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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Patterns of Target Market Selection

Patterns of Target Market Selection


After evaluating the segments on the basis of segment potential, competitor’s position and potential goal and objective achievement, the firm can select the segment that will be the target market(s). The firm can consider five patterns of target market selection. They are as follows: 

1. Single segment concentration: In the simplest case, the firm selects a single segment. It is also called as concentrated marketing (see following figure)

Single Segment Concentration

Through single segment concentration strategy, the firm achieves a strong market position in the segment owing to its greater knowledge of the segment’s needs and the special reputation it gains. Furthermore, the firm enjoys operating economies through specializing its production, distribution and promotion. As it captures leadership in the segment, the firm can earn a high return on its investment. At the same time, concentrated marketing involves higher than normal risks. The particular market segment can turn bitter.

2. Selective specialization: In this strategy, the firm selects a number of segments (see following figure), each objectively attractive and appropriate, given the firm’s objectives and resources. There may be little or no synergy between segments but each segment promises to be a money maker.

Selective Specialization

This strategy has the advantage of diversifying the firm’s risk. Even if one segment becomes unattractive, the firm can continue to earn money in other segments.

3. Product specialization: The firm makes a certain product that it sells to several segments (see following figure). An example would be a microscope manufacturer who sells to university, government, and commercial laboratories. The firm makes different microscopes for the different customer groups and builds a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology.

Product Specialization

4. Market specialization: The firm concentrates on serving many needs of particular customer group (see following figure). An example would be a firm that sells an assortment of products only to university laboratories. The firm gains a strong reputation in serving this customer group and becomes a channel for addition products the customer group can use. The downside risk is that the customer group may suffer budget cuts.

Market Specialization

5. Full market coverage: When a company decides to enter all or at least most segments, full coverage market segmentations is used. This is a high sales strategy, since greater penetration into each segment is combined with broad coverage of a total market (see following figure).
Full Market Coverage

Extensive resources are required to implement the strategy because it affords limited opportunity for economies of scale. Full coverage market segmentation is therefore most likely to be adopted by a large organization.

6. Niche marketing: The niches are the market segment that has been neglected by large organizations. Market niches are identified by dividing the market segments into sub-segments or by identifying customer groups whose needs have not been met by the large organizations.

Niche Marketing

Many companies succeed by producing a specialized product aimed at a much focused segment of market (or ‘niche’). In this pattern an organization concentrates on niche market segments to exploit market opportunities.

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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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Buying Center and Types of Buying Center

Meaning of Buying Center

Buying center is the decision making unit of a buying organization. It is composed of all the individuals and units that participate in the business decision-making process. The buying center includes all members of the organization who play a role in the purchase decision process. They share common goals and the risks arising from the decisions. The members includes the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying and those who control buying information.

The members of the buying center or decision-making unit of the organization fulfill various functions and often engage in complex interactions, both among themselves and with outsiders such as salespeople and suppliers.

Types of Buying Center

The buying center includes all members of the organization who play any of seven roles in the purchase decision process.
  1. Initiators: Initiators are those people who request that something to be purchased. They may be users or others in the organization.
  2. Users: Users are those people who will use the product or services. They are so-called because the work they do in the organization is directly affected by the purchase under consideration. They can range from trainees to executives.
  3. Influencers: Influencers are the people who influence the buying decision. They help to shape criteria by providing useful information. In the complex world of modern business, technical and legal experts often influence buying decisions, although they may have no direct connection with the buying process itself.
  4. Deciders: Deciders are the people who decide on product requirements or on suppliers. They have the final authority over buying decisions. In some cases, they buyer may also be that decider, but in most cases the two roles are performed by separate individuals. For example, engineers have the final say in deciding with suppliers of raw materials to choose.
  5. Approvers: Approvers are the people who authorize the proposed actions of deciders or buyers.
  6. Buyers: Buyers are those people who have formal authority to select the supplier and arrange the purchase items. They can range from the chief of the company to its purchasing agent. They contact suppliers and negotiate business transactions. Buyers often have the power to choose suppliers or to develop lists of suitable suppliers.
  7. Gatekeepers: Gatekeepers are those people who have the power to prevent sellers or information from searching members of the buying center. They can be purchasing agents, salespersons, or secretaries. They control the information flowing into the buying center and they are often the members of the organization who contact suppliers or vendors to solicit a quote for their products.
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