Analysing consumer buying behaviour and industrial buying behaviour

consumer buying behaviour and industrial buying behaviour

1. Analysing consumer buying behaviour and industrial buying behaviour Presented by – Rajat Chakraborty Safal Sharma

2. Consumer behaviour analysis INTRODUCTION Consumer behaviour is a complex and sophisticated understanding of psychological, social and physical actions when people buy and use goods and services. However researchers have to go deeper and ask people how and in which circumstances they purchase and consume. Consumer behaviour consists of ideas, feelings, experiences and actions of consumers with additional environmental factors like advertisements and prices. Furthermore, consumer behaviour is a dynamic process, because of the continuous changes in ideas, perception and activities of consumer as an individual or in a group.

3. Determinants of consumer analysis Consumers should be analysed by looing into three objects: 1. Affect and cognition: Affect represents person’s emotions concerning a product while cognition is the mental activity such as learning, interpreting and evaluating. 2. Consumer behaviour ; It refers to the consumer’s activities while buying a product. 3. Consumer environment: It is the surroundings and outside effects. All consumers are exposed to social pressure, culture, family, personal influence and situation effects.

4. Internal factors affecting consumer behaviour Demographics and personal choices: Demographics is especially an interest of marketers as it is important to see how population is changing in numbers and distribution of genders, age, economic situation, etc. For example, distribution of wealth is in focus as it has importance to determine buying power and market potential of the targeted consumers. Consumer attitude: Attitude is shaped selectively to compromise consumers needs and could be changed by external effects such as joining a new community, gaining more knowledge and environment of a person.

5. . Consumer motivations: Marketers are aiming to satisfy the consumer’s needs that rise in a certain time or period. When there is a need, people see solutions to diminish it. Motivations start up behaviour and direct to a goal or a specific action. A motivated person's involvement to an activity is always more than unmotivated. Learning and knowledge: Learning is gained by experience and it is affecting behaviour . Companies have to examine consumer’s knowlede about a product carefully. Finding out how consumer’s shopping habits are such as from where they buy, how often they purchase, which product groups have importance and how much they are aware of the products or brands help companies to motivate and reinforce consumer for buying behaviour

6. External factors affecting consumer behaviour Culture and subculture Culture is one of the main external factors that have a big effect on consumer behaviour , ideas and wishes. Behaviour is almost a learnt process and culture has power on our behaviour as we all grow up in a certain group of society with certain cultural properties. Social class Consumer’s position in a society with income level, family background and profession are indicators of a person’s social class. The people in the common groups seemed to have similar lifestyles, jobs and tastes and they mostly socialized between each other and affect their behaviour in the same social class.

7. . Family and Group Influence The most common and natural group in the society is the family that mostly act together with certain aims. Family members have different roles like initiator, influencer, decider, buyer and user. The impacts of family members on different assortments of products are changing depending on family size, structure and hierarchy in buying decision process. Consumer Decision Process Consumer buying decision starts with a need reconition and end up with divestment process. These paths of purchase behaviour enable marketers to interpret the buyer in one of these steps and change his decisions.

8. INDUSTRIAL BUYING BEHAVIOUR INTRODUCTION Increase in economy results into creation of demands for industrial goods and services, new entrant in market and rise in competition. Industrial buying is different from consumer buying. It involves buying of machinery, packaging materials & services such as insurance, consultation, and transportation. Industrial buyers buy either to produce something new or resell or use for organizational purpose. Industrial buying refers to the buying activities of organizations that purchase products and services for end-use purpose and not for direct consumption. Industrial buying process is a lengthy process and decision of complex nature. Each organization evolves its own procedure for making purchase decisions.

9. INDUSTRIAL BUYING DECISION PROCESS The buying process involves different stages .Yet, the buying process differs a lot depending on what type of product that will be bought. Three important buying decision for almost all product include: 1) Authority to purchase 2) To determine the product specification 3) Choice of supplier The industrial buying process depends upon various situations, which are categorizes into Straight Rebuy: Buying on routine basis. eg ; stationery. Modified Rebuy: Modified products specification, prize. Eg ; spare parts, technology. New Task: Buying for first time for a new task. Eg ; plant, building .

10. INDUSTRIAL BUYING DECISION PROCESS Recognition of need Determining product specification / Determining quantity & quality characteristics Search for suppliers Analysis of proposals Selection of suppliers Selection of an order routine Post purchase evaluation

11. Industrial buying products includes: Raw materials Fabrication parts & material Installation of machinery Accessories equipment’s Operating suppliers

12. PARTICIPANTS IN INDUSTRIAL BUYING PROCESS 1) Initiators: One who requested that something is to be purchased. 2) Users: One who uses the products or services. 3) Influencers: People who influence buying decisions. 4) Gatekeepers: People who have power to prevent sellers or information from reaching members of buying centers.

13. DECISION-MAKING UNITS (DMU’S) The decision making power in industrial buying is shared by few persons jointly/ collectively and not by one individual. There exists multiple buying patterns and the decision makers are also large in number. Joint authority or buying center is useful. Hence it results in making wise decision and also protecting the interest of industrial organization such authority is known as DMU. DMU may be defined as all the individuals or groups who are involved in the process of making decision to buying of industrial products.

14. FACTORS INFLUENCING PURCHASE DECISION Individual factor: Age, Income, Education and Job, Personality, Attitude. Interpersonal Factors: Authority, Status, Economic Environment: Level of demand, Economic outlook, Competition Organizational factors: Objective/goals, Policies, Procedures, Systems, Structures

15. Comparison between consumer and industrial behavior Consumer Buying Behavior Industrial Buying Behavior The individual consumers buy goods and services for ultimate use or satisfy their needs. The buying purpose of such consumers is not to earn profit by reselling the goods and services. The organizations buy goods and services for their business needs. The buying purpose of them is to earn profit by using and reselling the goods and services. Although consumers buy various kinds of goods, the quantity of goods remains small. They buy only the necessary quantity of goods, which they need for regular use. Organizational buying is done in large quantities. There are several reasons why organizations must buy the goods they need in bulk. In the first place, they use large quantities of each item and must maintain inventories at a level high enough that they will not run out of stock. Secondly, it is cheaper and more efficient to make large-volume purchases.

16. Consumer buying takes decision by consumers themselves. Sometimes they can consult with family members and friends. They need not fulfill any formality like organizational buying. Organizational purchasing is a rational process because the purchasing behavior of organizations is guided by objective factors having to do with production and distribution. It takes long time than consumer buying. Most of the consumers may not have adequate knowledge and information about market situation, available goods and services, etc. The educated customers may be aware and have knowledge about market and goods. Organizational purchase criteria are specifically defined. Organizational buyers usually have fewer brands to choose from than do individuals, and their purchases must be evaluated on the basis of criteria that are specific to the overall needs of the organization. The organizational buyers have full knowledge of market and suppliers.

17. Consumers buy many goods to use to satisfy personal or family needs. Organizational buyers buy limited goods to use to conduct business. Consumer buying behavior is effected by age, occupation, income level, education, gender etc. of consumers. Many individuals are involved in the buying process. Within large organizations, rarely is one individual solely responsible for the purchase of products for the purchase of products or services. Instead, many individuals and departments may be involved and departments may be involved in the buying process. The consumer buying process is very simple. No need to fulfill any formality. There is also no need to maintain extensive contact with sellers. Buyers and sellers in the organizational market must maintain extensive contact.

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