Models of CB & Industrial Buying Behaviour

Organizational Organizational Buying Behavior & Buying Behavior &

Models of Consumer Models of Consumer BuyingBuying

Shivali Kamal Shivali Kamal

Third semThird sem

Rbs,HyderabadRbs,Hyderabad

Contents in brief:-Contents in brief:-

Consumer Decision-Making, Models of Consumer Behaviour, Types of consumer behaviour models, Industrial buying behaviour Industrial Vs Consumer Market & The process of industrial purchasing .

Consumer Decision-Making Buyer decision processes are the decision making processes undertaken by Buyer decision processes are the decision making processes undertaken by

consumers in regard to a potential market transaction before, during, and consumers in regard to a potential market transaction before, during, and after the purchase of a product or service.after the purchase of a product or service.

A general model (“box-and-arrow” models) consists of :-A general model (“box-and-arrow” models) consists of :-

Models of Consumer Behaviour

Economic model :-It is one-dimensional model. Being rational, one will make his purchase decisions with the intention of maximizing the utility/benefits. Economic model is based on certain predictions as price effect ,substitution effect & income effect.

The sociological model :-The individual buyer is a part of the institution called society. So, he gets influenced by it and in turn also influences it in its path of development.

Learning model :-Classical psychologists have been interested in the formation and satisfaction of needs and tastes .living beings were influenced by both innate needs .A drive or internal stimulus which when directed towards a drive-reducing object becomes a motive.

Psychoanalytical model:-It is based on the work of psychologists who were concerned with personality (outcome of id, super ego & ego). Human needs and motives operated at the conscious as well as subconscious levels. Marketers have been using this approach to generate ideas for developing product-design, features, advertising and other promotional techniques.

Types of models of consumer Types of models of consumer behaviourbehaviour:-:-

A model a is simplified version of reality, it hasA model a is simplified version of reality, it has

never been reality, it isn’t reality and it will never never been reality, it isn’t reality and it will never

be reality...…therefore all models are subject to be reality...…therefore all models are subject to criticism.criticism.

Maslow’sHierarchy of Needs (Conceptual model);Maslow’sHierarchy of Needs (Conceptual model); The Howard Sheth Model of Buying Behaviour;The Howard Sheth Model of Buying Behaviour; Engel, Kollatand Blackwell model.Engel, Kollatand Blackwell model.

Maslow’s Hierarchy of Maslow’s Hierarchy of NeedsNeeds

Psychological needs(food, water, shelter)Psychological needs(food, water, shelter)1

Safety needs(security, protection)

Safety needs(security, protection)

2

Social needs(sense of belonging, love)

Social needs(sense of belonging, love)3

Esteem needs(self-esteem, recognition)

Esteem needs(self-esteem, recognition)

4

Self-actualization

(self-developmentand realization)

Self-actualization

(self-developmentand realization)

5

Engel-Kollat-Blackwell model

The Howard sheth modelThe Howard sheth model

Industrial vs. consumer Industrial vs. consumer marketsmarkets

Buying objective Enable production Personal need satisfaction

Buying motive Mainly rational Also emotional

Purchasing function Professional buying Consumers

Decision making Many persons involved, much discussion

Often impulsive, without consulting others

Characteristics Negotiations, intense interaction

Often without negotiation, little interaction

Product & market knowledge

Large Limited

Order size Often large Mostly small

Demand Derived, fluctuation Autonomous, relatively stable

Price elasticity Rather inelastic Rather elastic

Number of customers Mostly limited Very large

Spread of customers Sometimes large geographic concentration

Large spread

Aspect Industrial market Consumer market

The purchasing processThe purchasing process

- Establish expediting routine

- Expediting

- 'Trouble- shooting'

- Vendor rating- Vendor

- EstablishOrder routine

- Developorderroutines

- Orderhandling

Order

Proc. Role

Elements

Documents

- Prepare contract

- Contractingexpertise

- Negotiatingexpertise

Contract

- Assure adequatesupplier selection

- Prequalification of suppliers

- Request forquotation

Supplier selectionproposal

Get specification

-

FunctionalspecificationTechnicalchanges Bring supplier

knowledge toengineering

-

-

-

-

-

FunctionalspecificationNorm/spec.control

Definespecification

Selectsupplier

Contractagreement

Ordering Expediting EvaluationFollow up

Overdue list

- Vendor performanceevaluation

- Settling contractproblems

evaluation

- Vendor balanced score card- Vendor profile- Vendor ranking

Three types of purchasing situations:-

New task :- • Completely new product from unknown suppliers• High uncertainty regarding outcome• (e.g. acquisition of capital goods)

Modified Rebuy :-

• New product from known supplier• Existing product, new supplier• Moderate uncertainty regarding outcome

Straight rebuy:-• Known product from known supplier• Low uncertainty regarding outcome

Any Questions….?Any Questions….?

Thank u for Your Thank u for Your attentionattention