CHAPTER THREE

BUYING BEHAVIOR
3. 1 CONSUMER BUYING BEHAVIOR
 Consumer buying behavior studies how consumers
buy, use, and dispose of the product of the company.
 Consumer behavior refers to the buying behavior of
final consumers-individuals and households- that
buy goods and services for personal consumption.
 All of these final consumers combine to make up
the consumer market.
 Consumer market is all the individuals and
households who buy or acquire goods and services
for personal consumption.
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 3.1.1 CHARACTERSTICS AFFECTING CONSUMER BEHAVIOR

a. Cultural Factors
Cultural factors exert a broad and deep
influence on consumer's behaviors.
The marketer needs to understand the role
played by the buyer's culture, subculture, and
social class.
 Culture is a dominant factor in shaping
consumer's behavior as most human
behaviors are learned.
 It is the most basic cause of a person's wants
and behavior
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 Sub-culture: it is groups in a culture that
exhibit characteristic behavioral patterns
sufficient to distinguish them from other
groups within the same culture.
 Subculture includes such elements in
culture as nationality, religious, ethnic
groups, and geographic regions.
 It refers to groups of people with shared
value systems based on common life
experiences and situations.
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 social class: it exists in all societies, and
people's buying behavior is often strongly
influenced by the class share similar values,
interests and behaviors.
 It is not determined by single factor, such as
income, but is measured as a combination of
occupation, income, education, wealth, and
other variables.
 It is not an indication of spending capability
rather; it is an indication of preferences and life
styles.
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b. Social Factors: consumer's buying behavior is also
influenced by social factors like:
 Reference group: - groups of people who influence a
person's attitudes and behaviors.
 Primary reference groups-continuous communication and
information nature. E.G. Neighborhood
 Secondary reference groups less continuous interaction and
formal in nature. E.G Professional associations, models etc.
 Family: Family members can strongly influence buyer's
behavior.
 Role and status
 A role consists of the activities people are expected to
perform according to persons around them
 Status- reflects a general esteem given to role of by society.

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c. Personal Factors
 Age: - Age influences purchasing behavior of consumer
 Occupation: - A person's occupation significantly affects his or her
consumption patterns.
 Economic Situation: Economic situation includes some variables that
effect behaviors of individuals towards different products.
 The variables are income, saving, borrowing power (or interest rates)
etc.
 Life style: is a person’s pattern of living as expressed in his/her
activities, interests, and opinions
 Personality: The buying behavior of person is influenced by his/her
distinct personality.
 Personality refers to the unique psychological characteristics that lead
to relatively consistent and lasting responses to one's own
environment.

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d. Psychological Factors
 A person's buying choices are further influenced by different major
psychological factors
 Motivation.: A person acts at all because he or she experiences a need
and all behaviors start with a need.
 Perception: It refers to the process by which an individual selects,
organizes, and interprets information in order to create a meaningful
picture of the world.
 Learning is a relatively permanent change in behavior of human beings
resulting from observations and experience.
 Beliefs and attitudes: Beliefs, likes and dislikes influence a person's
purchase decisions

3.1.2. TYPES OF BUYING DECISION BEHAVIOR

There are four types of consumer buying behavior based on the degree of
buyer involvement and the degree of differences among brands
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1. Complex Buying Behavior: Consumers undertake
complex buying behavior when they are highly
involved in a purchase and perceive significant
brand differences.
 Consumers may be involved when the product is
expensive, risky, purchase infrequently, and highly
self-expressive (e.g. Car). Cognition-Attitude-
Behavior sequence.
2. Dissonance-reducing Buying Behavior: It occurs
when consumers are highly involved with an
expensive, infrequent, or risky purchase, but see
little difference among brands.
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 For example a consumer buying carpeting may
face a high-involvement decision because
carpeting is expensive and self-expressive.
Cognition-Behavior-Attitude sequence
3. Variety-seeking Buying Behavior: Consumers
undertake variety-seeking buying behavior in
situations characterized by low consumer
involvement, but significant perceived brand
differences. Example: Toothpaste
4. Habitual Buying Behavior: It occurs under
conditions of low involvement and little significant
brand difference. For example, Salt.
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3.1.3. THE CONSUMER BUYING DECISION PROCESS
a. Need or problem recognition: a need can be triggered by both the
internal and external stimuli.
b. Information search: Once a need is recognized, the individual then
searches for more information about the attainment of a desired state of
affairs
 Heightened attention: This is the case where the consumer gives
attention to information from the marketer
 Active information search: here the consumer actively searches
information about his goods or services
 The most common sources to information are:
o Personal sources- include families, friends, neighbors, colleagues
o Commercial sources- advertisments, sales persons, displays etc
o Public sources- mass-media, consumer rating organization etc
o Experiential sources- handling, examining, and using the product
before.
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 Through information gathering, consumers set different variables:
 Total set of product- Total amount of product available
 Awareness set: amount of known products by consumer
 Consideration set: set of product considered to simplify choice
 Choice set: set of final products available for choice.
c. Evaluation of Alternatives
 This step in the consumer's decision process is to evaluate the evoked
set of options identified during the search step
 Evaluative criteria: price, quality, brand name, country, durability
comfort etc
d. Purchase Decisions: The search and alternative evaluation stages of
the decision process result in the eventual purchase decision.
 But the intention to purchase may be affected by:
 The attitude of others
 Unanticipated factors

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e. Post purchase Behavior: It is the stage of
the buyer decision process in which
consumers take further action after purchase,
based on their satisfaction or dissatisfaction.
Satisfied:- buy it again and talk favorably
Dissatisfied: - Do not buy it again, inform
more number of friends, complain to the
lawyer, social organizations etc.

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3.1.4 Consumer Buying Role
The Marketer needs to know what people are
involved in the buying decision and what roles
each person plays. The roles are:
Initiator: the person who is first suggest or thinks
of the idea of buying a particular product or
service.
Influencer: a person whose views or advice
influence the buying decision.
Decider: the person who ultimately makes a
buying decision or any part of it.
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Buyer: the person who makes an actual
purchaser.
User: the person who consume/uses a
product.

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 3.2 ORGANIZATIONAL BUYER BEHAVIOR
 Organizational buyers include individual involved in purchasing
products for business, government agencies, and other institutions
and agencies.
3.2.1 Buying Situations:
 Straight Re-buy: The straight re-buy is a buying situation in which
the purchase department reorders on a routine basis (e.g. office
supplies, bulk chemicals etc).
 Modified Re-buy: The modified re-buy is a situation in which the
buyer wants to modify product specifications, prices, delivery
requirements, or other term.
 New Task Purchase: The new task is buying situation in which a
purchaser buys a product or service for the first time (e.g. office
building, new security system etc).
3.2.2 Major Influences on Organizational Buyers
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I. Environmental factors: Organizational buyers are
heavily influenced by factors in the current and
expected economic environment, such as the level of
demand for their product, the economic outlook, and
the interest rate.
II. Organizational factors: Each buying organization has
specific objectives, policies, procedures, organizational
structures, and systems.
III. Interpersonal factors:The buying centre usually
includes several participants with differing interests,
authority, status, empathy, and persuasiveness.
IV. Individual factors:These are influenced by the
participant’s age, income, education, job position,
personality, attitudes toward risk, and culture.
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3.2.3 The Procurement Process: Organization buying behaviour process
includes:
i. Problems recognition: recognition can occur as a result of internal or
external stimuli.
ii. General need description: the buyer proceeds to determine the needed
item’s general characteristics and quality needed.
iii. Product specification: After general needs are identified, the buying
organization must develop the item’s technical specifications.
iv. Supplier search: Once the product has been specified, the trade to
identify the most appropriate suppliers.
v. Supplier Selection: Before selecting a supplier, the buying centre will
specify desired supplier attributes with their relative importance.
vi. Order routine specification: After the suppliers have been selected, the
buyer negotiates the final order listing the technical specification; the
quality needed, the expected time of delivery, return policies, warranties,
and so on.
vii. Performance Review: When all is said and MKT
done, the buyer reviews the
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3.2.4 Participants in the business buying

process
 Users are members of the organization who
will use the product or service. In many cases,
users initiate the buying proposal and help
define product specifications
 Influencers often help define specifications
and also provide information for evaluating
alternatives. Technical personnel are
particularly important influencers.
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 Buyers have formal authority to select the supplier
and arrange terms of purchase. Buyers may help
shape product specifications, but their major role is
in selecting vendors and negotiating.
 Deciders have formal or informal power to select
or approve the final suppliers. In routine buying,
the buyers are often the deciders, or at least the
approvers.
 Gatekeepers control the flow of information to
others. For example, purchasing agents often have
authority to prevent salespersons from seeing users
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 CHAPTER FOUR
4. MARKET SEGMENTATION, TARGETING AND POSITIONING

Organizations that sell to consumer and

business markets recognize that they cannot
appeal to all buyers in those markets or at
least not to all buyers in the same way.
Rather than trying to compete in an entire
market, sometimes against superior
competitors, each company must identify the
parts of the market it can serve best.
Their thinking has passed through three
stages:
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 Mass Marketing: In this case, the seller mass-
produces, mass promotes, and mass distributes one
product to all buyers.
 Product-variety marketing: Here, the seller
produces two or more products that have different
features, styles, sizes, quality and so on.
 Products were designed to offer variety to buyers
rather than to appeal to different market segment.
 Target Marketing: Here, the seller identifies
market segments, selects one or more of them, and
develops products and marketing mixes tailored to
each.
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 Today’s companies are moving away from mass
marketing and product variety marketing toward
target marketing.
 They may differ in their wants, resources, locations,
buying attitudes, and buying practices.
4.1. MARKET SEGMENTATION
 It is the process of dividing the total market for a
good or service in to distinct group of buyers with
different needs, characteristics, or behavior who
might require separate products or marketing mixes.
4.1.1. BASES FOR SEGMENTING MARKETS

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A. Bases for segmenting consumer markets
 There is no single way to segment the market, so
marketers had better consider different bases in
segmenting their markets.
 The major bases of segmentation are:
o Geographic segmentation: - is the basis for
dividing a market in to different geographical units
such as nations, states, regions, and countries,
cities and towns where people live and work
o Demographic segmentation: It is the most
common basis of segmenting consumer markets.

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 They are frequently used because they are often
related to demand and are relatively easy to
measure. For example: age, gender, income,
education status, etc.
o Psychographic segmentation: It is segmenting
market in to different groups based on social
class, lifestyles (activities, interest, and opinion)
or personality characteristics.
o Behavioral segmentation: It divides buyers into
groups based on their knowledge, attitude, uses,
or responses to a product
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 Occasions: - time of using products by some consumer
group. E.g. weekends, holidays, lunch time etc.
 Benefits desired: - It a powerful form of segmentation.
Eg. price, service or economy etc.
 User status: - Markets can be segmented into groups of
nonuser, ex-users, potential users, first time users, and
regular (actual) users of a product.
 Usage rate: - Markets can also be segmented in to light,
medium, and heavy product users.
 Loyalty Status: - Markets can also be segmented by
consumer loyalty. Buyers can be divided into groups
accordant to their degree of loyalty. Eg. Hard core, split
loyal, shifting loyal and switchers.
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 Attitude- Five attitude groups can be found in a market: enthusiastic,
positive, indifferent, negative, and hostile.
 Multiple Segmentation-Marketers rarely limit their segmentation
analysis to only one or a few variables
 B. Bases for segmenting Business market
 Demographics
 Industry: which industries those buy this product should we focus on?
 Company size: what size company should we focus on?
 Purchasing Approaches
 Purchasing function organization: should we focus on companies
with highly centralized or decentralized purchasing organization?
 General purchase policies: should we focus on companies that prefer
leasing? Service contract? Systems purchase? Or sealed bidding?
 Purchasing criteria: should we focus on companies that are seeking
quality? Service? Or price?
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 Situational factors
 Urgency: should we focus on companies that need quick
delivery or service?
 Size of Order: should we focus on large or small orders?
c. Bases for Segmenting international markets
 They can segment by geographic location, grouping countries
by regions such as Western Europe, the Middle East, or Africa.
 Countries can also be segmented by political and legal factors
such as the type and stability of government, receptivity to
foreign firms, monetary regulations, and the amount of
bureaucracy.
 Cultural factors also can be used, grouping markets according
to common languages, religions, values & attitudes, customs,
and behavioral patterns.
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4.1.2 PROCEDURES IN MARKET
SEGMENTATION
 Survey stage:At this stage, the marketer identifies the
current and potential wants that exists within a market.
• The survey step may involve interviewing, or
observing the customers or firms to determine their
behaviors, levels of satisfactions and dissatisfactions.
 Analysis stage:This stage involves analyzing of data
conducted by marketers, which helps in identification
of the characteristics that distinguish the segments.
 Profile stage: The final step is to estimate how much
demand or potential sales each segment represents.
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4.1.3 Requirements/Criteria of market segmentation:
 Measurable: characteristics used to describe what segments
belong to.
 Accessible: - the segment must be accessible through the
existing market institutions: Middlemen, advertising media,
company sales force- with a minimum cost.
 Actionable: be sufficient finance, personnel and capability
to take them all by the Company.
 Substantial: - each market segment should be large enough
to be profitable for the company.
 Differentiable: there must be difference in the buying
pattern of the segments otherwise there is no need for
segmenting.
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4.2. MARKET TARGETING .
 Target market is a set of buyers sharing common needs or
characteristics that the company decides to serve
4.2.1. EVALUATING MARKET
 Segment size and growth: It must first collect and analyze
data on current segment sales, growth rates and expected
profitability for various segments in the market.
 Segment's structural attractiveness: A company ordinarily
should seek a market segments where there are the least and
smallest competitors.
 Company objectives and resources: Even if a segment has
the right size and growth and is structurally attractive, the
company must consider its own objectives and resources in
relation to that segment.
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4.2.2 TARGET MARKET SELECTION STRATEGIES
 The next activity after evaluating the segments
is to decide on which and how many segments
to serve. A company opts for the following
strategies:
 Single segment concentration
 Selective specialization
 Product specialization
 Market specialization
 Full market coverage
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4.3 THE CONCEPT OF POSITIONING
 Positioning is the act of designing the company's
offering and image to occupy a distinctive place
in the mind of the target market.
 It involves inserting the brand's unique benefits
and differentiation in customers' minds.
 The end result of positioning is the successful
creation of a customer focused value proposition,
a basic reason why the target market should buy
the product instead of other competitors offer.

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4.3.1 The positioning task consists of three steps:
1. Identifying a set of possible competitive advantage on
which to build a position. Eg. Product differentiation,
service differentiation, personnel differentiation, and
image differentiation.
2. Selecting the right competitive advantage: a company
decides how many and which ones.
3. Communicating and delivering the chosen position
4.3.2 Firms may have three strategies alternatives in
positioning:
 Strengthen its own current position in the consumer’s mind
 Mind grasp an unoccupied position in the consumer’s mind
 De-position or reposition the competition in the customer's
mind
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