MMPM-001
Consumer Behaviour
School of Management Studies
Indira Gandhi National Open University
New Delhi
COURSE DESIGN AND PREPARATION TEAM
Prof. K. Ravi Sankar
Director, School of Management Studies,
IGNOU, New Delhi
Prof. Madhulika Kaushik
Vice Chancellor,
Usha Martin University, Ranchi, Jharkhand
Prof. Ravi Shankar
Indian Institute of Foreign Trade
New Delhi
Prof. Santosh Dhar
Dean, Faculty of Doctoral Studies and
Research, Shri Vaishnav Vidyapeeth
Vishwavidyalaya, Indore
Prof. A Vidhyadhar Reddy
Institute of Public Enterprise
Hyderabad, Telangana
Prof. Ajit Upadhyaya
Director
Prestige Institute of Management
Dewas, M.P.
Prof. Rajeev Sijariya
ABV School of Management and
Entrepreneurship, JNU, New Delhi
Prof. Abraham Koshy*
Indian Institute of Management
Vastrapur, Ahmedabad
Prof. Deepak Chawla*
International Management Institute,
New Delhi
Mrs. Neerja Wable*
Indian Market Research Bureau,
New Delhi
Prof. Sudas Roy*
Indian Institute of Management, Calcutta
Dr. L.M. Johri*
Faculty of Management Studies
University of Delhi
Prof. A.P. Arora*
Indian Institute of Management,
Vastrapur, Ahmedabad
Prof. Mohan Aggarwal*
XLRI, Jamshedpur
Mr. T.V. Vijay Kumar,
School of Management Studies,
IGNOU, New Delhi
Course Editor
Prof. Madhulika Kaushik
Prof. Darshana R Dave
Dean, Faculty of Management,
Sardar Patel University,
Vallabh Vidyanagar, Gujarat
Dr. Chetan Srivastava
Associate Professor
SOMS, University of Hyderabad
Prof. Rakesh Khurana*
Pro-Vice Chancellor
Indira Gandhi National Open University,
New Delhi
Prof. Y.L. Grover*
Management Consultant, New Delhi
Prof. Mukul Gupta*
International Management Institute,
New Delhi
Shri Saurabh Khoshla*
Managing Director
Tulika Advertising Agency, New Delhi
Mr. Darlie Koshy*
National Institute of Fashion Technology,
New Delhi
Dr. N. Kinra*
Indian Institute of Management, Lucknow
Mr. D. K. Bose*
Media Director, R.K. Swamy,
BBDO New Delhi
Mr. Saurabh Jain
School of Management Studies
IGNOU, New Delhi
Course Coordinator
Prof. Rajeev Kumar Shukla,
School of Management Studies
IGNOU, New Delhi
Acknowledgement : Parts of this course is adapted from the earlier MS-61: Consumer Behaviour
course and the persons marked with (*) were the original contributors and the profiles are as it was
on the date of initial print.
PRINT PRODUCTION
Mr. Tilak Raj
Assistant Registrar,
MPDD, IGNOU, New Delhi-110 068
May, 2022
 Indira Gandhi National Open University, 2022
ISBN :
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without permission in writing from the Indira Gandhi National Open University.
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courses may be obtained from the University’s office at Maidan Garhi, New Delhi-110 068.
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Course Contents
Pages
BLOCK INTRODUCTION
5
Block 1
CONSUMER BEHAVIOUR-ISSUES AND
CONCEPTS
7
Unit 1 Consumer Behaviour- Nature, Scope, Models and Applications
9
Unit 2 Consumer Behaviour and Life-style Marketing
33
Unit 3 Organisational Buying Behaviour
52
Block 2
73
INDIVIDUAL INFLUENCES ON BUYING
BEHAVIOUR
Unit 4 Perceptions
77
Unit 5 Learning and Memory
87
Unit 6 Attitude and Attitude Change
103
Unit 7 Personality and Self-concept
116
Unit 8 Consumer Motivation and Involvement
133
Block 3
GROUP INFLUENCES ON CONSUMER
BEHAVIOUR
151
Unit 9 Reference Group Influence and Group Dynamics
155
Unit10 Family Buying Influences, Family Life Cycle and Buying Roles
182
Unit 11 Culture and Sub-culture Influences
198
Block 4
213
THE BUYING PROCESS
Unit 12 Problem Recognition and Information Search Behaviour
217
Unit 13 Information Processing
230
Unit 14 Alternative Evaluation
244
Unit 15 Purchase Process and Post Purchase Behaviour
257
COURSE INTRODUCTION
Dear Learners,
Marketing as a function aimed at satisfying consumer needs and wants through the
exchange process is a key to achieving organisational goals. In order to be able to
satisfy consumer needs, you need to first define who your consumers are and what
benefits they seek, when and how they buy the products and services being offered by
you. Why do these consumers buy your brand and not that of the competitors? How
do your consumers perceive your product or service to suit their needs? Do they feel
satisfied or dissatisfied after having bought your product? And how are these feelings
reflected in their subsequent behaviour as consumers? Seeking answers to all these
questions and related issues forms the interesting field of Consumer Behaviour.
Each and every person is a consumer. Based on both psychological and sociological
perspectives, this course introduces the concepts of individual and organisational buyer
behaviour, models of consumer behaviour, and marketing applications. In the context
of the buying process, this course discusses both individual influences such as perception,
learning, attitude, personality, self-concept, lifestyle, motivation, and involvement as
well as group influences such as family, reference group, cultural, and sub-culture. The
course is divided into four blocks and has 15 units in all. Activities and project
assignments to aid application of the concepts of consumer behaviour have been specially
added to facilitate learning.
Learning Outcomes
After studying this course, you should be able to:

Discuss the nature, scope, models, and applications of consumer behaviour
in marketing decisions.

Describe the buying decision-making process and the related theoretical
models.

Explain the individual influences on buying decisions, such as perception,
learning, attitude, personality, motivation, and involvement, and discuss their
practical implications.

Analyse group influences such as family, reference group, culture, and
subculture on buying behaviour.

Compare and contrast the consumer and organisational buying decision
processes.

Appreciate the emergence of online buying behaviour and its implications.

Create and assess marketing strategies based on an understanding of consumer
buying behaviour.
Block-1
Consumer Behaviour-Issues
and Concepts
BLOCK 1 CONSUMER BEHAVIOUR-ISSUES
AND CONCEPTS
In this first block of our course on Consumer Behaviour we have focused on the
nature and scope of consumer behaviour, with special reference to some major issues.
This block initiates a discussion on the components of the field of consumer behaviour,
models of consumer behaviour including online buying behaviour, and the major
applications to which the study of consumer behaviour can be put. Psychographics,
the study of lifestyles has emerged as an important aspect of the field. The second
unit in the block deals with lifestyle marketing and its implications for markets today.
The final unit provides a comprehensive coverage of organisational buyer behaviour,
its determinants, and technological developments that have impacted organisational
buying behaviour.
Unit 1
CONSUMER BEHAVIOUR- NATURE, SCOPE, MODELS AND
APPLICATIONS
Unit 2
CONSUMER BEHAVIOUR AND LIFE-STYLE MARKETING
Unit 3
ORGANISATIONAL BUYING BEHAVIOUR
Consumer Behaviour-Issues
and Concepts
8
UNIT 1 CONSUMER BEHAVIOUR-NATURE,
SCOPE, MODELS AND APPLICATION
Consumer BehaviourNature, Scope, Models and
Application
Learning outcomes
After studying this unit, you should be able to:

define consumer behaviour

describe the nature of consumer behaviour

explain the scope of consumer behavior

discuss the various models of Consumer Behaviour and explain their
applications

discuss the emergence of online buying behaviour and its implications

outline the broad areas of application of consumer behaviour in marketing
decisions
Structure
1.1 Introduction
1.2 Nature of Consumer Behaviour
1.3 Who is a Consumer?
1.4 What is a Consumer Decision?
1.5 Scope of Consumer Behaviour
1.6 Decision Process
1.7 Individual and Group Determinants of Consumer Decisions
1.8 Models of Consumer Behaviour including Online Buying Behaviour
1.9 Applications of Consumer Behaviour in Marketing
1.10 Summary
1.11 Key Words
1.12 Self-assessment Questions
1.13 Project Questions
1.14 Further Readings
1.1 INTRODUCTION
In your core course on Marketing Management MMPC-006, you have already
studied that Marketing as a function is aimed at satisfying consumer needs and wants
through the exchange process as a key to achieving organizational goals. In order
to be able to satisfy consumer needs, you need to first define who your consumers
are and what benefits do they seek,when and how they buy the products and services
being offered by you. Why do these consumers buy your brand and not that of the
competitors? How do your consumers perceive your product or service suit their
needs? After having bought your product do they feel satisfied or dissatisfied? And
how are these feelings reflected in their subsequent behavior as consumers? Seeking
9
Consumer Behaviour-Issues
and Concepts
answers to all these questions and related issues forms the interesting field of Consumer
Behaviour
It is important to the survival and growth of your organization that you regularly
raise such questions and attempt to find answers to them. It is only through such
a process of questioning and seeking that you can be sure of keeping your firm
on the growth path. A thorough knowledge of your consumers and an understanding
of their behavior as consumers are essential if you wish to continue to remainin
business.
This and the following units in this course provide you insights into the complex but
extremely interesting field of consumer behaviour. After having read this unit, you
would be able to spell out who are consumers, why they behave in the manner
that they do, what influences their behaviour and how you as a marketer can utilize
your knowledge of the influencing factors in your favor. This is the most important
aspect of consumer behaviour which has practical implications for firm. Once you
have an understanding of the behaviour of consumers and know that their behaviour
can be influenced, you can initiate a number of steps to do so. This unit covers the
nature, scope and applications of Consumer behaviour.
In the digital age, internet access and use, the deep penetration of smartphones
and the ubiquitous social media have created major changes in the way people search
for goods, evaluate their alternatives and acquires products and services.
Digital age has allowed people to browse and buy items right from the palm of
their hands, without leaving their seats. The internet offers the information buyers
need to know about products via a simple search. In fact, over 56% of shoppers
in India turn to search engines before they make a purchase. Even referrals have
transitioned online in the form of reviews and testimonials. This marketing strategy
dramatically influences a prospective buyer in completing a purchase conveniently,
as more and more people believe online reviews as much as their peers.
In order for marketers to succeed in the digital age, marketers will need to develop
a clear understanding of the way people shop, and the shifting influences on consumer
decision making. We will be covering this aspect of emerging online behavior later
in this unit
1.2 NATURE OF CONSUMER BEHAVIOUR
Consumer behavior can be defined as:
“The decision process and physical activity engaged in when evaluating, acquiring,
using or disposing of goods and services.” So, whenever you feel the need for a
product or service, all the activities you engage in like looking for the various alternatives
that could satisfy your need, searching for information on these alternatives, seeking
advice from other users, carefully evaluating your alternatives, deciding on your
selection, then actually buying and using the product or service, are part of consumer
behaviour. Also, once you have started using the product/service, your evaluation
of the use experience, the opinion you form and your intention to act in a certain
way when faced with similar need, also forms part of consumer behaviour.
10
This definition raises a few queries in our minds-what or who are consumers? What
is the decision process that they engage in and what are the various influences on
that decision? Answers to these questions help define the broad nature of consumer
behaviour.
Consumer BehaviourNature, Scope, Models and
Application
As a field of study, Consumer behavior is the study of consumers and the processes
they use to choose, use (consume), and dispose of products and services, including
consumers’ emotional, mental, and behavioral responses.
1.3 WHO IS A CONSUMER?
A “consumer” is anyone who typically engages in any one or all of the activities
described in our definition. Traditionally consumers have been defined very strictly
in terms of economic goods and services, i.e., goods and services purchase wherein
a monetary transaction is involved. However, over time this concept has been widened
to include goods and services where a monetary exchange is not involved. Thus,
the services of voluntary organizations have also been included in this definition,
and users of the services of these organizations are also viewed as consumers. To
put in very generic terms, a consumer is a person or a group who intends to order,
orders, or uses purchased goods, products, or services primarily for personal, social,
family, household and similar needs, not directly related to entrepreneurial or business
activities (Wikipedia). The logic behind this approach is that consumers of free service
also engage in the same kind of decision process and physical activity as consumers
of economic goods and services. A “customer” is one who actually purchases a
product or service from a particular shop or organization (offline/ online). A customer
is always defined in terms of a specific product or company.
However, the term consumer is a far wider term, encompassing not only the actual
buyer or customer but also all its users, i.e., consumers. There are two situations
when this distinction between consumers and customers may occur, i) when the
service or product is provided free, and ii) when the customer is not the actual
user of the product/service or is only one of the many users. The second situation
needs greater elaboration as it is of critical significance for us.
Very often, the actual customer making a purchase may not be doing so for himself
or herself. For instance, in case of a father buying a box or crayons for his fouryear old daughter, the customer is the father but the actual user or consumer is his
daughter. Another case may be where a father is buying a TV for the family members.
The father is the customer but all the family members are the consumers. The two
vital elements to remember in all consumer situations are- a) the influence on purchase
from other people and b) the roles taken on by different people in consumer behaviour
situations.
In the instance of the father buying crayons for his daughter, the latter may not
have had influence at all on the purchase; the father is the decision maker and
buyer and the daughter is the user. In case of the father buying a TV for his
family, it is quite likely that the wife and children may have exerted considerable
influence on the decision. The father is simply, the buyer, while other family
members may be influencers and all, including the father, are users. Table 1.1
presents one way of classifying the roles that people can take on in the context
of consumers behavior.
11
Consumer Behaviour-Issues
and Concepts
Table1.1 Some Consumer Behaviour Roles and Role Description
Role
Role Description
Initiator
:
The person who determines that some need or want is not
being met.
Influencer
:
The person who intentionally/unintentionally influences the
decision to buy the actual purchase and/or
use of product or service.
Buyer
:
The person who actually makes the purchase.
User
:
The person who actually uses or consumes the product or
service.
You will read more about the different buying roles and their influence on family
decision making in Unit10 of this course. These buying roles may vary in different
buying situations. While studying consumer behaviour we have to keep in mind all
the various consumer roles that can possibly be taken on. But in practical terms it
may be very difficult to study all these roles. Therefore, the emphasis of study is
on one role that of the buyer. The reason for this is that this is the only part of the
behavior which is overt and visible. It is only through the buyer, whom we can easily
identify, that we can attempt to study the influences exerted on the purchase by
other role players
Activity1
Name three recently bought products by you in which you are both the buyer
and user. Try and identify the influence, if any, exerted by another person in
your purchase decision
(1) Product
Influencer/Influence
1.
2.
3.
(2) Name three products purchased by your family in which you played the
role of influencer. Can you specify the nature of influence?
(2) Product
Influencer/Influence
1.
2.
3.
1.4 WHAT IS A CONSUMER DECISION?
12
We have defined consumer behaviour as the “decision process” and “physical activity”
engaged in by individuals. The physical activity which we focus upon in the course
of consumer behaviour is that of making the purchase, as explained in the previous
section. But there are a number of influences affecting the purchase and a number
of individuals may be involved in exerting these influences. So, the purchase action
that is visible to us may be the result of an interplay of a number of complex and
hidden variables which may have influenced the ultimate purchase activity. The final
purchase is just one activity in the entire series of physical and mental activities that
may have occurred in this whole process. Some of these activities may precede
the purchase while others may take place later. As, all these activities exert influence
on the purchase, they are considered a part of consumer behaviour, more specifically
a part of the decision process.
Consumer BehaviourNature, Scope, Models and
Application
Let us go back to the example of a father, we call Mr. Bannerjee buying a TV for
his family. It is possible that the consumer behaviour involving mental processes
and activities may have taken place in the following sequence and manner.
Mr.Bannerjee’s teenage daughter, sees a smart TV at her friend’s house. She then
raises the issue of buying a smart TV to replace their existing colour TV. The family
discusses the issue and agrees that it is indeed time they bought a smart TV which
will enable them to enjoy both the cable-based channels and all digital platformbased entertainments offered by providers like Netflix, Sony Max, Prime Video,
Hotstar and others. The next day Mr. Bannerjee discusses the matter with his friend
and colleague, Mr. Chandra. He visits Mr. Chandra’s home to see for himself the
quality of the Samsung Smart TV that he has. Mrs. Bannerjee also finds out more
about the various brands, prices and features of different brands, from her sister
who recently purchased a smart TV. Her sister has a Sony Bravia TV and
recommends the same. Meanwhile, Mr. Bannerjee’s daughter checks out the brands
of TVs that her various friends have at their respective homes and concludes that
Philips or Haier may be better choices. In the next few days, theentire Bannerjee
family makes it a point to carefully study any advertisements of Smart TVs that
appear in the newspaper, or on social media or TV. At all social occasions they
raise the question of which is the best Smart TV to buy amongst their friends and
relatives and mentally, mark the different positive and negative points of different
brands. Within two weeks, the Banerjees have collected enough information to take
a decision to buy the TV, but they need more specific information. They scour the
websites of the different manufacturers and also look at product ratings by
independent rating providers as well as customer ratings on social media. To get
the actual feel of the product they use a weekend to visit the nearby mall to see
the different TVs on display in the respective outlets.
On comparing features like price, quality of transmission, looks, features like warranty
and tech support, they finally decide to buy a Samsung Curve. The activity and
thought process which resulted in the final purchase of the TV started well before
the actual purchase and was spread over a period of two to three weeks. This
entire process forms part of consumer behaviour.
Depending on the nature of product or service in question, the mental decision
process accompanying the physical act of purchase may vary from very simple to
extremely complex, and from being instantaneous in nature to time consuming and
elaborate. But they all constitute consumer behaviour. Thus, not only the overt,
observable physical behaviour exhibited in the art of making a purchase, but all the
13
Consumer Behaviour-Issues
and Concepts
accompanying, preceding and following mental processes and activities also are an
integral part of consumer behaviour.
In case of the stock of regular brands of toilet soap being depleted at home, its
purchase may need no elaborate decision process or activity of comparison and
evaluation. Rather the purchase decision is a replenishment decision and almost
an automatic one.
Activity2
Recall the purchase of the last consumer durable in your family. It could be a
refrigerator, a two-wheeler or an air conditioner. Describe the decision process
and physical activities, preceding the purchase undertaken by the various member
of the family.
....................................................................................................................
....................................................................................................................
1.5 SCOPE OF CONSUMER BEHAVIOUR
The scope of a subject refers to everything that is studied as part of that subject.When
we set out to explain the scope of consumer behaviour, we need to refer to all that
which forms part of consumer behaviour.
The scope of consumer behaviour has been briefly touched upon in the previous
section wherein it was explained that how consumer behaviour includes not only
the actual buyer and his act of buying but also the various roles played by different
individuals and the influence they exert on the final purchase decision. In this
section we shall define and explain the scope of study of consumer behaviour.
To define the scope of a subject it is important to set parameters or a framework
within which it shall be studied. Loudon and Della Bitta have presented one such
framework for studying consumer behaviour and understanding its scope, which
is shared in Figure 1.1. This framework is made up of three main sections-the
decision process as represented by the inner-most circle, the individual determinants
in the middle circle and the external environment which is represented by the outer
circle.The study of all these three sections constitutes the scope of consumer
behaviour.
Let us look at the constituents of the framework briefly as they are explained in
detail in the subsequent units.
1.6 DECISION PROCESS
14
The decision process as depicted in the Figure 1.1 comprises a series of sequential
steps. The first step is when the consumer becomes aware of the fact that he has a
problem. The problem may be that he has run out of tooth paste or that he needs
new sofa for the drawing room or that he needs to engage the services of an accountant
to help him with his tax planning.
Consumer BehaviourNature, Scope, Models and
Application
Figure1.1: A simplified framework for studying consumer behaviour, adapted from
Consumer Behaviour by Loudon and Della Bitta
Problem recognition thus occurs when the consumer recognizes that he has an
unfulfilled need. The desire to fulfil this need triggers off the other steps of information;
search and evaluation and finally results in the purchase.
However, not all situations of problem recognition automatically led to the next step
of information search and evaluation. A consumer may recognize the need for a
vehicle to cover the long distance from his home to office and back. But if he does
not have the means to buy a vehicle for himself, then his need would remain a need,
and despite his recognition of the problem, the ensuing steps will not take place.
The constraints can be lack of availability or lack of ability to buy or even lack of
time to go through the purchase process.
Only if there are no constraints preventing further behaviour, the consumer will set
out to search for information relevant to the problem. The information search can
take place without the consumer even being aware of it or it may take the form of
a deliberate, prolonged search. To replenish the stock of tooth paste, a regular
customer knows from memory and past experience the brand, the package size he
wishes to buy, and the place from where he would like to buy. Of course, if it is a
first-time customer for toothpaste then he, would search for information from the
external environment, such as his friends, shopkeepers, and advertisements. Having
gathered the relevant information, the consumer needs to evaluate it to arrive at
the decision regarding which tooth paste best fulfils his need. You may also recall
that sometimes being exposed to an ad or seeing a new product in use, may trigger
your awareness of the need.
15
Consumer Behaviour-Issues
and Concepts
Having arrived at the decision, the consumer sets out to make the purchase. At
this point the consumer has to make a choice regarding which outlet to buy from
or whether to order the product online. After the purchase when the consumer uses
the product, he either feels satisfied with it and concludes that he has made the
right decision or he feels dissatisfied and decides that his decision was not correct.
This dissatis faction-set in motion a search for alternative choices and fresh evaluation.
It is thus a continuing cycle of decision process.
Activity3
Recall the last time you purchased toilet soap, a book for your leisure reading
and a dinner at a restaurant.Try and spell out the various physical and mental
activities which you indulged at each stage of the decision process, starting
from problem recognition. (For instance, the problem recognition in case of
toilet soap occurred when you had to go on an official tour and needed
necessary toiletries to carry along. So, you write “need to pack toiletries for
travel” in front on problem recognition and under the heading toilet soap, in
the matrix given below.) Similarly, you would fill in all the details in case of the
three purchase decisions.
(Hint: After dinner at a restaurant, wherein you are satisfied with the food
and service, you may tell the manager what an enjoyable evening you had
and make a mental note of the restaurant so that the next time you decide
to visit a restaurant, you consider this as one of the possibilities. On the
other hand, if you found the food to be of poor quality and the service
slow and inefficient, you may like to make a written complaint in the customer
book. And also, you strike off this restaurant from your mental list of
alternatives.)
1.7 INDIVIDUAL AND GROUP DETERMINANTS
Individual Determinants of Behaviour
Consider the case of two sisters brought up in one family environment with exactly
the same educational background living in one house and yet exhibiting very different
tastes and purchase decisions. While one is regular consumer of Dettol Soap, India
Today and buys ready-made garments the other sister uses only Lux International,
reads Stardust and buys hi-fashion clothes from boutiques. What is it that accounts
for the vast differences of consumer behaviour in the situation of these two sisters?
The answer to this can be found in the factors defined in the middle circle of Figure
1.1 i.e., personal motivation and involvement, attitudes, self-concept and personality,
learning, memory and information processing
16
Motivation and Involvement
All of us are consumers, with in a given society all of us have the same alternatives
to choose from and yet not two consumers may exhibit identical consumer behaviour.
The reason for this is that each one of us is a unique individual with a unique set of
needs, desires and motivation. Motivation is that internal force which arouses or
activates some need and provides direction of behaviour towards fulfilment of the
need. A motivation may be physiological in nature directed towards fulfilment of
biological needs such as hunger and thirst, other motivations are psychological in
nature focusing on the satisfaction of psychological desires such as the need for
seeking status, job satisfaction, or achievement. Everyone has both physiological
and psychological motivations, but we each fulfil them in different ways. One consumer
satisfies his thirst by drinking water, the second quenches it by having a Thums Up,
the third drinks Bisleri Mineral Water while a fourth prefers soda. For one consumer,
buying the latest SUV is a way of seeking status, another satisfies his want for status
by becoming a member of the best club in town, while for a third having a luxury
watch a status symbol.
Consumer BehaviourNature, Scope, Models and
Application
The reason why we adopt different methods of satisfaction of our motivations is
because of the differing level of personal involvement in various activities. Involvement
refers to the personal relevance or importance of a product or service that a consumer
perceives in a given situation. For a professional photographer the choice of a camera
is a consumer behaviour situation of high involvement because the camera is his
most important professional tool. The photographer would be motivated to buy the
best possible camera, irrespective of the price tag and would spend time in deliberating
upon his choice. For another consumer, a camera is just ameans of recording important
family events and with the camera features in mobile phones which is convenient
to handle would fulfill the need.
High involvement leads to a highly motivated state of mind as in case of the professional
photographer. High involvement and high motivation lead to a consumer behaviour
process which is distinctively different from that of a low involvement and low
motivation.
Attitudes
Attitudes are our learned predispositions towards objects, people and events. It is
our attitudes which influence how we respond to different products and services.
Attitudes are not inborn or innate inus. Rather they are an outcome of learning from
our social and cultural setting, forum and informal learning processes and experiences.
Till a few years ago most housewives had a negative attitude towards frozen,
dehydrated or instant food. But today, with more women joining the work force,
such products are viewed as a convenience and instant, quick to cook meals are
looked upon as a needed convenience. Similarly, our attitude towards saving is
undergoing radical changes. Instead of saving and leading a simple, frugal life, people
prefer to have a better lifestyle today rather than save for tomorrow.
Our attitudes influence our purchase decisions and consumption. An attitude which
is averse to risk taking will never make for a consumer investing his money in shares
and stocks, such a consumer would always prefer ‘safe’ investments even if though
rate of return may be comparatively lower.
17
Consumer Behaviour-Issues
and Concepts
Personality and Self-concept
Personality is the sum total of the unique individual characteristics that make
each one of us what we are. You will be studying about this important variable
in Unit 7.
A related construct, Self-concept or self-image is the way we perceive ourselves
in a social framework. We always tend to buy only those products and services
which we think fit or match with our personality or are in conformity with our selfconcept.
Marketers also try to give a distinct image or personality to their products which is
as close as possible to that of the target consumers. Raymond’s uses the image of
a complete man in a variety of settings to convey exclusivity and class. It is intended
to match the aspirational self-concept and image that would match well with the
self-concept of their target consumers.
Learning and Memory
We today live in a world of information overload everywhere as the available
information on the various media all around us is simply overwhelming. How much
of the information that you are exposed to everyday, can you really recall?
We only remember that which is of relevanceand importance to us, or where we
have a motivation to remember. Consider a situation where a family is viewing world
cup final match programme and the accompanying advertisements. Out of the 1520 advertisements, the seven-year-old daughter may remember the advertisement
for an attractive school bag, the husband (who drives the car) may remember the
advertisement of a new type of anti-skid car tyres and the wife may remember the
advertisement for a new model of mixer-grinder. This is because each one of them
has a motivation for different products.
Our motives, attitudes and personality act as filters by letting in only relevant
information and keeping all other information out. Surely, we would see the product,
hear its jingle but chances are it will not register in our minds. We will remember it
only for a short while and then forget it.
This is known as selective retention. We retain in our memories only selective
information. You will learn more about these individual influences on consumer behavior
in Unit 5 of this course.
InformationProcessing
This refers to the process and activities which consumers engage in while gathering,
assimilating and evaluating information. As discussed in the previous paragraphs,
we only attend to selective information. The manner in which we assimilate and
evaluate this selective information is determined by our motives, attitudes and
personality and self-concept. Thus, the same information may be evaluated in a
different manner by two different individuals and the ensuing response may also be
very different. A half-filled glass elicits the response “a half-empty glass from, one
consumer while another reacts by saying it is”half-full”.
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Activity 4
Suppose you have won Rs.50000 in a lucky draw. The following optional uses
of the money are available to you.
Consumer BehaviourNature, Scope, Models and
Application
a. Buying a Microwave oven
b. Go on a holiday with your family/friends
c. Buy shares
d. Buy a personal computer for use in the house
e. Buy a membership to a club
f.
Deposit it in a fixed deposit account.
Rank the above options in order of your preference. Try and analyze how your
personal motives, attitudes and personality affected your ranking. Now put
the same question to a colleague in your office/friend/spouse. Is their response
different fromyours?
Try and explain the response in terms of the determinants of individual behavior
explained in this section.
1.8 EXTERNAL ENVIRONMENT OR GROUP
INFLUENCES
As shown in Figure 1.1 the external environment is made up of six specific influences
and all other remaining influences are covered under the heading “other influences”.
Cultural Influences
The first of the influences is that of cultural variables. Culture is defined as the complex,
sum total of knowledge, belief, traditions, customs, art, morals, law and any other
habits acquired by people as members of a society. Culture of one society differs
from that of another. Many of our actions, and behaviour as consumers stem from
our cultural background for instance, the emphasis on saving schemes oriented towards
saving for higher education for children or the preferred attitude towards gold as a
form of saving are the result ofour unique cultural influence
Sub-cultural Influences
Within a given culture, there are many groups or segments of people with distinct
customs, tradition and behaviour, which setthemapart from other people. All Indians
share one common cultural heritage, but the Hindu Brahmins of Tamil Nadu are
very different from the Hindu Bengalis of Calcutta in the same way as Kashmiri
Hindus are different from the Hindus of Gujarat in the traditions, customs and food
habits they prefer. These subcultures as part of the same cultural mainstream on
account of their dress, food habits, religious traditions and rites; offer interesting
implication for the marketer.
A well-known brand of Sumeet Mixer and Grinder developed special heavy-duty
motor to with stand continuous running required for grinding rice for dosa, vada,
idli-staple food items of the South Indian cuisine. Similarly, marketers of spices need
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Consumer Behaviour-Issues
and Concepts
to modulate taste and formulation according to the consumers taste, which varies
from state to state. Interestingly enough, these sub culturally determined food product
variations made available nationwide have made it possible for diversity of cuisines
from different regions to be enjoyed on a pan India basis and widened the appeal
of such packaged spice mixes nationwide.
Social Class Influences
Social class is a group consisting of a number of people who share more or less
equal position in a society. Within a social class people tend to share same values,
beliefs, and exhibit similar patterns of behaviour and consumption. Some social classes
are ranked as higher and lower. Social classes differ from one society to another,
and their standing in society may also change over time. Social classes may be defined
by parameters such as income and occupation. The belongingness to a social class
influences decisions such as choice of residence, type of holiday, means of entertainment
and leisure.
Social Group Influences
A social group is a collection of individuals who share some common attitudes and
a sense of relationship as a result of interaction with each other. Social groups may
be primary where face-to-face interaction take place frequently, such as families,
workgroups and study groups. Secondary groups are those where the relationship
is a more formalized and less personal in nature. Examples of primary groups are
associations of professionals, members of a political party, and social groups such
as Rotary, Lions, YCWA etc.
Family Influences
Family is a social group which can be defined as a primary group. It needs to be
studied in great detailas it is one of the strongest sources of influences on consumer
behaviour.
The first and strongest influence on a child is that of his family and he imbibes many
behavioural patterns from other family members sub consciously. These influences
tend to stay with him even after attaining adulthood. Further, within a family many
decisions are made jointly with various members exerting different degree of influence.
The changing structure of families as the joint family system gradually gives way to
single nucleus families also influence the consumer behaviour.
Personal Influences
20
Each individual is influenced by the family, social class, sub-cultural and cultural
group to which he belongs, and yet has his own distinct personality which influences
his decisions and behavior as a consumer. Each decision process is the outcome
of an interplay of personal and social variables. You must also remember as noted
in the preceding paragraphs that social groups like family, and reference groups
are part of the early influences that shape personal variables like personality, selfconcept and attitudes. The process of evaluation of different products and different
brands will vary from person to person. For one, price may be the most important
parameter in making the decision to buy a water geyser, for another it is convenience,
and for yet another it may be the status symbol value.
Other Influences
All other influences not covered in any of the other specific influence headings
are covered here. These may be national or regional level events, situational factors
or any other external influences. The recent pandemic and its impact on the
consumption related behavior in terms of responsible consumption, safe food habits
and spend save decisions provides a good example of how events external to
the individual may impact consumer behavior during a given period. Cricket test
matches and other sports world competitions always lead consumers to opt for
sports channels and products like firesticks to facilitate uninterrupted watching
of their favorite sports events. The hosting of Asiad matches and Commonwealth
Games within the country, coupled with India’s performance at world events like
the Tokyo Olympics in 2021 brought in their wake tremendous awareness and
interest in sports. All such-events have both temporary and permanent influences
on consumer behaviour. During the period of the event, there is increased emphasis
on buying goods and services related to the event. After the event is over, as in
case of Asiad and Commonwealth games, because the infrastructure for sports
has been created, an interest amongst the people been kindled; sporting events
are now held regularly with more people participating. All this leads to greater
consumption of sports goods, and other facilitating services
Consumer BehaviourNature, Scope, Models and
Application
Situational variables such as product display, price reduction offers, free gift offers,
also influence consumer behaviour. Seeing an attractive offer, a free mug with a new
brand of coffee, a regular user of arival brand may be tempted to try the new brand.
As you would observe in Fig 1.1 the various factors in individual determinants and
external environment are separated by broken lines, this is done to denote the fact
that each of these specific factors influence and in turn are influenced by each other.
Further, you would notice that there is an arrow starting from external environment
and passing through individual determinants up to the decision process. This indicates
that external environmental factors do not affect the decision process directly, but
filter through individual determinants to influencethe decision process.
1.9 MODELS OF CONSUMER BEHAVIOR
In your core course, marketing management, Unit 9, you have gone through several
models of consumer behavior(https://egyankosh.ac.in/bitstream/123456789/7262/
1/Unit-9.pdf)
These include the Howard Sheth model, the Engel-Kollat-Blackwell Model, the
model of family decision making and the industrial buyer behavior. While we will
be looking at the organizational buying behavior in detail in the Unit 3 of this course,
a brief recap of the consumer buying behavior models is done in this section in
order to recall what has already been covered by you.
The Howard Sheth Model and the Engel Kollat Blackwell models both present
comprehensive models of individual buying behavior while the family buying behavior
explains the decision process and influences that come into play when the buying
is being done for joint use by a given family.
The Howard Sheth Model-The Howard Sheth Model recognizes consumer decision
making under 3 different problem-solving levels. These are:
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Consumer Behaviour-Issues
and Concepts
The first level describes extensive problem-solving where the consumer does
not have any basic information or knowledge about the brand or have any preferences
for any product. In this situation, the consumer will seek information about all the
different brands in the market before purchasing.
The second level, limited problem-solving, exists when consumers have little
knowledge about the market, or partial knowledge about what they want to purchase.
In order to arrive at a brand preference, some comparative brand information is sought
The third level is habitual or routinised response behavior exists when, the
consumer knows very well about the different brands, can differentiate between
the different characteristics of each product, and his repeat buying decision is usually
a brand replenishment decision in favour of his preferred brand.
This Howard Sheth model explains the buying decision process with the help of
four sets of variables that include (i) the inputs, (ii) the perceptual and learning
constructs (iii) the output and (iv) exogenous variables.
The input variables consist of the stimuli like price, quality, distinctiveness presented
by the marketers which have both significative and symbolic impact. Input variables
also include social variables like family, social class and reference groups.
The learning constructs comprise psychological variables such as motives, attitudes,
brand comprehension and choice criteria which enable the buying intention.These
are the same influences that have been discussed earlier in this unit as part of the
discussion on Figure 1.1.
The perceptual stimuli explain how the consumer receives and understands the
information from the input stimuli and other parts of the model. For example, stimulus
ambiguity results when the consumer does not understand the message from the
environment. Perceptual bias occurs if the consumer distorts the information received
so that it fits his or her established needs or experience. Learning constructs category,
consumers’ goals, information about brands, criteria for evaluation alternatives,
preferences, and buying intentions are all included. The proposed interaction in
between the different variables in the perceptual and learning constructs and other
sets give the Howard Sheth model its distinctive advantage.
The output variable is the purchase decision and the resultant post purchase evaluation
of either satisfaction or dissatisfaction. The former will result in strengthening of brand
comprehension and brand attitude, while the latter will trigger off a reaction of negative
attitude, low attention to the product stimuli, poor brand comprehension and negative
intention to purchase.
The Exogenous variables on the other hand are not shown as being part of the
decision process but may have an important bearing on the overall decision as such.
These include importance of the purchase, consumer personality traits, religion, and
time pressure
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The Engel Kollat and Blackwell model: The original model developed in the
late sixties, was proposed as a comprehensive, cognitive processing model and went
through several revision. The revised model presented in 1990, is now known as
the Engel, Blackwell and Miniard Model (EBM). You have studied this model in
detail in the unit 9 of your marketing management course and can revisit it by following
the link https://egyankosh.ac.in/bitstream/123456789/7262/1/Unit-9.pdf
To briefly recap, the model explains the buying behavior process with the help of
five components,
Consumer BehaviourNature, Scope, Models and
Application
1. Information input
2. Information processing
3. Decision process
4. Decision process variables
5. External influences
Let us take an example to understand consumer behavior as explained by this model
As somebody who is currently dissatisfied with the way his laptop is functioning,
you come across an advertisement by a computer dealer, announcing a sale on various
Brands of computers and laptops for which his company’s the authorized agent.
This is the component of information input. This component includes all kinds of
marketing stimuli like advertisements, product displays, a point of purchase stimulus
and non-marketing stimuli like information inputs shared by friends, family or
colleagues, who may suggest a brand be used by them as an alternative to you.
Once you are exposed to this information from a variety of sources you begin to
process this information by going through the stages of exposure, attention,
comprehension, acceptance and retention of this information. You also utilize your
stored memory relevant to this purchase in processing this information and before
retaining it as actionable input for your decision process The next component, the
decision-making process, in this model, suggests that you could enter the decisionmaking process at any time during your information processing stage. You could
begin contemplating the decision immediately after seeing the advertisement regarding
the sale by the dealer, or collect more information and recall inputs about your earlier
experiences from your memory and so on. The decision process is shown to comprise
of the sequential stages of problem recognition search for alternatives, alternative
evaluation, choice, and outcomes (post-purchase evaluation and behavior). Once
you arrive at the decision based on your alternative evaluation, which in turn is
impacted by both individual differences and external influences, this decision will
lead to a purchase. The outcome of the purchase could be satisfaction if the laptop
bought by you meets your expectations, or result in post purchase dissatisfaction,
if your purchase does not fully meet your expectations.These outcomes will now
become feedback and be stored in your memory to be used as reference in your
next purchase or related decision-making situation
As discussed in the foregoing paragraph, individual variables like demographics,
motives, beliefs, attitude, personality, values, lifestyle and external influences like
culture, social class and reference groups are important influences that impact the
stages of both information processing and decision making. If any of your important
reference group members like a colleague in the IT department of your office has
expressed a strong negative opinion about the after sales service of a given laptop
brand, that brand will not be considered among the alternatives that you evaluate
during your decision process.
Understanding Online Consumer Behaviour
There is no denying the fact that the widespread use of Internet on the one hand
has given huge impetus to the e-commerce activity and on the other hand has facilitated
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Consumer Behaviour-Issues
and Concepts
online buying to a great extent. Reports show that generation of sales globally reached
over USD 2,800 billion in 2018 (Digital Commerce360, 2019).
Certainly, the Covid 19 pandemic and the lockdown that disabled physical and face
to face economic activity, accelerated the adoption of online buying across the world
and India was no exception. The interesting thing to note however, is that once
the lockdown restrictions eased away, a large percentage of consumers report an
irreversible change in their buying habits as during this gap of over one year, a large
number of them got too used to the convenience of shopping from the convenience
of their homes or offices on an any time anyone basis. The vastly improved online
shopping platforms, stable and reliable payment options, and improve logistic
efficiencies have further added to the consumer convenience and improved experience,
A BCG research study on aspects of online buying behaviour in India has indeed
interesting trends among Indian buyers which are creating both challenges and
opportunities for the marketers. Let-us have a brief look at these trends that were
shared in October 2019. The study was conducted on over 4000 Indian consumers
in 2019, well before the impact of the pandemic on consumer buying really set in.
24

85% consumers checked at least two data points across all categories before
they made a purchase

62% consumers said that they main reason of buying a new product was
to keep up with the emerging trends

57% consumers reported using pre packaged food or shopping online to
free their time for other activities

50% consumers reported buying Indian Brands or over international Brands
in at least one category

Signaling a rise in women’s decision-making roles, 54% female consumers
were found to have the final say in more than half of the product categories
bought

In subsequent research on buying behavior in India across the different waves
of the pandemic, the agency reported the following trends in consumer
sentiment and behavior, on the basis of their study of the pandemic on
consumer sentiment and behavior released in June 2021

Accelerated growth in the adoption and engagement with social commerce
and healthier Food choices

Adoption of digital commerce, entertainment and education gaining new
heights

While the frequency of use of online Medical Services and interest in online
hobby classes has tended to wane around May 2021, use of online retailers
or E commerce, use of digital wallets, free apps like Hot star and You Tube,
paid OTT platforms and online education has tended to sustain.

a key takeaway from this research is that the COVID-19 crisis has
significantly altered the behavior of Indian consumers in several important
aspects, such as their heightened focus on health and their embrace of digital
tools and channels for making purchases.
The almost ubiquitous adoption of internet usage either through but even more
increasingly through Mobile devices has created several challenges for marketers
including those of an increasingly globalized and competitive marketplace. Also
challenging to the marketers is understanding of complex consumer behavior, driving
online buying and the major influences that impact such buying behavior. It is important
to understand the psychology, decision process.
Consumer BehaviourNature, Scope, Models and
Application
While systematic research has been going on in developing models of online buying
behavior for at least a decade, we as of now do not have a comprehensive and
universally accepted model of digital consumer behavior.
The Technology Acceptance Model
This model, developed by Fred Davis tries to explain consumer tendency towards
online buying behavior by linking perceived usefulness of the technology relating
to savings in time and efficiency in spending. The ease-of-use component traces
how easily and conveniently the online shopping system works. Both perceived
usefulness and perceived ease of use influence positive attitude and behavioral
intent towards online shopping and eventually lead to users using the productor
service. The model also shows impact on external and individual variables on such
behavior.
External factors include service quality, ease of payment options, easy accessibility
and user reviews. while the individual factors are the ones already studied by you
in earlier models-and comprise personal traits and attitudes, perceived ease of the
online option, time pressures and earlier experiences of online transactions.
Fig. 1.2 : Technology acceptance model of online consumer behaviour (adapted from
Maranguniæ, N. & Graniæ, A.., 2015. Technology acceptance model: a literature review
from 1986 to 2013. Universal Access in the Information Society, 14(1), pp.81-95,
doi: 10.1007/s10209-014-0348-1.
To take an example, consider the case of a young professional staying by himself
and finding the need to replace his geyser as his existingg equipment is giving him
frequent breakdown or trouble. He first thinks of his very busy day and then tries
to identify alternatives for a quick and easy way of resolving this problem and browses
through the Internet to look at his options. The perceived ease of accessing all this
information from the comfort of his home, without needing to go from shop to shop,
is seen as a great convenience, coupled with the opportunity of comparing different
options right from his own desk. Being quite familiar with the use of computers
and accessing the Internet he experiences a great ease of use. In about half an hour,
he has compared the leading modelslike Bajaj, Crompton, AO Smith, Orient, Havells
etc, in terms of price and other specifications like warranties and customer Care
Services and was able to decide on AO Smith as his choice.
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Consumer Behaviour-Issues
and Concepts
Comparing the supplier options, he found that Amazon India was offering great price
discount while the company was offering free installation within the next 24 hours.
After checking his work schedule, he chose a suitable delivery time, use his digtal
wallet to make an online payment and had resolved the entire appliance replacement
problem, before he left for work at 9.30 am!
Other studies have also shared insights on the variables considered most valued
by customers in online buying. A study by Linnworks shows:
76% of online consumers surveyed reported convenience to be their most significant
priority influencing the decision to engage in online shopping and 78% were found
to value convenience more than they did before the pandemic restrictions.
45% of the consumers surveyed reported they valued convenience more then they
valued price, 85% of the consumers reported that the valued ease of access across
all their devices, 70% of the consumers prefer access to omnichannel buying. Most
of them reported attending to shopping in a multitasking way, for example, attending
to shopping while scrolling social media platforms or travelling to office. Consumes
therefore prefer to have their preferred brands to have a presence on the channels
they spend most of their time on.
As online consumers seek convenience ease and multiplicity of payment options
including cash on delivery emerges as a major driver of online buying preference.
Simplify of online payment options was found to influence 89% of consumers into
making faster buying decisions.
Fast and reliable delivery, coupled with an easy returns policy is another very impactful
factor driving traffic to a given shopping site. Flip cart, that now offers the option
of home collection of returns within a specific time periodwas able to score over
its competitors for some time before the competition responded with matching
conveniences.
You would have noticed that almost all marketers now use online marketing in addition
to their traditional channels in a bid to extend their market in response to the changing
consumer preference for online buying. Services like banking and insurance are a
very visible example of online service usage where a large part of financial service
activity is now transacted online.
Activity 7
Discuss the last five major online purchases of products, services by members
of your family or by your colleagues, fill in the following format to understand
aspects of their online buying
Main
Motivation
to shop
online
Time taken
in the
activity
Payment Time
options
for
used
delivery
Major
influences
Experience
of the
transaction
Purchase 1
Purchase 2
Purchase 3
Purchase 4
Purchase 5
26
How, in your view, the online buying behavior seems to differ from the in store buying.
1.10 APPLICATIONS OF CONSUMER
BEHAVIOUR IN MARKETING
Consumer BehaviourNature, Scope, Models and
Application
Marketing is defined as “humanactivity directed at satisfying needs and wants through
exchange processes”. Thus, the beginning of marketing lies in identifying un satisfied
human needs and wants and understanding the ensuing activity which people engage
in to fulfil these. And that, as we have described, is the realm of consumer behaviour.
Consumer behaviour and marketing practice go hand-in-hand. Trying to do the latter
without an understanding of the former is a kin to firing a shot in the dark.
Consumer behaviour has a number of applications in the area of marketing as
described in the following paragraphs.
1. Analyzing Market Opportunity: Study of consumer behaviour helps in identifying
needs and wants which are unfulfilled. This is done by examining trends in income,
consumer lifestyles and emerging influences. The trend towards increasing number
of working women, and greater emphasis on leisure and convenience have signalled
the emerging needs for household gadgets such as vacuum cleaners, washing machine
and mixer grinders. Air purifiers, smart phones and water purifiers were marketed
in response to a genuinely felt need of the people.The rapidly rising sales graph in
these categories is an indication of how well the product has satisfied the consumer’s
need.
2. Selecting the Target Market: The study of the consumer trends would reveal
distinct groups of consumers with very distinct needs and wants. Knowing who
these groups are, how they behave, how they decide to buy enables the marketer
to market products/services especially suited to their needs. All this is made possible
only by studying in depth the consumer and his purchase behaviour.
A study of potential consumers for shampoo revealed that there was a class of
consumers who can afford to use shampoo only on special occasions and who
otherwise use soap to wash their hair. Realizing the huge size of this market, companies
with leading brands launched their shampoos in small sachets containing enough
quantity for one wash and priced just at 3-5 Rupees.
3. Determining the Product Mix: Having identified the unfulfilled need slot and
having modified the product to suit differing consumer tastes, the marketer now
has to get down to the brass tacks of developing the right offer to market. He has
to determine the right mix of product, price promotion and advertising. Again,
consumer behaviour is extremely useful as it helps find answers to many perplexing
questions
Product: The marketer has the product that will satisfy hitherto unfulfilled consumer
need, but he must decide the size, shape and attributes of the product. He must
figure out whether it is better to have one single product or a number of models to
choose from. Does the product require any special kind of packaging? Does it need
any guarantee or after sales service? What associated products and services can
be offered alongside?
Maggi Noodles were first launched in the most common flavours such as masala
and capsicum. Having succeeded with these, other flavours such as garlic and
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Consumer Behaviour-Issues
and Concepts
sambhar were launched with the objective of appealing to specific regional tastes.
However, these flavours did not succeed. Recently, variants like Atta noodles and
Oats Noodles were launched. All these are attempts to modify the product by
adding special features, attributes which might enhance the product appeal to the
consumers.
The study of consumer behaviour also guides the marketer in making decisions
regarding packaging. Pan Parag was first introduced in tins. But study of consumer
behaviour revealed that people wanted smaller packing which they could conveniently
carry on their person and in response to this the individual pouches were introduced.
Further study of consumers revealed a problem with, these pouches. Once opened
and kept in the purse or pocket, the pan masala would spill out of the pouch into
the purse or pocket. To overcome this problem, Pan Parag launched a pouch with
a zip. You eat as much as you want, zip up the packet and put it in your pocket
without fear of spillage and wastage.
The study of consumer needs revealed the need for a water storage facility in the
kitchen and bathroom but which didn’t occupy floor space. In response to this need,
Sintex added the overhead indoor loft tank to their existing range of outdoor roof
top water storage tanks.
Price: What price should the marketer charge for the product? Should it be the
same as that of the competing product or lower or higher? Should the price be
marked on the product or left to the discretion of the retailer to charge what he
can from the customer? Should any price discounts be offered? What is the customer
perception of a lower or higher price? Would a lower price stimulate sales? Or is
a lower price associated with poor quality? These are the kinds of questions facing
a marketer when taking a decision regarding pricing. The marketer has to determine
the price level which makes the image of the product and which also maximizes
the sales revenue. For doing so he must understand the way his product is perceived
by consumers, the criticality of the price as a purchase decision variable and how
an increase or decrease in price would affect the sales. It is only through continuous
study of consumer behaviour in actual buying situations that the marketer can hope
to find answers to these issues.
Distribution: Having determined the product size, shape, packaging and price, the
next decision the marketer has to make is regarding the distribution channel. What.
type of outlets including the online ones should be used to sell the products? Should
it be sold through all the retail outlets or only through a selected few? Should a
mix of online and offlinebe used? Should it be sold through existing outlets which
also sell competing brands or should new outlets be selling exclusively your brand
of product be created? How critical is the location of the retail outlets from the
consumers’ viewpoint? Does the consumer look for the nearest convenient location
or is he only willing to shop from the convenience of his own home?
28
The answers to all these questions can only be found when the marketer has a good
understanding of the consumers’ needs which are being fulfilled by his product and
the manner in which consumers arrive at the decision to buy. Long ago, Eureka
Forbes introduced vacuum cleaners in the Indian market. It was not only launch of
a new brand, but rather a launch of a new product concept. No retail outlets were
selling vacuum cleaners, very few consumers knew much about the product and
fewer still were willing tobuy it. Under these circumstances, the company decided
to sell the product only through personal selling with the salesman calling on the
consumer at his home. Here the sales man had enough time to explain, demonstrate
and convince the prospective customer about the utility of the vacuum cleaner. In
a retail outlet situation, all this would just not have been possible. The retailer has
neither the time nor the detailed knowledge required to sell such a new product
concept. This distribution strategy of Eureka Forbes, based on a very fine
understanding of the consumer behaviour, has yielded good sales results. The product
concept is well accepted in the markets and today the vacuum cleaner, is also sold
through some selected retail outlets. You only have to look at the growing proliferation
of firms like Urban Company, who focus on making utility services like home cleaning,
personal grooming, furniture and carpet care services available to the consumer at
home at reasonable prices to appreciate how understanding of consumer behavior
enables new distribution opportunities.
Consumer BehaviourNature, Scope, Models and
Application
Promotion: The marketer here is concerned with finding the most effective methods
of promotion which will make the product stand out amongst the clutter of so many
other brands, and products, which will help attain the sales objective and yet be
within the budget. This is possible only when the marketer knows who his target
consumers are,where are they located, what media do they have access to, what
is their preferred media and what role does advertising play in influencing the purchase
decision?
Today, Internet driven social, digital advertising and TV are among the most powerful
advertising media in the country. And many brands spend the greater part of their
promotion and advertising budget on these. Brands regularly advertised on these
media soon become well recognized names. But as a marketer you have to question
the suitability of any specific medium with respect to your specific product and budget.
Suppose your product is sold in only a few geographical markets you may decide
to avoid regional channels on TV, some regional print media and concentrate on
point of purchase promotion as well as hoardings.
In so many cases of industrial products, media advertising is very negligible, instead,
B-to-B digital Marketing, brochures or leaflets containing detailed product specification
and information are conveyed to the actual consumer, and sometimes followed up
by sales calls toclinch the deal. This is primarily because buyer behaviour and
informational needs of industrial buyers are very different from those of consumer
buying. You will study organizational buying behaviour in detail in Unit 3 of this block.
But you can make these decisions only when you know your consumer and understand
his behavior well.
Use in Non-profit and Social Marketing:
The knowledge of consumer behaviour is also useful in the marketing of non-profit
or social or governmental services of institutions such as hospitals, institutions, voluntary
agencies, law enforcement and tax collection agencies.
The income tax authorities have always been perceived in negative manner by the
common man who fears them and views them in a suspicious light. To overcome
this poor image, advertisements on TV, social media, and in newspapers and
magazines are regularly released,wherein a friendly, helpful image is sought to be
projected. Moreover, there is greater dissemination of information regarding the
rights and responsibilities of the tax payer.
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Consumer Behaviour-Issues
and Concepts
Similarly, the Covid Pandemic saw a massive effort at social marketing by
governments, public health agencies and responsible corporate to address the issues
of consumer awareness, protective measures and safety promoting behaviours.
The active public health and individual protection campaigns run during the various
waves of the corona pandemic, the “Swatchh Bharat and Swasth Bharat” initiatives
and other such events organized on special occasions such as India completing 75
years of Independence (Azadi ka Amrit Mahotsav), used various types of appeals
in order to motivate the maximum participation. Organizations such as Red Cross,
Blood Banks, Heart Foundation, Indian Cancer Society, Sight savers, The Kailash
Satyarthi foundation, UNICEF, etc., all use an understanding of consumer behaviour
to promote their services, encourage public participation in their activities, sell their
products (greeting cards in case of UNICEF), and to motivate people to donate,
get regular health check-ups.
Activity 8
In your own work experience, or any other consumer product organization
that you are familiar with, study the pricing, promotion and distribution of
products. Clearly state the kind of applications of the knowledge of Consumer
Behavior that was applied in these decisions.
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1.11 SUMMARY
This Unit attempts to introduce you to the subject of consumer behaviour and all
that which is studied as part of this subject. Consumer behaviour comprises the
entire spectrum of activities and processes which individuals engage in when buying,
using, acquiring or disposing of goods andservices. The purchase is only one part,
the clearly observable part, of this range of activities. The focus of study in consumer
behaviour is the individual making the purchase, but sometimes he may be purchasing
on behalf of somebody else. To get a complete picture it is necessary to include
both the buyer and user in the realm of consumer behaviour. The study of consumer
behaviour is concerned with the decision process involved in a purchase. This process
may comprise physical and mental activities preceding and following the purchase
event.
During this decision process, the consumer is influenced, by a variety of factors.
These influencing variables can be broadly divided into two categories, namely,
individual determinants and external variables. These were briefly touched upon in
this Unit and shall be explained in greater detail in later units.
An understanding of consumer behaviour is of critical importance to all persons
engaged in any form of marketing activity, its importance stems from the fact that
i) behaviour of consumers can be understood, ii) the behaviour can be influenced,
and iii) the marketer can utilize these influencing variables to his advantage.
30
The unit also introduces you to various models of consumer behavior including those
related to online buying behavior to expose you to research based comprehensive
explanations of how consumers decide.
The applications of Consumer behavior to all aspects of marketing decision making
have been discussed. Consumer behaviour is also applicable in case of noncommercial, non-profitmarketing.
Consumer BehaviourNature, Scope, Models and
Application
1.11 KEYWORDS
Decision Process: The sequence of mental and physical activities and processes
preceding and following an actual purchase action.
Individual Determinants: The specific variables unique to each individual, which
influence his behavior as a consumer. These variables are psychological in nature
External Environment: All the variables emanating from the society within which
an individual lives and interacts and which bear a strong influence on his consumer
behaviour.
1.12 SELF-ASSESSMENTQUESTIONS
1. Given below is a list of products and services, some or all of which you would
have purchased or used in your capacity as a consumer:
i.
Two-wheeler/car
ii.
An expensive suit/saree/dress for a very important social occasion
iii. Printer for your home office
iv. Health insurance for your self and members of your family
v.
Smartphone
vi. Members hip of a Society/Club/gym
Try to recall and identify the roles played by different people around you
ininfluencing the first-time purchase of these. Would the same roles be played
by the same people if you went in for a repeat purchase?
2. About 20 years ago, the ready-made clothes market in India was limited to
afew companies offering men’s shirts and trousers in a few instances. But today
a large of national and international brands have made available a huge range
of ready-made apparel for all age segments and socio-economic class segment.
Can you identify some key variables of individual determinants and external
environment responsible for this change?
3. What are the product and service categories where you and your family members
now do online buying more often than you do in store buying? What are the
major drivers of such behaviours?
4. What are the main benefits that consumers seek from non-store buying? Explain
by taking examples
1.13 PROJECT QUESTIONS
Interview individuals who sell the following items and try to find out their personal
models of consumer behavior.
a. Jewelry items
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Consumer Behaviour-Issues
and Concepts
b. Home fitness equipment
c. Health insurance
d. Cake/Pastry
1.14 FURTHER READINGS
Angeline G Close (2018). Online Consumer Behaviour; Taylor and Francis Limited
Belyaeva,O. (2015). Eight characteristics of consumer behavior in the digital economy.
http://www.online812.ru/2015/05/06/005/.
Bhattacharjee, J. and Chetty, P. (2019). An overview of online consumer behaviour
theory and model. [online] Project Guru. Available at: https://www.projectguru.in/
online-consumer-behaviour-theory-model/ [Accessed 09 Feb. 2022].
Consumer Behavior: https://nptel.ac.in/courses/110/105/110105029/ Open Textbook
Dave Walters (2019), Behavioural Marketing, Wiley
Durairaj Maheswaran (2017).Understanding Indian Consumers, Oxford University
Press
Engel James F, Kollat, DavidT. and Miniard, Paul W. (1986). “Consumer
Behaviour”, Hillsade, Dryden Press.
Micheal Solomon (2015). Consumer Behaviour:Buying, Having Being; Fourth Edition,
Pearson
Natalie Nahai (2017). Webs of Influence: The Psychology of Online
Persuasion,Second Edition, Pearson
Schifmann, Leon G. and Kanuk, Leslie Lazar (2018). Consumer Behaviour, Pearson,
Twelfth Edition.
32
UNIT 2 CONSUMER BEHAVIOUR AND
LIFESTYLE MARKETING
Consumer BehaviourNature, Scope, Models and
Application
Learning outcomes
After reading this unit, you should be able to:

define and illustrate the concept of lifestyle marketing

describe the role of lifestyle analysis and how it fits into other approaches
to study of consumer behaviour.

identify the characteristics of lifestyle

discuss the components of AIO inventory and VALS classification used in
Lifestyle

analyse the findings of lifestyle studies in India and apply them in your
marketing decisions

discuss current applications and trends in lifestyle marketing.
Structure
2.1 Introduction
2.2 Demographics, Psychographics and Lifestyle
2.3 Characteristics of Lifestyle
2.4 Influences on Lifestyle
2.5 Approaches to Study Lifestyle
2.6 Application of AIO Studies
2.7 Lifestyle Profiles in Indian Context
2.8 VALS System of Classification
2.9 Applications of Lifestyle Marketing
2.10 Summary
2.11 Key Words
2.12 Self-Assessment Questions
2.13 Project Questions
2.14 Further Readings
2.1 INTRODUCTION
Lifestyle marketing is a process of establishing relationships between products offered
in the market and targeted lifestyle groups. It involves segmenting the market on
the basis of lifestyle dimensions, positioning the product in a way that appeals to
the activities, interests and opinions of the targeted market and undertaking specific
promotional campaigns which exploit lifestyle appeals to enhance the market
attractiveness of the offered product. The Marketing Dictionary of Rona Ostrow
and Sweetman R.Smith describes lifestyle as “a distinctive mode of behavior centered
33
Consumer Behaviour-Issues
and Concepts
around activities, interests, opinions, attitudes and demographic characteristics
distinguishing one segment of a population from another. A consumer’s lifestyle is
seen as the sum of his interactions with his environment. Lifestyle studies are a
component of the broader behavioural concept called psychographics.”
Harold W. Berkman and Christopher Gilson define lifestyle as “unified” patterns
of behaviour that both determine and are determined by consumption. The term
“unified patterns of behaviour” refers to behaviour in its broadest sense. Attitude
formation and such internal subjective activities may not be observable, but they
shape behaviour nonetheless. Lifestyle is an integrated system of a person’s attitudes,
values, interests, opinions and his overt behaviour.
2.2 DEMOGRAPHICS, PSYCHOGRAPHICS AND
LIFESTYLE
Demographic variables help marketers “ locate” their target market and
psychographic variables provide the marketer with more insight about the segment.
Psychographics is, in common parlance, lifestyle analysis or AIO research. In its
most widely practiced form, a psychographic study consists of a long list of
statements designed to capture relevant aspects of a consumer, like personality,
hinting motives, interests, attitudes, beliefs and values.When the study becomes
oriented towards a particular product, the consumers are required to respond to
statements which are selected for the purpose i.e. on products, brands, services,
competitive situations etc.
The demographic and psychographic lifestyle approaches are highly complementary
and work best together. People hailing from the same sub-culture, social class and
even occupation follow quite different lifestyles. If we can create a fictitious Mrs.
Mathur to look at, possibly it may be like this: She may choose to live a “belonging”
lifestyle which will be reflected in her wearing conservative clothes, spending
considerable time with her family and participating in social activities. Or she can
be an “achiever” marked by an active personal life and playing hard when it comes
to travel and sports. It can be seen that lifestyle depicts the “whole person” in active
interaction with her environment.
The lifestyle analysis adds a great amount of understanding to a typical demographic
description. A person buying a new designer shirt may be 34 years old, married
and living in a three-bedroom house, having 2 children and valuing both independence
and flexibility that living in a metro with his nuclear family bring. The lifestyle analysis
would help marketers to paint a more human portrait to their target market.
For instance, the “young, upwardly mobile” lifestyle group cutting across sub-cultures,
social class, occupation etc. is being increasingly used by Indian marketers as their
market group. This finds its expression in advertising appeals “He loves the feel of
the city... The sky scrapers...The crowds...The pretty faces...And the heady feeling
of being successful... Above all the freedom of being himself”. So said the
advertisement for Pantaloon cotton trousers from Manz Wear. The behavioural
differences between prospects that do not show up in demographic figures come
alive in lifestyle patterns. Lifestyle, analysis leads to more comprehensive and
penetrating profiles of how consumers think and act than may be available from
other approaches.
34
Activity 1
Consumer Behaviour and
Lifestyle Marketing
Collect 10 advertisements (ads) involving the promotion of cars and find out,
how many of these ads are “playing up” the lifestyle appeal of target customers.
Identify, what lifestyles have been projected through these ads
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2.3 CHARACTERISTICS OF LIFESTYLE
Feldman and Theilbar describe lifestyle by the following characteristics
1. Lifestyle is a group phenomenon
A person’s lifestyle bears the influence of his/her participation in social groups and
of his/her relationships with others. Two clerks in the same office may exhibit different
lifestyles.
2. Lifestyle pervades various aspects of life
An individual’s lifestyle may result in certain consistency of behaviour across different
aspects of his life and consumption. Knowinga person’s conduct in one aspect of
life may enable us to predict how he/she may behave in other areas.
3. Lifestyle implies a central life interest
For every individual there are many central life interests like family, work, leisure,
sexual exploits, religion, politics etc. that may shape his interaction with the
environment.
4. Lifestyles vary according to sociologically relevant variables
The rate of social change in a society has a great deal to do with variations in lifestyles.
So do age, sex, religion, ethnicity and social class. The increase in the number of
double income families , nuclear families, rising income and aspirations, large number
of women in the workforce have resulted in very different lifestyles of Indian families
compared to the last decade.
2.4 INFLUENCES ON LIFESTYLE
Cultural and societal variables establish the outer boundaries of lifestyle specific to
a given culture. The interaction of group and individual expectations and values creates
a systematic pattern of behaviour. This is the lifestyle pattern that determines purchase
decisions. When goods and services available in the market are in tune with lifestyle
patterns and values, consumer market reactions are favourable. Purchases that
reinforce these patterns further illuminate these lifestyles. Lazer’s lifestyle hierarchy
brings out these interactions.
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Consumer Behaviour-Issues
and Concepts
Figure1: Hierarchy of Influenceson Lifestyles (adapted from Lazer, W. (1963) ‘Lifestyle
Concepts and Marketing’, in S. Greyser (ed.) Towards Scientific Marketing. Chicago:
American Marketing Association)
2.5 APPROACHES TO STUDY LIFESTYLE
The study of lifestyle is inter disciplinary. It draws on a variety of disciplines such
as anthropology, psychology, sociology and economics. Marketing uses this eclectic
approach for segmenting, targeting and positioning which forms the core of marketing
strategy. Because lifestyle refers to the way in which people live and spend money,
consumers psychographic profiles are derived by measuring different aspects of
consumer behaviour such as
1. Products and services consumed
2. Activities, interests and opinions
3. Value systems
4. Personality traits and self-concept
5. Attitude towards various product classes
Many approaches are available to the study of psychographic variables. One of
the ways is to study the lifestyle variables by an AIO inventory for use in segmenting,
targeting and positioning. Another lifestyle approach is by using VALS typology.
Two more recent approaches are the PRIZM approach and the Roper Starch global
lifestyle studies We will expand on these approaches now.
36
Consumer Behaviour and
Lifestyle Marketing
AIO Inventories
This approach involves developing detailed lifestyle profiles on the basis of analysis
of activities, interests, opinions and demographics of very large samples of population
AIO studies envisage a wide variety of variables and measures the major dimensions
shown below:
Activities
Interests
Opinions
Demographics
Work
Family
Themselves
Age
Hobbies
Home
Social
Education
Socialevents
Job
Politics
Income
Vacation
Community
Business
Occupation
Entertainment
Recreation
Economics
Family size
Clubmember
Fashion
Education
Geography
Community
Food
Products
Citysize
Shopping
Media
Future
Lifecycle
Sports
Achievements
Culture
Dwelling
Source: Joseph T. Plummer—The Concept and Application of Lifestyle Dimensions, Journal
of Marketing.
Let us take a closer look at these variables:
What are activities? Activities indicate how a consumer/family spends his/her/their
time.

What are interests? Interests are a family’s or consumer’s preferences or
priorities.

What are opinions? Opinions are how a consumer feels about a wide variety
of events and things.
In order to explore an individual’s activities, interests and opinions, respondents
are given lengthy questionnaires in which they are asked how strongly they agree
or disagree with statements such as:
I would like to become an actor
I usually dress for fashion and not for comfort
A woman’s place is in the house
I often have drinks before dinner
I love the outdoors.
The statements can be general or product-specific. They can be pertaining to individual
or family/household. For instance, the classifications of different type of Psychographics
statements for credit card use are given below:
37
Consumer Behaviour-Issues
and Concepts
General
Individual/personal
Family/ Household
I think that having to carry cash
when you travel is quite
cumbersome
My family is always shopping when
we travel
Product- Credit cards offer a great
specific alternative solution with
convenience and flexibility
We really appreciate the convenience
and safety that credit cards offer in
Comparison to carrying large sums
of cash
In constructing an inventory of such lifestyle statements researchers first go through
market research studies that might be of help in isolating psychographic variables.
Motivation research studies which reveal consumer’s reflections on their experience
and needs are a good source. Based on such reviews psychographic statements
are prepared which bring out the range of activities, interests and opinions that the
researcher wishes to evaluate. In constructing a psychographic inventory, it has to
be thoroughly assessed whether consumers will understand the meaning of the each
of the statements as the marketer expected them to be interpreted. It is also important
to avoid statements that lead consumers to make a socially acceptable response
which really does not reflect their true feelings or likely ways of interaction with
environment. In responding to an inventory as explained above consumers are usually
asked to rate in a quantifiable rating scale as is used in marketing research studies,
the extent of their agreement or disagreement with each statement and results are
statistically evaluated.
Thus, psychographic research produces quantifiable insights that are usually presented
in tabular format. The measurement is similar to the measurement of personality
traits in that it requires the use of self-administered questionnaire.
Forexample
Some studies have used factor analysis for revealing grouping of behaviour styles
in purchasing which can reveal how differed segment will differ in their choice of
certain products and services
Activity 2
Construct a questionnaire with about 30 AIO statements with specific reference
to smart phone buyers and users.
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38
2.6 APPLICATION OF AIO STUDIES
Consumer Behaviour and
Lifestyle Marketing
Studying the lifestyle closely through the AIO inventory of heavy/medium/light usersof
a product has been found to be immensely useful for marketers. In the US studies
have been done regarding the heavy use of beer, eye make-up and bank credit
cards. When it was revealed that 23% of the people who drink beer consume 80%
of the beverage sold, the heavy beer user became the advertising target of the new
campaign. William Wells and Douglas Tigert used an AIO inventory to probe the
heavy user of eye cosmetics. Demographic data revealed that such women were
young, well-educated and metropolitan. But she also tended to be a heavy smoker
and more inclined than the average woman to make long distance telephone calls.
From the responses to statements, she emerged as one who fantasises about trips
around the world, and as one who wanted a very stylish home.
In a study Plummer applied to bank credit card users, males who used bank
chargecards heavily were described as urbane and active with high income level
and occupational and educational achievements. The heavy card user places high
value on personal appearance consistent with his career and lifestyle. He was found
to buy atleast three new suits a year, to belong to several organisations and revealed
contemporary attitudes and opinions.
Thus, a study of personality, lifestyle and social class gives a more comprehensive
consumer profile and not a mere physical description of demographics. Using the
AIO inventory, the Chicago based advertising agency of Needham, Harper and
Steers identified five female lifestyle groups and five male lifestyle groups. We have
Indian parallels of these types and you may try to recall the advertisements given
along side in brackets to identify the lifestyle portrayed through these characters
and decide whether they conform.
Female Lifestyle Types
1. Cathy the contented housewife (the multitasking housewife in MTR
advertisement displaying multiple breakfast options possible at the same time)
Cathy epitomises simplicity. She is devoted to her family and faithfully serves
them as mother housewife and cook. She enjoys a relaxed pace and avoids
anything which might disturb here quilibrium.
2. Candice-the chic suburbanite. (Kiara Addvani in the Myntra commercial?)
Candice is an urban Woman. She is well educated and genteel. Socializing is
an important part of her life. She is a doer, interested in sports and the outdoors,
politics and current affairs. Her life is hectic and lived at a fast clip. She is a
voracious reader and there are few magazines she does not read.
3. Eleanor-the elegant socialite. (Various models in the Lakme 9 to 5 range
campaigns?) Eleanor is a woman with style. She lives in the city because that
is where she wants to be. She likes the socio-economic aspects of the city in
terms of her career and leisure time activities. She is fashion conscious and
dresses well. She is financially secure and hence not a careful shopper. She
shops for status and style and not for price. She is a cosmopolitan woman
who has travelled abroad and wants to.
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Consumer Behaviour-Issues
and Concepts
4. Mildred-the militant mother. (As an exercise, can you think of an example
so as to draw a comparison?)
Mildred is a woman who got married young and had children before she was
ready to raise a family. Now she is unhappy. She is frustrated and vents he
rfrustration by rebelling against the system. Television provides an ideal medium
for her to live out her fantasies.
5. Thelma-the old-fashioned traditionalist. (The elderly wife in the Swiggy ad?).
Thelma is a lady who has lived a good life. She has been a devoted wife, a
doting mother and a conscientious house wife. Even now, when most of her
children have left home, her life is centred around the kitchen. She lacks higher
education and has little appreciation for the arts or cultural activities. Her spare
time is spent watching TV.
To make these distilled profiles even more useful for segmenting markets for specific
products aimed at women, the researchers then portrayed these segments in terms
of an index of product usage. To illustrate, the following data on use of cosmetics
by the above female psychographic segment reveal very interesting information.
2.7 LIFESTYLE PROFILES IN INDIAN CONTEXT
In India, one of the agencies, tried to create a psychographic profile of the Indian
child based on a sample of over 4463 in 8 metros and mini-metros. As an outcome
of these studies the emerging profiles of the Indian children that emerged are given
below:
1. 6-7 years: A fun seeker, heavily influenced by the family and by teachers.
2. 8-10 years: A roleplayer, influenced primarily by school and by friends.
3. 11-15 years: An emulator, influenced by the peer group. At this stage, gradual
non-acceptance of the family begins
4. 16-18 years: young adults, almost entirely conforming to the group.
Some of the interesting findings of this survey were
40

Children love to see commercials on TV.

They have their favorite actors and cricketers.

Most of them are adventurous and like trying out new brands.

Children feel savings are necessary.

A very large percentage of children visit religious places.

reading figures across media are impressive-particularly for 16 to 19 years
age group.
Consumer Behaviour and
Lifestyle Marketing
Another major study using psychographic approach carried out by Path finders, a
marketing research agency in India in early 1990s covering 10303 working and
non-working women aged between 18-45 years with family income of more than
Rs. 350/- p.m. in 36 towns and cities across the country came up with 8 identifiable
types of Indian house wives.
The gregarious hedonist: Found predominantly in the east, she is most likely to
speak Bengali and is intensely extroverted and liberal. She does not believe in
sacrificing her life just to keep her family happy. Self-indulgent and willing to spend
money on new products, she is a marketing man’s dream.
The contemporary housewife: She is on the threshold of change. While she has
not given up many traditional values, she aspires for modernity and is least likely
to be living in north India.
Though she is happier than she was five years ago, she feels the need to do something
more meaningful besides housekeeping. She is fashion-conscious, but still uses fairness
skin creams and her idea of trendy clothes does not go beyond the sari.
The affluent sophisticate: She lives mainly in the west zone, and seems to live
by the motto: “Have money, will spend”. She is the highest user of all kinds of
consumer products and indulges in more activities-even simple ones like writing a
cheque or using a telephone-which are out of reach of most housewives. She is
comfortable talking to men outside her family circle, and would not mind if her children
marry outside the community. One out of three do some form of exercise and are
careful about their figures.
The tight-fisted traditionalist: Leading a sheltered life, she prefers to follow the
film stars in her dress habits but is particular about prices. She restricts her circle
of friends to within her community and believes that girls should be educated especially
to enable them to get good husbands. A majority live in north India.
The troubled home-body: Neither a leader nor an emulator, she is largely illiterate
and is least exposed to the media. Her three prized possessions are watches,
transistors and bicycles. Fashion takes a back seat and the fate, according to she,
is written in the stars.
The anxious rebel: Less likely to be found in the south, she would much rather
be working than staying at home. She is anxious, thrifty but discerning in her shopping,
though quite willing to try out new food recipes, and loves to spend on her children
and guests.
The contented conservative: She is extremely confident and probably the most
efficient householder of all. She is a great optimist, is very conscious of the family’s
health and is, by and large, the advertising man’s dream she believes that ads are a
great source of information.
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Consumer Behaviour-Issues
and Concepts
The above study confirms the view that the Indian housewife at that time saw her
self basically as a traditional provider. The survey also reveals that an increasing
number of urban women were beginning to see themselves in a more modern context.
AIO studies on online consumers
Studies from year 2000 onwards, using the AIO approaches have tried to segment
online consumers and analysed variables like attitude towards internet and online
shopping, related interests and opinions. Based on their study in 2011 Aljukhadar
et al identified three global lifestyle a type among online buyers
1. Basic communicators: consisting of older and highly educated people, these
consumers use the Internet mainly for emails to communicate
2. Lurking shoppers: consisting of highly educated men and women or families
with high incomes who use the Internet to navigate and identify shopping
alternatives and to heavily shop on the Internet
3. Social Thrivers: consisting of the youngest age group, mostly under 35 who
were heavy Internet users and employed it for social interaction, forming
relationships, blogging,video streaming and downloading content. They were
also the lowest income group segment among the population studied
A later study in 2015 classified the online shoppers into three segments based on
factors like Internet enjoyment and convenience, Internet distrust, online offers and
logistics concerns.The segments identified were
1. Mature traditionalists: relatively old married couples, who were attracted
by deals and offers made by brick-and-mortar stores but are also attracted
by the convenience and pleasure of buying online.
2. Offer enthusiasts: These are middle aged consumers who were attracted
by the wide selection quality and the variety of offers presented by online
shopping.
3. Technology mavericks: younger and very avid users of the Internet, are very
adept and self-sufficient in the use of the Internet, have little concerns about
the logistics but still have mistrust relating to security and privacy issues
Lifestyle segmentation based on AIO inventories are ongoing exercises, most attempts
at such segmentation have now shifted to VALS based studies
Activity 3
a. Select at least 10 consumer durable and non-durable products and identify
which of the above categories of Indian women will you target these
products to. Also identify the selling appeals and or propositions you would
use to market these products to these women types.
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42
b. Consider your own online shopping behavior and try to assess to which
lifestyle segment of online shoppers do you belong.
Consumer Behaviour and
Lifestyle Marketing
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2.8 VALS SYSTEM OF CLASSIFICATION
Another widely used lifestyle classification system is the Values and Lifestyle
classification developed by Arnold Mitchell. The VALS system of classification classifies
adults (18 +) in the US into distinctive lifestyle groups. Each group is based on
inner psychological needs (values) and behaviour response patterns (lifestyles) which
their values predict. The psychological theory used in VALS draws heavily on
Abraham Maslow’s Hierarchy, on Needs. The VALS theory and database were
first applied to markets in 1978. VALS provides a dynamic framework of values
and lifestyles; which helps to explain why people act as they do as social groups
and asconsumers.VALS, unlike someother approaches, weave stogether:
1. Demographics, 2. Attitudes, 3. Activities, 4. Consumption patterns,
5. Brand preferences, 6. Media graphics
The VALS 1 study led to the identification of four major groups i.e., the need driven
(the poor and uneducated), the outer directed (the middle- or upper-income class
consumer whose lifestyle is directed by external criteria) and the inner directed
(people who are motivated more by inner needs than by the expectations of others).
The fourth segment, called integrated represents individuals who have been able
to combine the best of both outer directed and inner-directed values.
Further sub-segments within these four classes were also identified.
Continued work by SRI on the VALS led the development of VALS2 classification
of lifestyle segments discussed below
VALS-2 Classification
In more recent developments on lifestyle and value system. SRI offers findings from
a very comprehensive study, termed the VALS 2. The VALS .2 typology also draws
heavily on Maslow’s need hierarchy and tries to explain the lifestyle orientation of
the various segments based on the values sought by each of them in their life.
VALS 2 typology classifies the American population into 3-major consumer groupsthe principle oriented, the status oriented, and the action oriented. These are
then further sub-divided in to eight distinctive lifesty lesegments. Figure 3 below
shows the VALS 2 classification segments. The three major segments as noted above
are defined in terms of self-orientations of people. The principles oriented represent
consumers whose choices are governed by their beliefs rather than their need for
other peoples’ approval. The choices of status-oriented consumers, on the other
hand, are directed by the action, approval and opinion of other people. The action-
43
Consumer Behaviour-Issues
and Concepts
oriented consumers are those who are motivated by a need for social or physical
activity,variety and risk bearing. The eight sub-divisions that these major selforientations have been divided into also differ in terms of their resources. Resources
in this typology have been defined as physical, psychological, and demographical
factors that become enabling variables in consumer’s choice making behaviour. A
description of the lifestyles and brief socio-economic profile of all the eight subsegments of VALS2 is given below. *
Figure3: VALS-2 Classification (*Description ofthe Profiles have been quoted from
Schiffman and Kanuk Vth edition PP.83 PHI.)
The principle-oriented people have been divided into 2 classes, the fulfilleds and
the believers
Believers are conservative, conventional people with concrete beliefs and strong
attachments to traditional institutions: family, church, community, and the nation. Many
Believers possess moral codes that are deeply rooted and literally interpreted. They
follow established routines, organized in large part around their families and the
social or religious organizations to which they belong. As consumers, they are
conservative and predictable, favoring American products and established brands.
Their education, income, and energy are modest but sufficient to meet the irneeds.
44
Fulfilleds are mature, satisfied, comfortable, reflective people who value order,
knowledge, and responsibility. Most are well educated, and in (or recently retired
from) professional occupations. They are well-informed about world and national
events and are alert to opportunities to broaden their knowledge. Content with their
careers, families, and station in life, their leisure activities tend to center on their
homes. Fulfilleds have a moderate respect for the status quo, institutions of authority,
and social decorum, but are open-minded about new ideas and social change. Fulfilleds
tend to base their decisions on strongly held principles and consequently appear
calm and self-assured. Although their incomes allow them many choices, Fulfilleds
are conservative, practical consumers: they are concerned about functionality, value,
and durability in the products they buy.
Consumer Behaviour and
Lifestyle Marketing
The status-oriented people have been further subdivided into 4 classes, the
actualizers, the achievers, the strivers and the strugglers.
Actualizers are successful, sophisticated, active, “take-charge” people with high
self-esteem and abundant resources. They are interested in growth and seek to
develop, explore, and express themselves in a variety of ways-sometimes guided
by principle, and sometimes by a desire to have an effect to make a change. Image
is important to Actualizers, not as evidence of status or power, but as an expression
of taste, independence, and character. Actualizers are among the established and
emerging leaders in business and government, and they continue to seek challenges.
They have a wide range of interests, are concerned with social issues, and are open
to change. Their lives are characterized by richness and diversity. Their possessions
and recreation reflect a cultivated taste for the finer things in life.
Achievers are successful career and work-oriented people who like to-and generally
do-noel in control of their lives. They value structure. predictability, and stability of
over risk, intimacy, and self-discovery. They are deeply committed to their work
and their families. Work provides them with a sense of duty, material rewards, and
prestige. Their social lives reflect this focus and are structured around family, church,
and business. Achievers live conventional lives, are politically conservative, and respect
authority and the status quo. Image is important to them. As consumers, they favour
established products and services that demonstrate their success to their peers.
Strivers seek motivation, self-definition, and approval from the world around
them.They are striving to find a secure place in life. Unsure of themselves and
low on economic, social, and psychological resources. Strivers are deeply
concerned about the opinions and approval of others. Money defines success
for them, who don’t have enough of it and often feel that life has given them a
raw deal. Strivers are easily bored and impulsive. Many of them seek to be stylish.
They emulate those who have more resources and possessions, but what they
wish to obtain is generally beyond theirreach.
Strugglers’ lives are constricted. Chronically poor, ill-educated, low-skilled, without
strong social bonds, aging, and concerned about their health they are often despairing
and passive. Because they are so limited, they show no evidence of a strong selforientation, but are focused on meeting the urgent needs of the present moment.
Their chief concerns are for security and safety. Strugglers are cautious consumers.
They represent a very modest market for most, products and services but are loyal
to favorite brands.
The action-oriented segment comprises of two sub segments of Experiencers and
Makers.
Experiences are young, vital, enthusiastic, impulsive, and rebellious. They seek
variety and excitement, savouring the new, the off beat, and the risky. Still in the
process of formulating life values and patterns of behavior, they quickly become
45
Consumer Behaviour-Issues
and Concepts
enthusiastic about new possibilities but are equally quick to cool. At this stage intheir
lives, they are politically uncommitted, uninformed, and highly ambivalent about what
they believe. Experiences combine an abstract disdain for conformity and authority
with an outsider’s awe of others’ wealth, prestige, and power. Their energy finds
an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers
are avid consumers and spend much of their income on clothing, fastfood, music,
movies, and video.
Makers are practical people who have constructive skills and value self-sufficiency.
They live in a traditional context of family, practical work, and physical recreation,
and have little interest in what lies outside that context. Makers experience the work
by working on it-building a house, raising children, fixing a car, or canning vegetablesand have sufficient skill, income, and energy to carry out their projects successfully.
Makers are politically conservative, suspicious of new ideas, respectfulof government
authority and organized labor. but resentful of government intrusion on individual
rights. They are unimpressed by material possessions other than those with a practical
or functional purpose (e.g., tools, pickup trucks, or fishing equipment).
Activity 4
How can the VALS 2 typology be used to develop promotional strategies for?
a. A full-service premium airline
b. A chain of health resorts
Which particular segments would you target for each of these and why?
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
Applications of VALS Classification
Marketers have put to good use this concept which is based on the idea that
individuals pass through a number of developmental stages with each stage affecting
the person’s attitudes, behaviour and psychological needs.
As the preceding portraits have revealed, VALS classification can be used to develop
a deeper understanding of the buying motivations and consumption values being
sought by the different lifestyles. The rapid adoption of consumer analytics, with
capabilities of accessing and studying very vast amounts of consumer data is expected
to bring clarity to segment profiles in times to come on consumption values being
sought by different segments with respect to given product and services.
Currently marketers are utilizing the insights developed through the VALS
classifications to:
1. Identify target market characteristics and usage.
2. Guide executional and strategic approaches.
3. Identify key media vehicles and appeals for target groups.
46
4. Guide merchandising and logistics efforts.
Consumer Behaviour and
Lifestyle Marketing
5. Develop deeper customer engagement and customer equity
6. Develop clearer insights for brand positioning and repositioning
Global Lifestyle Segments Identified by Roper Starch Worldwide
Based on a study conducted worldwide in 2001 by Roper Starch Worldwide, an
interesting model revealing relationship between personal values and consumer
behavior, proposed six global lifestyle types as shown below:
adapted from: http://www.worldcat.org/identities/nc-roper%20starch%20worldwide
2.9 APPLICATIONS OF LIFESTYLE MARKETING
The most striking uses of lifestyle concept and allied research have been made in
positioning of new products, repositioning of existing products, developing new
product concepts and creating new product opportunities in specific fields. In
congruence to the product concept chosen, lifestyle research is utilised for selecting
media, formulating media and promotion strategies and improving retail performance.
Lifestyle concept is also utilised as a framework for presenting research
recommendations, since it is capable of offering to the marketers, portraits of target
group expressed in an uncomplicated manner.
1. Positioning of New Products
Positioning comprises finding the most profitable niche for a new product in terms
of target market. Lifestyle research, forexample, an AIO portrait of heavy users
fora product like Wi-Fi music equipment not only tells us how old they are, where
they live and to what socio-economic group they belong, it also tells us what related
products are they likely to buy, what their interests and opinions are and what are
the consumption values that will drive their purchases. This provides an unusually
rich body of data for use in marketing decisions related to the positioning and will
add insights on decisions concerning the precise target group at which the product
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Consumer Behaviour-Issues
and Concepts
is to be aimed, the product image to be designed, the media vehicle and the type
of promotion strategy to be designed so that the complete product offer is in conformity
with a particular lifestyle type.
2. Repositioning an Old/Existing Product
Sometimes existing products may sell well below their forecasted potential or the
company may discover a new, more profitable niche, nearer to the core market
where it may now want to position the product. The company may also find that
the initially successful product is no longer in sync with the changing consumer
aspirations. Repositioning is often a contingency planned for in the new product
development process, primarily as a remedial measure. Generally, in markets where
the competitive activity is high, the need while positioning the product for the fixed
time is to get a foot hold in the market. After gaining market penetration, establishing
distribution and creating a certain degree of market acceptability, the manufacturer
may, through repositioning, or a series of repositionings move the product closer
to the core market. Lifestyle marketing strategies help considerably in reducing the
amount of ‘market groping’ that repositioning may entail moving the product closer,
to the psychographic profile of the core market segment, by altering its image or
some of its attributes to suit the lifestyle of the core segment
Figure 3 : Progressive Repositioning of an Existing Product
Recent examples of repositioning include the repositioning of Colgate tooth paste
to present the Colgate Vedshakti to relate to rising consumer preference for natural
or ayurveda based solutions to dental health.
Tata Motors’ development of the Electric vehicle variant show another effort to
reposition their automobile offers to increasing environmental consciousness by Indian
consumers.
3. Developing New Product Concepts
48
Study of existing market segments and analysis of their needs have typically been
used to conceptualise on new product opportunities. Traditionally, demographic
segmentation, or standard consumer classification of major groups like the educated
youth, the young collegiate, the urban housewife etc. have been used to define and
study the segments. Lifestyle studies on the other hand can be used to complement
the demographic studies in terms of market needs, customer and non-customer
attitudes, the opinions related to product usage and the interests of the target
customers, to be able to define the product attributes which may be congenial to
certain lifestyles. For example, users with sensitive teeth issues may have different
expectations from their toothpaste apart from the usual cleaning and gum protection
values. Some consumers may look exclusively for herbal solutions, others may look
for toothpastes specifically designed for nerve sensitivity and use it as a medicinal
aid to oral hygiene; others consumers may feel toothpastes should give cosmetic
benefit. Even among these who use it as a medicine, there are two sets of expectations,
some believing that product claiming curative benefits ought to taste like amedicine
while others strongly feel that just because curative benefits are claimed, their toothpaste
should not taste like medicine. In developing the concept of a new toothpaste, you
will find that a complete inventory of Attitudes, Interests and opinions of the consumers
as well as consumption values sought help you in defining the attributes of the final
product, as you can define the requirement soft he different lifesty lesegment and then
concept ualize asto which segment you wish to aim the product at.
Consumer Behaviour and
Lifestyle Marketing
4. Creating Promotional Strategies
Lifestyle information is helpful in developing promotional strategies in a number of
ways. It gives the decision maker a much more complete profile of the type of consumer
who will be at the receiving end of the communication. Lifestyle data suggests the
style of language, the tone of voice and even the appeal that may be utilized to reach
that kind of consumer. Further, lifestyle information indicates how the product or service
fits into people’s lives, how they feel about it and how they may be using the product
or service to communicate with others. This informationcan be utilized by the marketer
to decide upon the kind of image he wants to imbue the product with.
The Indian marketing scenario, with rising incomes and aspirations, rapidly urbanizing
population and greater buying power in the rural sector coupled with the huge
proliferation of new products and services entering the market has evolved into a
very competitive one. Hence companies are realizing that merely highlighting the
attributes of their product or of the company in terms of demographic or geographic
dimensions is not enough to be successful in the market place. Marketers have come
to appreciate that buying behavior is influenced by the consumer’s lifestyle.
Companies dealing in cosmetics, apparel, packaged food, hospitality, travel and
leisure related services are seeking opportunities in lifestyle segmentation. Stores,
especially those dealing in apparel, makeup, shoes and appliances have started closely
attuning their inventory to the lifestyle profiles of their major customers.
The‘Surprisingly Bata’ campaign addressed at the young professional women, who
also seeks active fun and sports activities is an example of this approach. The growing
and diversifying activity range of youth in our country and the resulting change in
lifestyle is responsible for the ever-increasing demand for athleticwear in the country
transcending demographic segmentsis another illustration
2.10 SUMMARY
Consumer behaviour is still a young discipline but an extremely dynamic one.
Developments in technology leading to data analytics and artificial intelligence have
enabled huge strides in our understanding of evolving consumer behavior. Lifestyle
analyses have helped marketers develop insights into how different groups of
consumers develop patterns of living in accordance with their interests, opinions,
values and demographics. Studies on lifestyles are still ongoing and facilitate the
segmentation of consumers across societies and even globally. These evolving lifestyle
profiles will keep on enhancing the use of psychographics and enable informed insights
into the behaviour of consumers to add to applications discussed in this unit,
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Consumer Behaviour-Issues
and Concepts
2.11 KEY WORDS
Belief
:
a descriptive thought that a person holds abouts omething.
Attitude
:
an attitude describes a persons’ enduring favourable or
unfavorable cognitive evaluations, emotional feelings and action
tendencies toward some object or idea.
Lifestyle
:
it refers to the person’s pattern of living in the world as
expressed in his activities, interests and opinions.
2.12 SELF-ASSESSMENTQUESTIONS
1. Think about one of your female relatives (Mother, Aunt, Sister etc.) and then
examine the psychographic segments of female population described in the unit.
Into which psychographic segment does this relative belong? What lifestyle
characteristics served to select the category? Then list out how marketing appeals
for purchase of formal wear to each of the segments identified by you will vary.
2. Examine the recent television and online advertisement for ready to cook foods
and apparel to determine if the product is being positioned to a specific lifestyle
segment. Justify your inference.
3. Analyse which VALS type best describes you and then find an advertisement
in your most frequently used media that appeals to this VALS type?
4. Imagine yourself as a retailer for classy home décor. How you would use lifestyle
approach to succeed in your venture?
5. How in your view is the understanding of global lifestyles useful to an Indian
multinational with a global reach? Explain with the help of examples.
2.13 PROJECT QUESTIONS
1. Develop a marketing strategy based on VALS for
a. Shoe
b. A Spa
c. Clothing
2.14 FURTHER READINGS
Kotler, P., Keller, K.L., Koshy, A. and Jha, M. (2018), Marketing Management:
A South Asian Perspective, Pearson Education.
Schiffman, L.G., Wisenblit, J., and Ramesh, K.S. (2018) “Consumer Behaviour”,
Twelfth edition, Pearson Education.
Berkman, Harold W. & Gilson, Christopher: Consumer Behaviour,
ConceptsandStrategies.
Aaron Ahuvia, Barbara Carroll, Yi Yang,Innovative Marketing, Volume 2, Issue 4,
200633 Consumer Culture Theory and Lifestyle Segmentation.
50
Pandey, S., Chawla, D., & Venkatesh, U. (Jan-Mar 2015). Online shopper
segmentation based on lifestyles: An exploratory study in India. Journal of Internet
Commerce, 14 (1), 21-41.
Consumer Behaviour and
Lifestyle Marketing
Aljukhdar, Muhammad, & Sylvain. (2011). Segmenting the online consumer market.
Marketing Intelligence & Planning, 29(4), 421-435
Allred, C. R., Smith, S. M., &Swinyard, W. R. (2006). E-shopping lovers and
fearful conservatives: a market segmentation analysis. International Journal of Retail
& Distribution Management, 34(4/5), 308-333.
https://www.hakuhodo-global.com/wp_admin/wp-content/uploads/2017/09/2011.pdfSeven Global Clusters: Asian Perspectives
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Consumer Behaviour-Issues
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UNIT 3 ORGANISATIONAL BUYING
BEHAVIOUR
Learning outcomes
After studying this unit, you should be able to:

define organisational buying and differentiate it from individual buying

identify and distinguish between different types of organisational customers

explain the process of organisation buying

describe and differentiate between different buying situations

analyse and utilise the influences on organisational buying behaviour

discuss the organisational structures and administrative arrangements in
relation to organisational buying

describe the models of organisational buying
Structure
3.1 Introduction
3.2 What is Organisational Buying Behaviour?
3.3 Organisational Buying Behaviour: Important Features and Typical Characteristics
3.4 Who are the Organisational Customers?
3.5 What Influences Organisational Buying?
3.6 The Organisational Buying Situations
3.7 Organisational Buying Behaviour: Some Models
3.8 The Selection of a Supplier
3.9 Recent Developments that have Impacted Organisational Buying
3.10 Summary
3.11 Key Words
3.12 Self-assessment Questions
3.13 Project Questions
3.14 Further Readings
3.1 INTRODUCTION
Mr. Kumar is purchase manager in Khyati Builders, a large construction company
located in Gurugram Haryana. In late March,The MD of the company asked Mr
Kumar to develop theproposal for buying a total of 50 desktops computers and
ten laptops to replace someold equipment and to provide the marketing staff with
modern laptops and improve organisational efficiency. His alternatives were:
a) To contact the various vendors of computer systems each unit costing
Rs. 25,000/- or
52
b) Directly deal with the companies as the order size was substantial.
In order to decide between the two alternatives, he sought the managing director’s
permission to formulate a purchase committee comprising of the Director Technical,
Director Finance, the HR manager and himself, with the suggestion that the
recommendations of the purchase committee will be placed before the MD for his
approval before the purchase order is issued.
Organisational Buying
Behaviour
Based on pure economical considerations, the committee decided look for some
brands assembled in China and also looked at reasonably priced multinational brands
like HP, Dell, Acer, Lenovo etc. Apple and Microsoft were not considered on cost
considerations. The Director technical provided the technical details regarding
configuration of the proposed systems. Leading vendors and Manufacturers were
contacted to get the quotations for the items specified. Issue of an inquiry brought
in quotations from 10 vendors/ manufacturers. The screening and evaluation of
quotations took one week. The final short list included two suppliers. The criteria
used to short list were:
i)
Past reputation of the manufacturer
ii) Conformance to the company specifications
iii) Delivery period
iv) After sales service and warranties
v) Systems equipped with requisite licensed software
vi) Performance guarantee
vii) Price and corporate discount being offered
Brand X was Rs. 1000 less per unit as compared to Brand Y. Brand X was an
established brand and had approximately 22% market share among business sector
in the state. Its parts manufacturing facilities were within the state and service centres
facilities were located in a nearby commercial industrial area; some 8 km away.
Brand Y, a late entrant, was being assembled in a nearby area only 2 km away.
The promoter of Brand Ywas an ex-employee of Brand X. He offered two-year
guarantee against one year warranty offered by brand X. Mr. Kumar discussed
the purchase committee recommendation with the Managing Director. The outcome
was the decision to place order on the Brand X. This news, somehow leaked. The
promoter of ‘brand Y was able to arrange a meeting with the MD of Khyati Builders
by using the social connection with a common friend and was able to convince him
on promise of excellent service support and product training, if given a chance.
This meeting led to the reversal of the decision in favour of brand Y. The entire
exercise of placing a formal order took 27 days and the new systems were installed
by early May.
While this was happening at the office. Mr. Kumar’s young son raised the demand
for replacing his old laptop, which he said was getting very slow and did not have
the capacity to install some of the new software that he needed. Based on the
experience of the son’s own friends with some of the leading brands, his own online
search that he shared with his father, the attractive deals being offered for students
by these brands and of course the comparative price positions of the different brands,
the Kumar family shortlisted some options. They then visited the city’s best Mall,
to look at the models shortlisted by them.
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Consumer Behaviour-Issues
and Concepts
Mr Kumar’s son was very excited about the different options but finally decided
to opt forbrand K that offered the best memory, speed and the preloaded original
software combination along with attractive price discounts. The entire activity from
the purchase request to the final acquisition took a total of 3 days.
What you have read just now is not fiction but a reality. You must be wondering as
to why the same person, buying the same product displayed very different buying
behaviour.
Well, if you think a little; you would recognise that in the earlier situation (Khyati
Builders), the ‘buying was on behalf. Whereas, in the latter, it was ‘buying for self
for Mr. Kumar. This ‘buying on behalf is the domain of Industrial or Organisational
Marketing. Similarly, the ‘buying for self is the domain of household or what is popularly
known as consumer marketing.
You must have also recognised that ‘buying on behalf’changes the entire complexion
of the buying exercise. And this is precisely the reason of studying organisational
buying behaviour (OBB) separately than the consumer buying behaviour (CBB).
The example of buying the computer systems by Khyati Builders, though comparatively
a simpler example amongst the vast multitude of highly complex, buying situations
of organizational buying, has many messages, and we will keep on coming back to
these. Let us now begin our learning of some important issues and concepts in the
area of organisational buying behaviour.
3.2 WHAT IS ORGANISATIONAL BUYING
BEHAVIOUR?
Webster and Wind, who have done some pioneering work in this area, define
organisational buying as a complex process of decision making and communication,
which takes place over time, involving several organisational members and relationships
with other firms and institutions. According to them, it is much more than a simple
act of placing an order with the suppliers. In this sense, they define organisational
buying behaviour as the decision-making process by which formal organisations
establish the need for purchased products and services and identify, evaluate and
choose among alternative brands and suppliers
It is important here to recognise the emphasis on the decision process rather than
on a single act of placing an order. The case of the computer system buying clearly
brings out the process which began with identification of the need to finally placing
of an order. Based on several observations of buying situation, Robinson, Faris and
Wind have identified this process as comprising eight steps of this decision process
are shown in Figure 1
54
Figure 1: The Phases of the Buying Decision Process
If you recall the exercise of buying computers for Khyati Builders, it would be easy
for you to comprehend the various’ phases of the process. You would also begin
to appreciate as to why Mr.Kumar took more than 21 days when he bought a similar
product within 3 days for his son.
Organisational Buying
Behaviour
3.3 ORGANISATIONAL BUYING BEHAVIOUR:
SOME TYPICAL CHARACTERISTICS
With the help of earlier discussions, we are now ready to identify some typical
characteristics of organisational buying behaviour. To begin with, we will use the
case of Khyati Builder to identify and finally conceptualise some of these typical
characteristics.
1. Organisational buying is a multi-person buying activity: A large number of
buying situations in organisations (manufacturing, government, hospitals, educational
institutions) would involve many persons. These persons may be from different
functions (production, purchase, design, maintenance), may have different
backgrounds (engineers, MBA, graduates etc.) may have different hierarchical
levels within the organisation (Managing Director, General Manager, Material
Manager). Further, persons in a buying situation, may appear to play different
roles over the entire buying decision exercise. A useful conceptualisation of various
roles of the different members is the concept of the Buying Centre. The various
members of the buying centre may appear to play any of the following roles:

Users like production department person

Influencers like Managing Director, Design Engineers or Consultants

Deciders like the committee appointed by Khyati Builders.

Buyers like the people from the purchase or materials department

Gatekeepers like those who can control the flow of information within an
organisation

Specifiers like consultants or design or production people who may develop
the specifications of the product or services needed.
The concept of Buying Centre is a very useful conceptualisation and it can
help immensely in developing effective marketing strategies.
2. It is a formal activity which follows the procedures laid down in an
organisation: Irrespective of the rupee value of technical complexities of products
and services, buying activities have to conform to the formal process and
procedures of an organisation. Even for emergencies, a typical organisation would
have a set of policies, and it is imperative for the suppliers to be aware of these.
Further, all buying decisions are finally converted into formal contracts between
buyers and suppliers.
3. Longer time lag between efforts and results: On account of being a
multiperson and formal activity, the organisation buying decisions take typically
longer time. This leads togreater time lags between the application of the market
effort and obtaining of the buying response. A marketer may develop unrealistic
plans if he is unaware of the response time of his customer for various buying
situations.
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Consumer Behaviour-Issues
and Concepts
4. Rational but also emotional activity: In spite of a formal activity following
a rational criterion of evaluation, organisational buying cannot be devoid of the
emotional (or irrational) aspects. This is because it involves human beings in
the buying decisions, The case of Khyati Builders has hints in it (common friend)
where after following a very rational and formal process, the decision appears
to have been influenced by some human or emotional considerations. These
human considerations are likely to play a vital role in situations of almost similar
alternatives or similar ethics like buying of commodities, raw materials, standard
products and components,
5. The uniqueness of organisations: In spite of the above common characteristics,
no two organisations would be similar in their buying behaviour and decisions,
these differences would be due to the nature of buying problems, objectives,
resources, capabilities as well as the human factors involved and so on. It is therefore
important to consider each organisation as a separate segment at the selling level.
Above characteristics are indicative enough to showcase that organisational buying
behaviour is more complex than consumer buying behaviour. It is not only more
complex than consumer buying behaviour, but also more complex than any other
types of decisions within the organisation. The added complexity, as claimed by
Webster and Wind, is primarily due to four factors:
1) Purchasing work flow is almost entirely cross-wise in the organizations.
2) Formal authority over buyers (purchase department executives) can be in
the hands of either a purchase manager or any other functional manager
like production manager.
3) A major work of the ‘purchase function’ is with people outside the
organisation.
4) Purchasing is a service function and this may have the perception of a lower
status within the buying organisation.
The idea of sharing some generalisable characteristics of organisational behaviour
was not only to highlight the complexities and differences; but it was also to encourage
a thinking process in your mind to relate some of your own experiences with these
characteristics. With the help of some known experiences, you may either like to
corroborate with the generalisations or maylike to disapprove of some of the
generalisations. You may consider this as your first exercise for this lesson.
Activity 1
Visit an organisation that you are familiar with, or study your own organisation
and try to analyse any two of its recent organisational purchases. With respect
to the characteristics studied just now, list out the factors which characterise
these buying situations.
Purchase 1
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....................................................................................................................
....................................................................................................................
....................................................................................................................
56
Purchase 2
Organisational Buying
Behaviour
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....................................................................................................................
....................................................................................................................
3.4 WHO ARE THE ORGANISATIONAL
CUSTOMERS?
By now, you must be wondering about this ‘ghost’:organizational customer. Perhaps
we need to become more clear about the constituents of the ‘organizational’ markets.
Conceptually, anyone besides the ‘household’ customer, i.e., those customers who
are buying for self, can be valid cases of organizational customers. However, a useful
and comprehensive way to identify the organizational customers is to visualize the
entire chain of the participants who may be involved in the production and marketing
of goods and services. Thus, for a desert cooler, the manufacturer may need
galvanized‘ iron sheets for body, angle iron for frames, wood shavings for water
pads, exhaust fan for air and so on. Similarly, each supplier of the needed items
would also need the downstream products in form of raw material, components
and parts. Thus, an exhaust fan manufacturer would need cold rolled strips for fan
blades, silicon iron laminations for rotor of the motor, wires for coils, and so on.
The chain, as you would begin to see, is long. Similarly, in order to market, there
would be a need of distributors and retailers. Figure 2 is a graphical representation
of this chain.
Figure 2 : The Chain Indicative of the scope of the Organisational Customer
With the help of Figure 2, it will be easy for you to appreciate that this ‘ghost
organisational customer’ can have several types and forms. These could be:
Mining and Extractive Industries: Coal India Limited, ONGC, Hindustan Copper
Limited are some examples.
Material Processing Industries: Tata Steel, Steel Authority of India Limited (SAIL),
Bharat Aluminium Corporation (BALCO) are some examples.
Manufacturing of Parts and Assembly: Bharat Forge, MICO, Sundaram Clayton,
GEC, Larsen & Toubro are some amongst a very large number of part and assembly
manufacturers catering to a variety of needs.
Final Assembly: Desert Cooler Manufacturer (there are several local brands), T.V.
and computer manufacturers (Sony,Samsung,HP, Dell, HCL), Truck manufacturers
(TELCO, Ashok Leyland, Mahindra) and the like are some examples. Like
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Consumer Behaviour-Issues
and Concepts
components and parts manufacturers, there could be many assembly units for numerous
end products.
Distributors: These could be several for each product like bearings, tubes, steel,
electrical appliances and so on. The entire range on internet-based consumer
transaction has added a new domain of organisational buying activity.You can easily
imagine the mammoth range of buying that online distribution aggregators like Amazon,
Flipkart, Myntra, Meeshow would be engaging in.
Perhaps, it is now easy for you to recognise that the area of operation of what we
call as “organisational marketing” is very vast and heterogenous. In such a scenario,
a legitimate question would be the validity of generalisations in form of typical
characteristics. Thus, from the viewpoint of practice, it is imperative to study the
organisational buying behaviour for the specific product-market situation.
A second way to identify the organisational customers is to classify them into three
categories. Industrial (all manufacturing organisations), Institutional (service organisations
like universities, hospitals, hotels, distribution firms) and government (CPWD,
DGS&D, Defence and so on). Besides the ownership pattern (public, private,
government) and type of business (manufacturing, service) it is important to remember
that it is neither the size (big, medium or small) nor the products, which separates
organisational customers from household customers.
Activity 2
With respect to the purchases that you studied for Activity 1, analyse how
these organisational purchases are different from individual purchases.
Purchase I
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
Purchase II
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
3.5 WHAT INFLUENCES ORGANISATIONAL
BUYING?
58
So far, we have discussed the meaning, characteristics of the organisational buying
behaviour and the constituents of the organisational markets. We will now discuss
the factors which may directly or indirectly influence the organisational buying behaviour.
A segment of economists. and marketers believe that the dominant influences are
essentially economic. Lowest price or lowest cost are thus considered as the only
criteria to select suppliers. On the other hand. a few take another extreme view of
declaring all organisational buying as an emotional or non-rational act as it involves
human beings making it difficult to maintain rationality or objectivity.
Organisational Buying
Behaviour
Accordingly, some suppliers feel that with strong personal relationships or with the
ability to win over the purchases through lures and. personal attractions, they may
get preference overothers. Both the viewpoints are the two extremes and reflect
only a limited view of the reality. What perhaps is needed is a balanced viewpoint
recognising that organisational customers respond to both economicand personal
factors. Where there is a close similarity in supplier offers; organisational customers
have little basis for only economic criterion. Remember our Khyati Builders case,
while many different brands of computer systems could meet the organisational
objective, personal factors did play an important role. On the other hand, where
competing products/brands differ substantially, organisationalcustomers may paymore
attention to the economic considerations.
A comprehensive view of influences has been provided by Webster and Wind. They
have grouped the various influences into four areas: environmental, organisational,
inter personal and individual. These groups are shown in Figure 3.
Figure 3 : Major Influences on Organizational Buying Behaviour
Environmental Factors: These factors include economical, political, technical, legal
or regulatory, technological, infrastructural and cultural factors. Environmental factors
interact with each other to produce information, values, norms and general business
conditions. The influence of environmental factors can be pervasive. A handy Indian
example is that of the current Atmnirbhar Bharat policy which requires public
organizations to give preference to products of comparable quality made in India.
This single policy will therefore have a significant effect on buying considerations
within government and public sector organisations.
Similarly, the persistent push towards green energy alternatives and the support of
given such initiatives through recognition and accreditation processes has encouraged
many education institutions to install solar energy-based power generation in the
institutions. Power shortages in some states in India have prevented the use of
‘sophisticated automatic elevators in the office and residential buildings and inspite
of the availability, the preference is still for manually operated elevators with shutter
type of doors.
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Consumer Behaviour-Issues
and Concepts
An industrial marketer should be aware of the environmental factors which may
affect the buyer behaviour and correspondingly fine tune its marketing strategy. Failure
to recognise the influences may lead to lost opportunities
Organisational Factors: While discussing the characteristics of organisational buying
behaviour, it was mentioned that organisations may differ from each other due to
objectives, procedures, organisational structure, systems and technology. It is important
to recognise the influence of such organisational factors on the buying behaviour. A
study by Sarin on four very large industrial organisations in India revealed major
changes in the buying structures and systems of the Indian firms.
Some of these were:
i)
Innovativeness in Organisational Buying
ii) Emergence of “Buyer” as an Important Member of the Buying Centre
iii) Decentralization and Centralization of materials
iv) Computerization of Organizational Buying
v) Separate Buying for Specialized Jobs
vi) Concern to Prevent Unhealthy Transactions between buyers and marketers
vii) Recognition at the top level.
The Interpersonal Factors: Organisational buying is a multi-person activity. The
concept of buying centre highlights the roles which different members of the buying
organisation may play in the entire buying decision making exercise. The situation
becomes more complex due to different statuses, authority, empathy and
persuasiveness of the members of the buying centre. These may lead to conflicts.
Though difficult, an organisational marketer may make attempts to become familiar
with the internal dynamics of the buying process within a customer organisation.
Sheth has identified four ways which organisations use for conflict resolutions:
i)
Problem Solving Approach: It involves information acquisition and
deliberation for more time.
ii) Persuasion: Attempt is made to influence the opinions of dissenting members
by asking them to reduce the importance of the criteria they are using in
favour of better overall achievements of organisational objectives.
iii) Bargaining: A more typical situation in which a conflict arises is due to
fundamental differences in buying goals and objectives. This is usually true
for new buying situations. In such a situation, conflict is resolved not by
changing the differences in relative importance of the buying goals or
objectives of the individuals involved, but by the process of bargaining.
For instance,in this a single party may be allowed to decide autonomously
in the specific situation in return for some favour or promise of reciprocity
in future decisions.
iv) Politicking: When the earlier three fail, the parties may resort to tactics
which may be unhealthy and lead to casting of aspersions on the dissenting
members.
60
According to Sheth, both ‘problem solving’ and ‘persuasion’ are rational methods.
Politicking and bargaining are considered as non-rational methods.
Organisational Buying
Behaviour
The Individual Factors: In spite of the environmental, organisational and interpersonal
factors, it must be recognised that ultimately individuals, and not organisations, take
buying decisions. Each member of the buying centre has a unique personality, a
particular set of learned experience, a specified organisational function to perform,
and perceptions of how best to achieve both personal and organisational goals.
An industrial marketer should be aware of the differing buying perceptions and their
influences on the ultimate buying decision. Perhaps, an understanding of the ‘perceived
risk and its management’ at the individual level holds the key to identifying the
individual influences on organisational buying behaviour in specificsituations
The Perceived Risk: Newall defines decision making as a risk-taking activity and
in this sense organisational buyer behaviour is seen as a risk handling behaviour.
According to Newall, the factors, which affect the risk behaviour are:
a) Characteristics of the Purchase Problem: Some factors related to purchase
problems are:

size (rupee value) of the expenditure

degree of novelty contained in the type of buying task

degree of product essentiality

factors provoking purchase.
b) Characteristics of the Buyers: This ncludes

Buyer’s level of general self-confidence

Buyer’s level of specific self-confidence in a given buying situation.

Buyer’s experience in playing the purchase role

Buyer’s purchase history i.e., of buying within a particular product area

Buyer’s degree of technical and professional affiliations.
c) Organisational Environment: Some factors affecting the risks at the level of
the company are:

The size and financial standing of the organisational customer

The degree of decision centralisation

The degree of decision routinisation.
d) The Management of Perceived Risk: Basically, an individual visualises two
types of risk.

Performance risk-product may failt ocomeup to the performance standards

Psychological risk-fear of being held responsible or accountable for the
decision by other members.
Both performance and psychological risk can be associated with the uncertainty
concerning the outcome and the magnitude of the consequences associated with
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Consumer Behaviour-Issues
and Concepts
the wrong choice. Individual decision makers are motivated by a strong desire to
reduce the level of risk in purchase decision. Research suggests the following categories
of action to minimise the risk:
1. external uncertainty reduction (e.g., visit supplier’s plant)
2. internal uncertainty reduction (e.g., consult with other buyers)
3. external consequence reduction (e.g., multiple sourcing)
4. internal consequences reduction (e.g., consult with company’s top
management)
Organisational buyers can also reduce the level of risk in purchasing situation by
relying on familiar suppliers. This source loyalty provides a convenient method of
risk minimisation. Similar to this, is a situation of placing orders on‘high’ credibility
image suppliers in new buying situation.
An industrial marketer must make an attempt to understand and anticipate the areas
of perceived risk and its minimisation by different members of the buying centre in
specific buying situations. The knowledge may help them in developing effective
selling strategies.
Activity3
a) Talk to a supplier who supplies material/equipment/machinery etc. to
organisational buyers: With reference to his last major order, try to find
out what in his view, influenced the purchase decision in his favour.
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
b) Discuss a major organizational purchase within your own organization or
any organization/institution that you are familiar with. Try to analyses the
main influences-environmental, organizational, interpersonal or personal which
influenced this purchase.
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
c) Do you find any difference in this viewpoint of the supplier and the
organizational buyer? Comment on it.
............................................................................................................
............................................................................................................
............................................................................................................
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............................................................................................................
3.6 THE ORGANISATIONAL BUYING SITUATIONS
Organisational Buying
Behaviour
An organisation needs to buy a variety of products and services to achieve its
objectives. The ‘buying basket’ for a typical industrial customer may include products
from any of the following categories:
1. Raw material-Steel, aluminium, iron ore
2. Major capital items - Blast Furnace, CNC machine tools, refrigeration systems
for a cold storage unit
3. Minor Capital Items-Industrial motors, pumps, valves, ERP solutions
4. Fabricated components and -Castings, sheet metal components, forgings
parts and sub-assemblies
5. Processed Chemicals-Foundry chemicals, basic pharmaceuticalformulations
6. Consumables-Lubricating oil, welding electrodes, batteries
7. Office Equipment-Plain paper copiers, computer and UPS sets.
8. Services-Travel arrangement, transporters, security, housing etc.
It should be easy for you to recognise that some products may be just one-time
purchases (major capital equipment), and others may be purchased frequently. The
buying effort, in this sense, would be a function of the experience which the organisation
may have for the different buying situations. Robinson, Faris and Wind have classified
the various buying situations into three categories
1. Straight-Re-buy Situations: This situation is similar to repeat buying situations
of consumer/household buying. In this the buyer keeps on placing the order
on routine basis without changing any product specifications (stationery items,
chemicals, lubricants, abrasives, paints are some examples). Some typical
characteristics of the routine buying situations are:
a) Routine purchasing procedures exist,
b) The buying alternatives are known, and a formal or informal list of ‘approved’
suppliers is available.
c) A supplier, not on list, is not considered.
d) Decision on each separate transaction is made by the purchasing department.
e) Buyers have relevant buying experience and require little new information
2. Modified Re-buy: In a modified re-buy situation, a buyer may change the
product specifications or may even change to a substitute product for economic
and performance considerations. Thus, using aluminium instead of copper wires,
nylon bushes instead of brass and using hydraulic excavators instead of mechanical
ones, are some examples. In this situation, some familiarity with either product or
its performance expectations does exist. Some characteristics of the modified rebuy situations are:
a) A regular requirement for the type of product exists.
b) The buying alternatives are known, but sufficient change has occurred to
require some alteration to the normal supply procedure.
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Consumer Behaviour-Issues
and Concepts
c) Change may be stimulated by external events, e.g., a policy change regarding
a raw material, inputs from supplying companies or an improved model
becoming available.
d) Change may be stimulated by internal events, e.g., new buying influences,
value analysis, reorganisation.
3. New Task Situation: New Task is a situation where the organisational customer
buys the product for the first time without having any previous experiences
(personal computers, networking solutions, solar power solutions, CNC machine
tools, multimedia labs are some products for which little experience exist amongst
a large number of organisations). Some of the characteristics, for ‘new task’
situations are:
a) Need for the product has not arisen previously.
b) Little or no past buying experience is available to assist in the purchasing
decision.
c) Members of the buying unit require a great deal of information.
d) Alternative ways of meeting the need are likely to be under review.
e) The situation occurs infrequently, but the decisions taken may set a pattern
for more routine purchases subsequently.
f)
Opportunities exist at an early stage in the decision process for external
(marketing) inputs to have an influence on the final decision made.
Activity 4
Study the purchases made by your organisation/institution in the last 3 months.
How would you classify them in terms of buying situations?
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
b) What were the characteristic features of
i)
Straight Re-buy situations
ii)
New Task situation
in your organisation /institution.
i)
Straight Re-buy situations
............................................................................................................
............................................................................................................
ii) New Task situation
............................................................................................................
............................................................................................................
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3.7 ORGANISATIONAL BUYING BEHAVIOUR:
SOME MODELS
Organisational Buying
Behaviour
The central idea of knowing and understanding the buyer behavior is to anticipate
the response of a buyer for different marketing stimuli surrounded by various
environmental factors. Figure 4 is a simplified conceptual model highlighting this
relationship.
Figure 4 : A Simple Model of Organizational Buying Behavior
The conceptual model is indicative of the relationships and possible outcomes.
However, a marketer’s desire is to have a functional model with high degree of
predictive reliability. In simple terms, he wants to have an answer as to “how” and
“when” will he get the results. Desire to answer this question with high degree of
consistency on predictive reliability has led to the development of a large number
of models on organizational buying behavior. However, some of the important
indicative models are being analyzed here.
The Buy Grid Model: Robinson, Faris and Wind, developed a matrix with
rows for various buying decision steps (called as Buy Phases) and the columns
as the type of the buying situation (called as Buy Classes). This model is shown
in Figure 5.
Figure 5: The Buy Grid Model of Organizational Buying Behavior
65
Consumer Behaviour-Issues
and Concepts
The interaction of 8 rows with 3 columns has resulted into 24 cells. This model, as
you would observe, provides a very comprehensive view of the buying exercise. It
would be easy for you to recognize that the buying exercise may be a very complex
and time consuming for the ‘new task’. This is because a buyer in this situation will
have a large buying centre, and will require sufficient amount of effort and time for
each phase before moving to the second phase. On the other hand, the task would
be simple and routinised for straight re-buy situations. A marketer, depending upon
thebuy class for his product can formulate the marketing strategies. The payoffs of
the ‘buy grid’ models are:

Its ability to convey the degree of complexity or simplicity for an organizational
customer for a given product or service.

Its ability to help the marketers to anticipate the marketing effort needed
for the different buying stages in the decision making.

A framework to identify the composition of the buying centers and the
dominant influences for each stage.
In spite of the above payoffs, the buy grid model is completely devoid of any predictive
ability. It addresses itself only to the ‘non-human’ factors and thus fails to bring out
the dynamics and the influences of human related or emotional factors. But in spite
of the limitations, the Buy Grid Model is a very useful conceptual framework to
comprehend the complexities of organizational buying behavior.
Activity 5
With the help of the ‘Buy Grid Model’ framework, study the buying decision
exercises in a company for the three types of buying situations. Try to identify
the composition of buying’ centers for different buy phases and try to map the
total buying center for each buying situation.
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
66
The Fisher's Model: Figure 6 illustrates this model. This has been named after its
author.
Organisational Buying
Behaviour
Figure 6: Fisher’s Organizational Buying Behavior Model
As you would observe, the model attempts to identify the dominant influences along
two main dimensions of any buying decision. These are product complexity and
commercial uncertainty. Consider the case of Khyati Builders. For this, the product
complexity as well as the commercial uncertainties were low, the purchase department
(Buyer Emphasis Cell 1) played the dominant role in the buying decision. It was
only after the short listing of the two options, that the top management was involved.
Fisher’s conceptualization is an outstanding example of a simple representation of
a very complex situation. In fact, it is a true representation of administrative
arrangements and provisions which a large number of organizations have made to
buy a vast heterogeneous array of products and services. The limitation, however,
is absence of predictive ability.It also fails to highlight the time dimension and the
various steps in the buying decision exercise. Similar to the buy grid model, it facilitates
in providing good insights of buying situations.
3.8 THE SELECTION OF A SUPPLIER
Up to this point of time we have been discussing the ideas, issues and concepts
related to organizational buying behaviour. Through these, we have covered the buying
decision process, buying situations, buying influences, typical organisational buying
67
Consumer Behaviour-Issues
and Concepts
characteristics and finally two models of the organisational buying behaviour. Khyati
Builders case, also gave us the idea of the total buying task. In this section, we will
concentrate on the evaluation and selection criteria which organisations may adopt
while selecting suppliers for the specific products or services. For instance, the
purchase manager of Khyati Builders had received 10 quotations from different
manufacturers/vendors of computer systems. He had then, based on a check list
of attributes, and on the basis of committee discussions short listed the two brands.
Generally, these attributes cover product quality, reliability of the supplier, price and
delivery. However, the attributes and their relative importance may vary for different
product categories. Thus, in case of computers, the importance ranking of vendor
evaluation attributes by theKhyati Builders could be:
Ranking Order Attribute
1. Reliability of delivery dates promised
2. Price
3. Supplier’s flexibility
4. Consistency in dealings of the supplier
5. Complaint rates and resolution
6. Kind of assembly/production facilities
7. Efficient follow-up of the order
8. Persistent efforts to improve the quality of services
9. Prompt attention to enquiries
10. Supplier’s overall reputation
Using the important attributes, members of the buying center may then rate the suppliers
against these attributes to identify the most attractive suppliers for computers. After
the ratings of the suppliers on these attributes, the members of the buying center
may like to negotiate with the preferred suppliers for better terms of prices and
delivery schedules before making the final selection. Depending upon the situation,
they may select one or many suppliers. Telco’s price panels, to finalise the annual
contracts for a large number of ‘boughtouts’, is a classic example of selecting vendors.
Before inviting the suppliers for meeting with the ‘price panel’, Telco evaluates the
suppliers on relevant attributes. After ensuring quality and reliability, it begins its
negotiations on the commercial aspects covering price, delivery schedules and payment
terms to arrive at mutually beneficial agreements for both the suppliers and Telco.
3.9 SOME RECENT DEVELOPMENTS THAT HAVE
IMPACTED ORGANISATIONAL BUYING
BEHAVIOUR

68
Technology enabled search and access to suppliers/manufacturersThe rapid proliferation of technology and applications of the Internet have made
vast changes to the way we live and work. Organizational buying processes
have been impacted in many ways particularly in terms of widening access to
suppliers and manufacturers, technology supported interactions including meetings,
live demonstrations and synchronous video-based meetings across distances
and even countries. The range of sourcing options has indeed widened and in
the view of some large multinationals, has facilitated the pursuit of strategic cost
advantage.
Organisational Buying
Behaviour
Communications have become faster; Data Processing and analytics have enabled
alternative evaluation more realistic and efficient. One has only to look at the
accelerated growth of e commerce in the B2B segment to appreciate the extent
of ICT usage in one organizational buying.
A Forrester survey found that 74% of B2B business executives conduct more
than half of their research online before making an offline purchase. (https://
www.forrester.com/blogs/15-05-25-myth_busting_101_insights_)
Another recent survey showed that more than half of all B2B buyers (51%) now
depend on content to support their buying decisions. Almost all the buyers surveyed
(96%) wanted more inputs from industry thought leaders, and 47% buyers interacted
with three to five pieces of content before calling a sales representative. An interesting
fallout was that interaction following online information acquisition and with follow
up meetings resulted in forming strong relationship networks that are a vital link in
organisational (https://www.demandgenreport.com/resources/research/2016-contentpreferences-survey-b2b)
The role of an in-person sales representative is likely to come under some rethinking,
as the cost and efficiency of long-distance demonstrations followed by in depth
technical discussions with potential suppliers get adopted as a mainstream practice.
Within the Buying Centre, with access to information becoming more ubiquitous,
the role of the gatekeeper is likely to come under some reset as all members of the
Buying Centre are now in a position to access verifiable information about buying
alternatives.
Trends emanating from developments in IoT
An ongoing research study based on case studies of organizations on buying
professional services has explored the development of IoT based applications in
organizations and came to the conclusion that in times to come the straight re-buy
situations are likely to be strongly dependent on IoT applications in terms of the
restocking point and the reorder quantity. AI applications may begin to facilitate
information-based inputs on supplier choice for straight re-buy situations.
3.10 SUMMARY
Organisational buying behaviour is a complex process of decision making. A variety
of influences and factors add to this complexity. The buying behaviour of a firm
would vary for ‘new buy’ situations to ‘repeat buy’ situations. In order to comprehend
various dimensions, it may help industrial marketers to seek answers to some basic
questions like:

How does an organisation buy?

Who takes the buying decisions in an organisation?

What factors influence the buying behaviour of an organisation?

Who constitutes the organisational markets?

What evaluation criteria is used to select the vendors?
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Consumer Behaviour-Issues
and Concepts
The area is vast as it encompasses thousands and thousands of product market
situations, which in some sense may appear as unique and distinct from each other.
It is therefore suggested to relate some specific situations with the general views
discussed in this unit. This will facilitate in your comprehension of this complex diversity.
3.11 KEY WORDS
70
Buying Centre
:
It comprises of members, who are directly or
indirectly connected with the organizational
buying decisions. The different roles are:
Influencers
:
These are individual who can influence the buying
decision at any stage. Top management, external
experts, consultants, financial institutions and
government policy makers are usually grouped
into this category.
Users
:
Individuals who actually use the product-service
package. They are sometimes also defined as
‘indentors’ or ‘specifiers’.
Deciders
:
Individuals who are entrusted with the
responsibility of making the buying decision. This
category can include ad hoc purchase
committees.
Specifiers
:
Those individuals who develop and finalize the
product’s technical specifications.
Buyers
:
Individuals who are entrusted with theact of
formalizing the final order and the commercial
terms and conditions. They are normally
executives of the purchase department.
Gatekeepers
:
Individuals who control the flow of information
within a buying organization. These can be top
management personnel, information analysts such
as computer personnel and at times even mail
receiving and sorting personnel
Buy Phases
:
The different stages of the buying decision
process like problem recognition, evaluation
(refer to the rows of the Buy Grid Model).
Buy Classes
:
The three types of the buying situations like
straight re-buy, modified re-buy and ‘new
task’.
Evaluation Criteria
:
The criteria like price, delivery, quality used by
the customers to evaluate the suppliers.
Organisational Customer
:
The term includes industrial customers,
institutional customers and the government
customers.
Buying Influences
:
These include infrastructural, political,
organisational, economic, social and individual
factors.
Organisational Buying
Behaviour
3.12 SELF-ASSESSMENT QUESTIONS
1. How would you differentiate between organisational buying and individual buying.
Taking the example of purchase of CCTV camera, stationery for your home
use and for organisational purposes, explain the differences across the different
stages of the buying decision.
2. Discuss the major influences on organizational buying.What opportunities does
the knowledge of these influences create for theindustial marketer.
3. Explain the Fischer model of organisational buying behaviour.
4. Discuss the criteria affecting the selection of suppliers by an organisation. Try
to find out the process and factors influencing the supplier selection for your
organisation and compare it with what you have studied.
5. How does the organizational buying of IT solutions for the organization create
atypical issues of complexity in the context of rapidly changing technologies,
multiple options with slightly differing features and the long commitment period.
What are the risk reduction strategies that organizations can use in such situations?
6. Try to identify three or four purchase situations which enable you to use the
issues and concepts discussed in the section of buying influences and perceived
risk in these, situations.
3.13 PROJECT QUESTIONS
Meet a person responsible for purchasing in industry/ organization/ or government
agency and discuss the role of supplier relationship management.
3.14 FURTHER READINGS
Aggarwal, M., Burger, J.K., Philip, C.; and David R.A. (1986). “Readings in Industrial
Marketing,”’ Prentice-Hall, Inc., Englewood Cliffs, New Jersey.
Ames, C. B., and Hlavaack, J. D (1984). “Managerial Marketing for Industrial
Firms”, New York. Random House Business Division, pp. 247-265.
Arch, G. W., andKathleen R. F. (2005). Advancing OrganisationalBuying Behaviour
Theory andResearch: 1956-2056,Journal of Customer Behaviour 5(2):121-140
Choffray, J.M., and Lilien, G. L. (1980). “Market Planning for New Industrial
Products”, John Wiley & Sons, New York.
Corey, R.E. “Industrial Marketing, Cases and Concepts”, 3rd ed., Englewood Cliffs,
New Jersey: Prentice Hall, Inc.
Ghosh, P.K.(2005). Industrial Marketing Oxford University Press.
Hutt and Speh (1981).”Industrial Marketing Management”, Chicago: Dryden Press,
1981.
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Consumer Behaviour-Issues
and Concepts
Kevin, S. An Exploration of Organizational Buying Behavior In The Public Sector,
Digital Object Identifier: https://doi.org/10.13023/ETD.2018.119
Kotler, P., Keller, K.L., Koshy, A. and Jha, M. (2018), Marketing Management:
A South Asian Perspective, Pearson Education.
Talai, O.,Wesley, J.J.(2018).”The adoption of the Internet of things technologies in
business procurement: impact on organizational buying behavior, Journal of Business
& Industrial Marketing 33(10)DOI:10.1108/JBIM-10-2015-0190
Tilley, A. (2015) “Qualcomm: The Internet of Things is already a billion-dollar
business,” Forbes.com accessed on May 15, 2015.
Webster, F. E (1984). “Industrial Management”, 2nd Ed., Wiley, New York.
Zablah, A., Brian, B., and Naveen D. (2010) “The relative importance of brands
in modified rebuy situations,” International Journal of Research in Marketing,
27-3, pp. 248-260.
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