Decision Making Process Different Situations

1.2 Compare Buyer Behavior and the Decision Making Process Different Situations

Consumers are the end users of a product or service. The buying decisions of consumers vary in relation to environmental factors. The understanding of how consumers behave in different situations helps business marketers to formulate effective marketing strategies.Kuester (2012, p. 110) defines consumer behaviour as the “study of individuals, groups or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society”. The individual buying decision-making process is usually influencedby the factors shown in figure 1.2.1 below: 

Figure 1.2.1: Factors Influencing Consumer Behaviour 

Source: e Notes MBA (2014)

As shown in figure 1.2.1 above, personal factors play important roles in affecting the behaviour of consumers. For instance, teenagers will generally be interested in buying bright and loud colours as opposed to elderly people who will prefer decent, simple and subtle design. Similarly, consumer behaviour is a function of economic condition, in terms of the earnings, of the buyer. Low-income earners will generally spend greater parts of their incomes on food and products for survival, whereas high-income earners can generally afford to buy expensive and premium products.

On social status, upper class consumers, such as celebrities and top-rated footballers, have tendency to spend on luxurious cars, designer clothes, and other high-end products compared to low-class consumers who will only spend on basic products (Schwartz, 2006).

Factors affecting organisational Buying Behaviour

Environmental factors often affect the buying behaviour. These include environmental, organisational, interpersonal and personal factors as shown in figure 1.2.2 below

Figure 1.2.2: Factors affecting organisational Buying Behaviour

Source: Awesome Inc. (2014)

Economic factor includes the level of demand and economic health. During good economic climate, organisations’ buying decisions to buy are positive as against the negative decision during recession. In addition, changes in technology, it space and transfer often affect organisations’ buying decisions. E-commerce and improved information system has brought revolutionary changes to organisations’ buying decisions.

Organisations generally base their buying decisions on their objectives, policies, procedures, structure and systems. For instance, the policy of an organisation can be to buy locally; the procedure can be to purchase by tender; the purchase order can be through only a particular department or manager; and purchasing decision can be either centralised or otherwise

Interpersonal and persona; factors also contribute to the organisational buying decision. For instance, the risk-taking level of an organisation or a person responsible for organisational purchase often affects the buying of the organisation. 

Buying Decision-Making Process

In relation to how customers buy, Calvin (2004) suggested that customers go through a five stage decision-making process, shown in figure 1.2.3 below, when purchasing.

Figure 1.2.3: Buying Decision-Making Process 

Source: Adapted from BPP (2013)

The model is important in making consumer decisions. Although, this model suggests that all the steps are gone through in the decision-making process, in more routine purchases, consumers often skip or reverse some stages (BPP, 2013). For instance, purchases of regular needs such as purchase of a bottle of water by a thirsty consumer. However, decision to buy a new car will engage all the phases above. According to Calvin (2004), the most important stage is the need awareness stage. He positioned that if there is no need, there is no purchase.

Organisational Decision Making Process

This is a process by which business organisations establish the need to buying products and services, as well as identifying, evaluating, and choosing among alternative brands and suppliers(Wind and Webster, 1972).

The stages of the process involved is shown in figure 1.2.4 below

Figure 1.2.4: Organisational Decision Making Process

Source: MBA Notebook (2012) 

Consumer Buying Behaviour

There are four types of buying decision making situational behaviour, shown in figure 1.2.4 below

 

Figure 1.2.5: Consumer Buying Situations

Source: Solomon (2014) 

Organisational Buying Decisions

The buy-class theory of purchasing cited by Solomon (2014) identified the following, shown in figure 1.2.6 below organisational buying situations

Figure 1.2.6: Organisational Buying Situations

Buying SituationExtent of EffortRiskBuyers Involved
Straight RebuyDecision making is habitualLowAutomatic reorder
Modified RebuyLimited Problem solving is requiredLow to moderateOne or a few
New Task BuyExtensive problem solvingHighMany

Source: Solomon (2014) 

Straight Rebuy is a routine buy compared to individual habitual purchases. Organisations re-evaluate their purchases when it comes to Modified Rebuy in order to change the quantities, specifications or even suppliers to fit for use. New Task Buy is complex divorced from experience. For instance, a firm buying a new production plant will also have to train staff to operate the machine

Differences between organisational and consumer buying situations

The basic differences between the organisational and consumers’ buying situations are shown in figure 1.2.7 below

Figure 1.2.7: Differences between organisational and consumer buying situations

Buying StepBusiness to BusinessConsumer
Problem recognitionAnticipates and plans for a purchase on a routine bias.Reacts to needs when they arise.
General  need descriptionExtensive, objective cost-benefit analysis.Limited analysis of benefits; concern with total cost
Product specificationPrecise technical description using techniques such as value analysis.Description more in terms of benefits.
Information/supplier searchExtensive search that extends to the supplierLimited search-geographically and in terms of sources.
Proposal solicitationFormal such as in tender process when large volume or value is involvedMay be verbal
Buying stepBusiness to businessConsumer
Supplier selectionUsually made after extensive evaluation of objective information.Limited analysis with subjective and informal information influencing the decision.
Order-routine specificationRoutine calculation of re-order points as well as time and place of delivery.Not routine
Post-purchase performance reviewExtensive comparison made and feedback given, concern with quality management at sourceLittle bias for comparison

Source: Bhuidas (2014) 

Conclusion

Both consumers and organisations see buying decision-making process as a good way to arrive at buying decisions. The steps may not be strictly followed in some situations, but in some other situations, they are importantly followed. The most important aspect of all is that a need must be identified for a purchase to occur.