Consumer Behaviour Factors Influence Consumer Behaviour Chapter 3

Advanced 467 Reasoning Puzzles Book SBI PO 2018

Consumer Buying Behavior

The buyer behavior relates to the purchase behavior of individuals, groups and organizations who buy products to meet their needs and solve problems. Buyer behavior may be defined as the decision process and acts of people involved in buying and using products. There are two facets of buyer behavior analysis as follows:

1. Consumer Behavior - Consumer behavior refers to the buying behavior of ultimate consumers, those people who purchase products for personal or household use. Consumer behavior is more complex as individuals are influenced by rational, emotional, and social forces.
2. Organizational Buyer Behavior - Organizational buyer behavior refers to buying process and decisions of business organizations, social institutions and government. Organizational buying behavior is less complex than consumer buying as it is mostly driven by reasons and logic.
Buyer behavior is the study of how individuals and groups make their decisions to use their resources in terms of time, money and effort. It includes the study of various aspects of buying, using, and disposing products and services. 

Types of  Buyer Decision Behavior

  1. Complex Buying Behaviour - Complex buying behaviour involves a three-step process; first, the buyer develops beliefs about the product. Second, he or she develops attitudes about the product. Third, he or she makes a thoughtful choice. When the customer is involved in complex buying, they are aware of significant- differences in brands. This is the case when the products are expensive, bought frequently risky and highly self expressive
  2. Dissonance – Reducing Buyer Behaviour: Sometimes the consumer is highly involved in a purchase but sees little difference in brands. The purchase is expensive, infrequent, and risky; therefore the consumer is highly involved. In this case, the buyer will go around to learn what is available but will buy when he gets a good price. After the purchase, the consumer might experience dissonance that stems from noticing certain odd features or hearing favourable things about other brands. In this case, the consumer first acted, then acquired new beliefs, then ended up with a set of attitudes.
  3. Habitual Buying Behaviour - There are many Products which are bought under conditions of low involvement and the absence of significant brand differences. Take a simple example of salt. Consumers have little involvement in this product category. They go to the shop and reach for the brand. If they keep reaching for the same brand, it is out of habit, riot strong brand loyalty. It is evident that consumers have low involvement with most low-cost, frequently Purchased Products. With these products, consumer behaviour does not pass through the ‘normal sequence of belief, attitude and, behaviour. Consumers do not search extensively for information, evaluate characteristics and make decisions on which brand to buy. Instead they are passive recipients of information the television or print ads. The repetition of ads creates brand familiarity rather than brand conviction. After making the purchase, they may not even evaluate the choice because they are not highly involved with the product. For low involvement products, the buying, process begins with brand beliefs formed by passive learning & is followed by purchase behaviour which may be followed by evaluation.
  4. Variety seeking Buying Behaviour - There has some buying situation that an characterized by low involvement but significant brand differences. In such cases the consumer often goes into a lot of brand switching. Take the example of chocolates. The consumers has some beliefs about chocolates chooses a brand of chocolates without much evaluation, & evaluates the -product during consumption. Next time, the consumer may reach for another brand out of a wish for a different taste. In this case the brand switching occurs for the sake of variety rather than dissatisfaction.

Buyer Behavior Process Model

Buyer behavior can be viewed as an input-processing-output model. In this model, the buyer receives inputs from the marketer and the environment, processes them, and transfers them into outputs in the form of responses.
1. Inputs - The inputs are received from two sources- the marketing firm and the environment. The marketing inputs are in the form of marketing mix- product, price, place and promotion. The inputs from the environment are in the form of economic, demographic, technological, and socio-cultural forces.
2. Processing - The inputs from the marketing firm and the environment are processed by the buyer. The processing is influenced by the buyer's own personal, psychological, and socio-logical characteristics. The buyer goes through a five stage purchase decision process that involves need recognition, search for information, evaluation, purchase, and post purchase evaluations.
3. Outputs - The outputs are the results of the processing and are seen in terms of the major responses from the buyer. The responses reflect in the form of various choices such as product, brand, store, and purchase amount.

Stages of the Consumer Buying Process

Organizational/Institutional buyer passes through different stages to buy goods or services. Marketers should know the organizational buying process along with how his customers buy goods or services. Generally, following stages include in organizational or institutional buying process:
1. Need Recognition - The first stage of organizational buying process is to recognize problem or need. Such problem or need is recognized due to internal reasons such as unsatisfactory performance of existing machines and equipment, dissatisfaction with latest purchase, lack of cost saving opportunity etc. within the organization itself. Similarly, the external reasons such as announcement of new product, consultation of supplier with sales representative, newspaper advertisement, trade fair etc. also motivate to buy a new product. A successful marketer tries to understand the problems or needs of his institutional customers and uses making program that can to identify problems.
2. Determination Of The Product And Buying Specifications - After problem or need is recognized, an imagination of the product can solve the problem comes to mind. Such imagination should be able to reflect the features of the product. In this stage, help of consultants, engineers, designers, researchers, developers, producers, sales specialists etc. to find out the product or solving the problem. In this stage of buying process, special specifications such as quantity, quality, price, mode of payment etc are determined.
3. Search for Qualified Supplier - In the third stage of institutional buying process, a capable supplier of the necessary goods is searched. Purchase agent can seek capable supplier in consultation with related employees. Potential supplier is searched and proposal demanded by looking the record of the company, contacting with suppliers for information, requesting acquainted suppliers to send their proposal, looking in price list or looking in different business publications etc.

4. Analysis and Evaluation Of Supplier's Proposal - In this stage, evaluation and analysis of the proposals submitted by different suppliers is made. The suppliers can submit their proposals in both written and oral form. The business organization can uses this opportunity to promote its products. It also can make efforts to prove its products to be better in quality, price, durability and other advantages than the products of other companies. In such situation, buying organization should do vendor analysis for systematic evaluation of potential suppliers. The received proposals should be comparatively evaluated on the basis of price, quality, goodwill, services, delivery capacity and personal relation with buyer etc.

5. Selection Of suppliers And Purchase Order - After detailed evaluation of the proposals, the buyer can negotiate for better terms, conditions and price before taking final decision. The buyer should take decision whether to buy all the materials from a supplier or use different suppliers. If more suppliers are used, the buyer need not have to depend on the single supplier. It also gives opportunity to evaluate and compare the services, delivery capacity, time etc. of all suppliers. After a proper supplier has been selected, purchase order is to the supplier. In this stage, packing, mode of transport and delivery, condition of credit facility, mode of Payment, services agreement etc are determined.


6. Evaluation Of Performance - In the last stage of organizational buying process, products as well as performance of supplier is evaluated. In comparison of personal consumers, the activity of organizational buyers becomes very formal, directed and clear after buys any products. They evaluate the quality and performance of the product supplied by a supplier. Evaluation of the products is useful for both suppliers and buyer. It also helps to maintain quality and ensure satisfaction of the buyers.

Factors that Influence Consumer Behavior

Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below.
1. Cultural Factors- Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
  • Culture - Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.
  • Subculture -Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group.
  • Social Class - Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc.
2. Social Factors - Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.
  • Reference Groups - Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics).
  • Family - Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles.
  • Roles and Status - Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.
3. Personal Factors - Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept.
  • Age - Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage.
  • Occupation - The occupation of a person has significant impact on his buying behavior. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes.
  • Economic Situation - Consumer economic situation has great influence on his buying behavior. If the income and savings of a customer is high then he will purchase more expensive products. On the other hand, a person with low income and savings will purchase inexpensive products.
  • Lifestyle - Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting and interacting in the world.
  • Personality - Personality changes from person to person, time to time and place to place. Therefore it can greatly influence the buying behavior of customers. Actually, Personality is not what one wears; rather it is the totality of behavior of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer behavior for particular product or service.
4. Psychological Factors - There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation, learning, beliefs and attitudes.
  • Motivation - The level of motivation also affects the buying behavior of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction.
  • Perception - Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will support what the customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs.
  • Beliefs and Attitudes - Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behavior therefore marketers are interested in them. Marketers can change the beliefs and attitudes of customers by launching special campaigns in this regard.

Motivation - Motivation can be defined as stimulating, inspiring, and inducing the employees to perform to their best capacity. It is the  process of giving someone a reason for doing something. Motivation is the purpose or psychological cause of an action. Motivation has been shown to have roots in physiological, behavioral, cognitive, and social areas.

Frederick Herzberg's Two-Factor Theory

Frederick Herzberg's Two-Factor Theory, also known as Motivation-Hygiene Theory or intrinsic vs. extrinsic motivation, concludes that there are certain factors in the workplace that can cause job satisfaction and a separate set of factors that can cause dissatisfaction. It is critical to emphasize that this is not a linear relationship: the factors that cause satisfaction do not necessarily negate those that cause dissatisfaction; one does not necessarily increase exactly as the other decreases.
  1. Extrinsic MotivatorsExtrinsic motivators tend to represent more tangible, basic needs—i.e., the kinds of needs identified in McClelland's "existence" category of needs in his ERG Theory or in the lower levels of Maslow's Hierarchy of Needs. Extrinsic motivators include status, job security, salary, and fringe benefits. Managers must realize that not providing the appropriate and expected extrinsic motivators will sow dissatisfaction and unmotivated behavior among employees.
  2. Intrinsic MotivatorsIntrinsic motivators tend to represent less tangible, more emotional needs—i.e., the kinds of needs identified in McClelland's "relatedness" and "growth" categories of needs in his ERG Theory and in the higher levels of Maslow's Hierarchy of Needs. Intrinsic motivators include challenging work, recognition, relationships, and growth potential. Managers must recognize that while these needs may be outside the more traditional scope of what the workplace should provide, they are absolutely critical in empowering strong individual and team performance.

Herzberg's Theory in Context

Herzberg's Two-Factor Theory, McClelland's Need Theory, and Maslow's Hierarchy of Needs all talk about higher-level psychological needs such as achievement, recognition, responsibility, and advancement. The key factor that differentiates Two-Factor Theory is the idea of expectation.
According to Herzberg, intrinsic motivators and extrinsic motivators have an inverse relationship. This is to say that intrinsic motivators tend to inspire motivation when they are present, while extrinsic motivators tend to reduce motivation when they are absent. This is because of expectation. Extrinsic motivators (e.g., salary, benefits) are expected and so will not increase motivation when they are in place, but they will cause dissatisfaction when they are missing. Intrinsic motivators (e.g., challenging work), on the other hand, can be a source of additional motivation.
If management wants to increase employees' job satisfaction, they should be concerned with the nature of the work itself—the opportunities it presents employees for gaining status, assuming responsibility, and achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it must focus on the job environment—policies, procedures, supervision, and working conditions. To ensure a satisfied and productive workforce, managers must pay attention to both sets of job factors.

Maslow’s Need Hierarchy Theory

Motivation is a psychological phenomenon and the needs of employees play very important role in motivation. Need or the desire is very important element in motivation because the employees get motivated only for their needs and if the needs are fulfilled completely then it is not possible to motivate the employees.

Five Levels of the Hierarchy of Needs


There are five different levels in Maslow’s hierarchy of needs:
1.     Physiological Needs -These include the most basic needs that are vital to survival, such as the need for water, air, food, and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met.
2.     Security Needs - These include needs for safety and security. Security needs are important for survival, but they are not as demanding as the physiological needs. Examples of security needs include a desire for steady employment, health care, safe neighborhoods, and shelter from the environment.
3.     Social Needs - These include needs for belonging, love, and affection. Maslow described these needs as less basic than physiological and security needs. Relationships such as friendships, romantic attachments, and families help fulfill this need for companionship and acceptance, as does involvement in social, community, or religious groups.
4.     Esteem Needs - After the first three needs have been satisfied, esteem needs becomes increasingly important. These include the need for things that reflect on self-esteem, personal worth, social recognition, and accomplishment.
5.     Self-actualizing Needs - This is the highest level of Maslow’s hierarchy of needs. Self-actualizing people are self-aware, concerned with personal growth, less concerned with the opinions of others, and interested fulfilling their potential.