CHAPTER 3 THE CONSUMER BEHAVIOUR Marketing

THE PURCHASE DECISION PROCESS

Problem Recognition Consumer Information Processing Evaluation of Alternatives Purchase Post Purchase Evaluation

FACTORS AFFECTING CONSUMER BUYING BEHAVIOR

The Consumer and Psychological Influences Social Influences The Purchase Situation

THE CONSUMER AND PSYCHOLOGICAL INFLUENCES

Motivation Perception

a. Selective Exposure b. Selective Attention c. Selective Comprehension d. Selective Retention

Learning Attitudes

a. Family Influences b. Peer group influencesc. Informationd. Experiencee. Personality --- Lifestyle

THE LEARNING PROCESS – FACTORS INFLUENCING ATTITUDE FORMATION

Family Peer group Information Experience Personality attitude

SOCIAL INFLUENCES

Personal Influence Reference Groups The Family Social Class Culture

THE PURCHASE SITUATION

The purchase task Social surroundings Physical Surroundings Temporal effects Antecedent states

QUESTIONS FOR DISCUSSIONS

What is the importance of learning consumer behaviour?

Why is social class an important factor in buying behaviour?

Activity: Prepare a list of five products purchased by

your family indicate who is the information gatherer, the influence, the decision maker, the purchaser and the user

CHAPTER THREE

The Buying Behaviour of Organizational Markets

INTRODUCTION

The consumer market consisting of individuals and families are not the only customers marketing firms can serve. There are other types of buyers which may offer opportunities for the marketer. This type of buyers consists of organizations with buying behaviour that is unique and different from those of the consumers.

WHAT ARE ORGANIZATIONAL MARKETS

Organizational markets are those that buy goods for production purposes or for reselling. They may be, classified into the following;

1. Industrial Markets 2. Reseller Markets 3. Government Markets4. Non- Profit Organizations

INDUSTRIAL MARKET

Organizations that require goods and services for the purpose of producing goods or services are called industrial markets. The production output of the industrial firms are sold for profit

e.g. Textile Firms – Chemicals Producers of Vegetable – Hotels and Restaurants Publishers – Universities and Colleges

RESELLER MARKETS

Are organizations that buy goods and services which they later sell at a profit. Wholesalers and retailers of drugs will qualify as the reseller of drug manufacturing companies.

e.g. Mercury Drug – Unilab Most farmers sell their produce to persons

who later sell them to consumers. These middlemen are the most visible forms of reseller market.

GOVERNMENT MARKETS

Government agencies that buy products and services for use in the production of public goods and services are referred to as “government markets” These include the national, regional, provincial, and municipal governments.

Examples of government markets are the following: 1. NFA – buys palay from farmers 2. State Universities and Public Schools – buy books

and school supplies from dealers or manufacturers

3. The AFP – uniforms and transport equipment

NGO

Are nongovernmental organizations that serve their customers but do not have profits as organizational goal.

E.g. Girl Scouts, Red Cross, Knight Columbus, Saint Nicholas Parish etc.

Characteristic Organizational Market

Consumer Market

Few Buyers YES NO

Close Supplier/Customer Relationship

YES NO

Geographical Concentration of Market

YES NO

Derived Demand YES NO

Large Buyers YES NO

Inelastic Demand YES NO

Fluctuating Demand YES NO

Professional Purchasing

YES NO

More Buying Influences

YES NO

ORGANIZATIONAL BUYING AND ITS CHARACTERISTICS Organizational Buying Behaviour has unique

characteristics regarding the following: 1. Demand 2. Potential buyers 3. Buying objectives 4. Buying criteria5. Size or order of purchase 6. Buyer-Seller Information 7. The Buying Centre

CONT...

Demand – the demand for products and services as required by organizations are derived from the demand for consumer products and services

Potential Buyers – firms that sell to organizations have to deal with only a few customers.

Buying Objectives – organizations buy for the purpose of making profits and this is done through increasing sales or reducing costs.

CONT...

Buying Criteria – organizations are concerned with short and long term objectives. They used the following criteria when buying products and services.

a. Price

b. Ability of the seller to meet the quality specifications required for an item

c. Ability of the seller to meet required delivery schedule ; technical capability of the seller

d. Warranties and claim policies in the event of poor performance

e. Past performance of the seller on previous contracts

f. Production facilities and capacity of the seller.

CONT... Size of Order or Purchase – the size of goods

purchased by the organization is typically larger and they usually sets certain requirements concerning the size of the order.

Buyer –Seller Interaction – the complexity of organizational buying makes it necessary for buyer and seller interaction to be more time consuming. e.g. Long term negotiation

The Buying Centre – a group consisting of several people from different departments who participate in the decision process of buying, the members share knowledge of information relevant to the purchase of a product or service. e.g. Purchasing department either single or unit

KINDS OF BUYING PROCESSES

New- Task Buying – happens when org. Has a new need and the buyer wants a great deal of information. Takes more time and involves the ff:

a. Setting product specifications

b. Identifying sources of supply

c. Establishing an order routing for possible future purchases

Straight Re-Buy – is a routine repeat purchase, happens when previous purchase was satisfactory.

Modified Re-Buy- happens when the items purchased remain the same but the members of the buying centre are not satisfied with the product attributes. Involves opportunity for other suppliers

PARTICIPANTS IN ORGANIZATIONAL BUYING

1. USERS - ones who will use the products 2. INFLUENCERS - persons who influence the

buying decision e.g. Technical experts or buying centre member

3. DECIDERS - persons who make decisions on product requirements and suppliers. The buyer is the decider in routine buying.

4. APPROVERS- persons who authorize the proposed actions of deciders or buyers.

5. BUYERS – persons who authorize to select the supplier and arrange the terms of purchase

6. GATEKEEPERS - persons who have the power to prevent seller or information from reaching members of the buying centre.

PURCHASE DECISION-MAKING PROCESS IN ORGANIZATIONS

1. Recognition of a problem or need2. Search for information about products and

suppliers 3. Evaluation and selection of supplier 4. The purchase 5. Performance evaluation and feedback

RECOGNITION OF A PROBLEM OR NEED FACTORS TO CONSIDER

Organizational purchasing is a result of product and operational needs

An organization’s needs can be identified by different employees of the firm.

Progressive firms are engaged in requirements planning. ( risk of supply shortage and price increase)

The firm needs to determine the product specifications

SEARCH FOR INFORMATION ABOUT PRODUCTS AND SUPPLIERSTHE FOLLOWING MUST BE CONSIDERED

A listing of products or services that will solve the problem. ( value analysis and systematic appraisal of product specifications)

Make or Buy Analysis – sometimes firms consider manufacturing their own needs due to it is more economical and they want to minimize the risk of a suppliers vulnerability to strike or avoid price increase or poor service.

Information must be gathered about potential suppliers

EVALUATION AND SELECTION OF SUPPLIERS Organizations are more formal and they use a set

of choice criteria which show the advantages offered by each supplier.

Criteria Used are the following: 1. The quality of goods and services being

considered for the purchase 2. The characteristics and needs of the buyer3. The suppliers ability to meet quality standards 4. The suppliers ability to meet delivery schedules 5. The price 6. Technical capability of supplier In evaluation Rating Sheet is Prepared to facilitate

comparison in terms of total ratings.

THE PURCHASE

To achieve efficiency organizations prefer to routinize their purchases, most often they will be going through BLANKET PURCHASE ORDER – which is an agreement where the supplier promises to resupply the buyer as needed on agreed price and terms over a specified period of time.

The Blanket Purchase order – shuts other suppliers until buyer is no longer satisfied with it relationships with current supplier.

PERFORMANCE EVALUATION AND FEEDBACK Performance Evaluation steps are as follows: 1. The buyer inspects the delivered products to

determine whether it meets the required specifications.

2. The user will determine if the purchased product performs according to expectations

3. The buyer evaluates the supplier’s performance on the following - promptness of delivery - product quality - after sales service

Purpose: provide necessary information in evaluating proposals and selecting suppliers

about similar products in the future

WHAT INFLUENCES ORGANIZATIONAL BUYERS

Economic – such as price, product, quality and service

Personal – such as favours, attention and risk avoidance.

Specifically influences on organizational buyers may be classified as follows:

1. Environmental Factors –politics, economics & competition

2. Organizational Factors – policies & procedures

3. Interpersonal factors – members 4. Individual Factors - personal