CHAPTER THREE: CUSTOMER AND BUSINESS BUYER BEHAVIOR

3.1 Consumer Markets and Consumer Buyer Behavior

Managers in an organization spend a great deal of time thinking about customers. They want to know who their
customers are, what they think and how they feel, and why customers buy their product rather than competitors'
owners themselves do not know exactly what motivates their buying. Thus, understanding buyers’ behavior is
an essential but difficult task the company must carefully produce its product and its image to match buyer
needs and desires.
Consumer buyer behavior refers to the buying behavior of final consumer- individuals and households who
buy goods and services for personal consumption. All of these final consumers make up the consumer market.
Consumers or buyers behaviors involves the activities of people engaged when selecting, purchasing, using
and disposing products, so as to satisfy the need and desire.

3.1.1 Major Factors influencing Buying Behavior

Consumers' buying behavior is influenced by many cultural, social, personal and psychological factors. For that most
part, marketers cannot control such factors, but they must take them into account.
A. Cultural factors
Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to
understand the role played by the buyer's culture, sub-culture and social class.
Culture- is the most basic cause of a person's wants and behavior. Human behavior is largely learned.
Growing up in a society, a child learns basic values, perceptions wants and behaviors from the family and other
important institutions.
B. SOCIAL FACTORS a consumer's behavior also is influenced by social factors, such as the
consumer's small groups, family, and social roles and status.
C. Personal Factors
A buyer's decisions also are influenced by personal characteristics such as the buyer's age and life-
cycle stage, occupation, economic situation, lifestyles, and personality and self-concept.
D. Psychological Factors
A person's buying choices are further influenced by four major psychological factors: Motivation,
Perception, Learning, Beliefs and attitudes.

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 Fig3.1: Characteristics Influencing Consumer Behavior

3.1.2. Types of Consumer Buying Behavior

There are four types of consumer buying behavior based on the degree of buyer involvement and the degree of
differences among brands.
➢ Complex Buying Behavior: Consumers undertake complex buying behavior when they are highly
involved in a purchase and perceive significant brand differences. Consumers may be involved when the
product is expensive, risky, purchase infrequently, and highly self-expressive (e.g. Car). Typically the
consumer has to learn about the product category.
➢ Dissonance-reducing Buying Behavior: It occurs when consumers are highly involved with an expensive,
infrequent, or risky purchase, but see little difference among brands. For example a consumer buying
carpeting may face a high-involvement decision because carpeting is expensive and self-expressive. Yet
buyers may consider most carpet brands in a given price range to be the same. In this case, because
perceived brand differences are not large, buyers may shop around to learn what is available, but buy
relatively quickly. They may respond primarily to a good price or purchase convenience. After the
purchase, consumer might experience post-purchase dissonance (after sale discomfort) when they notice
certain disadvantage of the purchased carpet or hear favorable things about brands not purchased. To
encounter such dissonance, marketer’s after-sale communications should provide evidence and support to
help consumers feel good about their brand choices.
➢ Habitual Buying Behavior: It occurs under conditions of low involvement and little significant brand
difference. For example, take Salt. Consumers have little involvement in this product category- they simply

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 go the store and reach a brand. Consumers appear to have low involvement with most low cost, frequently
purchased products.
➢ Variety-seeking Buying Behavior: Consumers undertake variety-seeking buying behavior in situations
characterized by low consumer involvement, but significant perceived brand differences. In such cases,
brand switching occurs for the sake of variety rather than because of dissatisfaction.

Fig3.2: Types of buying behavior

3.1.3 The Buyer Decision Processes

The consumer passes through five stages: need recognition, information search, evaluation of alternatives,
purchase decision, and post purchase behavior. Clearly the buying process starts long before actual purchase
and continues long after. Marketers need to focus on the entire buying process rather than on just the purchase
decision.
Consumers pass through all the five stages with every purchase. But in more routine purchases, they often skip
or reverse some of the stages. However, we use the model in the figure below because it shows all the
considerations that arise when a consumer face a next and complex purchase situations.

Need Information Evaluation of Purchase Post Purchase

Recognition Search Alternatives Decision Behavior
Fig. 3.3 Buyer Decision Process

Need Recognition
The buying process starts with need recognition where the buyer recognizes a problem or need. The buyer
senses his/her actual state and some desired state. The need can be triggered by internal stimuli when one of the
person’s normal needs, hunger, thirst, – rises to a level high enough to become a drive. A need can also be
triggered by external stimuli. At this stage the marketer should research consumers to find out what kinds of
needs or problems arise, what brought them about, and how they led the consumer to this particular product.
Information Search

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An aroused consumer may or may not search for more information. If the consumer's drive is strong and a satisfying
product is near at hand, the consumer is likely to buy it then. If not the consumer may not store the need in memory or
undertake an information search related to the need.
The consumer can obtain information from any of several sources:
- Personal Source: family, friends, neighbors, acquaintances.
- Commercial Sources: advertising, salespersons, dealers, packages, displays
- Public Sources: mass media, consumer-rating organizations.
As more information is obtained, the consumers' awareness and knowledge of the available brands and features
increase. A company must design a marketing mix to make prospects aware of and knowledgeable about its brand.
Consumers should be asked how they first heard about the brand, what information they received, and what importance
they placed on different information sources.
Evaluation of Alternatives
How does the consumer process competitive brand information and make a final judgment of value? There is no simple
and single evaluation process used by all consumers or by one consumer in all buying situations.

Some basic concepts will help understand consumer evaluation processes first, the consumer is trying to satisfy a need
second, the consumer is looking for certain benefits from the product solution. Third, the consumer sees each product as
a bundle of attributes with varying abilities of delivering the benefits sought to satisfy this need.

Consumers differ as to which product attributes they see as most relevant as well as on the importance of weighs they
attach to each attribute. They will pay the most attention to the attributes that deliver the sought benefits. The market for
a product can often be segmented according to the attributes that are salient to different consumer groups.
Purchase Decisions
In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer's
purchase decision will be to buy most prepared brand, but two factors can come between the purchase intention
and the purchase decision. The first factor is the attitude of others. The second factor is unexpected situational
factors. The consumer may form a purchase intention based on factors such as expected income, expected price,
and expected product benefits.
Post Purchase Behavior
The marketer's job doesn't end when the product is bought. After purchasing the product, the consumer will be
satisfied or dissatisfied and will engage in post purchase behavior of interest to the marketer. The negative
feeling that may occur after a commitment purchase has been made is called cognitive dissonance. What
determines whether the buyer is satisfied or dissatisfied with a purchase? The answer lies in the relationship
between the consumer's expectations and the product's perceived performance. If the product falls short of
expectations, the consumer is disappointed, if it meets expectations, the consumer is satisfied. If product's
performance exceeds expectations, the consumer is delighted.

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3.2 BUSINESS MARKETS AND BUYING BEHAVIOR
3.2.1 What is a Business Market (Organizational buyers)?
The business market comprises all the organizations that buy goods and services for use in the production of
other products and services that are sold, rented, or supplied to others. It also includes retailing and wholesaling
firms that acquire goods for the purpose of reselling or renting them to others at a profit.
3.2.2 Buying situations in organizational buying

There are three main types of buying situation. These are: straight rebuy, modified rebuy, and new
task.

(i) Straight Re buy - The buying situation in which the purchasing department reorders on a routing basis
(eg. Office Supplies, bulk chemicals)
(ii) Modified Re buy:a situation in which the buyer wants to modify product specifications, prices, delivery
requirements, or other terms.
(iii) New task: is a buying situation in which a purchaser buyers a product or service for the first time (e.g.
office building, new security system etc.)
3.2.3 PARTICIPANT IN ORGANIZATIONAL BUYING PROCESS
The decision-making unit of a buying organization is called its buying center: all the individuals and units that
participate in the business decision-making process. The buying center includes all members of the organization
who play any of five roles in the purchase decision process.
 Users- are members of the organization who will use the product or service. In many cases, users
initiate the buying proposal and help define product specifications.
 Influencers- often help define specifications and also provide information for evaluating
alternatives. Technical personnel are particularly important influencers.
 Buyers- have formal authority to select the supplier and arrange terms of purchase. Buyers may
help shape product specifications, but their major role is in selecting vendors and negotiating. In
more complex purchases, buyers might include high-level officers participating in the negotiations.
 Deciders- have formal or informal power to select or approve the final suppliers. In routine
buying, the buyers are often the deciders, or at least the approvers.
 Gatekeepers- control the flow of information to others. For example, purchasing agents often have
authority to prevent salespersons from seeing users or deciders. Other gatekeepers include
technical personnel and even personal secretaries.

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3.2.4 The Business Buying Process
There are eight stages of the business buying process. Buyers who face a new-task buying situation usually go
through all stages of the buying process. Buyers making modified or straight rebuys may skip some of the
stages. We will examine these steps for the typical new-task buying situation.

1. Need Recognition
The buying process begins when someone in the company recognizes a problem or need that can be met by
acquiring a specific product or service. Problem recognition can result from internal or external stimuli.
Internally, the company may decide to launch a new product that requires new production equipment and
materials. Or a machine may break down and need new parts. Perhaps a purchasing manager is unhappy with a
current supplier's product quality, service, or prices. Externally, the buyer may get some new ideas at a trade
show, see an ad, or receive a call from a salesperson who offers a better product or a lower price. In fact, in their
advertising, business marketers often alert customers to potential problems and then show how their products
provide solutions.
2. General need Description
➢ a buyer describes the general characteristics and quantity of a needed item
3. Product Specifications
➢ The buying organization decides on and specifies the best technical product characteristics for a needed
item, often with the help of a value analysis engineering team.
4. Supplier search- buyer tries to find the best vendors.
5. Proposal solicitation- The buyer invites qualified suppliers to submit proposals.
6. Supplier selection- the buyer reviews proposals and selects a supplier or suppliers.
7. Order-routine specifications-
➢ The buyer writes the final order with the chosen supplier(s), listing the technical specifications,
quantity needed, expected time of delivery, return policies, and warranties
8. Performance Review- the buyer assesses the performance of the supplier and decides to continue,
modify, or drop the arrangement.
3.2.5 Characteristics of Business Markets
In some ways, business markets are similar to consumer markets. Both involve people who assume buying roles
and make purchase decisions to satisfy needs. However, business markets differ in many ways from consumer
markets. The main differences, are in the market structure and demand, the nature of the buying unit, and the
types of decisions and the decision process involved. Business markets also have their own characteristics. In
some ways, they are similar to consumer markets, but in other ways they are very different. The main
differences include:
1. Market structure and demand.
Business markets typically deal with far fewer but far larger buyers. They are more geographically
concentrated. Business markets have derived demand (business demand that ultimately comes from or derives
from the demand for consumer goods). Many business markets have inelastic demand; that is, total demand for

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many business products is not affected much by price changes, especially in the short run. A drop in the price of
leather will not cause shoe manufacturers to buy much more leather unless it results in lower shoe prices that, in
turn, will increase consumer demand for shoes.
Finally, business markets have more fluctuating demand. The demand for many business goods and services
tends to change more—and more quickly—than the demand for consumer goods and services does. A small
percentage increase in consumer demand can cause large increases in business demand. Sometimes a rise of
only 10 percent in consumer demand can cause as much as a200 percent rise in business demand during the
next period.
2. Nature of the Buying Unit:
Compared with consumer purchases, a business purchase usually involves more decision participants and a
more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend
their working lives learning how to make better buying decisions. Buying committees made up of technical
experts and top management are common in the buying of major goods. Companies are putting their best and
brightest people on procurement patrol. Therefore, business marketers must have well-trained salespeople to
deal with well-trained buyers.
3. Types of Decisions and the Decision Process
Business buyers usually face more complex buying decisions than do consumer buyers. Purchases often involve
large sums of money, complex technical and economic considerations, and interactions among many people at
many levels of the buyer's organization. Because the purchases are more complex, business buyers may take
longer to make their decisions. The business buying process tends to be more formalized than the consumer
buying process. Large business purchases usually call for detailed product specifications, written purchase
orders, careful supplier searches, and formal approval. The buying firm might even prepare policy manuals that
detail the purchase process.
Finally, in the business buying process, buyer and seller are often much more dependent on each other.
Consumer marketers are often at a distance from their customers. In contrast, business marketers may roll up
their sleeves and work closely with their customers during all stages of the buying process—from helping
customers define problems, to finding solutions, to supporting after-sale operation. They often customize their
offerings to individual customer needs. In the short run, sales go to suppliers who meet buyers' immediate
product and service needs.