PRINCIPLES OF MARKETING

Lesson 6: Differentiate the Buying Behavior and Decision

Making of an Individual/ Household Customer versus the
Business (Organizational) Customer

Objectives:

1. Analyze the buying behavior and decision making of an individual or

organizational customers.
2. Identify the different household customer versus the business
(organization) customer.

Abstraction:

Difference between Consumer Buying Behavior and Organizational Buying Behavior:

Bases Consumer Buying Behavior     Organizational Buying Behavior

The individual consumers buy goods
and services for ultimate use or The organizations buy goods and services for
Purpose of satisfy their needs. The buying their business needs. The buying purpose of them
Buying purpose of such consumers is not to is to earn profit by using and reselling the goods
earn profit by reselling the goods and and services.
services.
Organizational buying is done in large quantities.
There are several reasons why organizations must
Although consumers buy various kinds
buy the goods they need in bulk. In the first place,
of goods, the quantity of goods
they use large quantities of each item and must
Quantity remains small. They buy only the
maintain inventories at a level high enough that
necessary quantity of goods, which
they will not run out of stock. Secondly, it
they need for regular use.
is cheaper and more efficient to make large-
volume purchases.
Consumer buying takes decision by Organizational purchasing is a rational process
consumers themselves. Sometimes because the purchasing behavior of organizations
Purchase
they can consult with family members is guided by objective factors having to do with
Decision
and friends. They need not fulfill any production and distribution. It takes long time
formality like organizational buying. than consumer buying.
Market Most of the consumers may not have Organizational purchase criteria are specifically
 defined. Organizational buyers usually have fewer
adequate knowledge and information
brands to choose from than do individuals, and
about market situation, available
their purchases must be evaluated on the basis of
Knowledge goods and services, etc. The educated
criteria that are specific to the overall needs of
customers may be aware and have
the organization. The organizational buyers have
knowledge about market and goods.
full knowledge of market and suppliers.
Types of Consumers buy many goods to use to Organizational buyers buy limited goods to use to
Goods satisfy personal or family needs. conduct business.
Many individuals are involved in the buying
process. Within large organizations, rarely is one
Consumer buying behavior effected by individual solely responsible for the purchase of
Effect age, occupation, income level, products for the purchase of products or services.
education, gender etc. of consumers. Instead, many individuals and departments may be
involved and departments may be involved in the
buying process.
The consumer buying process is very
simple. No need to fulfill any
Buying Buyers and sellers in the organizational market
formality. There is also no need to
Process must maintain extensive contact.
maintain extensive contact with
sellers.

Procurement is the act of obtaining goods or services, typically for business

purposes. ... Procurement generally refers to the final act of purchasing but it can also include
the procurement process overall which can be critically important for companies leading up to
their final purchasing decision.