Difference Between Consumer Buyer and Organisational Buyer Behaviour

In this essay, we will be talking about the difference between consumer buyer behavior and organizational buyer behavior and how marketers can harvest this knowledge to create the right marketing strategies for each category of the market. The main difference between consumer buyer behavior and organizational buyer behavior is that consumer buying consists of activates involved in buying and using of products for personal and household use, where organizational buyers purchase primarily for organizational purpose.

Consumer behavior is complex and a company has to fit their product more closely and satisfy their customer needs more fully than the competitors. Marketers will also need to know whether their controllable variables, e. g. marketing mix variables, will affect buying behavior. Culture is the broadest environmental factor which influences buyer behaviour, consumption choices cannot be understood without considering the culture. It is the prisms with which customers perceive the product. The culture of consumers determines the priorities he attaches to different products.

The link between consumer behavior and culture is a two-way street. In one direction the products that are produced to fit a consumer’s culture are better accepted, in the other direction products and innovation that are created in a specific culture on a given time show us a clear domination in the culture’s ideals. (Michael Solomon, Culture, 2006) Social class refers to the grouping together of individuals or families who have certain common social or economic characteristics. Societies can be divided in haves and have-nots.

Social Class is determined by income, family background, and occupation. The social class is not only determining how much money is spent by the individual but also how it is spent. (Michael Solomon, Consumer Behaviour A European Perspective, 2006) Consumer buyer behaviour Maslow`s hierarchy of needs is the first model we are looking at. It implies a hierarchy of biogenic and psychogenic needs where the order of development is fixed and a certain level must be attained before the next higher one.

In Maslow`s hierarchy one must first satisfy basic needs before he can progress up the ladder. The application of this model is relatively simplistic as one product can satisfy more than one need. (Michael Solomon, Consumer Behaviour, 2006) The next model we are talking about is the Howard Sheth model. The model describes brand decision under incomplete or limited information. It distinguishes three levels of decision:

1. Extensive problem solving- the buyer has little or no knowledge about the product and has no criteria by which to choose the product.
2. Limited problem-solving- In this stage the choice criteria are defined but the buyer is still undecided about the brads which best serve him.
3. Routinized responses behaviour- The criteria set in this stage is well defined and the consumer has the best brand which best serves him. He makes the buying process with little evaluation of alternatives.

The Howard Sheth model borrows concepts from the learning model to explain the brand choice. Four major components are involved in this process: impute variables, output variables, hypothetical constructs, and exogenous variables. Rao, 2011) There are three different impute variable, the first and second is provided by the marketer by significant stimuli like physical brand characteristics and symbolic stimuli like visual or verbal characteristics.

The third variable is provided by family, reference group etc. (Rao, 2011) The perceptual and learning construct define the main part of the model. It deals with the psychological variables with interact with consumer decision making. The output variables are the response to the impute variables and helps us understand how the consumer will engage with the perceptual construct. Rao, 2011)

The Last model we are looking at is the Engel-Kollat-Blackwell model which was created to describe the knowledge concerning consumer behavior. The first stage is the decision-process stage. The model is focusing on the five mine decision-process stages: Problem recognition, search for alternatives, alternate evaluation purchase, and outcomes. The consumer does not necessarily have to go through all this stages. The number of stages depends if it is an extended or routine problem-solving behavior.

The second stage is the information impute where the consumer is getting information from marketing and non-marketing sources with will influence the decision-making process. The third stage is the information processing stage and it consists of the exposure, attention and retention of the consumer to the information. The consumer must first be exposed to the message, allocate space for this information, interpret the stimuli, and retain the message by transferring the input to long-term memory. The fourth stage consists of individual and environmental influences that affect all five stages of the decision process.

Individual characteristics include motives, values, lifestyle, and personality; the social influences are culture, reference groups, and family. Situational influences, such as a consumer’s financial condition, also influence the decision process. (Engel, 1995) Organisational buyer behaviour Broadly speaking organisational customers can be classified in commercial, institutional and governmental sector. (Oxford University Page) Commercial customers can be divided furthermore in

1. Distributors: They are also known as intermediaries and their main purpose is to transfer products through the supply chain adding value to them. The main types of intermediary are wholesalers, dealers, agents, value-added resellers.
2. Original equipment manufacturers (OEMs): They are the classic business customer. They purchases parts or materials and manufacture and marked with the manufacturer’s brand.
3. Users: These customers buy some products to sustain their own production.
4. Retailers: They purchase goods to sell them to their customers.

The Institutional customer may differ greatly from the commercial customer in the preceding list. Universities are a good example of institutional customers and the products they have to buy in order to keep operating. Oxford University Page) The Governmental customers can differ from government to government as they can regalement their spending on military health and education.

While there are differences between consumer buyer behavior and organizational buyer behavior we clearly can see some similarities between them especially when we realises that rationality in organizational buyer behavior can be misplaced. If the buyer are people to then they can also make mistakes lead by perception, emotion and pear pressure.

On the other hand some consumer purchases involve high technical complexity and time involving information search. The practice of B2B and B2C is not always clear as an example we can take Sun Microsystems witch approaches large business directly but also encourages small developers to build OEM machines and sell them to customers. (Oxford University Page) We clearly can see that there are some similarities in the B2C and B2B market but there are some huge differences. For example, consumer markets often consist of millions of customers where far fewer customers are in the organisational market.

A small percentage often makes a large percentage of the earnings of a B2B business. (Oxford University Page) The B2C buying process can be fairly complex for a high involvement purchase like a car but in a B2B market there is often not only one person involve in this process, it is typically known as the decision-making unit (DMU). Members involved in this decision making unit can be managers who are not involved in the usage of the product and often have a strategic and financial perspective of the company but also members who directly use the product are involved in the decision making process.

We can describe the different parties (Webster and Wind, 1972) in the decision making process as followed:

1. Initiator- is the person who makes the first request for the purchase
2. Buyer – they are the formal authority in the process and are making the purchases from the suppliers
3. Influencers –they affect the decision-making process by providing internal or external information.
4. Decision makers- they are the persons with the authority to approve a purchase.
5. Users – they are the persons who use the product. They often deliver feedback of the performance.
6. Gatekeepers – they control the flow of information to other managers within the buying organisation One of the most recognised models of organisational buyer behaviour is the Buygrid Framework (Robinson et al, 1967).

It combines nature of the buying situation with the stages in the decision process. It is worth noting the differences between the three buyclass situations:

1. New task purchases – In this category the company is buying a product or a service for the first time. They typically have no experience in the supplier’s capabilities. The DMU is usually larger and the schedule for the decision is often extended.
2. Modified rebuy – in this chase the company has already knowledge about the suppliers capabilities but has to alter a variable in the order witch could be: time, amount or price.
3. Straight rebuy – in this case the company does not alter the order. It is normally seen when basic goods are ordered.

The decision-making process is quite formal in B2B markets and it goes through many as eight buyphases for a new task purchase:

1. Problem Recognition – this can be created by a supplier review, dissatisfaction with current providers and changing business needs.
2. General need description – the need can come from an innovation, the need for cutting costs or improving production.
3. Specifications – It necessity buyer/supplier dialog and is the part where suppliers are differentiated and evaluated.
4. Supplier search – it is the stage where a consideration set of suppliers is created and information is gathered.
5. Proposal submission – suppliers are put into a choice set and a proposal is solicited from those last few suppliers
6. Supplier Selection – in this stage proposals are evaluated and negotiation may take place between buyer and seller.
7. Order process specification – in this stage an agreement or a contract is created.
8. Performance review – in this stage the suppliers are revised and benchmarked and then changed, modified or discontinued. (Oxford University Page)

It is very important for a company in the B2B market to understand the different members and their roles in a DMU of a company; the members can be brought together from all parts of a company and can include purchasing, R&D, finance and even marketing.

The marketing strategy of the supplying must reflect the individual interest within a DMU but also the whole interest and group dynamic of a DMU. (Oxford University Page)

Referencing

• Retrieved 03 21, 2012, from Oxford University Page: http://www. oup. com/uk/orc/bin/9780199551682/ellis_ch02. pdf
• Engel, J. B. (1995). Consumer Behaviour. In J. B. Engel, Consumer Behaviour. Michael Solomon, G. B. (2006). In G. B. Michael Solomon, Consumer Behaviour A European Perspective (p. 460). Michael Solomon, G. B. (2006). Consumer Behaviour . In G. B.
• Michael Solomon, Consumer Behaviour A European Perspective (pp. 125-126). Michael Solomon, G. B. (2006). Culture. In G. B. Michael Solomon, Consumer Behaviour A European Pespective (pp. 525-527).
• Rao, V. S. (2011, 01 10). Howard Sheth Model. Retrieved 03 21, 2012, from cite Man Network: http://www. citeman. com/13241-howard-sheth-model. html
• Robinson, P. J., Faris, C. W. , & Wind, Y. (1976) Industrial Buying and Marketing , Allyn & Bacon, Boston Webste, F. E. & Wind, Y. (1972) Organisational Buying Behaviour, Prentice-Hall, Englewood Cliffs, NJ