Chapter

1
Chapter 3 Consumer and Organizational Buyer
Behavior
2

• 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

3

• Organizational selling/ buying may be more risky
• Organizational buying is more complex
• Negotiation is often more important in
  organizational buying
• 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?

4

• Blackwell, Miniard and Engel describe five roles
• Initiator
• Influencer
• Decider
• Buyer
• User
• The consumer decision making process
• Need identification/ Problem awareness
• Information gathering
• Evaluation of alternatives
• Selection of an appropriate solution
• Post- purchase evaluation

5

• 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

6

• 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

7

• 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 persons activities, interests and
  opinions

8

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

9

• 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

10

• 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

11

• 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

12

• 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

13

• 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

14

• 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

15

• 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

16

• 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.

17

• 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