ABM102

INTRODUCTION TO
MARKETING MANAGEMENT
 Module 4
Consumer and Business Buyer Behaviour

Module Overview:

Welcome to Module 4! This module will give you an overview of Analysing the

Consumer Markets and Consumer Buyer Behaviour– what it is about and its

importance to business organizations.

There are 3 lessons that you will take up in this module: (1) Consumer Buying

Process (2) Influences on Consumer Buyer behaviour (3) The Business Market

Module Outcome:

 Appraise the consumer market and illustrate the consumer buying process.

 Identify and characterize the situational influences on consumer behaviour.

 Internalize the business buying process and discuss the participants in the

business buying process.

Time Frame: Four (4) weeks

A Guide through This Course
These are the standard icon that prompts you to some reminders or actions:

ACTIVITY

This includes a variety of activities that you need to work on to help build the
concepts of the topic being presented.

ANALYSIS

This gives a variety of analysis questions intended draw out your reactions or
responses.

ABSTRACTION

This is where you get the inputs and some discussions about the topic.

APPLICATION

You are expected to utilize knowledge gained from this lesson.

CLOSURE
Lesson 1
Consumer Buying Process
Learning Outcomes

 Appraised the consumer market and illustrate the consumer buying process.

Activity
Kindly accomplish the following task:
 In your own perspective, list down at least 3 factors that contributed to your
decision making in buying a certain product in the market.
 Discuss each factor briefly.

Analysis
Answer the following questions:
 What are your insights and realization in answering the activity?

Abstraction

THE CONSUMER MARKET

The whole world is a consumer market. Every time a consumer buys a
particular market includes products and services that are being needed in everyday
living. Hence, consumer market refers to the market where people buy products for
personal use and are not intended for further sale to other people. Some basic types
of consumer markets include food and beverages, retail stores, fast moving
consumer products and transportation.
The individual consumers themselves decide on specific products they need
to purchase for personal consumption or for sharing to other people. Individuals in
the consumer market have unsatisfied demands and are big in number. In order to
serve this large number of buyers who are geographically widespread, there is also
the presence of a large number of middlemen the distribution channel. Although,
their individual purchases are in small quantities.
CONSUMER BUYING PROCESS

Some retailers often times have the thinking that consumers buy in
randomized patterns. Certain products appeal into customers based on tastes and
preferences. It could either be that a purchase may take place or it does not. There
are two questions that come to mind on how product and service marketing is being
done. Firstly, are the steps in decision making before a consumer buys or not.
Secondly, is presence of a scientific approach being used to find out the buying
process that could make selling to target market not just a complete guess?
A consumer buying process is the sequence of steps that a consumer will
need to undergo in order to arrive at the final purchasing decision. Typically,
consumers pursue a usual buying process.

According to Philip Kotler, the typical buying process involves five stages the
consumer passes through described as under:
Problem Recognition

A customer must first have a problem before a purchase can happen. A

problem occurs when his desire as a customer is far from the reality. Simply, what is
actually taking place or his actual state is different from the belief and perception of
the customer or his desired state. This step is also recognized as identification of
unmet need. This unmet need becomes a basis or force of buying behavior. When
the unmet need or problem is identified, the buying problems crop up. An individual
is obliged to buy a product or service in answer to the need or problem.
Information Search

Following the problem recognition, an interested consumer will undertake to

search for information. At this point, he will read newspapers and magazines, watch
television, make a trip to showroom or dealer, get in touch with salesman, confer
with friends and relatives, and undertake all the feasible sources of information.
Mostly, the consumer can attempt to look for information coming from one or more of
following sources, namely:
1. Personal sources - They may be composed of family members, friends, package,
colleagues, and relatives.
2. Commercial sources - Advertising, salesmen, dealers, package, trade show,
display, and exhibition are leading commercial sources.
3. Public sources - Mass media such as radio, TV, newspapers, magazines, cinema,
and consumer-rating agencies are some primary public sources.
4. Experimental sources - They consist of handling, examining, testing, or using the
product.
 Personal characteristics, types of products, and capacity and reliability of
sources are some bases of sources choice. Every information source has its distinct
role in influencing buying decision. A consumer can discover a lot about different
products and brands offered in the market through information collected from
relevant sources.

Evaluation of Alternatives

After a consumer has gathered information about certain brands of a product

or service, he is now ready to make evaluation. Obviously, he would not buy all of
these brands. As a consumer; he would just select one brand among the alternatives
that for him is the best to provide the utmost satisfaction. He has, of course, certain
criteria to use in evaluating various alternatives, such as:

1. Benefits provided by the brands

2. Qualities, features or attributes, and performance
3. Price changed by different brands

4. Past record of brands Attractiveness, image or reputation of brands

6. Product-related services provided by the brands, for example after-sales services,
warrantee, and without charge installation

7. Accessibility of brands and dealer rating

Whichever brand satisfies the criteria rationally is the one chosen by a
consumer. It is the role of the marketer to emphasize those advanced features of his
brand. Advertisement could help marketers make good comparison of the different
brands. Most newspapers even provide comparative table so that consumers are
able to know which the best brand among the rest is.
Purchase Decision

At this stage, the customer has searched several brands; he knew the price
and payment options and now prefers one as a promising brand to buy. Obviously,
the brand that offers maximum benefits or satisfaction in relation to price is chosen.
However, sometimes a customer walks away from the purchase. It is essential for a
marketer to provide more information about the need discovered in the first step. The
marketer needs to explain why the product being offered is the best to fulfill such
need. In this way, the marketer can be able to bring back the customer. Hence, in
this step, profits could be gained or lost. Basically, there are several factors that
contribute on the decision of the consumer to avoid, modify, or postpone a purchase
decision, which are:
1. Attitudes of others - Sometimes other persons' attitudes are negative about the
consumer's preferred brand. The consumer may be affected with these negative
attitudes and comply with them.
2. Unanticipated situational factors - Increase in price, unemployment, income of the
household, big medical expenses, and unavailability of the most favored brand and
such other comparable unexpected situations may change the buying intention.
3. Consumer's perceived risk - Some bases of perceived risk could be on price,
quality doubt, entrance of a new better-quality product and the customer self
confidence
Purchase

All the stages that lead toward purchasing have been completed, although it is
still unsure whether the customer will really buy. During this phase, the consumer
must settle on the following:
1. From whom they should buy, which is prejudiced by price point, terms of sale, and
prior experience with or knowledge of the seller and the return guidelines.
2. When to buy, which can be prejudiced by the store atmosphere or environment,
time pressures and constraints, the existence of a sale, and the shopping
experience.
3. This is also a time during which the consumer might choose against making the
purchase decision. Alternatively, they may also decide that they want to make the
purchase at some point in the near or far future perhaps because the price point is
above their means or simply because they might feel more comfortable waiting.

Post-Purchase Evaluation
After a purchase is completed, it is expected that the customer would evaluate
whether he made a good decision or not. When the customer feels that his purchase
was an erroneous decision, there may be a possibility of a return. When a return
took place, the marketer may offer a simple and easy exchange. In case the
customer is satisfied with the purchase, a chance of buying again the same brand is
still under consideration. Basically, there is no assurance of a total satisfaction. A
gap between the expected level of satisfaction and the actual satisfaction is normal
to happen. Hence, the succeeding behavior of the customer depends on the level of
his satisfaction or dissatisfaction.
Here are some of the few things that a marketer should check about the post-
purchase experience of the buyers, namely:
1. Post-purchase satisfaction - Actual satisfaction may not be identical to the
expected one. A customer may discover some faults or defects in the product as he
uses it. It is the concern of marketers to know the level of customer satisfaction.
Dissatisfaction happens when there is a big gap between expectations and actual
performance. In contrast, satisfaction takes place once a product meets or exceeds
all the expectations. When totally satisfied, a consumer may repeat buy and create a
favorable word of mouth.
2. Post-purchase action - The best advertisement is a completely satisfied customer.
Certainly, the succeeding action towards the products depends on the level of the
consumer's satisfaction. On the contrary, unsatisfied consumer may dump the
product, file a complaint and turn to legal action. He must investigate where the
product falls short. Close informal relations with consumers can yield valuable
information. Remember that a unsatisfied consumer is more important than a
satisfied one as his every problem regarding the product reveals a ready suggestion.
Marketer must welcome complaints and tackle them carefully for the bright future.

3. Post-purchase use and disposal - Information concerning product usage and

disposal have to be observed by marketers. Marketers can make use of the
information as guide to find out potential problems and opportunities. Most of the
time, consumers use or dispose a product in these manners, such as:

 Consumer may fully use the product right after buying;

 Consumer may store the product for use in the future;
 Consumer may resell or trade it;
 Consumer may discover new uses of the product; hence use it in a different
way
 Consumer may present the product to other people as a gift
 Consumer may consider the product worthless and throw it away.

In reality, the buying process is a voyage starting from recognizing the problem
until the feedback is taken from the customers. The process is significant both for the
seller and the consumer. Hence, the consumer’s viewpoint needs to be studied and
supported by marketers on every stage in the buying process.

Application
Kindly accomplish the following: (Minimum of 8 Sentences)

 As a future marketer, discuss the importance of identifying the consumer

buying process.

Closure
Congratulations! You just have finished the Lesson 1. Now continue your
learning experience by proceeding to Lesson 2!
Lesson 2
Influences on Consumer Buyer behaviour
Learning Outcomes

 Identify and characterize the situational influences on consumer behaviour.

Activity
Kindly accomplish the following task:
 Discuss your answer briefly.
 In your opinion, do you believe that there are certain factors that influence a
consumer in buying a certain product?

Analysis
Answer the following questions:
 What are your insights and realization in answering the activity?

Abstraction

SITUATIONAL INFLUENCES ON CONSUMER BEHAVIOR

The motivation to buy may rely on several factors that cannot be controlled by the
consumer or the marketer. Some buyers often experience that their buying behavior
is influenced by their situations. Situational influences are short-term conditions that
shape how buyers behave, whether they actually buy a product, buy additional
products, or buy nothing at all from a store.
Often, customers react to the following:
 Temporal Perspective

Time is the focus of temporal perspective. The standpoint on time could mean
time allocated for shopping, time of the day for shopping which could be in the
morning, evening or afternoon, season, time of the year, time of festivals and other
related factors that may be identified with time.
Time is very vital that often some customers even give up something important for
the sake of shopping. Here the three forms on how time can affect shopping:
1. Time pressure - Time is essential for comprehensive problem solving. However,
when time is limited, customers are likely to process less information. Being in a
hurry makes customers not being able to think very well about different options. They
may pick the accessible well-known brand that is usually premium priced. Or worst,
they choose the cheapest product but only to have remorse later.
2. Time of year - Buying decision could also be affected by the changing seasons. In
the Philippines for instance, during summer people are into swimming escapades,
leading to increase in resorts and hotels big occupancy. During summer also people
tend to buy more comfortable apparel. In general consumers are likely to spend
more money in the summer. Food items differ with the season and holidays.
3. Time of day - Every individual has his own body clock. A lot of people are natural
sleepers and are awake during the day. However, some are still up during late hours
in the evening. Natural sleepers may not be comfortable, not well-informed and not
able to decide well during midnight shopping, In order to keep them alert and alive,
some would take in energy drinks and beverages with caffeine content.
 Purchase Task

Purchase task means the buying intention or reason behind the purchasing
decision of a certain product or service. The intention for shopping speaks of the
types of products customers are eager to interact with at that point in time and may
be the basis for them to avoid certain products they would usually interact with on
another shopping spree. Some people buy products and services for their own self-
consumption. Others made purchases to present the items as gift for special
occasions like birthdays, anniversaries, weddings and so on. Self-consumption and
giving gifts are some influencers of the purchase task.
 Social Surrounding

Often times a purchase is influenced by the presence of other members of the

society while in a shopping activity. Being a social being, the opinion of these people
about the purchase and use of products affects buying decision of consumers.
 Atmospherics in the Physical Surroundings

The concept of atmospherics includes the physical surroundings, the muse and the
handling of the crowd." The physical surroundings act as, stimuli and through the five
senses may catch the attention of customers. Hence, there must be a right
combination of these atmospherics that may create a, friendly environment to all
consumers. With the exposure to the right combination of atmospherics, consumer
may react either as pleasure or displeasure and lead him to a respond to a particular
purchase decision.
1. Point-of-purchase displays - It can draw attention to a certain product or a
particular brand and generate a greater chance of purchasing that product or brand.
For instance, an end-of-aisle display highlighting a particular brand of baby powder
will boost purchases of this brand compared to normal shelf sales.
2. Color - Different cultures have particular meanings to colors. Hence, a store
whether physical or virtual must have complete understanding of colors and their
meanings. Most of the times, colors affect customers unconsciously. Red stimulates
ones energy; green a refreshing effect while blue is a calming color.
3. Smell - Obviously, a store with bad smell would drive away customers and would
not shop longer. It is not a coincidence for a store to look and smell longer and move
around the facility, great. The intention of the store management is to let customers
stay a little Known as strategic fragrance.
4. Music- It has been said that music influences a customer's mood. Slow tempo
music calms down the customer and becomes the basis for them to linger in the
store longer. While fast tempo music may be best for stores that require fast turnover
of their items.
5. Crowds - Based on some studies, overcrowding in stores lead to negative
shopping experiences. Customers may feel too restricted in their movements and
turn to be unhappy leaving the store immediately. However, other studies have
shown that to a certain degree, overcrowding can have a positive impact on a
person's buying experience. The experience is often known to as "herd behavior."
6. Promotional deals - This is about offering a price purchase incentive such as
some cents-off sales, buy one take one or even bundled items. This is made
somewhat often in the promotion of repeatedly purchased consumer products like
toothpaste, shampoos and conditioners.
7. Stock-out - It means that a store has not restocked the product. This can cause
brand switching or store switching. There are some things a customer would do in
this circumstance:
a. Purchase a substitute product at the original store; however this may replace the
intended brand for future purchases
b. Wait to buy until the intended product is obtainable
C. Do not buy any
d. Buy the intended brand at another store

PSYCHOLOGICAL INFLUENCES ON CONSUMER BEHAVIOR

The human psychology has an important role to play in manipulating the consumer's
preferences and likes or dislikes for a specific product and services.
 Motivation

Maslow's hierarchy of needs fully explains the different needs of individuals. These
needs consist of basic needs, security needs, social needs, esteem needs and self-
actualization needs. A person may experience various needs at the same time.
The motivation of an individual to act is based on the importance of each need.
1. Physiological needs consist of hunger, thirst, and other basic drives. Every one
living, in spite of their level of maturity, has physiological need Physiological needs
are universal and persist throughout nature.
2. Safety and security involve a nonstop fulfillment of physiological needs beside the
non-existence of the danger of physical damage. Safety and security include
physical and financial security. Financial security provides to meet person's
physiological needs. Health and physical welfare and protection from accidents are
part of these needs. Gyms, organic supplements and insurance are examples of
products that answer for these needs.
3 Love and belonging are also essential needs. Love includes the needs for
belongingness, friendship, human relationship, and family. They involve individual's
relations with others and the need to be accepted as part of social groups, big or
small. Dating services, flower shops and fragrances are products under this type of
need.
4. Esteem consists of the need to experience goodness about oneself, to be
treasured and appreciated by others, besides a positive self-image.
5. Self-actualization is the need humans feel to accomplish their highest potential
and to achieve all that they can with their talents and abilities. Depending on the
individual's interest, self-actualization may be in the form of engagement in musical
or artistic pursuits, good parenting, or athletics. At different points in their lives,
individuals might convey this need through various quests.
 Perception

The consumer's perception concerning a product and the brand also has impact on
his buying decision. The perception is the process by which the individual chooses,
sorts out and takes meaning to the information in drawing a significant conclusion.
Such as, Apple computer is perceived as a first-class brand and consumers are
motivated to acquire it to get connected with the privileged class of the society.
 Learning

Learning is an experience and practices that in reality changes behavior of any

consumer. The individual's learning depends on the skills, knowledge and intention.
The skills are developed through practice while the knowledge and intention are
acquired with the experience. There could be a conditional learning or a cognitive
learning.
In the conditional learning, the consumer obtains learning from being trained to
particular stimuli. Simply a person when he is exposed to the same situation, again
and again, he develops a specific reaction towards it. While in the cognitive learning
the individual applies all his knowledge, skill, attitudes, values and beliefs to find the
answer of a problem and gets satisfaction out of it.
  Values, Beliefs, and Attitudes

The individuals have certain beliefs and attitudes about products on which their
purchase decisions depend. These attitudes and beliefs are the likelihood to take
action to a given product in a particular way, and these make up the brand image
that influences the consumer buying behaviour.
SOCIO-CULTURAL INFLUENCES ON CONSUMER BEHAVIOR
Man is a social animal living in a complicated environment among people with
different buying behaviors. . He tries to adjust in becoming socially acceptable. Thus,
the social factors have control over the buying behavior of an individual to a big
scope.
"The social factors are the factors that are common in the society where a consumer
resides. The society resides. The society is composed of several individuals that
have different preferences and behaviors. On the other hand the cultural factors are
the factors that an individual learns while growing up due to socialization within the
family and other key institutions.
 Reference Groups

A reference group is a group with which an individual likes to be associated with, and
be called as a member of that group. It has been observed, that all the members of
the reference group have similar buying behavior and have a strong influence over
each other.
The marketers should strive to discover the roles within the reference group that
influences the behavior of others, such as:
1. Initiator - He initiates the buying decision.
2. Influencer - His opinion influences the buying decision.
3. Decision-maker - He has the authority to take the purchase decision.
4. Buyer - He ultimately buys the product.
 Roles and status

Status is the position a person occupies in a particular situation. Everyone occupies

several statuses and perform the roles that may be coupled with them. A role is the
set of norms, values, behaviors, and personality characteristics connected to a
status.
The position and role of a person in the society has also an influence in his buying
decision and behavior. Being a person with higher position in an organization los
instance commands him to purchase items that will give emphasis and support
marketer is necessary prior to product endorsement.
Therefore, role and status as social factors need to be studied and understood
building the preferences and behavior of an individual first: before developing
marketing campaigns. They play a very significant role in building the preferences
and behavior of an individual.
 Family

One's preferences and behavior are highly influenced by family members. It is within
that family an individual grows, develop his personality and shape his values.
Likewise, an individual's buying preferences and behavior are developed as he
watches his parents and a great possibility of buying similar products or services
even when he grows old.
There are basically two ways in which the family can have an influence on the buying
preferences and behavior of an individual which are:
1. Influences the personality, attitude, beliefs, and characteristics of a person.
2. Influences the decision-making of a person on the acquisition of some goods and
services.
 Social Class

The influence of the social class is very strong in the buying decision of a customer.
Social class is where an individual belongs in the society. Social class is relatively a
permanent and ordered division in a society whose members share the same value,
interest and behavior.
The society normally has three social classes namely upper class, middle class, and
the lower class. An individual from an upper middle class would spend for high-class
goods for status symbol. While an individual from middle income purchase carefully
and collect information to compare different producers in the same line. Lower
income group would buy items required to satisfy their basic needs.
 Culture

The culture refers to the beliefs, customs, rituals and practice that a particular group
of people follows. As a child grows, he inculcates the buying and decision- making
patterns through his family and the key institutions. The culture varies from region to
region and even from country to country.
 Subculture

The culture can be further divided into subculture wherein the people are categorized
more particularly based on their shared customs and beliefs. Customers could be
subcategorized in terms of religions, geographic regions, nationalities, and so on.
The different subcultures form numerous markets segment,
PERSONAL INFLUENCES ON CONSUMER BEHAVIOR
The personal factors are the individual features of consumers that highly control their
buying behaviors. These features differ from person to person that may result in the
differences of perceptions, attitudes and behavior about goods and services.
 Age

The consumer buying behavior is greatly influenced by his age. Consumers buy
different products in different stages of their life cycle.
 Gender

Since males and females have different needs in terms of fashion and lifestyle, or fe
affect their buying choices These gender are greatly different because of the
distinction in their needs. However they be similar in terms of food and fun. Possibly
they could watch the same movie together or eat the same brand of bread.
 Education

Outlook about the things that are around is influenced by education. Education also
has an impact on the level of judgment consumers apply when buying. These days
education has a big role as a determinant of social status. Educated people have
higher level of judgment that they apply when buying products or availing services.
Education may change buying preferences of people.
 Occupation

The occupation of the individual also influences his buying behavior. An individual's
nature of job has a direct influence on the products and brands he picks for himself.
The people tend to buy those products and services that promote their profession
and role in the society. For example, the buying patterns of the lawyer will be
different from the other groups of people such as doctor, teacher, businessman, and
other professionals.
 Lifestyle

Lifestyle is the way an individual stays in the society. The consumer buying behavior
is influenced by his lifestyle. The lifestyle also means individual's interest, values,
opinions and activities that reflect the manner in which he lives in the society. Such
as, if the person has a healthy lifestyle then he will avoid junk foods and consume
more of organic products.
ECONOMIC INFLUENCES ON CONSUMER BEHAVIOR
The economic factors are the features that speak about the level of sales in the
market and the financial position of the consumer, such as how much an individual
spends on the purchase of goods and services that add to the overall sales of the
company.
Personal Income
The income of the person influences his buying patterns. It is the income of a
consumer that dictates his purchasing power. Simply, the more personal income a
Person has, the more he can spend on a lot of items. The contrary is true for people
with less income.
Family Income
The family income refers to the combined sum of the income of all the family
members. The total family income 'also influences the buying behaviors of its
members. The residual income after purchasing all the basic necessities of everyday
life may be utilized to buy shopping goods, luxury items, durable goods, and other
items.
Consumer Credit
The credit facility obtainable to the consumer also influences his buying behavior. If
the credit terms are liberal, then the customers are likely to spend more on the
extravagant items, durable goods, and shopping goods. This credit is offered by the
seller either directly or indirectly through the banks and other financial institutions.
This is the case of car loan or housing as examples.
Liquid Assets and Savings of the Consumer
The liquid assets with the consumer have an influence in his buying behavior. The
liquid assets are the assets that are easily redeemable into the cash. If the customer
has more liquid assets, then he is predictable to use more on the extravagant items
and the shopping goods. On the other hand, if the liquid assets are restricted then
the spending on extravagant items also reduces.

Application
Kindly accomplish the following: (Minimum of 8 Sentences)

 Among the all factors that were identified in the module, which do you think
has the highest level of significance in terms of influencing a consumer in
buying a certain product?

Closure
Congratulations! You just have finished the Lesson 2. Now continue your
learning experience by proceeding to Lesson 3!
Lesson 3
The Business Market
Learning Outcomes

 Internalize the business buying process and discuss the participants in the
business buying process.

Activity
Kindly accomplish the following task:
 Discuss the importance of business markets in an organization.

Analysis
Answer the following questions:
 What are your insights and realization in answering the activity?

Abstraction

THE BUSINESS MARKET

Very different from the consumer market is the business market. The
business market consists of all the organizations that obtain goods and services
used in the production of other products or services that are sold, rented, or supplied
to others. Thus, the business market does not buy for personal consumption.
Types of Business Market
In addition to targeting specific types of consumers or segments of a particular
marketplace, businesses can fit their products and services to diverse types of
macro marketplaces. A business can sell similar product or service in a different way
in various markets by modifying what is offered, the pricing, promotional strategies
and distribution channels.
 Industrial markets

The industrial market consists mainly of companies making business in durable

goods such as machinery, materials, chemicals, vehicles and office furniture and
supplies. The buyers are often manufacturers and the sellers are known as
suppliers. Suppliers must be specialists in their product or service and the market in
general. They frequently employ a consultative selling method to partner with
customers, assisting them resolve problems or accomplish definite business goals.
  Resale markets

Resale markets purchase finished products and re-trade them to their

customers for the intention of making a profit. Resale markets do not change the
products they procure. They can be wholesalers who put up for sale their products to
other resellers or retailers who sell their products to final users. The resale market
includes wholesalers, retailers, and distributors. Resellers may limit their purchases
to one product or brand or sell an assortment of products and brands.
 Government Markets

In the majority countries, government organizations are a key buyer of goods and
services. Especially in the developing country like the Philippines, where the chief
infrastructural projects and production are government activities, government
markets happen to a very vital component. Government organizations normally need
suppliers to propose bids and usually they grant the contract to the lowest bidder.
Getting these contracts typically needs filling out long bids, showing evidence of
corporate standing and approving to pursue other business practices government
agencies necessitate.
 Institutional Markets

Institutional market includes schools, hospitals, nursing homes, prisons and other
institutions that must be supplied with goods and services to people in their care.
Numerous of these organizations are characterized by low budgets and captured
customers. Here, the principal measure is to continue spending inside preset budget
limits that have been placed as element of formerly agreed operational spending
restrictions.

BUYING SITUATIONS IN THE BUSINESS MARKET

Business buyers face loads of decisions in making a purchase. Following are the
three types of business buying situations.
 Straight Rebuy

In this case, the prior routine order is made by the industrial business buyer
without any adjustments. The organization simply rebuys products and services from
the same suppliers. Suppliers typically proactively visit the organizations to take the
orders beforehand to sustain their market share. The people concerned in the buying
process have reasonably good experience of buying and require no further
information on products and services. There is no danger implicated because of
earlier period experience of purchasing similar products and services.
 Modified Rebuy

In this situation, a certain business wants to change its order in respect of

specification of product, its price or terms and so on. This needs more partaker in the
decision making process. Owing to change in preferences or entrance of a substitute
product in the marketplace, organizations are obligatory to change an existing
product to fit with the target market. The modifications can be alteration in product
characteristics, price, quality, suppliers, and many more. In order to reach these
production requirements, marketers look for inventory or raw materials that meet the
organization's objectives. The people concerned in the buying process have basic
information and must study the options suiting the organization's needs. This
process is less risky and less time consuming in contrast to "New Task" buying
situation. The information in this situation is gathered on alternatives.
 New Task

When a business buys an exact product or service for the first time, then this
case is called new task buying. The purchase is done for the first time with no
purchasing experience, and extensive search is done to evaluate options. The
greater the cost or risk involved, the more the expertise of decision making
participants is needed. A business identifies first its need, and then makes evaluation
of some products that can satisfy this need. Thereafter, it tries to look for vendors
(suppliers) that can give solutions for the need. The company evaluates the
capabilities of these vendors and right after qualifying request the eligible vendors to
submit their bids. Only after the evaluation of the bids that the company may decide
whom to buy from any of the vendors that will satisfy their needs the best

PARTICIPANTS IN THE BUSINESS BUYING PROCESS

Business buying behavior has become complex also because of the
participation and interest of many people in the buying process, besides the various
nature of the products being purchased. These people involved may even have
conflicting requirements in the buying process. It is vital for people responsible in
marketing to business organization that they understand the complexities they may
encounter in selling to business buyers. Every organization has its respective buying
or procurement department or an in-charge person responsible in handling buying
transactions.
However, they are not the only people who may place pressure on the buying
decision or have the authority to do the buying. The Buying Center makes the final
decision to purchase. This is not essentially a fixed entity; hence it is not shown in
the organization chart of the company. The memberships of the Buying Center come
and go based on the type of product being bought and the stage of the buying
process.Different people play different roles in the buying process, in an
organization. The roles differ due to their belonging to different functional areas in an
organization.
 Initiators

Initiators are those who start the buying process. Depending on what type of
product to purchase, there would be differences on who will be initiating. If the
equipment will be used for creating a new component or a new product, the
engineering department initiates this capital equipment purchase. The production
department may initiate for replacement of existing equipment which is no longer
producing in full capacity or not enough quality. Production and planning control
department may initiate for buying components to become a part of the finished
product. Maintenance department or store personnel may initiate in case of spare
parts of equipment.
 Influencers

Influencers are those people who give information and put in decision standards
during the buying process. In business buying, influences are different in nature. In
the case of capital equipment and component purchases, the essential standards
could be quality, output, quantity, price of production per unit, delivery timeliness and
maintainability. The buying process is often influenced by various departments and
makes certain that their own respective standards are followed when the equipment
is bought. Often times the requirements of various departments possibly may
contradict each other. High quality and low cost of production are some requirements
that may conflict each other in buying the same equipment.
In the buying process a clear understanding of each other's requirement is
necessary for various stakeholders. Everyone should be prepared to make
compromises. It is too difficult to insist one's individual requirements. It is
disadvantage to the equipment effectiveness in general for a strong influencer
department to have its own means. In order to make sure that the selected
equipment is being bought, top management should get in the way. If a particular
department rules, damage the business goals in general could be possible.
 Deciders

Deciders are those who have power to choose a supplier. For various purchases,
the main influencers may come to a decision upon the seller jointly. The major
influencers may, in fact, sit down as a group, sort out differences and consent upon a
supplier together. However in other cases, major influencers may be working for a
real decision maker who most of the times are the top management, though formally
the group of major influencers may be designated as decisions takers.
Even when the Decision Making Unit (DMU) has the ultimate decision, the group
usually allows itself to be influenced by the person whose department will be affected
most prominently by the product to be purchased. For major purchases like
equipment, the final decision may be taken by top management.
 Users

Users are individuals or groups that use the product. For equipment, the user is
the production department, for components, the user is assembly department for
operating supplies, the user may be maintenance department. The feedback from
the user department is vital for the supplier doing business with the company in the
future. The seller company has to maintain a line of communication with the user
department and offer to help in all possible ways with the use of the product.
It is possible to develop long-term relationships with users because most equipment
is in operation for a long time. The user can provide information about impending
purchases and important influencers. Such information help out a supplier in
establishing an advantage over competitors in the buying process because he can
approach the company early on with a proposal aligned to the preferred criteria of
the identified influencers.
 Buyers

Some companies may consent to users in buying low priced items from a
preferred group of suppliers by themselves. However, the majority of companies
would oblige all purchasing to be routed through the purchase department. So even
though the purchase department may have a marginal role in selection of a supplier,
the order will be placed by the purchase department. This practice is useful as the
purchase department is able to track progress of the completion of the item in the
seller's premise and guarantee its timely delivery.
Sometimes the influencers may be so focused on their individual parameters that
the price of the equipment may be disregarded. Most influencers and users are not
really troubled by price. They are focused on the value that they want to gain from
the product. Smart business marketers will take concurrence of users and
influencers in justifying the high prices of their products.
 Gatekeepers

A gatekeeper controls the flow of information, or allows or prevents access to a

DMU member. He may be a purchaser whose permission must be sought before a
supplier can contact other members of the DU. The purchase department may
company be routed through it. Insist that all discussions between the supplier and
various decision makers in this may be with good intentions as the purchase
department is ultimately responsible for a good buy, so it should know what is being
agreed upon between the supplier and the decision makers, and get them
implemented by the supplier.
But this requirement gives lot of power to the purchase department. Also, the few
suppliers that get to present their items are chosen by the purchase department. For
very important decisions, the decision making unit is complex, involving large
number of executives within the buying organization. The salesperson has to identify
and reach key members of the DM, and convince them that his product meets their
choice criteria.
BUSINESS BUYING PROCESS
Business buying process is quite different from the consumer buying process,
because in this case the business market is involved in different set of characteristics
and demands. The companies doing business in business markets adopt separate
marketing strategies.
The business buying process is split into eight stages. The new task buying contains
all of these steps whereas the straight or modified rebuy may skip some of them.
These stages are as follows:
 Problem Recognition

In the first stage of business buying process, a certain problem is identified by

someone in the organization. The need or the problem is recognized through either
internal or external cues. An internal factor would be the awareness of not having
adequate capacity, so that new equipment must be bought or it may be product
returns from customers meaning that its machine is not manufacturing quality
products. Another internal reason, may be that the supplier is not giving effective
goods at a reasonable price. Some problems which are recognized inside the
company may not be provided solution owing to more critical problems.
 Description of General Need

This stage begins when an obvious need has been recognized by the organization.
The team or unit in the process involves a team of buyers, engineers and other
professionals who work together to agree on the desired product. In this step,
description about the general need has been set which explains the general
characteristics and the quantity of the needed product. The Decision Making Unit
(DU) draws up a description of what is required in terms of reliability, price, durability
and other features.
The capability of salespeople to persuade the DM in the specifications can furnish
their company an advantage at later stages of the buying process. Through
persuading the buying company to detail features that only their product possesses,
the sale may be almost closed at this stage. So, it is essential that the sales team is
connected with the buyer very early in the buying process. Said team must also have
strong and close enough relationships with the buyer's management in order to sway
details of product's specifications.
 Specification of the Product

In this stage, the organization that is involved in the business buying process
organizes a comprehensive list of the technical specifications of the preferred
product through value analysis carried out by the engineering team. In value
analysis, cautious studies are prepared to find out the cost reduction production
process for the redesigning or making standard the desired product or service.
The professional team includes the best features and characteristics necessary in
buying the product. The selling organizations can also employ this step to raise their
sales.
 Search of Supplier

In this step of the business buying process, the buying organization looks for the
suppliers to buy with the best one. For this intention, a list of competitive vendors is
readied by the buying organization with the use of supplier directories, aid of the
Internet, or getting in touch with other organization for getting recommended
 Proposal Solicitation

In this stage the suppliers are asked to submit their proposals. In some cases,
some suppliers send only their salespersons or simple catalogs. However when the
desired product is expensive and complex than proper formal presentations, detailed
written proposals are required from the qualified suppliers. The marketers of the
business organizations should also be skillful in writing and presentation of business
proposals to the buying organizations.
Therefore, it is important that a supplier is known to the buyer, and it can do so by
maintaining relationships with the buyer even when the latter is not buying, and by
being seen in the relevant media. Proposals are called from chosen suppliers and
then analyzed.
 Selection of Supplier

At this stage the final supplier is chosen from the list of possible suppliers who
have submitted their proposals to the buying organization. The selection team of the
buying organization appraises the proposals of all suppliers and list the offered
attributed on the basis of the rank of importance. Following are some of the main
attributes that serve as the basis for the selection of potential suppliers.
1. Quality of product
2. Delivery time
3. Ethical corporate behavior
4. Reasonable price
5. Honest communication
6. Past performance and reputation
7. Repair and maintenance services etc.
 Order-Routine Specification

The order-routine specifications are prepared in this step which contains the order
having a final list of the specifications, the selected supplier, delivery time, quantity
required, price and repair and maintenance services etc.
Details of payment and delivery are important. This is conducted by the purchasing
department.
Performance Review
This is the last stage of the business buying process in which the performance of the
supplier is reviewed by the buying organization. For this purpose the buying
organization contacts with the customers or users of the purchased product and ask
them to provide their experience of using that product. Mainly the consumer behavior
or the satisfaction level of users serves as the basis of the performance reviewing
factor for the product purchased from business supplier.
The performance review helps in future decision of the business buying process in
the form of straight rebuy, modified rebuy or new task buying. The selling
organization also takes into account the same factors that would affect in the
performance review by the buying organization.

Application
Kindly accomplish the following: (Minimum of 8 Sentences)

 Identify the 5 participants in the business buying process and discuss their
importance in an organization.

Closure
Congratulations! You just have finished the Lesson 3. Now continue your
learning experience by proceeding to Module Assessment!
Module Summary

In Module 4, you were introduced to analysing the Consumer Markets and

Consumer Buyer Behaviour – what it is about and its importance to business

organizations.

To finish up module 4 Consumer Markets and Consumer Buyer Behaviour,

you need to take the Module 4 Assessment.

Module Assessment
Case Study: Orange World Mobile App
Engaging the millennial is the name of the game for most of the today's
business. The challenge differs as each brand has its own unique customer
perception to build, manage, and nurture. But it can even be more difficult for some
industries, life insurance to be specific. Insurance companies have to deal with
negative perceptions on their industry that have been around for quite some time. On
top of that, the lack of constant interaction between insurance brands and
consumers has been a challenge. Insurance has always been very transactional by
nature, from policy purchase to the claim pay-outs, touch points between the insurer
and the client tend to be far and few in between.

One brand took a unique approach to addressing these challenges, FWD Life
Philippines. FWD aims at energizing the industry with technology-driven products in
creating fresh customer experiences. The vision is to empower Filipino consumers
and change the way they feel about insurance. Creating meaningful and continuous
relationships while staying attuned to their customers' lifestyles and passions has
become the number one goal.

Knowing Your Audience ALWAYS Counts

Passion underlies everything Filipinos have grown accustomed to in the digital age.
The way they interact with the world around them has been shaped by the ever-
changing digital landscape. They want to do things their way and they want it now.
Unsurprisingly, mobile has become ingrained into the Filipino millennial's day-to-day
living. It has become their constant companion in pursuing life's adventures;
searching for awesome surfing destinations or the latest food parks.

Be Where They Are

Leveraging the power of digital marketing is not just about applying technology for
your audience's use. It's about reinventing the way you get you message Keros"ald
the culture within it- to drive innovation, to drive loyalty, and to drive passion into
today's generation. FWD wanted to build an online community to further amplify and
empower as they encourage them to live passionate lives. Introducing a new world
of opportunities that one can enter with just a few clicks More so, to provide a go to
guide for those passion-driven consumers as they explore and embrace lifés
adventures.

The Orange World App

With the help of AdSpark, FWD Life Philippines launched an industry innovation for
today's tech-savvy and passion-driven consumers - the Orange World mobile app
(now known as FWD Max available on iOS and Android). The app's overall
experience was carefully designed to cater to the 8-second attention span of today's
generation with content that would entice them to come back.

Engaging the app allows the user to do two things, learn and fulfil. Through relevant
well-written articles, the audience learns more about what excites them and at the
same time discover other interesting activities they can try. On the other hand, they
are also given the opportunity to fulfill their passions via exciting offers and promos
that they can avail through partner establishments and merchants. It aims to be the
go-to source for the four facets of life that Filipinos are most passionate about: travel,
fitness, food, and the arts. The beauty of it is how it is able to translate mobile
experiences into memorable real-life experiences, redefining the conventional brand
loyalty programs. Orange World users can earn "passion points" in the app by simply
logging in, reading, sharing, or liking content. They can redeem these from various
brands and avail of their exclusive offerings. "passion points" The app allows FWD to
stay attuned to the market's passion points, therefore staying relevant and ultimately
pave the way to changing the way people feel about insurance. The Orange World
App is designed to help millennials understand that having a secure future does not
exclude the pursuit of their passions; that it is not impossible for security and passion
to go hand in hand.

How Did It Fare?

Orange World App has gained the admiration of several award-giving institutions.
The program bagged several awards namely Brand-Single Medium- Digital and
Mobile from PANAta Marketing Effectiveness Awards 2017 and Award of Merit for
Digital Communications 2017 Philippine Quill Awards. It Effectiveness/ Sentiment
Improvement was also one of the finalists at the 2017 Boomerang Awards under the
category.

Case Questions:

1. What are the various influences in consumer behaviour of Orange World App
customers? Describe each of them.

2. Do you think the influences in consumer behaviour will be the same for
Generation X? Explain your answer briefly.