the case of the buying centre it is also possible that
different participants could be involved at different
points of time

Even in the case of buying process steps, it is possible

that the buyers may not follow the order. They may add
new steps to the process depending on their business
needs