City Groups of Colleges

Lecture Plan (UNIT-3)

Course:- BBA Semester: IV
Paper: BBA-406 Subject: Consumer Behaviour
Syllabus: Models of Consumer Behavior, Consumer Behavior in India, Difference between
consumer buying and industrial buying, nature and factors affecting industrial buying

Lecture-1 Models of Consumer Behaviour

Lecture-2 Consumer Behaviour in India

Lecture-3 Difference between consumer buying and industrial buying

Lecture-4 Nature of industrial buying

Lecture-5 Factors affecting industrial buying

Lecture-1
Models of Consumer Behaviour
1. Nicosia Model

Nicosia model is a structural model of the purchase decision-making process by an

individual consumer or a whole family.

This model shows the interactive relationship between the company and the consumer. They
arise between them for mutual communication - company communicates with consumers
through promotional activities, while consumers by making purchases.

The four areas of the decision-making process in Nicosia Model

In Nicosia Model the decision-making process is divided into four areas

 Area 1 - includes consumer attitudes shaped by information from the market. In this
area information flows from the source of their creation to the recipient.
 Area 2 - consumer is looking for information about specific products and gives them value.
During the evaluation the consumer allocates appropriate weight to each information
piece. When the result of the evaluation of a given product from the consumer's point of
view is satisfactory, consumer is motivated to buy.

 Area 3 - act of purchase. Motivation - established in advance by consumer prompts him to

acquire the product.
 Area 4 - feedback, as result of the consumption of the product, the consumer acquires a
new experience and base on it his new preferences (predisposition). This last step is not
only the consumption of a product but also a very important factor for the future decisions
of the consumer. Feedback is also a very important factor for the company, which acquires
a new information that could be used in preparing future product policy, its advertising and
communications targeted to the consumer.

2.Black Box Model

The model consists of three major components namely: Environment, Buyer’s black box, and
Buyer’s responses.

Three major components of the model

Three major components of the black box model

Environment

According to this model, the environment consists of stimuli given by the firm as well as
external stimuli. This marketing stimuli given by the firm will be in the form of the marketing
mix. For example, the firm might be sending advertising messages for products. The external
stimuli refer to the marketing environment which indirectly influences the customers. It is
important to note that we differentiate between “environment” and ‘people’ here as people
influence the choices but people cannot create decision situations.

Buyer’s black box

As mentioned, the buying decision is made by a person that does not fully understand all
factors influencing him or her. This refers to the customer interacting between past experience,
beliefs, desires, and objectives when making a buying decision. The buyer’s “black box” consists
of his/her personal preferences and attitudes towards the product-market fit as well as the
value creation process itself.
Buyer’s Characteristics

The buyer’s characteristics work closely with the buyer’s black box. A buyer’s character
depends on many factors such as information and motivation. It is believed that buying
characters are relatively stable over time while people can change attitudes of their personal
preference during a lifetime for an item which has influenced them in the early years. The
buying characters are determined by other people’s information, purchase behavior, and brand
attitudes.

Buyer’s Decision Process

The buyer’s decision process is the sequence of steps that the buyer will follow when making a
buying decision.

Buyer’s responses

After purchase, the product performance can also affect the reaction of buyers. If a person who
is angry or upset with an experience suffers from buyer’s remorse, s/he may be inclined to
purchase to revise the past event in order for this negative feeling to be removed although it
seldom happens because many people are purchasing a product without first having any
thoughts to it.

When the sales of a particular brand decrease rapidly, this implies that customers are
dissatisfied with their experiences from those experienced brands which create an insufficient
demand for those products as well as declines its value itself which also causes other people
not to buy that brand. If the customers are loyal enough to return to “solve” their problem, this
can positively impact the sales…oftentimes more than no longer offering those products will
negatively contribute due to overall damage caused by not gaining any client or losing the
client.

Conclusion

The black box model also suggests that consumers will continue to purchase products they do
not need just because they have been habituated into doing so by previous purchases.
Therefore, you should not be surprised if your customers continue to buy the same products
over and over again. This model does not take into account the situation in which the customer
has already made a purchase; it only looks at how people make new purchases.

Engel Blackwell Miniard Model

This model is also called the consumer decision model. The model is “structured around a
seven-point decision process: need recognition followed by a search of information both
internally and externally, the evaluation of alternatives, purchase, post-purchase reflection, and
finally, divestment.” A consumer identifies a need before proceeding to carry out a search
based on the complexity of the issue at hand.

The pre-purchase evaluation of alternatives follows where one explores the available options
based on beliefs, the availability of resources, and environmental factors among others. One
then purchases a good or service based on its utility. After consumption, a consumer carries out
post-consumption analysis, which in most cases is termed as feedback. The divestment stage is
peripheral in the process, and it acknowledges that at one point the good or service will be
disposed of.
Lecture-2
Consumer Behaviour in India
Need of studying Indian consumer behaviour

 Decision making: Understanding how consumers make decisions while purchasing.

 Product use: Understanding how consumers use products.
 Environmental Influences: Environmental influences like culture, family, types of
advertising and the media can influence the ways consumers make choices.
 Understand and predict buying behavior: The study of consumer behavior enables the
marketer to understand and predict buying behavior.

New consumption patterns of Indian Consumer

 Bulk Purchasing
 Trendy Lifestyle
 Teenagers as potential customers
 Women as new customers

Lecture-3
Difference between consumer and Industrial Buying
Lecture-4
Nature of Industrial Buying
Industrial Buying
Industrial buying concerns the purchase of products and services for use in an organization’s
activities. Industrial buying behavior or organizational buying behavior is the field of industrial
marketing that focuses on the understanding of how companies and organizations buy goods
and services.
Buying Situations

 New task: refers to the first time purchase of a product or input by an organization
 Modified rebuy: where a regular requirement for the type of product exists and the
buying alternatives are known but sufficient changes (for instance a delivery problem)
have occurred to require some alteration to the normal supply procedure.
  Straight rebuy: refers to a purchase by an organization from a previous approved
supplier of a previously purchased item.

Characteristics of Industrial Buying:

 Derived Demand: The demand for industrial goods is ultimately derived from the
demand of consumer goods.
 Market Characteristics: There are limited no. of customers for industrial
products/services but they purchase on large scale.
 Place or distribution characteristics: Channel lengths are direct and short.
 Formal Activity: It has to follow all the formal procedure of the organization.
 Multi-person activity: It is a complex process and it involves interactions among
various people.
 Longer time lag between efforts and results: There is a great time effort between
initiation of the marketing effort and the actual buying taking place.

Buying roles in Industrial buying

 Initiators: Those who raise the request to buy the product.

 Users: Those who actually use the purchased products and services
 Buyers: Those with formal responsibility and authority to actually perform the
contractual agreements.
 Influencers: Those who influence the buying process directly or indirectly by adding
information or decision criteria for the evaluation of alternative buying actions.
 Deciders: Those who have the authority to choose among alternative buying actions.
 Approvers: Those who permit the activities and decisions of the buyers and deciders.
 Gatekeepers: Those who control the flow of information (and materials) into the buying
center)

Process of Industrial Buying

1) Problem Recognition: The purchasing/buying process begins when someone in
company recognizes a problem or need that can be met by acquiring goods or services.
The common events that lead to this phase could be- a machine breakdown and require
 replacement or new parts, company decides to diversify or expand business, the
company decides to develop new products.
2) General need description: This phase involves determination of the characteristics
could be reliability, durability, price etc. and the marketer along with the purchasing
manager, engineers and users can describe the needs. The question can arise like- what
type of goods/services should be considered, what quantities should be needed, what
performance specification need to be met.
3) Product Specification: Obtaining the input from the second phase, the buying
organization has to develop the technical specifications of the needed items.
4) Supplier Search: this phase pertains to the search for the qualified suppliers among the
potential suppliers. This phase only involves making a list of qualified suppliers.
5) Proposal Solicitation:
6) Supplier Selection: Each of the supplier’s presentation are rated according to certain
evaluation models. The buying organization may also attempt to negotiate with its
preferred suppliers for better prices and terms before making a final decision. Various
parameters like reliability, delivery, flexibility, price, service, etc. are used for supplier
selection and their rating.
7) Order routine specification: After the suppliers have been selected, the buyer
negotiates the final order, listing the technical specifications, the quantity needed, the
expected time of delivery etc.
8) Performance Review: This phase consists of a formal or informal review and feedback
regarding about product performance as well as vendor performance.

Lecture-5
Factors affecting Industrial buying
The groups of factors mentioned are:
Environmental factors (environmental determinants of buying behavior which include
physical, technological, economic, political, legal, and cultural influences)
Organizational factors (organizational determinants of buying behavior that include
technology, structure, tasks, and people)
Interpersonal factors (interpersonal relationships among the members in the buying
center, that is, interpersonal determinants of buying behavior that include different
roles played by the participants, how they influence each other, and their relationships)
Individual factors (individual characteristics of the member, including motivation,
cognitive structure, personality, learning processes, and perceived roles)
Inter-organizational factors (these factors include factors related to the relationship
between the buying and the selling firm)
Buying situation (the buying situation refers to the three buy-classes : new task,
modified rebuy, and straight rebuy)