HOW CONSUMER AND ORGANIZATIONAL BUYING BEHAVIOUR IMPACTS MARKETING STRATEGIES

In the intricate world of commerce and marketing, understanding why a purchase is made is as crucial as understanding what is purchased. The motivations, processes, and influences behind buying decisions form the bedrock of modern business strategy. These dynamics are broadly studied under two distinct yet related disciplines: Consumer Behaviour and Organizational Behaviour. While both involve the act of procurement, they differ fundamentally in their meaning, the factors that influence them, and the processes they follow.

The Meaning of Consumer and Organizational Behaviour

At their core, both fields explore the decision-making that precedes, accompanies, and follows a purchase. However, their focus, scale, and underlying purpose are fundamentally different.

1. Consumer Behaviour refers to the study of individuals, groups, or households and the processes they employ to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy their personal needs and wants. The unit of analysis is the end-user. This field is a blend of psychology, sociology, anthropology, and economics, seeking to answer questions like: How does a consumer choose between brands? What motivates someone to buy a luxury item versus a budget alternative? How do friends, family, and culture shape purchasing habits? The primary driver behind consumer behaviour is the fulfillment of personal or household utility and satisfaction. The demand for these goods is known as direct demand, as it is driven directly by the user’s needs.

2. Organizational Behaviour, specifically in the context of purchasing, is the study of the decision-making processes by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. The buyers here are not acting for personal consumption; instead, they are acquiring goods and services on behalf of an organization to achieve its objectives. These objectives could include producing other goods (raw materials), supporting daily operations (office supplies, software), or for resale (wholesalers and retailers). The demand in this context is derived demand, meaning it is derived from the demand for the consumer goods that the organization ultimately produces or sells. The decision-making unit is often a group, referred to as the buying center, and the process is typically more formal, rational, and documented than consumer purchasing.

In essence, the primary distinction lies in the motive and the decision-maker. Consumer behaviour is driven by individual satisfaction, whereas organizational behaviour is driven by collective business goals.

Influencing Factors

The path to a purchase decision is rarely straightforward; it is a complex journey influenced by a multitude of internal and external factors. These factors differ significantly between individual consumers and organizations.

(a) Factors Influencing Consumer Behaviour

The influences on a consumer can be categorized into four main groups, moving from the most internal to the most external.

1. Psychological Factors: These are internal to the individual and are fundamental to their choices.
   • Motivation: An internal drive that compels a person to satisfy a need. Maslow’s Hierarchy of Needs (physiological, safety, social, esteem, self-actualization) provides a classic framework for understanding how different products can appeal to different levels of need.
   • Perception: The process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world. Two people can perceive the same advertisement very differently.
   • Learning: Changes in an individual’s behaviour arising from experience. A positive experience with a brand can lead to brand loyalty.
   • Beliefs and Attitudes: A belief is a descriptive thought a person holds about something, while an attitude is a person’s consistently favourable or unfavourable evaluation or feeling toward an object or idea.
2. Personal Factors: These are demographic and lifestyle characteristics unique to the individual.
   • Age and Life-Cycle Stage: A young, single person’s purchasing priorities differ vastly from those of a middle-aged parent.
   • Occupation and Economic Situation: A person’s job and disposable income directly impact their purchasing power and product choices.
   • Lifestyle: A person’s pattern of living as expressed in their activities, interests, and opinions (AIOs). A consumer who values sustainability will seek out eco-friendly brands.
   • Personality and Self-Concept: Consumers often choose brands that have a personality consistent with their own.
3. Social Factors: Humans are social creatures, and their purchase decisions are heavily influenced by others.
   • Reference Groups: These include family, friends, colleagues, and aspirational groups (e.g., celebrities) that a person looks to for guidance on products and behaviours.
   • Family: The family is the most important consumer buying organization in society.
   • Roles and Status: A person’s position in a group can influence their buying behaviour.
4. Cultural Factors: This is the broadest and deepest influence.
   • Culture: The set of basic values, perceptions, wants, and behaviours learned by a member of society from family and other important institutions.
   • Subculture: Groups of people with shared value systems based on common life experiences and situations (e.g., nationalities, religions, racial groups).
   • Social Class: Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviours.

(b) Factors Influencing Organizational Behaviour

Organizational purchasing is ostensibly more rational, but it is still conducted by people whose decisions are shaped by a unique set of factors.

1. Environmental Factors: These are macro-level forces that affect the organization and its purchasing decisions.
   • Economic Conditions: In a recession, organizations will cut back on spending, delay capital investments, and renegotiate with suppliers.
   • Technological Change: The rapid pace of technological innovation can make existing equipment obsolete, forcing new purchases.
   • Political and Regulatory Environment: Government regulations, trade policies, and political stability can dictate what, how, and from whom an organization can buy.
   • Competition: The competitive landscape can force an organization to invest in new technology or materials to gain an edge.
2. Organizational Factors: These are internal to the company itself.
   • Objectives, Policies, and Procedures: A company focused on innovation will have different purchasing priorities than one focused on cost-cutting. Formal purchasing policies dictate supplier criteria and budget approvals.
   • Organizational Structure: A centralized purchasing department will operate differently from a decentralized system where individual departments make their own buying decisions.
   • The Buying Center: This is the group of individuals who participate in the buying decision. It includes users, influencers, buyers, deciders, and gatekeepers. The interplay and dynamics within this group are critical.
3. Interpersonal Factors: These relate to the group dynamics of the buying center.
   • Authority: Who holds the formal power to make the final decision?
   • Status: The relative importance or influence of each member.
   • Empathy and Persuasiveness: How do members of the group influence one another? Personal relationships, negotiation skills, and internal politics play a significant role.
4. Individual Factors: These are the personal characteristics of the individuals within the buying center.
   • Age, Income, and Education: These demographics can influence a person’s outlook and risk tolerance.
   • Job Position and Risk Attitude: A purchasing agent may be primarily concerned with cost and reliability, while an engineer may prioritize performance and specifications. Their personal tolerance for risk will also affect their willingness to try a new supplier or product.
   • Personal Motives: Despite the organizational context, individual buyers are still motivated by personal factors like career advancement, risk avoidance, or simply making their job easier.

The Decision Process in Logical Order

Both consumers and organizations follow a recognizable process when making a purchase, but the organizational journey is typically more structured, complex, and protracted.

(a) The Consumer Decision-Making Process

The consumer process is often described in five distinct stages:

1. Need Recognition: The process begins when the consumer recognizes a problem or need. This can be triggered by internal stimuli (e.g., hunger, thirst) or external stimuli (e.g., seeing an advertisement for a vacation).
2. Information Search: An aroused consumer may then search for more information. This can range from a simple, heightened awareness (paying more attention to car ads if you need a new car) to an active information search (reading reviews, visiting dealerships). Sources include personal (friends, family), commercial (ads, websites), public (reviews), and experiential (handling the product).
3. Evaluation of Alternatives: The consumer uses the gathered information to evaluate alternative brands in their choice set. They will assess products based on a set of criteria (e.g., price, quality, features) and form a judgment about which brand best meets their needs.
4. Purchase Decision: After evaluating the alternatives, the consumer generally makes a purchase decision, selecting the most preferred brand. However, two factors can come between the purchase intention and the purchase decision: the attitudes of others and unexpected situational factors (e.g., a sudden job loss).
5. Post-Purchase Behaviour: After the purchase, the consumer will experience some level of satisfaction or dissatisfaction. This stage is crucial as it influences repeat purchases and word-of-mouth recommendations. The consumer may also experience cognitive dissonance (buyer’s remorse), especially after a major purchase, and will look for reassurance that they made the right choice.

(b) The Organizational Buying Process

The business buying process is more formal and is often described in eight stages, particularly for complex new-task purchases:

1. Problem Recognition: The process starts when someone in the company recognizes a problem or need that can be met by acquiring a good or service. This can result from internal stimuli (e.g., machine breakdown, need for a new production material) or external stimuli (e.g., seeing a new idea at a trade show, a salesperson’s call).
2. General Need Description: Having recognized a need, the buyer determines the general characteristics and quantity of the needed item.
3. Product Specification: The buying organization develops detailed technical specifications for the item. This often involves a team of engineers and users who define the requirements precisely.
4. Supplier Search: The buyer conducts a search to identify the most appropriate vendors through trade directories, online searches, and recommendations.
5. Proposal Solicitation: The buyer invites qualified suppliers to submit proposals. For complex items, this often takes the form of a formal Request for Proposal (RFP), and suppliers will respond with detailed presentations.
6. Supplier Selection: The buying center reviews the proposals and selects a supplier (or suppliers). They will rate suppliers against a set of desired attributes, such as product quality, delivery timeliness, price, and customer service.
7. Order-Routine Specification: The buyer now prepares the final order with the chosen supplier(s), detailing technical specifications, quantity needed, expected time of delivery, return policies, and warranties. This stage often involves finalizing a formal contract.
8. Performance Review: In this final stage, the buyer assesses the performance of the supplier and the product. The buyer may survey the end-users for their satisfaction and use this feedback to decide whether to continue, modify, or terminate the supplier relationship.

In conclusion, while the fundamental act of exchange unites consumer and organizational behaviour, they operate in different worlds. A consumer’s journey is often personal, emotional, and social, while an organization’s is procedural, collaborative, and driven by strategic objectives. A profound understanding of both frameworks is not merely an academic exercise; it is an indispensable tool for any organization aiming to effectively create, communicate, and deliver value in a diverse and competitive marketplace.

References

1. Kotler, P., & Armstrong, G. (2018). Principles of Marketing. 17th Edition. Pearson Education.
2. Schiffman, L. G., & Wisenblit, J. L. (2019). Consumer Behavior. 12th Edition. Pearson Education.
3. Robbins, S. P., & Judge, T. A. (2017). Organizational Behavior. 17th Edition. Pearson Education.
4. Webster, F. E., & Wind, Y. (1972). A General Model for Understanding Organizational Buying Behavior. Journal of Marketing, 36(2), 12-19.
5. Solomon, M. R. (2017). Consumer Behavior: Buying, Having, and Being. 12th Edition. Prentice Hall.