Consumer and Industrial Buying Behaviour — Theories and Models

Understanding how consumers and businesses make purchasing decisions is fundamental to marketing strategy. This unit delves into the theories and models that explain these complex behaviours, providing insights into the factors influencing choices and the processes involved.

Consumer Buying Behaviour

Consumer buying behaviour refers to the study of individuals, groups, or organizations and the processes they use to select, buy, use, and dispose of ideas, goods, and services to satisfy their needs and wants. It encompasses how consumers make their decisions about what to buy, when to buy it, how to buy it, and why they buy it.

Factors Influencing Consumer Behaviour

Numerous factors influence a consumer's buying decision. These can be broadly categorized into four main groups:

1. Cultural Factors

Culture is the most basic determinant of a person's wants and behaviour. As children, individuals learn basic values, perceptions, wants, and behaviours from their family and other important institutions. Subcultures are smaller groups within a culture that share specific value systems based on common life experiences and situations. Social classes are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviours.

• Culture: Broadest influence, shaping fundamental values and perceptions.
• Subculture: Groups with shared experiences (e.g., nationalities, religions, geographic regions).
• Social Class: Hierarchical divisions within society based on income, occupation, education, etc.

2. Social Factors

A consumer's behaviour is influenced by social factors such as their reference groups, family, and social roles and statuses.

• Reference Groups: Groups that serve as direct or indirect points of comparison or reference in forming a person's attitudes or behaviour. These can be membership groups (to which one belongs) or aspirational groups (which one wishes to belong to). Opinion leaders often emerge from these groups.
• Family: Family members can strongly influence buyer behaviour. The family is the most important consumer-buying organization in society, and its members can influence specific buying decisions. Roles within the family (e.g., initiator, influencer, decider, buyer, user) are crucial.
• Roles and Statuses: A person belongs to many groups—family, clubs, organizations. A person's position in each group can be defined in terms of both role and status. People often choose products appropriate to their role and status.

3. Personal Factors

A buyer's decisions are also affected by personal characteristics such as age and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept.

• Age and Life-Cycle Stage: People change the goods and services they buy over their lifetimes. Tastes often change with age. Life-cycle stages (e.g., single, married, divorced, with children, empty nesters) significantly impact purchasing.
• Occupation: A person's job affects the goods and services they buy. For example, a construction worker will buy more durable work clothes than an office clerk.
• Economic Situation: Consumers' spending depends on their disposable income, savings, debt, and attitudes toward spending versus saving.
• Lifestyle: Lifestyle is a person's pattern of living as expressed in their activities, interests, and opinions (AIO). It profiles a person's whole pattern of acting and interacting in the world.
• Personality and Self-Concept: Each person has a unique personality that influences their buying behaviour. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to their own environment. Self-concept, or self-image, is the idea people have about themselves. Consumers often choose brands with personalities that match their own or the image they aspire to have.

4. Psychological Factors

A person's buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes.

• Motivation: A need becomes a motive when it is pressing enough to make the person act. Motivation research refers to qualitative research designed to uncover consumers' hidden motivations.
• Perception: The process by which people select, organize, and interpret information to form a meaningful picture of the world. Consumers perceive information selectively, distort it selectively, and retain it selectively.
• Learning: Changes in an individual's behaviour arising from experience. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement.
• Beliefs and Attitudes: A belief is a descriptive thought that a person holds about something. An attitude is a person's consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea. Attitudes are difficult to change.

The Consumer Decision-Making Process

The consumer decision process typically involves five stages:

1. Need Recognition

The buying process starts when the buyer recognizes a problem or need. The need can be triggered by internal stimuli (e.g., hunger, thirst) or external stimuli (e.g., seeing an advertisement, hearing a friend talk about a product).

2. Information Search

Once a need is recognized, the consumer is motivated to search for information. The sources of information can be:

• Personal: Family, friends, neighbours, acquaintances.
• Commercial: Advertising, salespeople, dealers, packaging, displays.
• Public: Mass media, consumer-rating organizations.
• Experiential: Examination and trial of the product.

The amount of information sought depends on the importance of the purchase and the consumer's existing knowledge.

3. Evaluation of Alternatives

After gathering information, the consumer evaluates the alternatives available. This stage involves using information to compare different brands and products based on certain criteria. Different consumers may use different evaluation procedures and weigh criteria differently.

4. Purchase Decision

The consumer's purchase decision is the decision to buy the most preferred brand. However, two factors can come between the purchase intention and the purchase action:

• Attitudes of others: The intensity of the negative attitude of a significant other towards the consumer's preferred alternative and the consumer's motivation to comply with that significant other.
• Unanticipated situational factors: Factors like a sudden loss of income or the sudden emergence of a more desirable product.

5. Post-Purchase Behaviour

After purchasing and using a product, the consumer will experience some level of satisfaction or dissatisfaction. This is the post-purchase behaviour stage. Most consumers will be satisfied with their purchase, but some will not. Dissatisfied consumers may:

• Abandon or return the product.
• Complain to the company.
• Publicly criticize the product.

Satisfied consumers are more likely to repurchase the product and become brand advocates.

Models of Consumer Behaviour

Several models attempt to explain consumer behaviour. These range from simple to complex, incorporating various influencing factors.

1. The Stimulus-Response Model (Black Box Model)

This is the most basic model. It suggests that marketing and environmental stimuli enter the consumer's "black box" and produce response or buying behaviour. The "black box" consists of the buyer's characteristics and the buyer's decision process.

Stimuli: Marketing (Product, Price, Place, Promotion) and Environmental (Economic, Technological, Political, Cultural).

Buyer's Black Box: Buyer's Characteristics (Cultural, Social, Personal, Psychological) and Decision Process (Problem Recognition, Information Search, Evaluation, Decision, Post-purchase).

Response: Product choice, Brand choice, Dealer choice, Timing of purchase, Amount of purchase.

2. The Howard-Sheth Model

This is a more complex cognitive model that explains consumer behaviour as a learning process. It distinguishes between three states of the buyer: extensive problem-solving, limited problem-solving, and routinized response behaviour, depending on the buyer's degree of learning and commitment.

This model includes inputs (stimuli), constructs within the buyer (perceptual and learning constructs), and outputs (response variables).

• Perceptual Constructs: Include attention, stimulus ambiguity, and preference.
• Learning Constructs: Include confidence, attitude, intention, and habit.
• Exogenous Variables: External factors like social status, personality, and time pressure that influence the buyer's state.

3. The Engel-Kollat-Blackwell (EKB) Model

This is a comprehensive, stage-by-stage model that describes the decision-making process. It identifies five stages: problem/need recognition, information search, alternative evaluation, purchase, and post-purchase evaluation. It also incorporates psychological, social, and situational influences.

The EKB model emphasizes the cognitive aspects of decision-making and views the consumer as a problem-solver.

Industrial Buying Behaviour (Organizational Buying Behaviour)

Industrial buying behaviour refers to the decision-making process by which organizations establish the need for purchasing goods and services, identify potential suppliers, evaluate and choose among alternative suppliers and brands, and review the purchasing decision.

Industrial markets are different from consumer markets in several ways:

• Fewer, larger buyers: B2B markets typically have fewer buyers, but each buyer purchases in much larger volumes.
• Derived demand: Industrial demand is derived from the demand for consumer goods.
• Inelastic demand: Demand is not greatly affected by price changes in the short run.
• Fluctuating demand: The volume of industrial demand can change significantly and rapidly.
• Professional purchasing: Buyers are trained professionals.

The Industrial Buying Decision Process

The organizational buying process typically involves eight stages:

1. Problem Recognition

The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or service. This problem can arise from:

• Internal sources: e.g., a machine breaking down, a new product idea.
• External sources: e.g., a new technological development, a competitor's innovation.

2. General Need Description

The buyer describes the general characteristics and quantity of the needed item. For complex items, this may involve engineers and users identifying components and technical specifications.

3. Product Specification

The buying organization develops detailed technical specifications for the item. For standard items, this is straightforward. For complex items, it involves detailed engineering drawings and requirements.

4. Supplier Search

The buyer searches for potential suppliers. This involves identifying sources of supply, such as trade directories, trade shows, and competitor websites.

5. Proposal Solicitation

The buyer invites suppliers to submit proposals. Suppliers will prepare detailed written proposals addressing the buyer's specifications, often accompanied by company brochures, technical capability statements, and warranties.

6. Supplier Selection

The buying centre members establish supplier criteria and evaluate proposals. They will assess factors like supplier reliability, product quality, price, delivery terms, and after-sales service. Negotiation may occur to finalize terms.

7. Order-Routine Specification

The buyer writes the final order with the chosen supplier, listing technical specifications, quantity needed, delivery time, return policies, and warranties. This may involve establishing a blanket contract for frequent deliveries.

8. Performance Review

The buyer or buying centre periodically reviews the performance of the chosen supplier and the purchased product. This review can lead to the continuation, modification, or termination of the supplier relationship.

The Buying Centre

In organizational buying, the decision-making unit is called the "buying centre." It is not a formally constituted unit but rather all the individuals and units that participate in the organizational buying decision-making process. The members of the buying centre can include:

• Users: Those who will actually use the product or service. They often initiate the buying proposal and help define product specifications.
• Influencers: People who influence the buying decision, often by providing technical information or specifying selection criteria (e.g., engineers, R&D staff).
• Buyers: People who have the formal authority to select the supplier and arrange the purchase terms. They play a major role in choosing suppliers and negotiating contracts.
• Deciders: People who have the formal or informal power to select or approve the final supplier. They are often the highest-ranking individuals in the buying centre.
• Gatekeepers: People who control the flow of information to the buying centre. They can be purchasing agents, receptionists, or R&D personnel who screen information and suppliers.

The composition of the buying centre varies depending on the complexity and importance of the purchase.

Models of Industrial Buying Behaviour

Similar to consumer behaviour, several models explain organizational buying.

1. The Webster and Wind Model

This is a widely cited model that considers influences from four main sources:

• Environmental Factors: Economic, technological, political-legal, and cultural-social influences.
• Organizational Factors: Goals, policies, procedures, organizational structure, and the nature of the buying task.
• Group Factors: Roles, reference points, power, and influence within the buying centre.
• Individual Factors: Personal background, perception, and learning of the individuals within the buying centre.

The model also identifies perceptual and learning processes, decision-making processes, and the outcomes of the buying decision.

2. The Sheth Model of Industrial Buying Behaviour

This model, developed by Jagdish Sheth, focuses on the psychological and social processes within the buying centre. It acknowledges that organizational buying is a complex interaction between individuals within the firm and the organizational context.

Key aspects include:

• Factors influencing the buyer: Organizational, group, and individual factors.
• The buying process: Problem solving, information gathering, and evaluation of alternatives.
• Social interaction: Communication and negotiation within the buying centre and with external suppliers.
• Product/Brand Choice: The final decision on what to buy.

Sheth emphasizes that organizational buying involves negotiation and requires a certain level of expertise and knowledge among the participants.

3. The Robinson, Faris, and Wind Model

This model focuses on the stages of the organizational buying process and the factors influencing decisions at each stage. It highlights the role of the buying centre and the different types of buying situations:

• New Task Buying: The organization is buying a product for the first time. The buying centre is likely to be large, and the process is extensive.
• Modified Rebuy: The organization is buying products or services it has purchased before but with some changes in specifications, price, or supplier. The buying centre may be smaller.
• Straight Rebuy: The organization is buying the same items from the same sources as before. The buying centre is minimal, and the process is routinized.

The model outlines how different buying situations affect the complexity of the decision process and the involvement of the buying centre.

Buyclasses and Buyphases

These terms, introduced by Robinson, Faris, and Wind, are crucial for understanding industrial buying.

• Buyclasses: Refer to the types of buying situations:
  • New Task: Most complex, largest buying centre, extensive search.
  • Modified Rebuy: Moderate complexity, some search, changes from previous purchase.
  • Straight Rebuy: Least complex, smallest buying centre, routine process.
• Buyphases: Refer to the eight stages of the organizational buying process described earlier (Problem Recognition to Performance Review).

The combination of buyclass and buyphase determines the complexity and participants involved in the decision.

Relationship between Consumer and Industrial Buying

While distinct, consumer and industrial buying behaviours share some commonalities. Both involve a decision-making process, are influenced by psychological and social factors, and aim to satisfy needs. However, industrial buying is characterized by a more rational, professional, and complex process driven by organizational objectives, whereas consumer buying is often more emotional and influenced by personal needs and wants.