Consumer and Organizational

Buyer Behavior

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  Difference between Consumer and Organizational Buying
 Fewer organizational buyers
 Close, long-term relationship between organizational
buyers and sellers
 Organizational buyers are more rational
 Organizational buying may be to specific requirements
 Reciprocal buying may be important in organizational
buying
 Organizational selling/ buying may be more risky
 Organizational buying is more complex
 Negotiation is often more important in organizational
buying

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 Consumer Buyer Behavior
 An understanding of customers can only be obtained by answering
the following questions
 Who is important in the buying decision?
 How do they buy?
 What are their choice criteria?
 Where do they buy?
 When do they buy?

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  Blackwell, Miniard and Engel describe five roles:
 Initiator
 Influencer
 Decider
 Buyer
 User
 The consumer decision making process:

1. Need identification/ Problem awareness

2. Information gathering
3. Evaluation of alternatives
4. Selection of an appropriate solution
5. Post- purchase evaluation

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  Choice Criteria
 Choice criteria can be economic, social, or personal
 Economic criteria include performance, reliability, price
 Social criteria include status and the need for social
belonging
 Personal criteria concern how the product or service relates
to the individual psychologically

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  The buying situation:
 Howard and Sheth identified three types of buying
situation
Extensive problem solving: When a problem or
need is new, the means of solving that problem is
expensive and uncertainty is high, a consumer is likely
to conduct extensive problem solving
Limited problem solving occurs when the consumer
has some experience with the product in question and
may be inclined to stay loyal to the brand previously
purchased
Automatic response happens when companies who
have built up a large brand franchise will wish to move
their customers to the state of automatic response

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  Personal influences: A second group of factors that
influences the consumer decision making process concerns
the psychology of the individuals
 Relevant concepts include
 Personality
 Motivation
 Perception
 Learning
 Lifestyle patterns have attracted much attention from
marketing research practitioners
 Lifestyle refers to the patterns of living as expressed in a
person’s activities, interests and opinions

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  Social influences: Most social influences on consumer decision
making include
 Social class
 Reference groups
 Culture and
 Family

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  Organizational Buyer Behavior:
 Organizational buyer behavior has usefully been broken
down into three elements by Fisher. They are
 Structure – who participates in the decision making
process and their particular roles
 Process – the pattern of information getting, analysis,
evaluation and decision- making which takes place as the
purchasing organization moves towards a decision
 Content – the choice criteria used at different stages of the
process and by different members of the decision- making
unit

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  Structure: An essential point to understand in organizational
buying is that the buyer or purchasing officer is often not the only
person who influences the decision, or who actually has authority
to make the ultimate decision. Rather, the decision is in the hands
of a decision making unit (DMU), or buying center as it is
sometimes called

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  Process: Need or problem recognition
 Determination of characteristics, specification and quantity of
needed item
 Search for and qualification of potential sources
 Acquisition and analysis of proposals
 Evaluation of proposals and selection of suppliers
 Selection of an order routine
 Performance feedback and evaluation

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  Content:This aspect of organizational buyer behavior refers to
the choice criteria used by the members of DMU to evaluate
supplier proposals
 Quality
 Price and life-cycle costs
 Continuity of supply
 Perceived risk
 Office politics
 Personal liking / disliking: As with consumer behavior, three
selective processes may be at work on buyers such as
 Selective exposure, selective perception, selective retention

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  Factors affecting Organizational buyer behavior:
 Cardozo identified three factors:
 The buy class
 The product type
 The importance of purchase to the buying organization
 The buy class:
 Straight re-buy
 Modified re-buy
 New task

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  The product type:
 Products can be classified according to four types
 Materials
 Components
 Plant and equipment
 Products and services for maintenance, repair, and operation
(MROs) e.g. spanners, welding equipment
 Importance of purchase to the organization:
 Involves large sums of money, considerable uncertainty about
the outcome of alternative offerings

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  Development in Purchasing Practice:
 A number of trends have taken place within the purchasing
function which have marketing implications for supplier firms
 They are
 Just in time purchasing (JIT)
 The just in time (JIT) concept aims to minimize stocks by
organizing a supply system which provides materials and
components as they are required
 Centralized purchasing
 Where several operating units within a company have
common requirements and there is opportunity to strengthen
a position by bulk buying, centralized purchasing is an
attractive option

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  Reverse marketing
 Purchasing is taking on a more proactive, aggressive stance
in acquiring the products and services needed to compete.
 This process whereby the buyer attempts to persuade the
supplier to provide exactly what the organization wants is
called reverse marketing
 It provides an opportunity to develop a stronger and
longer relationship
 It could be a source of new product opportunities that may
be developed to a broader customer base.

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  Leasing
 A lease is a contract by which the owner of an asset grants the
right to use the asset (e.g. a car ) for a period of time to
another party in exchange for payment of rent
 There are two main types of lease
 Financial lease or full payment lease
 Operating lease sometimes called rental agreements

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