Everything you need to know about the consumer buying process. Consumer behaviour relates to the buying behaviour of individuals for products for their own use.
Organizations buy to enable them to provide goods and services to the final customers.
Organizational buying behaviour has many similarities to consumer behaviour. Both involve the behaviour of human beings, whether individually or in groups.
Organizational buyers do not necessarily act in a more rational way than individual buyers. Organizational buyers are also affected by environmental factors.
Buyer buy on the basis of various other factors than just product or service. These factors along with his approach toward product then result in a purchasing decision. It is a complicated procedure involving dynamic forces responsible for ultimate decision.
Hence buyers are subject to many influences when they make their buying decisions. Lowest cost consideration that is the economic consideration was only influential factor in buyer decision before globalization. Buyer used to buy on the basis of lowest cost policy, that is seller with lowest cost was selected for purchase.
Some of the steps and stages of consumer buying process are:
1. Problem Recognition 2. General Need Description 3. Product Specification 4. Supplier Search 5. Proposal Solicitation 6. Supplier Selection 7. Order Routine Specification 8. Performance to Add to Customer ‘Value’.
Consumer Buying Process: Problem Recognition, General Need Description, Product Specification, Supplier Search and a Few Others
Consumer Buying Process – 5 Basic Stages: Problem Recognition, Information Search, Evaluation of Alternatives, Purchase Decision and Post-Purchase Behaviour
Based on examining many consumer reports of buying episodes, consumer behaviour researchers have proposed ‘stage models’ of the buying process. Stage models are mostly relevant to complex decision-making, i.e., buying expensive, high involvement products.
The consumer as passing through five stages:
1. Problem recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behaviour
Thus model emphasises that the buying decision process starts long before the actual purchase and has consequences long after the purchase. It encourages the marketer to focus on the buying process rather than on the purchase decision.
The model implies that the consumers pass through all five stages in buying a product. We saw that this is not the case, especially in low-involvement purchases. Consumers may skip or reverse some of these stages. Thus, a woman buying her regular brand of toothpaste would go right from need for toothpaste to the purchase decision, skipping information search and evaluation.
Stage # 1. Problem Recognition:
The buying process starts with buyers recognising a problem/need. The buyer senses a difference between his/her actual state and a desired state. The need can be triggered by internal or external stimuli.
In the former case, one of the person’s normal needs — hunger, thirst, sex, rise to a threshold level and become a drive. From previous experience, the person has learned how to cope with the drives and is motivated towards a class of objectives that he/she known will satisfy the drives.
The marketer needs to identify the circumstances that trigger the particular need/interest in consumers. The marketer should research consumers to find out what kinds of felt needs or problems arose, what brought them about and how they led to this particular product.
Stage # 2. Information Search:
An aroused consumer may or may not search for more information. If the consumer’s drive is strong and an affordable gratification object is at hand, the consumer is likely to buy the object then. If not, the consumer’s need may simply be stored in memory. The consumer may undertake no further search, some further search, or a very active search for information bearing on the need.
If the consumer undertakes some search, we can distinguish between two levels. The milder search state is called highlighted attention. One may go into active information search where one looks for reading material, phones, friends and engages in other search activities to learn about the product.
How much search one undertakes depends on the strength of one’s drive, the amount of information one initially wants, the case of obtaining additional information, the value one places on additional information and the satisfaction one gets from search. Normally the amount of consumer search activity increases as the consumer moves from decision situations of limited problem-solving to extensive problem- solving.
Of key interest to the marketer are the major information sources that the consumer will turn to and the relative influences each will have on the subsequent purchase decision.
Consumer information sources fall into four groups:
i. Personal sources- Family, friends, neighbours, acquaintances.
ii. Commercial sources- Advertising, salespersons, dealers, and packaging displays.
iii. Public sources- Mass media, consumer-rating organisations.
iv. Experiential sources- Handling, examining, using the product.
The relative amount and influence of these information sources vary with the product category and the buyer’s characteristics. Generally speaking, the consumer receives much information exposure about a product from commercial sources that is marketer-dominated sources.
On the other hand, most effective exposures come from personal sources. Each type of sources may perform a somewhat different function in influencing the buying decision. Commercial information normally performs an informing function, and personal sources perform a legitimizing and/or evaluation function.
Through gathering information, the consumer learns about the brands in the market and their features. Fig. 3.4 shows the total set of brands available to the consumer. One will become acquainted with only a sub-set of these brands will meet one’s initial buying criteria and make up the consideration set.
As one gathers more information about these brands, only a few will remain as strong choices and make up the choice set. One makes final decision from the choice set, based on the evaluation process one uses.
The practical implication is that a company must strategies to get its brand into the prospect’s awareness set and choice set. Otherwise the company has lost its opportunity to sell to the customer. The company must go further and learn which other brands remain in the consumer’s choice set so that it knows its competition and can plan its appeals.
As for the consumer’s information sources, the marketer should identify them carefully and evaluate their relative importance, consumers should be asked how they first heard about the brand, what information came in later and the relative importance of the different information sources. This information is critical for preparing effective communication for the target market.
Stage # 3. Evaluation of Alternatives:
There is no simple and single evaluation process used by all consumers or even by one consumer in all buying situations. There are several decision evaluation processes. Most current models of the consumer evaluation process are cognitively oriented — that is, they see the consumer as forming product judgments largely on a conscious and rational basis.
First, the consumer considers various product attributes. Each consumer sees a given product as a bundle of attributes.
Consumers will vary in the attributes of a product they deem relevant of salient. Consumers will pay most attention to those attributes that are connected with their needs. The market for a product can often be segmented according to the attributes that are salient to different consumer groups.
Second, the marketers must not conclude that the salient attributes are the most important ones. Some of them may be salient because the consumer has just been exposed to a commercial message mentioning them or has had a problem involving them, hence, making these attributes ‘top of the mind’.
Furthermore, non-salient attributes might include some that the consumer forgot, but, whose importance would be recognised when mentioned. Marketers should be more concerned with attribute importance than attribute salience. They should try to find the importance weights that consumers attach to the salient attributes.
Third, the consumer is likely to develop a set of brand beliefs about where each brand stands on each attribute. The set beliefs held about a particular brand is known as the brand image. The consumer’s beliefs may be at variance with the true attributes owing to his/her particular experience and the effect of selective perception, selective distortion and selective retention.
Fourth, the consumer is assumed to have a utility function for each attribute. The utility function describes how the consumer expects product satisfaction to vary with different levels of each attribute.
Fifth, the consumer arrives at attitudes (judgments, preferences) towards the brand alternatives through some evaluation procedure. Consumers have been found to apply different evaluation procedures to make a choice among multi- attribute objects.
Some alternative buying decision processes used by consumers to evaluate alternative brands are:
i. Expectancy value model
ii. Ideal brand model
iii. Conjunctive model
iv. Disjunctive model
v. Lexicographic model
vi. Determinacy model
Options available to marketer are:
a. Modify the product- The marketer could re-design his brand so that it offers more characteristics that this type of buyer desires. This is called real positioning.
b. Altering beliefs about the brand.
c. Altering beliefs about the competitor’s brand.
d. Altering the importance weights.
e. Calling attention to neglected attributes.
f. Shifting the buyer’s ideals.
Stage # 4. Purchase Decision:
In the decision evaluation stage, the consumer forms preferences among the brands in the choice set. The consumer may also form a purchase intention and lean towards buying the most preferred brand. However, factors can intervene between the purchase intention and the purchase decision.
The first factor is ‘attitude of others’.
The extent to which another person’s attitude will reduce one’s preferred alternative depend on two things:
1. The intensity of the other person’s negative attitude towards the consumers preferred alternative.
2. The consumer’s motivation to comply with the other person’s wishes.
The more intense the other person’s negativism and the closer the other person is to the customer, the more the consumer will revise downward his/her purchase intention. The converse is also true- A buyer’s preference for a brand will increase if someone, he/she, likes or favours the same brand. The influence of other complex when several people close to the buyer hold contradictory opinions and the buyer would like to please them all.
Purchase intention is also influenced by unanticipated situational factors. The consumer forms a purchase intention on the basis of such factors as expected family income, expected benefits from the product. When the consumer is about to act, unanticipated situational factors may erupt to change the purchase intention. Thus, preference and even purchase intentions are completely reliable predictors of purchase behaviour.
A consumer’s decision to modify, postpone or avoid a purchase decision is heavily influenced by perceived risk. Many purchase involve some risk-taking. Consumers cannot be certain about the purchase outcome. This produces anxiety. The amount of perceived risk varies with the amount of money at stake, the amount of attribute uncertainty and the amount of consumer self-confidence.
A consumer, who decides to execute a purchase intention, will be making up to five purchase decisions:
I. Brand decision
II. Vendor decision
III. Quantity decision
IV. Timing decision
V. Payment-method decision
Stage # 5. Post-Purchase Behaviour:
After purchasing the product, the consumer will experience some level of satisfaction or dissatisfaction. The consumer will also engage in post-purchase action and product uses of interest to the marketer. The marketer’s job does not end when the product is bought, but, continues into the post-purchase period.
Post-Purchase Satisfaction:
After purchasing a product, a consumer may detect a few. Some buyers will not want the flawed product. Others will be indifferent to the flaw and some may even see the flaw as enhancing the value of the product. Flaws can sometimes be dangerous to consumers.
What, in general, determines whether the buyer is highly satisfied, somewhat satisfied, somewhat dissatisfied or highly dissatisfied with a purchase? The buyer’s satisfaction is a function of closeness between the buyer’s product expectation and the product’s perceived performance.
If the product matches, the decision he has made has certain advantages, it also has certain disadvantages. That dissonance arises after almost every decision and further, the individual will invariably take steps to reduce this dissonance.
Post-Purchase Actions:
The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behaviour. If the consumer is satisfied, then he/she will exhibit a higher probability of purchasing the product on the next occasion. The satisfied consumer will also tend to say good things about the product and the company to others. According to marketers, “Our best advertisement is a satisfied customers.”
Dissonant customers will resort to one or more courses of action. They may try to reduce the dissonance by abandoning or returning the product, or they may try to reduce the dissonance by seeking information that might confirm its high value or avoiding information that might confirm its low value.
Marketers should be aware of the full range of ways in which consumers handle dissatisfaction. Consumers have a choice between takings or not actions include complaining to the company, going to a lawyer, or complaining to other groups that might help the buyer get satisfaction, such as, business, private or government agencies.
Or the buyer might simply stop buying the product, utilising the existing option. Alternatively, the consumer may choose to use the voice option. In all these cases, the seller loses something in having done a poor job of satisfying the customer.
Marketers can take steps to minimize the amount of consumer post-purchase dissatisfaction. They can place ads showing satisfied brand owners. They can solicit customer suggestions for improvements and list the locations of available services.
They can send owners a magazine containing article. Post-purchase communications to buyers have been shown to result in fewer product returns and order cancellations. In addition, they can provide good channels for customer complaining and arrange for speedy redress of customer grievances.
Post-Purchase Use and Disposal:
There is one more step in the post-purchase behaviour of buyers that the marketers should want, viz., how the buyers use and dispose of the product. If consumers find a new use of the product that should interest the marketer because this use can he advertised.
If consumers put the product away in the closet or throw it out, this indicates that the product is not very satisfying and word or mouth would depress new product sales. All said, the marketer needs to study product use and disposal for clues to possible problems and opportunities.
Understanding consumer needs and buying processes is essential for building effective marketing strategies. By understanding how buyers go through problem recognition, information search, evaluation of alternatives, the purchase decision and post-purchase behaviour, marketers can design effective marketing programmes for their target markets.
Consumer Buying Process – 8 Identified Stages: Problem Recognition, General Need Description, Product Specification, Supplier Search and Few Others
The buyer’s focus is short-term oriented. The buyer gives importance to price reduction. The product is considered as a commodity. The buyer taps many sources of supply and makes them compete for share of the company’s purchases.
i. Procurement – Instead of compelling lower input prices, procurement orientation calls for better relationships with suppliers. Suppliers will be involved in the acquisition and management of inventory. Ultimately the purpose is to achieve win-win relationships with major suppliers.
ii. Supply Management – This orientation views purchasing a strategic value-adding activity. The organisation emphasises the whole value chain from materials to end users.
The Buying Process:
Robinson and associates have identified eight stages of industrial buying process. These stages are also known as buy phases are buy grid frame work.
1. Problem Recognition – In this stage, the buyer perceives a need for the product. The marketers can stimulate external stimuli by advertising, personal selling and telemarketing.
The following events may trigger the internal stimuli:
i. The new – product development process requires new materials and equipment.
ii. The buyer requires better quality raw materials at lower prices.
iii. The automation or computerisation requires new equipment.
2. General Need Description – Here the buyer determines the required item’s characteristics in terms of reliability, durability, price, etc. Far complex items, many participants will be involved.
3. Product Specification – Normally 20 percent of the parts account for 80 percent of the costs of manufacturing it. In this stage, the buyer lays dawn product specifications and service requirements.
4. Supplier Search – Here the task of the organisational buyer is to identify the suitable suppliers. In this regard, trade directories, trade advertisements, trade shows and internet will provide necessary direction. Finally, the buyer is able to screen out a large number of suppliers who may not be able to meet the requirements.
5. Inviting Proposals – This is the stage where sealed proposals are solicited from qualified suppliers. The invitation is either in the form of an open tender notice or the buyer may seek proposals from a few well-known suppliers.
6. Supplier Selection – Suppliers are now evaluated mare closely on their ability in meeting buyer requirements. Negotiations take place in this stage. Sometimes the buyer selects two suppliers in order to ensure uninterrupted supply.
7. Order-Routine Specification – During this stage, the buyer determines the technical specifications, the quantity required, the expected time of delivery, guarantees and so on. Buyer normally prefers blanket contracts rather than periodic purchase orders. Blanket contracts emphasise a long-term relationship. In this stage, actual placement of order will take place.
8. Performance Review – This is a critical stage for the supplier. The buyer reviews, and obtains feedback from all the departments using suppliers’ products and services. The performance review may lead the buyer to continue, alter, or terminate the relationship with the vendor. The repeat purchase is going to be based on these reviews.
A new-task buying situation generally involves all the buying stages we have discussed. In straight re-buy or modified re-buy situations, certain stages would be bypassed.
Consumer Buying Process – 5 Main Steps: Need Recognition, Information Search, Evaluating Alternatives, Purchase Decision and Post-Purchase Experience and Behaviour
The buying process includes the following five steps:
1. Need recognition.
2. Information search.
3. Evaluating alternatives.
4. Purchase decision.
5. Post-purchase experience and behaviour.
Step # 1. Need Recognition:
Buying process begins when a person begins to feel that a certain need or desire has arisen. The need may be activated by internal or external factors. The intensity of the want will indicate the speed with which a person will move to fulfill the want. The buyer will postpone the less important motives. Marketing management should offer appropriate cues to promote the sales of the product.
Step # 2. Information Search:
Aroused needs can be satisfied promptly when the desired product is not only known but also easily available. But when it is not clear what type or brand of the product can offer best satisfaction, the person will have to search for information. This may relate to the brand, location and the manner of obtaining the product. Consumers can use many sources, for example, family, friends, neighbours, opinion leaders and acquaintances.
Marketers also provide relevant information through salesman, advertising, dealers, packaging, sales promotion, window displaying, and mass media like newspapers, radio and television. Marketers are expected to provide reliable, up-to- date and adequate information regarding their products and services. This is the pressing demand of consumerism.
Step # 3. Evaluating Alternatives:
This is the critical stage in the process of buying.
There are several important elements in the process of evaluation:
i. A product is viewed as a bundle of attributes. These attributes or features are used for evaluating alternative brands. For example, a product has certain common attributes such as – taste, flavour, strength, aroma, colour, number of cups per packet and price etc.
ii. Information cues or hints about a set of characteristics of the product or brand, such as -quality, price, distinctiveness, availability, etc., help in the process of evaluation.
iii. Brand images and brand concepts can help in the evaluation of alternative.
iv. In order to reduce the number of alternatives, some consumers may consider more critical attributes and mention the level for those attributes.
v. Occasionally, consumers may use an evaluation process permitting trade-offs among different alternatives.
Marketers should grasp thoroughly the process and utility functions for designing and promoting the product.
Step # 4. Purchase Decision:
While the consumer is evaluating the alternatives, she/he will develop some likes and dislikes about the alternative brands. This attitude towards the brand influences the intention to buy. Thus the prospective buyer heads towards final selection. In addition to all other factors, situational factors like dealers’ terms, falling prices, for example, are also considered.
Perceived risk may also influence the decision to purchase. High-priced products involve higher risk. Sophisticated products involve performance risk. Consumers may not have confidence in foreign products involving higher cost and they would prefer national brands to reduce risks and problems of service after sale.
Step # 5. Post-Purchase Experience and Behaviour:
The brand purchase and the product use provide feedback of information regarding attitudes. If the devised satisfaction is as per the expected satisfaction, it will create brand preference influencing future purchase. But if the purchased brand does not yield desired satisfaction, negative feelings will occur and this will create anxiety and doubts.
This phenomenon is called cognitive dissonance. (Post-purchase anxiety). It is the lack of harmony between the buyer’s beliefs and his/her purchase decision. Marketer may try to create dissonance by attracting users of other brands to his brands. Advertising and sales promotion can help marketer in this job of brand switching.
Different theories on buyer’s behaviour throw light on different aspects of marketing mix. A deep study of these theories can provide valuable insights into consumer’s behaviour which lead to successful marketing efforts.
Consumer Buying Process – 2 Important Stages: Need Recognition and Evaluation of Alternatives – The Multi-Attribute Model
Retailers attempt to influence consumers as they go through the buying process to encourage them to buy the retailer’s merchandise and services.
Each stage in the buying process are addressed below:
Stage # 1. Need Recognition:
The buying process is triggered when people recognise they have an unsatisfied need. An unsatisfied need arises when a customer’s desired level of satisfaction differs from his or her present level of satisfaction. For example, Sania recognised that she had a need when she was faced with interviewing for jobs in her blue suit. She needed a suit that would make a good impression and realised her worn, outdated blue suit wouldn’t satisfy this need.
Need recognition can be as straightforward as discovering there’s no milk in the refrigerator, or it can be as ambiguous as feeling the need for an uplifting experience after a final exam. Visiting stores, surfing the Internet, and purchasing products are approaches to satisfying different types of needs.
The needs motivating customers to go shopping and purchase merchandise can be classified as functional or psychological. Functional needs are directly related to the performance of the product. For example, people who need to style their hair might be motivated to purchase a hair dryer. This purchase is based on the expectation that the hair dryer will assist the customer in styling hair.
Psychological needs are associated with the personal gratification customers get from shopping or from purchasing and owning a product. For example, a Tommy Hilfiger shirt may not serve the function of clothing any better than a knit shirt from Kmart, but the Hilfiger shirt may also satisfy the customer’s need to be perceived as a fashionable dresser. When products are purchased to satisfy psychological needs, the product’s functional characteristics are typically less important.
Many products satisfy both functional and psychological needs. The principal reason for purchasing a Tommy Hilfiger shirt may be to enhance one’s self- image, but the shirt also satisfies the functional need for clothing. Most Americans have more income than they require to satisfy their functional — needs for food, liquid, clothing, and shelter. As disposable income rises, psychological needs become increasingly important. Thus, store ambiance, service, and fashionable merchandise are more important to American retail customers than to customers in countries with less developed economies.
Functional needs are often referred to as rational, while psychological needs are called emotional. These labels suggest that visiting stores or buying products to satisfy psychological needs is irrational. But is it really irrational for people to buy designer clothing because it makes them feel more successful? Anything customers do to improve their satisfaction should be considered rational, whether the action satisfies a functional or a psychological need. Successful retailers attempt to satisfy both the functional and psychological needs of their customers.
Most customers have multiple needs. Moreover, these needs conflict. For example, Sania Mirza would like to wear a DKNY suit. Such a suit would enhance her self-image and earn her the admiration of her college friends. But this need conflicts with her budget and her need to get a job. Employers might feel that she’s not responsible if she wears an expensive suit to an interview for an entry- level position. Typically, customers make trade-offs between their conflicting needs.
Because needs often cannot be satisfied in one store or by one product, consumers may appear to be inconsistent in their shopping behaviour. For example, an executive might own an expensive Mercedes-Benz auto and buy gas from a discount service station. A grocery shopper might buy an inexpensive store brand of paper towels and a premium national brand of orange juice. The pattern of buying both premium and low-priced merchandise or patronising expensive, status-oriented retailers and price-oriented retailers is called cross- shopping.
While cross-shoppers are seeking value, their perception of value varies across product classes. Thus, a cross-shopper might feel it is worth the money to buy an expensive sweater in a boutique but feel there is little quality difference between jeans at K-mart and designer brands at the boutique.
Similarly, consumers may cut back on dining at an expensive restaurant but still want to treat themselves to expensive, high-quality jams, mustards, and olive oils in the supermarket. While retailers might think the buying patterns of cross-shoppers do not make sense to them, it makes sense to their customers.
c. Stimulating Need Recognition:
Customers must recognise unsatisfied needs before they are motivated to visit a store and buy merchandise. Sometimes these needs are stimulated by an event in a person’s life. For example, Sania’s department store visit to buy a suit was stimulated by her impending interview and her examination, of her blue suit.
An ad motivated her to look for the suit at Macy’s. Retailers use a variety of approaches to stimulate problem recognition and motivate customers to visit their stores and buy merchandise. Advertising, direct mail, publicity, and special events communicate the availability of merchandise or special prices. Within the store, visual merchandising and salespeople can stimulate need recognition. For example, a salesperson showed Jennifer a scarf to stimulate her need for an accessory to complement her new suit.
One of the oldest methods for stimulating needs and attracting customers is still one of the most effective. The Saks Fifth Avenue store in Manhattan has 310 feet of store frontage along 49th and 50th streets and the famed Fifth Avenue. Each day at lunchtime, about 3,000 people walk by the 31 window displays. Saks has 1,200 different window displays each y-+ear, with the Fifth Avenue windows changing each week. These displays can dramatically impact sales.
Stage # 2. Evaluation of Alternatives – The Multi-attribute Model:
The multi-attribute attitude model provides a useful way for summarising how customers use the information they have about alternative products, evaluate the alternatives, and select one that best satisfies their needs.
The multi-attribute attitude model is based on the notion that customers see a retailer or a product as a collection of attributes or characteristics.
The model is designed to predict a customer’s evaluation of a product or retailer based on:
(1) Its performance on relevant attributes and
(2) The importance of those attributes to the customer.
Consumer Buying Process – Explained!
The actions a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions.
The behavioral sciences help answer questions such as:
i. Why people choose one product or brand over another?
ii. How they make these choices? and
iii. How companies use this knowledge to provide value to consumers?
In the model below, marketing and other stimuli enter the customers “black box” and produce certain responses.
Marketing management must try to work out what goes on in the mind of the customer – the “black box”.
The Buyer’s characteristics influence how he or she perceives the stimuli, the decision-making process determines what buying behaviour is undertaken.
Buyer Purchase Decision Process:
Behind the visible act of making a purchase lies a decision process that must be investigated. The purchase decision process is the stages a buyer passes through in making choices about which products and services to buy.
Research suggests that customers go through a five-stage decision-making process in any purchase.
This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages.
For example, a student buying a favorite hamburger would recognise the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation.
Thy buying process starts with need recognition. At this stage, the buyer recognises a problem or need (e.g., I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g., you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins).
An “aroused” customer then needs to decide how much information (if any) is required if the need is strong and there is a product or service that meets the need close to hand then a purchase decision is likely to be made there and then. If not, then the process of information search begins.
A customer can obtain information from several sources:
i. Personal sources – family, friends, neighbours etc.
ii. Commercial sources – advertising, salespeople, retailers, dealers, packaging, point of-sale displays.
iii. Public sources – newspapers, radio television, consumer organizations; specialist magazines.
iv. Experiential sources – handling, examining, using the product.
The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customer’s value and respect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify which information sources are most influential in their target markets.
In the evaluation stage, the customer must choose between the alternative brands, products and services.
View with Respect to Customer Value:
Problem Recognition – Perceiving a Need:
i. Perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision.
ii. Can be as simple as noticing an empty milk carton or it can be activated by marketing efforts.
Information Search – Seeking Value:
The information search stage clarifies the options open to the consumer and may involve two steps of information search.
Internal Search:
i. Scanning one’s memory to recall previous experiences with products or brands.
ii. Often sufficient for frequently purchased products.
External Search:
i. When past experience or knowledge is insufficient.
ii. The risk of making a wrong purchase decision is high.
iii. The cost of gathering information is low.
The primary sources of external information are:
i. Personal sources, such as – friends and family.
ii. Public sources, including various product-rating organizations such as – Consumer Reports.
iii. Marketer-dominated sources, such as advertising, company websites, and sales-people.
Alternative Evaluation – Assessing Value:
The information search clarifies the problem for the consumer by:
1) Suggesting criteria to use for the purchase.
2) Yielding brand names that might meet the criteria.
3) Developing consumer value perception.
A consumer’s evaluative criteria represent both –
i. The objective attributes of a brand (such as – locate speed on a portable CD player).
ii. The subjective factors (such as – prestige).
Types of Evaluation Set:
i. Evoked set – The set of alternatives that would be listed at any point in time.
ii. Awareness set – Evoked set plus those alternatives that the person has heard of but do not come to mind immediately.
iii. Choice set – The set of alternatives included in deliberations. In most purchase decisions, the choice set is systematically reduced until it consists of only the final choice.
Purchase Decision – Buying Value:
There are three possibilities:
1) From whom to buy – which depends on such considerations –
a. Terms of sale
b. Past experience buying from the seller
c. Return policy.
2) When to buy – which can be influenced by –
a. Store atmosphere
b. Time pressure
c. A sale
d. Pleasantness of the shopping experience.
3) Do not buy.
Post Purchase Behaviour-Value in Consumption or Use:
1) After buying a product, the consumer compares it with expectations and is either satisfied or dissatisfied.
2) Satisfaction or dissatisfaction affects –
a. consumer value perceptions.
b. consumer communications.
c. Repeat-purchase behavior.
3) Many firms work to produce positive post purchase communications among consumers and contribute to relationship building between sellers and buyers.
4) Cognitive Dissonance – The feelings of post purchase psychological tension or anxiety a consumer often experiences.
5) Firms often use ads or follow-up calls from salespeople in this post purchase stage to try to convince buyers that they made the right decision.
Involvement and Problem-Solving Variations:
1) Consumers may skip or minimize one or more steps in the purchase decision process depending on –
a. The level of involvement.
b. The personal, social and economic significance of the purchase.
2) Three characteristics of high-involvement purchase –
a. Is expensive.
b. Can have serious personal consequences, or
c. Could reflect on one-social image.
Three general problem-solving variations exist in the consumer purchase decision process.
Routine Problem Solving:
i. Virtually a habit.
ii. Involves little effort seeking external information and evaluating alternatives.
iii. Typically used for low-priced, frequently purchased products.
iv. Limited Problem Solving.
v. Involves the use of moderate information-seeking efforts.
vi. Often used when the buyer has little time on effort to spend.
Extended Problem Solving:
i. Each stage of the consumer purchase decision process is used.
ii. Used in high-involvement purchase situations.
iii. Considerable time and effort on –
a. External information search and in identifying
b. Evaluating alternatives.
Consumer Involvement and Marketing Strategy:
Low and high consumer involvement has important implications for marketing strategy which differs for products that are market leaders from their challengers.
i. Consumer involvement theory – This is one way to understand the psychology and behavior of your target audience. There are others. But none is quite so simple and insightful.
ii. Involvement refers to how much time, thought, energy and other resources people devote to the purchase process.
iii. The Emotional / Rational scale is a measure of reason vs impulse, desire vs logic passion vs prudence. That sort of psychological issues.
1. High involvement / rational
2. High involvement / emotional
4. Low involvement / emotional.
1. High Involvement / Rational:
In this category you find expensive business purchases – anything relating to the technological infrastructure, the office location and lease, as well as the company health insurance plan.
On the consumer side, high involvement / rational purchases tend to be linked to high cost. This category can include financial services and products, the purchase of a home or car, as well as major appliances and electronics. That said, high involvement consumer purchases can vary significantly on the rational / emotional scale from individual to individual.
For Ms. Smith, a car is strictly a way to get to work, and her selection is based on fuel economy and reliability. For Mr. Wilson, a car is an important expression of his status and ego.
Your task is to determine how the majority of your target market relates to the purchase of the particular product or service. For both B2C and B to B markets, advertising for HI/R (High Involvement / Rational) purchases tend to be copy driven, with clear explanations of features and benefits.
2. High Involvement / Emotional:
Business purchases that fall into this category might include such things as office design, advertising, and perhaps the hiring of certain employees. For individuals, high involvement / emotional purchases can include jewelry, weddings, and holiday travel plans. In some societies the selection of a husband or wife will fall into group. As can the purchase of a home or car. Again, depends on the culture, person, and how much purchasing power she has.
Advertising in this category tends to focus on visual and emotional appeals. Give people visual details, with music.
3. Low Involvement / Rational:
These are the things we buy out of habit, without much thought. This category includes most of the things you put into your basket at the drug store or market. The places you eat lunch, say the local McDonald’s or purchase of office supplies.
Here the typical role for advertising is to get people to sample or switch. To break the automatic habit of spending their money with the competitor, they consider coupons and other incentives. As well as, ways to differentiate or re-position the product.
Over the counter (OTC) medicines tend to fall into this category. But pain relievers, cough medicines and the like, especially those for children, can be more emotionally driven. In that case, see the LI/E below.
4. Low Involvement / Emotional:
The gratification we get from these products is emotional or sensual. But fleeting it doesn’t last a long time. So we don’t spend a lot of time thinking about the purchase. Movies, candy, an entertaining magazine, or a birthday card. Perhaps selecting a restaurant for a special occasion.
The advertising challenge here tends to be the flash promise of pleasure, of gratification the promise of a benefit. Strong positioning can help, especially in a crowded product category.
Situational Influences – Five Situational Influences:
i. The purchase task – The reason for engaging in the decision.
ii. Social surroundings – Including others present when a purchase decision is made.
iii. Physical surroundings – Such as – decor, music, and crowding in retail stores.
iv. Temporal effects – Such as – time of day or the amount of time available.
v. Antecedent states – Which include the consumer’s mood or amount of cash on hand.
Psychological Influences on Consumer Behavior:
Concepts such as motivation and personality; perception; learning, values, beliefs and attitudes; and lifestyle are useful for interpreting buying processes and directing marketing efforts.
Motivation and Personality:
If a marketer can identify consumer buyer behavior, he or she will be in a better position to target products and services at them. Buyer behavior is focused upon the needs of individuals, groups and organizations.
It is important to understand the relevance of human needs to buyer behavior (remember marketing is about satisfying needs).
Let’s look at human motivations as introduced by Abraham Maslow by his hierarchy of needs – The hierarchy is triangular. This is because as you move up it, fewer and fewer people satisfy higher level needs. We begin at the bottom level.
Physiological needs such as – food, air, water, heat, and the basic necessities of survival need to be satisfied. At the level of safety, man has a place to live that protects him from the elements and predators. At the third level we meet our social and belongingness needs i.e., marry, or join groups of friends, etc.
The final two levels are esteem and self-actualisation. Fewer people satisfy the higher level needs. Esteem means that you achieve something that makes you recognised and gives personal satisfaction, for example writing a book. Self-actualisation is achieved by few. Here a person is one of small number to actually do something. For example, Neil Armstrong self-actualized as the first person to reach the Moon.
The model is a little simplistic but introduces the concept a differing consumer needs quite well.
Consumer Buying Process – 5 Main Stages: Need Arousal, Information Search, Evaluation Behaviour,Purchase Decision and Post Purchase Feeling
Information regarding buyer behaviour through the process of purchase can also be received. The seller can improve his marketing programmes on the basis of this information so received. The seller asks some questions to the buyer when he already would buy the goods in the process of purchase.
For example, he will ask how could he know the item? From where he obtained other information relating to the goods? How many difficulties does he face till the stage, he could decide to buy that goods? How and by what manner those difficulties were removed?
Buying Process consists of the following five stages:
Stage # 1. Need Arousal:
The first stage of buying process starts from the buyer’s need for item or product. The buyer arouses the need for the item through interior and exterior motives. For example, hunger, thirst, mute and sleep etc., related needs arouse through the drive motives and the buyer attracts towards the particular item on the basis of his pre-experiences in order to satisfy them.
The buyers several times, arouse through the exterior atmosphere. For example, need for Jalebi arouses when a man crosses the sweet-meat shop on the way and sees it baking fresh.
A need exists so long as the acute desire remains. The sellers therefore, should remove the brain fatigues of buyers by adding their buying motives with the promotion drive for sale of the concerned item.
Stage # 2. Information Search:
An effort to receive information relating to real purchase of the product is made under this stage. If the desire or necessity of the buyer is aroused, the item will be bought definitely and when the source of supply is strong, the buyer will go and buy the item from there in order to satisfy his need.
However, the buyer does not buy the item immediately when need is aroused and sometimes, they defer the buying intention too. A seller arrives at a conclusion when due search on the reason is made that – (i) The need of buyer is not acute or – (ii) He is failed to ascertain the item for buying or – (iii) Location of item is far from the easy reach of the buyer.
The sellers should assist the buyers in these circumstances because it will generate a confirm nature for the items in them.
Information from the other sources:
(i) Personal Source – Members of family, friends and neighbours.
(ii) Behavioural sources – Sellers, traders, advertisements etc.
(iii) Public source – Organizations and consumer evaluation etc.
(iv) Trial Source – Experiment or scrutiny source etc.
Stage # 3. Evaluation Behaviour:
The buyer does analysis and evaluation of the collected information related to the satisfaction of needs under this stage and then he assesses to the decision. The buyer in practical does evaluation of the information obtained under several methods and it is difficult for the sellers to study all these methods adopted. In order to study the evaluation behaviour of buyer, the sellers should study the views which may be followed by the prospective buyer. For example, category, quality, utility, brand concept and evaluation method etc., of the product.
Stage # 4. Purchase Decision:
The buyer in this stage exhibits his desire for purchase of that item to which he has given the top place in priorities of purchase. The purchase decisions are influenced by the social and the prospective events as well. For example, a buyer prefers buying BPL T. V. but his father argue the cost factor and suggest the purchase of other brand T. V. The confirm view of the buyer gets deflected for the B.PL.
Similarly, the buyer’s desire for purchase will subdue if he is known of his termination from service shortly. The purchase decision is also influenced of the quantum of risks involved. Lesser the risks ensure stronger decision for purchase. The quantum of money required for purchase, quality, and quantum of risks involves and self-confidence of buyer is added with this risk.
The sellers should in the circumstance, reduce the elements of risk by the confirm information made available through media.
Stage # 5. Post Purchase Feeling:
The buyers at the last stage of buying process consider on the aspect of satisfaction or dissatisfaction when the item is bought. His priority for the brand gets confirmation if he avails perfect satisfaction from the item so bought. If on other side, satisfaction is not obtained, he may put full stop on purchase of that brand in future.
It is also worth knowledge regarding the production of item from the angle of producer and sellers. Whether the item in question can provide with requisite satisfaction to buyers or not? If its answer is in negative, the reasons for this are searched.
Further, what defects of the item the seller may remove? How can the negative feeling of buyers be removed? The sellers can obtain this all information from the buyer either directly or indirectly. The sellers by doing this can remove the negative feelings and difficulties of the buyers through improvements in the future programmes of marketing.
Consumer Buying Process – Organisational Buying Process: Problem Recognition, General Need Description, Product Specification, Supplier Search and a Few Others
1. Problem Recognition:
The buying process starts when someone in the organisation/company recognises a problem or need which can be met by purchasing a good or service. The problem can arise as a result of internal or external stimuli.
Internal stimuli, which can trigger off a problem recognition situation are:
I. The company decides to launch a new product and requires new equipment and materials for manufacturing the new product.
II. The breakdown of a machine which requires replacement or new parts immediately.
III. The material purchased from a vendor proves to be unsatisfactory and the company is urgently looking out for another vendor.
IV. The purchase department head notices an opportunity to obtain better prices or quality materials.
The various factors which can act as external stimuli are:
The buyer comes to know or gets new ideas at an exhibition or trade show or by seeing an advertisement in a technical magazine or from a sales representative who offers a better product at a lower price etc., the buyer becomes aware of the availability of a better product at a reasonable price.
So the industrial marketer has to act as the stimulant for problem recognition by developing informative and attractive advertisements, mail literature to industrial buyers about the availability of technical products, direct their sales personnel to call upon the buyers/prospects and so on.
2. General Need Description:
Having recognised the problem, and realising the need for fulfilling the need, the buyer will now be involved in identifying the characteristic features and the quantity of the product which is required. Unlike the ultimate consumer, the industrial buyer will be motivated by budgetary considerations, such as profit goals, expense quotas and cost benefit analysis.
He is conscious of justifying the purchase based on some measurable parameter. Very often, hence, the buyer will select the vendor/supplier based on the sellers/marketer’s quality, service and price generally in this order.
During this stage, the industrial buyer tends to define product quality as that combination of properties which fits the product for its use in the future. Related to this is the supplier’s capability to deliver materials, components and supplies consistently in the required standard of quality.
Then he should be convinced that the supplier will provide a variety of services in the form of technical, replacement parts, delivery, information and sales. And lastly, the industrial buyer will work out the evaluated price, on the basis of the amount of scrap or waste resulting from the use of material, the cost of processing the material, the work required to be done by the machine, the power it consumes, the damage or loss liability, and many other factors which should help in minimizing costs.
Typically, these parameters are verified after which the buyer will rank the attributes in a sequence or order of importance like reliability, durability, price etc., required in the item to be purchased.
Ideally, the marketer must take care of the product characteristics desired by the buyer and then interact with the industrial buyer and communicate about the availability of the same with him.
3. Product Specification:
The buying organisation will now proceed to the item’s technical specifications. For this the buyer will do value analysis to appraise a supplier’s effectiveness. Value analysis involves the review of product specifications in relation to requirements, the identification of unnecessary cost elements and suggestions for their elimination.
This method requires participation by several groups of functional area specialists, such as engineering, manufacturing and production and accounting. These groups will be required to look for optional product characteristics and specify them accordingly. Moreover the buyer has also got the choice of refusing merchandise that fails to meet the intended standards.
In turn, value analysis can be used by the marketer as a tool for opening a new account with an industrial buyer.
4. Supplier Search:
The buyer now tries to identify the most appropriate vendor. The buyer has to be certain that their suppliers meet the standard of performance and quality for which they have worked out their operational plans. They will find out ways to accurately assess vendor capabilities, mainly in the areas of technology, production, financial strength and management.
So, at times the vendors will be dropped from the list of considerations because they may not be able to supply the needed quantity or because of a bad reputation in the market. And ultimately the buyer will be left to choose the supplier from the ‘finally approved list’ of qualified suppliers.
5. Proposal Solicitation:
The next stage requires qualified suppliers to submit proposals. Generally, the supplier will furnish information in the form of a catalogue or send their sales representative to the buyer with the necessary information. In case of more complex or expensive item, the buyer will prefer to have a detailed written proposal from the supplier.
The proposals must include both the technical as well as the marketing documents. In case of oral presentations, the supplier must be able to generate confidence of the buyer in his company’s capabilities and abilities to be able to stand out in the midst of competition.
6. Supplier Selection:
Now the stage is set whereby the members of the buying center will review the proposals and take a decision for the final selection of the supplier. This buying center will generally draw up a list of the desired supplier attributes and their relative importance.
A few of the attributes looked out for in a prospective supplier are:
i. Technical support services
ii. Prompt delivery
iii. Quick response to customer needs
iv. Product quality
v. Supplier reputation in the market
vi. Product price
vii. Extension of credit, and so on.
In this stage the buyer will do vendor analysis so as to ascertain not only the technical competence of the various suppliers but also their ability to deliver in time and provide the necessary services. The buyer will rate the supplier’s against the desired attributes and then identify the most attractive supplier.
The buyer will negotiate with the preferred suppliers for better prices and terms before making the final selection. Usually, buyers opt for multiple sources of suppliers and prefer not to be totally dependent on one supplier in case of anything going wrong. Further, they will also be in a position to compare the prices and performance of various suppliers.
7. Order Routine Specification:
This requires the buyer to specify and write out the final order in terms of technical specifications, quantity to be ordered, expected time of delivery, terms on goods returned, warranties and so on. Moreover, placing a new order each time the stock is required is a costly affair.
Similarly neither would the buyer want to stock extra materials or items because it indicates carrying more inventory, which is also not a healthy sign. To avoid the above problems, the buyer very often goes for ‘blanket contract’ with the supplier. Under this contract, the supplier will agree to resupply the buyer as and when required on certain price terms over a specified period of time.
8. Performance to Add to Customer ‘Value’:
In this stage, the buyer will review the performance of the supplier. Today all industrial marketers suffer from the problem of product parity. So they are trying to build relationship with the buyers by adding value to the transaction. Suppliers are customising by knowing not only their own customers but also their customer’s customer.
For instance, Asian Paints had customised its paints portfolio to add real value to the buyer. ‘Asian Paints’ tries to work out the auto buyers preferences, and tailor make its shades accordingly based on the findings of qualitative and quantitative research on preferred colours of automaker’s interests. In this way, Asian Paints had customised its paints portfolio and used this flexibility to add real value to the industrial buyer.
In another instance, ‘Standard Batteries Ltd.’ (SBL) realising that ‘Exide Industries’ was a big competitor to take on in the replacement market, put its focus on Maruti Udyog Ltd. (MUL). It offered a two year warranty period – higher than the industry average of one year-as an assurance of indicating that it wanted a long term relationship and not short term profits. Based on this technique and also by proving its performance SBL was able to bag orders from new automakers like Mahindra Ford, General Motors India and Mercedes Bern.
During this stage the buyer reviews the performance of the particular supplier(s). Based on the performance review, the buyer will decide whether to continue, modify or drop the seller.
The above eight stages in the buy phase model represent the major steps in the industrial buying process. However, in a real situation, the industrial marketer will need to act according to the situational requirement.