Chapter 4: Buyer Behavior

Concept of Buyer Behavior

Consumer are those INDIVIDUALS who BUYS
product and services for themselves or on behalf
of their households. Also called FINAL USERS
or END USERS of these products.

The consumer behavior on the other hand

describes the process of how consumers make
PURCHASE DECISION and how they use the
purchased products.
1) Which of the following is the best
explanation of consumer buying behavior?
a) A consumer purchasing a product
b) A consumer making a decision
c) A consumer’s behavioral state
d) Sum total of all factors that influences a
consumer’s purchasing decision
2) You are hungry and look into the fridge only
to find you don’t have any food. In which stage
of the buying process are you?
a)Need b)Want c)Problem d)Demand
Answer Key: 1(d), 2(c)
 Concept of Buyer Behavior
Discussion:
Think about a specific major purchase you’ve made recently.
What buying process did you follow (How did you decide)? What
major factor influenced your decision?

Consumer buying process or purchase decision can be described

as following:
Step 1: Need Identification/ Problem Recognition
Step 2: Information Search
Step 3: Evaluation of Alternatives
Step 4: Purchase Decision
Step 5: Post – Purchase Evaluation
 Process of Buyer Behavior
1) Need Identification/ Problem Recognition: The recognition of the
particular problem or need and here the buyer has a need to satisfy or a
problem that needs solving, and this is the beginning of the buyer decision
process.
2) Information Search: Buyers here begin to look around to find out
what’s out there in terms of choice and they start to work out what might
be the best product or service for solving the problem or satisfying any
need.
3) Evaluation of Alternatives: The evaluation of the available alternatives
whereby the buyer decides upon a set of criteria by which to assess each
alternative.
4) Purchase Decision: Individual or teams of buyers make the final choice
of what to buy and from whom to buy it.
5) Post – Purchase Evaluation: The process continues even when the
product or service is being consumed by the individual or business.
 Influencing Factors of Consumer Buying
Decision
1) Demographic Factors:
– Age : Generally children demands toys and youth demands sport materials.
That means different age influences the consumer buying decision.
– Gender: Male are sensitive towards brand and image of product whereas
females are sensitive towards discount, offers etc.
– Family Size and Life Cycle: Demand of single family is differ from demand of
joint family.
– Occupation: Workers buy cheap clothes to wear while working in the
factory. Professors, advocates, managers etc. buy costly dresses to wear
while working in their offices. So the occupation also affect the buying
decision of the consumers.
– Self-concept or self image: Someone buy simple clothes to match the outfit
of their role model (i.e. Hero of Movie). On the other hand if their role
model is villain may buy rough and tough clothes.
 Influencing Factors of Consumer Buying
Decision
2) Economic Factors:
– Personal/Family Income: Personal income can be spend on the
luxurious (i.e. personal need/ interest) purchase while family income
may be used to fulfill the need of the family.
– Expected Future Income: if consumer is optimistic then he think his
income will grow and current decision of purchase is increased.
Otherwise he saves his money for future emergencies, investment and
so on.
– Liquid Assets and Credit Facility: having high liquid assets (bank
balance, share, debenture etc.) influences the purchase decision
positively. Similarly, credit facility also increases the purchase decision.
– Price Level: Increase in market price level decreases the consumption/
purchase.
– National Income or Per Capita Income (PCI), Taxes etc. also influences
the buying decision of consumer.
 Influencing Factors of Consumer Buying
Decision
3) Psychological Factors:
– Perception: Perception is a mental process and it start when sensory organs
(eyes, ears, nose, mouth and skin) detect stimuli. If we see burger in a
restaurant and perceived to be very delicious then we decide to buy and grab
it.
– Motivation: consumer purchase according to their need level. According to
Abraham Maslow there are five types of need (a) Basic need (b) Safety need
(c) Love affection need (d) Esteem need (e) Self actualization need. If
consumer need lies on the basic need then they demand rice, clothes, shelter
etc.
– Attitude: Attitudes put people into a frame of mind of liking or disliking
things, of moving towards or away from them. If they like it then they decide
to buy.
– Beliefs: belief is the conception or thought built up by the individuals about
product or services. Ram may believe that SONY Camera is good with the cost
of 45000. He may decide to buy it even if the camera is too heavy.
 Influencing Factors of Consumer Buying
Decision
4) Cultural Factors: Intangible (attitude, beliefs, values,
language etc.) and tangible (tools, housing, products,
work of art etc.) affect the consumer buying decision.
5) Social Factors:
– Family: no. of members in a family influences buying
decision.
– Social Class: Middle class people demand different
product quality than Higher class people.
– Opinion Leaders: opinion, reviews of other determines
consumer purchase decision.
– Reference Group: consumer purchase through the refer.
 Organizational Buying Decision
Business (organizational) buyer behavior refers to
the organizations that BUY GOODS and services
for USE IN THE PRODUCTION of other products
and services that are SOLD, RENTED, OR
SUPPLIED to others.
Organizational buying behavior is the decision
making process by which a buying group
establishes the needs for goods and services and
identifies, evaluate, and chooses among
alternative brand and suppliers.
 Organizational Buying Decision
Step 1: Problem/Need identification
Step 2: Need Description
Step 3: Product Specification
Step 4: Search for Suppliers
Step 5: Analysis of Proposals
Step 6: Selection of Suppliers
Step 7: Placing the Purchase Order
Step 8: Post Purchase Evaluation
Influencing Factors of Organizational Buying

1) Environmental Factors:
– Political, Economical, Socio-cultural, Technological
factors.
2) Organizational Factors:
– Objectives, Goodwill, Structure, Policies etc.
3) Individual Factors:
– Age, Education, Income, Job position, Background,
Risk Attitude etc.
4) Interpersonal Factors:
– Authority, Interest, Status etc.
 Global Consumer Movements and
Consumer Protection
a) The right to satisfaction of basic needs
b) The right to safety
c) The right to be informed
d) The right to choose
e) The right to be heard
f) The right to redress or compensate
g) The right to consumer education
h) The right to healthy environment
Thank You
In the early 1970s, when Nirma washing powder was introduced in the low-
income market, Hindustan Lever Limited (HLL) reacted in a way typical of
many multinational companies. Senior executives were dismissive of the
new product: "That is not our market", "We need not be concerned." But
very soon, Nirma's success in the detergents market convinced HLL that it
really needed to take a closer look at the low-income market.

Starting as a one-product one-man outfit in 1969, Nirma became a Rs 17

billion company within three decades. The company had multi-locational
manufacturing facilities, and a broad product portfolio under an umbrella
brand – Nirma. The company's mission to provide, "Better Products, Better
Value, Better Living" contributed a great deal to its success. Nirma
successfully countered competition from HLL and carved a niche for itself in
the lower-end of the detergents and toilet soap market.

The brand name became almost synonymous with low-priced detergents

and toilet soaps. However, Nirma realized that it would have to launch
products for the upper end of the market to retain its middle class
consumers who would graduate to the upper end.
Questions:
1) What is the main issue in this case?
2) Discuss the success factor of Nirma.
3) Explain the future challenges for Nirma.
A waiter takes an order at a table, and then enters it online via one of the six
terminals located in the restaurant dining room. The order is routed to a printer in
the appropriate preparation area: the cold item printer if it is a salad, the hot-item
printer if it is a hot sandwich or the bar printer if it is a drink. A customer’s meal
check-listing (bill) the items ordered and the respective prices are automatically
generated. This ordering system eliminates the old three-carbon-copy guest check
system as well as any problems caused by a waiter’s handwriting. When the kitchen
runs out of a food item, the cooks send out an ‘out of stock’ message, which will be
displayed on the dining room terminals when waiters try to order that item. This
gives the waiters faster feedback, enabling them to give better service to the
customers. Other system features aid management in the planning and control of
their restaurant business. The system provides up-to-the-minute information on the
food items ordered and breaks out percentages showing sales of each item versus
total sales. This helps management plan menus according to customers’ tastes. The
system also compares the weekly sales totals versus food costs, allowing planning
for tighter cost controls. In addition, whenever an order is voided, the reasons for
the void are keyed in. This may help later in management decisions, especially if the
voids consistently related to food or service. Acceptance of the system by the users
is exceptionally high since the waiters and waitresses were involved in the selection
and design process. All potential users were asked to give their impressions and
ideas about the various systems available before one was chosen.
Questions:
• In the light of the system, describe the decisions
to be made in the area of strategic planning,
managerial control and operational control? What
information would you require to make such
decisions?
• What would make the system a more complete
MIS rather than just doing transaction processing?
• Explain the probable effects that making the
system more formal would have on the customers
and the management.