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Slide 3.

Chapter 3

Consumer and
organisational
buyer behaviour

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.2

Objectives

After studying this chapter, you should be able to:


1. Understand the different motivations of consumer
and organisational buyers.
2. Formulate strategies for approaching consumer
and organisational buyers.
3. Recognise the importance of relationship
management.

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.3

Differences between consumer


and organisation buying
Fewer organisational buyers: 80% of output will be sold to
perhaps 10-15 organizations.
Close, long-term relationships between organisational
buyers and sellers: n consumer markets customers and
manufacturrers rarely meet and for many supermarket
products, brand switcing is common.
Organisational buyers are more rational: decisions will be
made on economic criteria.
Organisational buying may be to specific requirements:
buyers determine product specifications and sellers tailor their
product offerings to meet them.
Reciprocal buying may be important in organisational
buying: demand concessions in return for placing the order.
David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.4

Consumer buyer behaviour

For both types of buyer, an understanding of


customers can only be obtained by answering the
following five questions:
1. Who is important in the buying decision?
2. How do they buy?
3. What are their choice criteria?
4. Where do they buy?
5. What do they buy?

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.5

Who buys?
Impulse buying
1. Initiator: the person who begins the process of considering a
purchase. Information may be gathered by this person to help
the decision.
2. Influencer: the person who attempts to persuade others in the
group concerning the outcome of the decision. Influencers
typically gather information and attempt to impose their choice
criteria on the decision.
3. Decider: the individual with the power and/or financial authority
to make the ultimate choice regarding which product to buy.
4. Buyer: the person who conducts the transaction: who calls the
supplier, visits the store, makes the payment and effects
delivery.
5. User: the actual consumer/user of the product.
David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.6

How they buy

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.7

The Buyer Decision Process

Need Recognition

Occurs when the buyer recognizes a


problem or need triggered by:
Internal stimuli
External stimuli

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.8

The Buyer Decision Process


Information Search
Sources of Information
Personal sourcesfamily and friends
Commercial sourcesadvertising, Internet
Public sourcesmass media, consumer
organizations
Experiential sourceshandling, examining, using
the product

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.9

The Buyer Decision Process


Evaluation of Alternatives

How the consumer processes information


to arrive at brand choices

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.10

The Buyer Decision Process

Purchase Decision

The act by the consumer to buy the most


preferred brand
The purchase decision can be affected
by:
Attitudes of others
Unexpected situational factors

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.11

The Buyer Decision Process


Post-Purchase Decision
The satisfaction or dissatisfaction that the
consumer feels about the purchase
Relationship between:
Consumers expectations
Products perceived performance
The larger the gap between expectation
and performance, the greater the
consumers dissatisfaction

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.12

The Buyer Decision Process

Post-Purchase Decision

Customer satisfaction is a key to


building profitable relationships with
consumersto keeping and growing
consumers and reaping their customer
lifetime value

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.13

Organizational Buyer Behavior


Three elements:
1.STRUCTURE
Decision making Unit or Buying center is all of the
individuals and units that participate in the business
decision-making process
Initiators: those who begin the purchase process
Users: those who actually use the product
Influencers: provide information
Buyers: have authority to execute the contractual
arrangements
Deciders: have the authority to select the supplier
Gatekeepers: those who control the information
flow
David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.14

Organizational Buyer Behavior


2. process

Figure 3.5 The organisational decision-making process (buy phases)

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.15

Organizational Buyer Behavior


The Buying Process
Problem recognition occurs when someone
in the company recognizes a problem or
need
Internal stimuli
Need for new product or production
equipment
External stimuli
Idea from a trade show or advertising

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.16

Business Buyer Behavior


The Buying Process

General need description describes the characteristics


and quantity of the needed item
Product specification describes the technical criteria
Value analysis is an approach to cost reduction where
components are studied to determine if they can be
redesigned, standardized, or made with less costly
methods of production

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.17

Business Buyer Behavior

The Buying Process

Supplier search involves compiling a list


of qualified suppliers

Proposal solicitation is the process of


requesting proposals from qualified
suppliers

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.18

Business Buyer Behavior


The Buying Process
Supplier selection is the process when the
buying center creates a list of desired
supplier attributes and negotiates with
preferred suppliers for favorable terms
and conditions

Order-routine specifications is the final


order with the chosen supplier and lists all
of the specifications and terms of the
purchase David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.19

Business Buyer Behavior


The Buying Process

Performance review involves a critique


of supplier performance to the purchase
terms

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.20

Organizational Buyer Behavior

3. Content
This aspect of organisational buyer
behaviour refers to the choice criteria
used by members of the DMU to evaluate
supplier proposals.
Table.3.2

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.21

Factors affecting organizational


buyer behaviour
The buy class:
A new task occurs when the need for the product has not
arisen previously so that there is little or no relevant
experience in the company, and a great deal of
information is required.
A straight re-buy, on the other hand, occurs where an
organisation buys previously purchased items from
suppliers already judged acceptable. Routine purchasing
procedures are set up to facilitate straight re-buys.
The modified re-buy lies between the two extremes. A
regular requirement for the type of product exists and the
buying alternatives are known, but sufficient change has
occurred to require some alteration of the normal supply
procedure. David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.22

The product type

Products can be classified according to four types:


1. Materials to be used in the production process,
e.g. steel.
2. Components to be incorporated in the finished
product, e.g. alternator.
3. Plant and equipment.
4. Products and services for maintenance, repair
and operation (MROs), e.g. spanners, welding
equipment and lubricants.

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009
Slide 3.23

Importance of purchase to buying


organisation

A purchase is likely to be perceived as important to the


buying organisation when it involves:
large sums of money,
when the cost of making the wrong decision, for
example in lost production, is high and
when there is considerable uncertainty about the
outcome of alternative offerings.
In such situations, many people at different
organisational levels are likely to be involved in the
decision and the process is likely to be long, with
extensive search and analysis of information.

David Jobber and Geoff Lancaster, Selling and Sales Management, 8th Edition Pearson Education Limited 2009