CONSUMER AND ORGANIZATIONAL BEHAVIOUR

CONSUMER AND ORGANIZATIONAL BEHAVIOUR

Consumer behaviour is 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.

Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how:

  1. The psychology of how consumers think, feel, reason, and select between different alternatives (e.g ., brands, products, and retailers);
  2. The psychology of how the consumer is influenced by his or her environment (e.g ., culture, family, signs, media);
  3. The behaviour of consumers while shopping or making other marketing decisions;
  4. Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome;
  5. How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and.
  6. How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

Consumer behaviour holds a great important in marketing field because it is said that in the modern philosophy of marketing that CUSTOMER is treated as the KING, his needs and wants are being studied for making any product, and above that it is always been seen while looking for opportunities for a product development that whose product is brought most and what are the factors that result in purchase of a product. We can easy understand its importance if we look around our environment. consumer behaviour is made up of two words consumer and behaviour. Consumer is the person who consume the product, he may or may not be a buyer and behaviour means the aggregate of all the responses made by an organism in any situation. So consumer behaviour means the aggregate of response made by the consumer. It make us know the reasons behind the purchase of a product, and about the various feelings of the customer that are being attached with the purchase of the product.

Hence we can say that it is very importance to study the behaviour of your consumers whom you are going to serve through your product.

 

FACTORS INFLUENCING CONSUMER BEHAVIOUR

1) Cultural factors: Culture is defined as the patterns of behaviour and social relations that characterize a society and separate it from others. Culture conveys values, ideals, and attitudes that help individuals communicate with each other and evaluate situations. Cultural factors comprise set of values and ideologies of a particular community or group of individuals.

It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture. Cultural factors have a significant effect on an individual’s buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.

 

2) Social factors: A consumer’s behaviour also is influenced by social factors, such as the (a) Groups (b) Family (c) Roles and status.

  • Groups: Two or more people who interact to accomplish individual or mutual goals. A person’s behaviour is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups. Some of the primary groups are family, friends, neighbours and co-workers. Some of the secondary groups, which are more formal and have less regular interaction. These includes organizations like religious groups, professional association and trade unions.
  • Family: Family members can strongly influence buyer behaviour. The family is the most important consumer buying organization society and it has been researched extensively. Marketers are interested in the roles,and influence of the husband, wife and children on the purchase of different products and services.
  • Roles and Status: A person belongs to many groups, family, clubs, organizations. The person’s position in each group can be defined in terms of both role and status.For example. “M”&”X” plays the role of father, in his family he plays the role of husband, in his company, he plays the role of manager, etc. A Role consists of the activities people are expected to perform according to the persons around them.

 

3) Personal factors: Consumer behaviour deals with why and why not an individual purchases particular products and services.

Personal factors play an important role in affecting consumers’ buying behaviour.

(a) Occupation: The occupation of an individual plays a significant role in influencing his/her buying decision. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself.

For example, Mr Olumide was working with an organization as a Chief Executive Officer while his friend now a retired professor went to a nearby school as a part time lecturer. Mr Olumide always looked for premium brands which would go with his designation whereas his friend preferred brands which were not very expensive. Mr Olumide was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas his friend never really bothered about all these.

That is the importance of one’s designation. As a CEO of an organization, it was really essential for Mr Olumide to wear something really elegant and unique for others to look up to him. A CEO for that matter and a senior professional can never afford to wear cheap labels and local brands to work. An individual’s designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor cannot afford to wear premium brands everyday to work.

 

(b) Age and Life cycle Stage: People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle.A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold, etc. An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure.

 

(c) Economic situation: The buying tendency of an individual is directly proportional to his income/earnings per month.How much an

individual brings home decides how much he spends and on which products individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival.

 

(e) Personality: An individual’s personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipment whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows, etc.

 

4) Psychological factor: It includes these factors: (a) Motivation (b) Perception (c) Learning (d) Beliefs and Attitudes.

  • Motivation: Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of the need.
  • Perception: The process by which people select, Organize, and interpret information to form a meaningful picture of the world.
  • Learning: Changes in an individuals behaviour arising from experience.
  • Beliefs and attitudes: Belief is a descriptive thought that a person holds about something. Attitude, a Person’s consistently favourable or unfavourable evaluations, feelings, and tendencies towards an object or idea.

 

STAGES OF THE CONSUMER BUYING PROCESS

There are six stages to the Consumer Buying Decision Process. Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all the stages, determined by the degree of complexity. These stages are:

  1. Problem Recognition: This can also be called awareness of need. Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals. Individual who buys a cold drink or a bottle of mineral identifies his/her need as thirst. The marketer must recognize the needs of the consumer as well as how these needs can be satisfied.
  2. Information search: In consumer buying decision process, information search comes second. In this stage, consumer searches the information about the product either from family, friends, neighbourhood, advertisements, whole seller, retailers, dealers, or by examining or using the product. A successful information search leaves a buyer with possible alternatives
  3. Evaluation of Alternatives: This is where consumers start cutting down the possible options by comparing it with their criteria and what they want from the product/service. They evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket.
  4. Purchase decision: The purchase of a product or service is the fourth step in the consumer buying process. At this point, the consumer has considered all of the factors relating to the product, and has shopped around for the best deal or option. Customers have typically made up their minds about what they want to spend and where to spend it.
  5. Post purchase behaviour: The last phase of the buying process is an evaluation process, during which consumers determine if their purchasing decision was the right one. This may or may not be a conscious thought process. For many advertisers, the goal is to elicit positive results with a product or service, with the hope that customers will review or talk positively to others about the product or service they have used.

 

ORGANIZATIONAL BUYING BEHAVIOUR

Organization buying is the decision making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

Some of the characteristics of organizational buyers are:

  1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products.
  2. The purchases are in large quantities.
  3. Close relationships and service are required.
  4. Demand is derived from the production and sales of buyers.
  5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products.
  6. The organizational buyers are trained professionals in purchasing.
  7. Several persons in organization influence purchase.
  8. Lot of buying occurs in direct dealing with manufacturer.

 

FACTORS THAT INFLUENCE ORGANIZATIONAL BUYING BEHAVIOUR

Organizational buying is much more complex than consumer buying, and thus deserves to be studied separately. The entwined interpersonal relationships and the multiple communication processes between the organizational members, involved in the buying decision process, are some of the major contributors to this complexity. The list of affecting factors is not limited to these; there are many more important ones such as:

1) External Environmental Factors: As a major constraint under which a business operates, the external environment impacts nearly every aspect of a business, including its buying decisions. Here is a list of the external elements that affect organizational buying.

  • Economic Conditions: The fluctuations in the money markets and the interest rates have a major impact on the buying strategies. The interest rates and organizational buying have an inverse relation; in most cases, an increase in the interest rates may bring about a drop in the buying.
  • Regulatory Changes: Any changes in the corporate laws, rules and regulations will also influence how,when and what the organizations buy. There are also regulatory changes that may affect only a particular industry and accordingly the related organizations will change their buying patterns to stay in-line with the new regulations.
  • Political Environment: A change of the government or policy has a direct impact on the economic scenario, and this ultimately translates into a shift in the organizational buying patterns as well.
  • Social Environment: Societies and cultures are ever evolving, and every business has to change its practices and procedures to meet up with the societal changes. For instance with the rise in the number of animal lovers, pure leather suppliers have seen a slump in their business. The clothing and footwear manufacturers have shifted to artificial leather suppliers. This points out how the social environment can affect the buying patterns of organizations.
  • Competition: Today’s business is all about beating competition and staying ahead. So when an organization’s competitors move on to a newer product or service, or if they get to enjoy a competitive edge because of their suppliers, it is very likely for the organization to change its trends too and thus its buying pattern will change accordingly.

 

2) Internal Organizational Factors: More than the external factors, it is the internal organizational factors that influence organizational buying. These internal factors are the:

  • Organization’s Goals and Objectives: The goals and objectives of an organization are major determinants of how and what the organization will purchase. An organization that wants to capture a bigger chunk of the market by selling cheaper stuff is more likely to look for suppliers who can supply larger quantities at a low price. However, a company whose goal is to deliver quality products may have a very contrasting buying pattern, and they will focus more on the quality issues than on the price advantage.
  • Organizational Structure: Hierarchical and management structures vary from one organization to another. While some organizations have a well established purchase department, others may assign this job to the HR. or Administration department. There are also organizations where the purchase decisions must be taken collectively by all concerned departments. The organizations also have well-defined guidelines as to which purchase decisions can be made and by which management level. The internal setup and how authority and responsibility flow through it, play an important role in the organizational purchasing.
  • Policies and Procedures: How the purchase order is routed, depends on the organization’s policies. How does the buying procedure begin, who will participate and who has the ultimate authority to decide on the purchase are all dependent on the policies and procedures of the organization. Some organizations prefer to invite public bids, while others may contact only the few suppliers on their list. There are also budgetary policies that have a say in the purchase decisions, for instance while some organizations may have a flexible policy to make purchases as and when the need arises, others may have to wait till the allocation of the annual or biannual budget.
  • Technological Levels: Whenever new purchases are made organizations take into consideration their current technology. Some purchases are meant to replace the current technology with a newer version, so their buying decision will be influenced by what level of technology they currently own. Also, organizations try to ensure that all new purchases being made are technologically compatible with their existing technology. So, one way or the other an organization’s existing technology has a major influence on its future purchases.
  • Manpower Skills: Whether the organization has the skilled manpower to make proper and optimum use of the new purchases being made, especially equipment and machinery, is another issue that influences organizational buying.

 

3) Interpersonal and Individual Factors: Since organizational buying decisions are never a one person affair, interpersonal relationships among the decision makers play a vital role in this type of buying.

  • Participation and Authority: In organizational buying situations, there are always re-defined rules as to who can participate in the purchase decision and who is the ultimate deciding authority.
  • Interpersonal Conflict: Interpersonal conflicts and conflicts of interest amongst the decision makers often results in delays and changes. Thus, the kind of thinking and the kind of relationship the decision makers share have a major role to play in corporate buying.
  • Education and Awareness: The educational background of the decision makers and their level of awareness have a major bearing on what type of purchases they will make.
  • Risk Taking Ability: If the buying committee constitutes high risk takers, they will not be averse to the idea of choosing the latest technology or new suppliers. While on the other hand, decision makers with a low risk taking tolerance are more likely to stick to proven and tested technology or to well known and well established suppliers.
  • Individual Factors: Individual factors such as age, cultural background and social status, of the members on the buying team, also influence the buying decisions.