HARAMBEE UNEVERSITY

CHAPTER FIVE
Consumer and Organizational buying Behavior
Chapter contents:
- Consumer buying behavior
- Organizational buying behavior
4.1. Consumer buying behavior
4.1.1. What is Consumer Buying Behavior?
Definition of Buying Behavior: Consumer Behavior is the mental, emotional and physical
activities engaged in when selecting, purchasing, using and disposing of products and services to
satisfy needs.
Buying Behavior is the decision processes and acts of people involved in buying and using
products.
 Need to understand about Consumer Buying Behavior:
- Why consumers make the purchases that they make?
- What factors influence consumer purchases?
- The changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs
to analyze buying behavior for:
- Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s success.
- The marketing concept stresses that a firm should create a Marketing Mix (MM) that
satisfies (gives utility to) customers, therefore need to analyze the what, where, when and
how consumers buy.
- Marketers can better predict how consumers will respond to marketing strategies.

 Why Study Consumer Behavior?

- It is of central importance to developing new products: segmentation and product
positioning
- It is critical to market
- It is critical to product positioning
- It is critical to profitability analysis
- It is critical to pricing decisions
- It is critical to distribution decisions
- It is critical to promotion decisions
- It is of importance to public policy makers and regulators
- It is of importance to public policy makers and regulators: Hi-octane gasoline
- It is of importance to public policy makers and regulators: nutritional labels
- Interest in symbolism and consumption culture
4.1.2. Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase. All

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consumer decisions do not always include all 6 stages, determined by the degree of complexity.
Those are:
i. Problem Recognition (awareness of need): difference between the desired state and the
actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your
need to eat.
Can be stimulated by the marketer through product information-did not know you were
deficient? i.e., see a commercial for a new pair of shoes, stimulates your recognition that
you need a new pair of shoes.
ii. Information search:
- Internal search, memory.
- External search if you need more information. Friends and relatives (word of mouth).
Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set.
Hungry, want to go out and eat, evoked set is
- Ethiopian dish
- Chinese food
- Indian food
- Burger king

iii. Evaluation of Alternatives: need to establish criteria for evaluation, features the buyer
wants or does not want. Rank/weight alternatives or resume search. May decide that you
want to eat something spicy, Ethiopian dish gets highest rank etc.
If not satisfied with your choice then returns to the search phase. Can you think of another
restaurant? Look in the yellow pages etc. Information from different sources may be treated
differently. Marketers try to influence by "framing" alternatives.
iv. Purchase decision: Choose buying alternative, includes product, package, store, method of
purchase etc.
v. Purchase: May differ from decision, time lapse between 4 & 5, product availability.
vi. Post-Purchase Evaluation: outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance,
have you made the right decision. This can be reduced by warranties, after sales
communication etc. After eating an Ethiopian meal, may think that really you wanted a
Chinese meal instead.
4.1.3. Consumer buying Decision Making

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A Simple Model of Consumer

Decision Making
Need Info Brand Brand Purchase
Criteria Processin Perception Attitudes Behavior
g s
- Safety is very important to me in buying a car.
- I think Volvo is a very safe car.
- Therefore, I like Volvos.
- As a result, I would consider a Volvo the next time
- I am in the market for a new car.

4.1.4. Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:
- Level of Involvement in purchase decision. Importance and intensity of interest in a
product in a particular situation.
- Buyer’s level of involvement determines why he/she is motivated to seek information
about a certain products and brands but virtually ignores others.
High involvement purchases: Honda Motorbike, high priced goods, products visible to others,
and the higher the risk the higher the involvement. Types of risk:
- Personal risk
- Social risk
- Economic risk
 The four type of consumer buying behavior are:
i. Routine Response/Programmed Behavior: buying low involvement frequently purchased low
cost items; need very little search and decision effort; purchased almost automatically.
Examples include soft drinks, snack foods, milk etc.
ii. Limited Decision Making: buying product occasionally. When you need to obtain
information about unfamiliar brand in a familiar product category, perhaps. Requires a
moderate amount of time for information gathering. Examples include Clothes--know
product class but not the brand.
iii. Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or
infrequently bought products. High degree of economic/performance/psychological risk.
Examples include cars, homes, computers, education. Spend a lot of time seeking
information and deciding. Information from the companies MM; friends and relatives, store
personnel etc. Go through all six stages of the buying process.

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iv. Impulse buying, no conscious planning. The purchase of the same product does not always
elicit the same Buying Behavior. Product can shift from one category to the next. For
example: Going out for dinner for one person may be extensive decision making (for
someone that does not go out often at all), but limited decision making for someone else. The
reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of
friends will also determine the extent of the decision making.
4.1.5. Categories that Effect the Consumer Buying Decision Process
A consumer, making a purchase decision will be affected by the following four factors:
 Personal
 Psychological
 Social
 Cultural
The marketer must be aware of these factors in order to develop an appropriate MM for its target
market.
i. Personal: Unique to a particular person. Demographic Factors. Sex, Race, Age etc. Who in
the family is responsible for the decision making? Young people purchase things for different
reasons than older people.
ii. Psychological factors: Psychological factors include:
- Motives: A motive is an internal energizing force that orients a person's activities toward
satisfying a need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives then
they can better develop a marketing mix. MASLOW hierarchy of needs!!
o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization
Need to determine what level of the hierarchy the consumers are at to determine what motivates
their purchases. Motives often operate at a subconscious level therefore are difficult to measure.
- Perception: What do you see?? Perception is the process of selecting, organizing and
interpreting information inputs to produce meaning. Information inputs are the sensations
received through sight, taste, hearing, smell and touch.
- Ability and Knowledge: Need to understand individual’s capacity to learn. Learning,
changes in a person's behavior caused by information and experience. Therefore to change
consumers' behavior about your product, need to give them new information re:
product...free sample etc.
- Attitudes: Knowledge and positive and negative feelings about an object or activity-maybe
tangible or intangible, living or non- living.....Drive perceptions.
Individual learns attitudes through experience and interaction with other people.
Consumer attitudes toward a firm and its products greatly influence the success or failure of
the firm's marketing strategy.
Attitudes and attitude change are influenced by consumers personality and lifestyle.

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Consumers screen information that conflicts with their attitudes. Distort information to make
it consistent and selectively retain information that reinforces our attitudes.
- Personality: all the internal traits and behaviors that make a person unique, uniqueness
arrives from a person's heredity and personal experience. Examples include:
o Self confidence
o Friendliness
o Adaptability
o Ambitiousness
o Dogmatism
o Authoritarianism
- Lifestyles: Recent Ethiopian trends in lifestyles are a shift towards personal independence
and individualism and a preference for a healthy, natural lifestyle. Lifestyles are the
consistent patterns people follow in their lives.
iii. Social Factors: Consumer wants, learning, motives etc. are influenced by opinion leaders,
person's family, reference groups, social class and culture.
- Opinion leaders: Spokespeople etc. Marketers try to attract opinion leaders...they actually
use (pay) spokespeople to market their products. Michael Jordon (Nike, McDonalds,
Gatorade etc.)
- Roles and Family Influences: Role, things you should do based on the expectations of you
from your position within a group. People have many roles. Husband, father, employer/ee.
Individuals role are continuing to change therefore marketers must continue to update
information. Family is the most basic group a person belongs to. Marketers must understand:
o that many family decisions are made by the family unit
o consumer behavior starts in the family unit
o family roles and preferences are the model for children's future family (can
reject/alter/etc)
o family buying decisions are a mixture of family interactions and individual decision
making
o family acts an interpreter of social and cultural values for the individual.
- Reference Groups: Individual identifies with the group to the extent that he takes on many
of the values, attitudes or behaviors of the group members.
- Families, friends , sororities, civic and professional organizations. Any group that has a
positive or negative influence on a person’s attitude and behavior.
o Membership groups (belong to): Affinity marketing is focused on the desires of
consumers that belong to reference groups. Marketers get the groups to approve the
product and communicate that approval to its members. Credit Cards etc.!!
o Aspiration groups (want to belong to)
o Disassociate groups (do not want to belong to)
The degree to which a reference group will affect a purchase decision depends on an individual’s
susceptibility to reference group influence and the strength of his/her involvement with the
group.

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iv. Culture and Sub-culture: Culture refers to the set of values, ideas, and attitudes that are
accepted by a homogenous group of people and transmitted to the next generation.
Culture also determines what is acceptable with product advertising. Culture determines
what people wear, eat, reside and travel. Cultural values may relate to good health,
education, individualism and freedom. Different society has different levels of needs,
different cultural values.
Culture can be divided into subcultures:
o Geographic regions
o Human characteristics such as age and ethnic background.
4.2. Organizational Markets and Organizational Buyer Behavior
Organizational/ Industrial / buyers are those who purchase items on behalf of their business or
organization
Businesses now spend considerable sums trying to learn about what makes “customers tick”. The
questions they try to understand are:
- Who buys?
- How do they buy?
- When do they buy?
- Where do they buy?
- Why do they buy?
For a marketing manager, the challenge is to understand how customers might respond to the
different elements of the marketing mix that are presented to them. If management can
understand these customer responses better than the competition, then it is a potentially
significant source of competitive advantage.
Organizational Buyer Behavior: ‘The decision-making process by which formal organizations
establish the need for purchased products and services, and identify, evaluate, and choose among
alternative brands and suppliers’(Kotler and Armstrong)
Hence, business buyer behavior is the buying behavior of the organizations that buy goods and
services for use in the production of other products and services or for the purpose of reselling or
renting them to others at a profit.
Business buying process is decision process by which business buyers determine which products
and services their organizations need to purchase, and then find, evaluate, and choose among
alternative suppliers and brands
In business buying, buyers and sellers work more closely together and build close long-run
relationships.
4.2.1. Major Types of Buying Situations
While it would appear business customers face the same four purchase situations faced by
consumers (Minor New Purchase, Minor Re-Purchase, Major New Purchase, Major Re-
Purchase), the nature of the business market noted above has led many marketing academics to
group business purchase situations into only three categories. The reason is that the idea of a
minor order may not hold as well in the business market, where buyers tend to place larger
orders and where suppliers’ marketing efforts are directed toward the most profitable buyers.

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i. Straight Re-Purchase: These purchase situations involve routine ordering. In most cases
buyers simply reorder the same products or services that were previously purchased. In fact,
many larger companies have programmed re-purchases into an automated ordering system
that initiates electronic orders when inventory falls below a certain pre-determined level. For
the supplier benefiting from the re-purchase this situation is ideal since the purchaser is not
looking to evaluate other products. For competitors who are not getting the order it may
require extensive marketing efforts to persuade the buyer to consider other product or service
options.
ii. Modified Re-Purchase: These purchases occur when products or services previously
considered a straight re-purchase are for some reason now under a re-evaluation process.
There are many reasons why a product is moved to the status of a modified re-purchase.
Some of these reasons include: end of purchase contract period, change in who is involved in
making the purchase, supplier is removed from an approved suppliers list, mandate from top
level of organization to re-evaluate all purchasing, or strong marketing effort by competitors.
In this circumstance the incumbent supplier faces the same challenges they may have faced
when they initially convinced the buyer to make the purchase. For competitors the door is
now open and they must work hard to make sure their message is heard by those in charge of
the purchase decision.
iii. New Task Purchases: As the name suggests, these purchases are ones the buyer has never or
rarely made before. In some ways new task purchases can be considered as either minor or
major depending on the total cost or overall importance of the purchase. In either case the
buyer will spend considerably more time evaluating alternatives. For example, if faced with
a major new task purchase, which often involves complex items, such as computer systems,
buildings, robotic assembly lines, etc., the purchase cycle from first recognizing the need to
placement of the order may be months or even years.
4.2.2. Participants in the Business Buying Process:
Buying center: includes all members of the organization who play a role in the purchase
decision process

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Roles in the purchase decision process:

- Users: members of the organization who will use the product or service (initiate the
buying proposal and help define product specifications)
- Influencers - help define specifications and provide information for evaluating alternatives
(Technical personnel are particularly important influencers)
- Buyers: have formal authority to select the supplier and arrange terms of purchase. ( their
major role is in selecting vendors and negotiating
- Deciders have formal or informal power to select or approve the final suppliers
- Gatekeepers control the flow of information to others
4.2.3. Organization purchase decision process:
To cap our discussion of the business market we now look at how purchasing decisions are
made. Business purchasing follows the same five-step buying process faced by consumers:
- Need Recognition
- Search
- Evaluate Options
- Purchase
- After-Purchase Evaluation.
While the steps are the same as consumer purchasing, the activities occurring within each step
are quite different as we discuss below.
i. Need Recognition: In a business environment needs arise from just about anywhere within
the organization. The Buying Center concept shows that Initiators are the first
organizational members to recognize a need. In most situations the Initiator is also the User
or Buyer. Users are inclined to identify the need for new solutions (i.e., new products)
while Buyers are more likely to identify the need to re-purchase products. But marketers
should also understand that more companies are replacing human involvement in re-
purchase decisions with automated methods, thus making it more challenging for
competitors to replace currently purchased products. In straight re-purchase situations,
whether there is human intervention or not, the purchasing process often jumps from Need
Recognition to Purchase and little search activity is performed.

ii. Search: The search for alternatives to consider as potential solutions to recognized needs is
one of the most significant differences between consumer and business purchasing. Much
of this has to do with an organization’s motive to reduce costs. While a consumer will
probably not search hard to save two cents a gallon on gas, a company that has a large fleet

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of cars or trucks certainly will. In fact, this step in the purchase process is where
professional buyers make their mark. The primary intention of their search efforts is to
identify multiple suppliers who meet product specifications and then, through a screening
process, offer a selected group the opportunity to present their products to members of the
Buying Center. Although in some industries, such as chemicals, online marketplaces and
auction sites offer buyers another option for selecting suppliers that may not include
supplier presentations.
iii. Evaluate Option: Once the search has produced options, members of the Buying Center
may then choose among the alternatives. In more advanced purchase situations, members of
the Buying Center may evaluate each option using a checklist of features and benefits
sought by the buyer. Each feature/benefit is assigned a weight that corresponds to its
importance to the purchase decision. In many cases, especially when dealing with
Government and Not-For-Profit markets, suppliers must submit bids with the lowest bidder
often being awarded the order, assuming products or services meet specifications.
iv. Purchase: To actually place the order may require the completion of paperwork (or
electronic documents) such as a purchase order. Acquiring the necessary approvals can delay
the order for an extended period of time. And for very large purchases, such as buildings or
large equipment, financing options may need to be explored.
v. After-Purchase Evaluation: After the order is received the purchasing company may spend
time reviewing the results of the purchase. This may involve the Buyer discussing product
performance issues with Users. If the product is well received it may end up moving to a
straight re-purchase status thus eliminating much of the evaluation process on future
purchases.

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