Most important components that affect to the buying behavior of a consumer

Most important components that affect to the buying behavior of a consumer

There are many major factors that affect consumer buying decision. The major components affecting consumer buying decisions are as follows:

A. Economic Factors: Buying decision primarily depends upon the several economic factors. They are as follows:

1. Personal income: The ability of the consumers to pay money depends upon the level of their personal income. The higher the level of income, the higher will be the purchasing power and the lower the income, the lower will be the purchasing power.
2. Income of other members of the family: In a joint family like Nepalese societies, change in income of one family may affect the buying capacity of another member of the same family.
3. Expected future income: Expectation of future income determines the buying behavior of the consumer.
4. Liquid assets: When a consumer posses adequate liquid assets, he will be able and willing to spend more on goods and services although his regular income is minimum. Bank balance, short term bank deposit, share, Government bonds, etc. are the examples of consumer liquid assets.
5. Credit facility: If adequate credit facility is available to the consumer, he will tend to spend more on goods and services although his regular income is low. Refrigerators, cars, scooters and TV, washing machine are sold on an installment basis. Cellular phones are also provided on installment basis.

B. Demographic Factors: Buying decision is affected and determined by demographic factors also. They include the following factors:

1. Age and life cycle stage: Consumer buys different goods and services over their life time. Consumption is also shaped by the stage of the family life cycle. For instance, a young person is usually fashion conscious, while a middle-aged person is usually status conscious.
2. Occupation: A person’s buying behavioral pattern is also influenced by his occupation. For example, a company president will buy expensive suit, credit card membership etc.
3. Gender (Sex): The product needs of male and a female significantly differ.
4. Life style: Life style is defined as the patterns in which people live and spend time and money. Life style is concerned with the overt actions and behavior of consumers. The life-style categories are different from one person to the other.

C. Socio-cultural Factors:

a) Social factors: The major social factors that affect consumer behavior are as follows: 

1. Reference group: It is a relatively small social group to which person belongs or aspires to belong and that provide guides to acceptable beliefs, values, attitudes and behavior. Well known athletes, players, musicians, actors, and professionally successful people are reference groups. They influence product and brand choice.
2. Family: It is also considered as one of the strongest sources of group influence for the individual consumer. The joint family is the most common form family system in Nepal. From the marketers point of view the decision making role in the joint family system is being played by the oldest member of the family.
3. Roles and status: A person participates in many groups throughout the life. The person’s position in each group can be defined in terms of roles and status. A role consists of activities that a person is expected to perform according to the persons around him. Each role carries a status. A manager has more status than a salesman. Marketers are aware of status symbol potential of products and brands. However, status symbol varies for social classes and also geographically. On the basis of roles and status marketers target their product.

b) Cultural Factors: The major cultural factors that affect consumer’s behavior are as follows:

1. Culture: Culture is an important determinant of human behavior in the society. Marketers need to understand the major characteristics of culture such as: cultural values keep on changing through the passage of time and they are shared by the society as a whole.
2. Sub-culture: Sub-cultures include nationality, ethnic group and geographical regions. Many sub cultures make up important market segments and marketers often design product and marketing programmes tailored to their needs. They influence food preferences, clothing choices, recreation etc.
3. Social class: It is identified as relatively permanent homogeneous group of people having certain identifiable characteristics. There are three types of social classes:
1. High class
2. Middle class
3. Lower class

The marketer has to study the behavioral patterns of these classes so as to formulate marketing strategy and promotional communication.

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• Consumer Buying Process

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Organizational Buyer and Processes of Organizational Buying

Meaning of Organizational Buyer

Organizations make purchase decision in order to satisfy their goods, as do the final consumers. But, the goals differ. Organizations have goals of producing goods or services. Organizational buying is the decisions making process by which organizations establish the need for purchase of product and services, and identify, evaluate and choose among alternative brands and suppliers. Thus, organizational buying behavior is a process by which company/organization establishes a need for purchasing products and chooses among competing brands and suppliers. 

According to Pride and Ferrell –“Organizational buying behavior refers to purchase behavior of producers, government units, institutions and resellers.”

According to Bennett, Webster and Wind –“Organizational buying behavior is the decision-making process by which a buying group establishes the need for goods and services and identifies, evaluates, and chooses among alternative brands and suppliers.” 

In conclusion, organizational buying behavior refers to the buying behavior of organizations that buy for business use, resell or to make other products. Organizations consist of business, industries, retailers, government and non-government organizations. Marketing management needs to understand the organizational buyer behavior.

Organizational Buying Process 

Organizational buying process involves six stages. They are as follows: 

1. Problem recognition: The buying starts with problem recognition. In this stage, one or more individuals in the organization recognize that a problem or a need exists. Problem recognition may arise under several circumstances, such as when a new product is being introduced or an existing product is being modified or when a machine break down occurs. Individuals in the buying center, such as users, influencers and buyers may be involved in the problem recognition stage. 
2. Developing product specifications: This stage consists of determining what will be required to solve the specific problem. In this stage, several individuals in the organization, such as technical personnel, users, deciders and buyers participate jointly in developing specifications about the product needs of the organization. 
3. Search for products and suppliers: The third stage involves searching for possible products to solve the problem and locating possible suppliers of the product. Search activities may involve looking into company files and trade directories, contacting suppliers for information, inviting proposals for supply and so forth. 
4. Evaluation: The fourth stage consists of evaluation of the products and the suppliers on the basis of price, service, quality, reliability and consistency of supply factors. 
5. Selection: The fifth stage involves selecting of the product to be purchased and the supplier from whom to buy it. Specific details regarding terms credit arrangement, delivery dates and methods are worked out in this stage. 
6. Evaluation of product and supplier performance: The final stage in the organizational buying process involves the product’s performance and also the performance of the supplier. This stage helps organization to take corrective actions. The results of such an evaluation are used as important feedback for further purchase decisions.

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• Levels of Organizational Behavior

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Factor Determining Organizational Buying Decision | Buying Behavior

The behavior of an organization shown in buying goods or services is called organizational buying behavior. The organizations buy goods or services for business use, resale, produce other goods or provide services. Business and industrial organizations buy goods to use in business or produce other goods. 

Related Topic:

Meaning and Features of Organizational Buying Behavior

Several factors affect organizational buying decision. They can be grouped in environmental, organizational, interpersonal and personal factors. They are shown as follows:

Factors Affecting Organizational Buying Behavior

I. Environmental Factors           

Environment factors affect organizational buying behavior. This includes economic, technological, political-legal, social responsibility and competition.

1. Economic Factors

Economic factors affect organizational buying behavior. This includes level of demand and economic health. The level of demand includes capacity and desire for buying goods. This is affected by income distribution and price of product. Prosperity, recession and recovery are included in economic health. The prosperity condition is economically good condition. Recession is economically bad condition.

2. Technological Factors

Technological factors also affect organizational behavior. This includes level of technology, pace of technology, technology transfer etc. E-commerce as well as information technology has got revolutionary change. It has directly affected organizational buying behavior.

3. Political and Legal Factors

Political and legal factors also affect organizational buying process directly. Political factors include political system, political situation, and political thought, government policies etc. whereas constitution, laws, rules and regulations etc. are included in legal factors.

4. Social Responsibility

A business organization should consider social responsibility while buying any goods or services. Indigenous goods should be given preference in buying and interest of society should be protected. Interest of different pressure group of the society also should be considered while buying goods or services.

5. Competition

Competition also affects buying behavior. This competition includes pure competition, monopolistic competition and oligopoly competition.

II. Organizational Factors            

Organizational factors also affect organizational buying behavior. This includes objectives, policies, procedures, organizational structure and system.

1. Objectives

Buying objective is determined according to organizational goal. Goods should be purchased according to organizational objective. As goods or services need to be purchased according to organizational goal, buying is affected by objective.

2. Policies

Purchasing or buying policy also effects organizational buying behavior. Goods should be purchased according to buying policy of the organization. If the organization has the policy of buying indigenous goods, the buyer cannot buy foreign goods. If the purchasing policy is silent in this matter, whichever goods, foreign or indigenous, can be purchased as desired.

3. Procedures

The methods and process adopted by an organization to buy goods or services is called procedure. Goods or services can be purchased directly through agreement, or through tender, demanding catalog etc. Any of the method can be adopted to buy goods or services. Whichever procedure the organization has adopted, the buyer should follow it.

4. Organizational Structure

Organizational structure defines authority and relations which directly affects buying behavior. In some organizations, goods or services are purchased by direct order of chief executive while in some other organizations, goods or services are bought through purchase department. So, buying behavior is affected by organizational structure.

5. System

Purchasing system also directly affects buying behavior. An organization can adopt any one or more such as centralized system, decentralized system, huge quantity purchase system and others.

III. Interpersonal Factors            

Interpersonal factors also affect buying behavior. This includes authority, status, interest etc.

1. Authority

The personnel whom the organizational structure gives authority to order for purchase, no goods can be purchased without his order. Buying decision of such authority plays an important role in buying.

2. Status

The persons to purchase goods or services and to give order for purchase may be different in an organization. As much the behavior of the person issuing purchase order affects behavior of the buyer. If the status or level of the buyer is high, his buying decision becomes rational and quick. His/her behavior becomes mature.

3. Interest

Users, influencers, buyers, decider and gate keeper are involved in organizational buying process. Their interest affects organizational buying process. As their interest becomes different, buying process may be complicated.

IV. Personal Factors             

Personal factors also affect buying behavior. This includes age of person, education, level of job, personality etc.

1. Age

Age of person also affects selection and priority. Younger persons make buying decision and supplier selection quicker than older aged persons. Similarly, the younger persons try to find new suppliers whereas older persons try to give continuation to the same who is supplying. So this also affects buying process.

2. Education

Education makes person able to analyze good or bad. So, an educated person takes buying decision rationally whereas uneducated person makes buying decision at hit and miss or hunch. Educated person selects goods or services carefully. So, buyer’s education also affects organizational buying behavior.

3. Job Position

Job position also shows a person’s status. Buyer’s position or status also affects his buying behavior. Buyer’s status may be low or high.

4. Personality

Personality of person working in an organization may be different. Personality affects selection of quality, brand, price etc. So, buyer’s personality also affects organizational buying behavior.

5. Risk Attitude

Risk bearing capacity of men becomes different. Some can bear more risk and others like to take less risk. Similarly, some like to avoid risk and some others like to face. The capacity and attitude to bear risk also affect buying behavior. The buyers having the capacity to take high risk become aggressive. But those having less risk bearing capacity and having no risk bearing capacity do not do so.

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• Organizational Behavior and Its Emerging Trends

• Levels of Organizational Behavior

• Contributing Disciplines Organizational Behavior (OB)

• Meaning and Importance of Buyer Behavior

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Organizational Buying Behavior | Meaning and Features | Organizational Buying Process

Meaning of Organizational Behavior        

The behavior of an organization shown in buying goods or services is called organizational buying behavior. The organizations buy goods or services for business use, resale, produce other goods or provide services. Business and industrial organizations buy goods to use in business or produce other goods. Resellers buy goods for reselling them at profitable price. Similarly, government bodies buy goods for office and conducting development program. Non-governmental organizations, hospitals, educational institutes, social organizations, religious organizations etc. buy goods to provide services to their followers or customers.

Users, influencers, buyers, deciders and gate keepers take part in organizational buying process. Users who are the members of organization use bought goods or services. They prepare buying proposal and help in preparing product specification. They also help in preparing special report and analyzing alternatives. Influencers influence buying decision. They help in preparing products specification and analyzing alternatives. Those who buy goods or services are called buyers. Buyers select suppliers and make buying terms and conditions. The person who makes the last decision to buy goods or services from the selected supplier is called decider. Goods are purchased from the supplier selected by the decider. Gatekeeper controls follow of information and other things. Technical staff and personal assistant work as gate keeper.

Organizational buying behavior is influenced by marketing stimuli and other stimuli. Marketing stimuli includes product, price, place and promotion and other stimuli includes economic, technological, political, cultural and competition. These motivators bring changes in the buyers’ behavior after they enter in an organization. Or these

stimuli influence selection of goods or service, selection of suppliers, order, quantities, delivery time, terms and conditions of goods or services etc.

According to Pette D. Bennett, “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.”

 

According to W. M. Pride and O. C. Ferrel, “Organizational buying behavior refers to the purchase behavior of producers, government units, institutions and resellers.”

 

In conclusion, the behavior shown by an organization while buying goods or services is called organizational buying behavior. User, influencer, buyer, decider and gate keeper are involved in organizational buying process. Organizational buying behavior is influenced by marketing stimuli and other stimuli. Generally, these stimuli influence selection of goods or services, selection of suppliers, buying quantity, terms of delivery, terms of service and terms of payment.

The model of organizational buying behavior can be shown in the following figure:-

The Model of Organizational Buying Behavior

Features of Organizational Buying Behavior      

Few buyers, close relationship between buyers and suppliers, rational buyers, direct channel, adaptation of certain purchase policy made by business organization etc. are the main features of organizational buying behavior.

1. Few buyers

As organization itself become buyer, organizational buyers are few in number. But they buy in huge quantity. Organization buyers live scattered in different places.

2. Close relationship

Organizational buyers and suppliers have close relations. It may be long lasting. Such relation has positive effect on future buying. Generally all organizational buyer and suppliers have close relation.

3. Rational buyers

Buyer becomes rational in organizational buying. Professional and trained buyers are involved in buying. So, buying decision becomes rational.

4. Direct channel

As organizational buyers buy a huge quantity, they buy goods directly from producer. So, marketing channel becomes direct. But some organizations buy goods through intermediaries or agencies.

5. Purchase policy

The buying method of organization and persons become different. An organization makes certain policy for buying and buys goods according to the policy. Buying through quotation, buying through tender, buying through contract etc. are the major buying policies of organizations.

Organizational Buying Process              

Organizational buying has certain processes. The following figure shows organizational buying process. There are eight stages. An organization may go through all of these stages as following or it may change some of them. This depends on buying quantity, buying price, nature of goods, buying frequency etc.

Stages of Organizational Buying Process

1. Need Recognition

Organizational buying process starts from need recognition. In an organization, a certain person recognizes need of certain goods and after buying the needed goods, need is fulfilled. Needs in organization can be recognized in two ways. They are: external stimuli and internal stimuli. If a company decides to produce new goods, it is internal stimuli. It needs to buy new goods and equipment. Similarly, when a buyer observes trade exhibition, s/he may make his/her idea to buy new goods. Such idea is external stimuli, because this idea is made from outer environment and materials should be purchased for this.

2. Need Description

After the need is recognized, the buyers should describe need. This task is completed in the second stage of organizational buying process. While describing need, features of needed goods and needed quantity should be described. If the goods have standard, this task becomes easy; if otherwise, it becomes complicated. Help of engineers, users and consultants should be taken for complex goods.

3. Product Specification

The task of preparing specific description of goods is the third stage of organizational buying process. In this stage, description performance of goods is prepared to solve the problems. Technician’s help should be taken for this task. In this stage, the value of goods is analyzed.

4. Supplier Search

At this stage of organizational buying process, the buyer searches proper suppliers or sellers. Buyer prepares a list of suppliers to select good and proper suppliers. This list is prepared by looking at trade directory, searching in Internet, asking other companies for suggestions etc. If the goods to be bought are new, complicated and costly, it needs long time to search suppliers.

5. Proposal Solicitation

Proposal solicitation is the fifth stage of organizational buying process. At this stage, buyer calls best suppliers for submitting proposal. As the reaction, some send catalog or sellers to the organization. If the product is costly and complicated, the buyer demands detailed proposal, and if the product is technical, business organization calls for presenting the product itself.

6. Supplier Selection

At the sixth stage of organizational buying process, buyers assess the proposal and select one or more suppliers. For selecting the suppliers, a list is prepared and rating is made on the basis of their attribute and importance. Then the best supplier is selected. Analysis of the suppliers is done in the following ways.

Supplier attribute	Rating
	Very poor (1)	Poor (2)	Fair (3)	Good (4)	Excellent (5)
Price competitiveness			x
Product quality, reliability					x
Service and repair capabilities					x
On-time delivery			x
Quality of sales representatives				x
Overall responsiveness to customer needs					x
Overall reputation Average Score = 4.29					x

7. Order Routine Specification

After the best suppliers have been selected, the buyer prepares final order. In this order, all the matters such as attribute of goods, quantity, specification, time for supply, warranty, method of payment, service after sale etc. should be clearly mentioned.

8. Performance Review

This is the last process of organizational buying. At this stage, the buyer reviews suppliers’ performance. This type of review helps to take decision whether to continue relation with the supplier or change or end the relation. If the performance of the supplier is satisfactory, the relation can be continued; if it is somewhat defective, if partial correction is made and the relation is maintained. But if the performance is disagreeable, it is broken.

Stages of the buying process	Buying situations
	New task	Modified rebuy	Straight rebuy
1. Problem recognition	Yes	May be	No
2. General need description	Yes	May be	No
3. Product specification	Yes	Yes	Yes
4. Supplier search	Yes	May be	No
5. Proposal solicitation	Yes	May be	No
6. Supplier selection	Yes	May be	No
7. Order-routine specification	Yes	May be	No
8. Performance review	Yes	Yes	Yes

          You may also like to read:         

• Factor Determining Organizational Buying Decision | Buying Behavior

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• Buying Center and Types of Buying Center

• Most important components that affect to the buying behavior of a consumer

• Organizational Behavior and its Emerging Trends

• Levels of Organizational Behavior