Importance of understanding consumer behaviour

The purpose of marketing is to make consumers develop an urge for a particular product even if they are not looking for the same. That is why organisations are required to understand the behaviour of customers before marketing their products in a more desirable way. Consumer behaviour is defined as “the way the consumers act or behave when looking for, buying and using products” (O’Dougherty, Haynes, Davies & O’Connor, 2007). Consumer behaviour is significant to businesses as they determine the nature of the prospective buyers. Knowing consumer behaviour helps business enterprises to find out the best way to advertise the products in order to attract a particular set of consumers.

In the earlier times, shop keepers were able to acquire a fair understanding of consumer behaviour because they sold their products directly to the customers. However, with the increasing growth in the size of firms, opportunities of direct contact with consumers have lowered. Increasingly, managers are investing more to gain an insight on consumer behaviour. As a consequence, business and academic researchers invest more resources in studying consumer energy for the improvement of businesses.

Literature Review

Several academics and professional have conducted their research on consumer behaviour. A review of the literatures would include significant theories and studies in this perspective.

Stimulus-Behaviour Model

One of the oldest models in regards to consumer behaviour is ‘stimulus-behaviour model’. The following model propagates that marketing and other stimuli influence the buyer’s black box, producing certain responses (The Institute for Working Futures, n.d.). The stimuli can be of two kinds. The marketing stimuli or the marketing mix consist of 4 P’s including product, price, place and promotion. Others include economic, technological, political and cultural stimuli. All these stimuli move through the consumers’ black box and help them to make the product choice, brand choice, purchasing timing and purchasing amount.

Figure 1: Stimulus-Behaviour Model

(Source: Tyagi & Kumar, 2004)

Apart from this simplified model, several other models have been developed by the marketing scholars in the field of ‘consumer behaviour’. The most prominent models have been developed by John A. Howard and Jagdish N Sheth, Francesco M. Nicosia, James F. Engel, Roger D. Blackwell and David T. Kollat. The five stage model of buying process includes steps like recognizing the problems, searching for information, evaluating the alternatives, purchasing decision and post purchase behaviour of the consumers. After purchasing the products, the buyer is expected to feel some level of satisfaction or dissatisfaction regarding the product or service acquired.

The number of organisational buying processes can be quite large. Product and service marketers have recognized that at every step of the buying process, the purchaser can have different requirements and various groups can get involved in the same.

Buy Grid Model

According to the Buy Grid model, the process of decision making within an organisation has two parts including buy phase model and buy class model. The stages in the ‘Buy Phase model’ are quite similar to the buying stages discussed above. After identifying the requirements, industrial buyers pass through a number of processes including determination of requirements, specific description of the same, search for probable sources, assessment of the sources, selection of the same, establishment of order routine and appraisal of the performance feedback (Baker & Hart, 2003).

Figure 2: Buy Grid Model

(Source: Baker & Hart, 2003)

‘Buy class’ has been added to the same model to create a grid. ‘Buy class’ model refers to the various types of buying decisions; the decisions are mostly based on consumers’ experience about specific products or services. The ‘new buying decision’ takes into account the products and services which have never been acquired, along with the entire process. The ‘straight re-buy process’ and ‘modified re-buy process’ consider less number of tasks as consumers do not need to spend time on searching for sources (Dwyer & Fanner, 2008).

Industrial Buying Behaviour

Back in the year 1973, Sheth had proposed a model on the industrial buyers’ behaviour. The model is a complex one with a large number of variables integrated in it.

Figure 3: An Integrated Model of Industrial Buying Behaviour

(Source: Sheth, 1973)

The model considers many variables. However, all of these variables hold relevance in the process that determines purchase decisions. Certain conditions are there which can be simplified depending on the situation. Prior to that, in the year 1966, Nicosia has proposed a model which included attitude, motivation and experience as the driving force behind the purchase process (Swarbrooke & Horner, 2007).

Buyer Seller Interaction

In 1985, Campbell criticized the Sheth model for not considering the interplay between the marketing and purchasing strategies and their antecedents. Another disadvantage is that the model concentrates on the buyers’ side rather than paying attention to the sellers’ influence on buying behaviour. In contrast, an interaction model introduced by IMP group has focussed mostly on the interaction of the two parties giving almost equal importance to the characteristics of both the buyers and the sellers.

According to the Campbell, the model includes three variable groups: the buyers’ characteristics, the product and the supplier.

Figure 4: Buyer Seller Interaction

(Source: Baker & Hart, 2003)

The above model considers few probable types of ‘buyer and seller interaction’ strategies. These are competitive, cooperative and command. A joint occurrence of the above mentioned strategies can happen if both the parties have almost similar level of power and the switching cost to other suppliers is almost equal for every case. In ‘command buying’, the consumer is expected to have more power than the vendor. Cooperative buying mostly happens between the manufacturer and the distributor of the products, when cooperation is required between the two. The above model shows buyer’s and seller’s characteristics with detailed discussion on the interaction.

There are certain other concepts related to consumers’ buying behaviour. There are a number of people, directly and indirectly involved in the purchasing processes. The buying centre is comprised of all the people involved in the buying process. The initiator, user, buyer, influencer, decider and gatekeeper are individuals or groups involved in the various stages of the process. The initiator is the individual or group who first suggests the need of purchasing a particular product. The influencer is the individual or group, who would have his or her input in the entire process. People, controlling the information flow and access to concerned individuals in the organisations, are the ‘gatekeepers’ of the entire process (Folsom & Boulware, 2004). Apart from those mentioned above, there are several others involved in significant stages of the process.

Conclusion

After critically examining all these models, it was understood that most of these models have taken into account a number of broad factors which are comprehended according to the model specifications. Most of these models start with the initiation of expectations among the consumers. Certain other factors such as lifestyle of the users, status of the consumers, information sources such as exhibition and shows, advertisements, word- of-mouth may result in influential factors behind the consumers’ purchasing processes. Certain factors, such as time pressure and inherent risk are quite specific to the respective product and have the ability to put an impact on purchasing process. Apart from these, there can be certain other situational and company specific factors influencing the choice of suppliers (Sheth, 1973). Post-purchase satisfaction also triggers the re-buying process.

Reference

Baker, J., M & Hart, S. 2003. The Marketing Book. Butterworth-Heineman.

Dwyer, R., F. & Fanner, F., J. 2008. Business Marketing. New York: McGraw Hill.

Folsom, D. W. & Boulware, R. 2004. Encyclopedia of American business. NewYork: Infobase Publishing.

O’Dougherty, D., Haynes, R., Davies, V. M. & O’Connor, M. 2007. Consumer Behavior. South Africa: Pearson Education.

Sheth, N. J. 1973. A Model of Industrial Buyer Behaviur. [Pdf]. Available at: http://www.jagsheth.net/docs/A%20Model%20of%20Industrial%20BuyerBehavior.pdf [Accessed on November 01, 2010].

The Institute for Working Futures. No Date. Consumer Buying Behavior. [Online]. Available at: http://www.marcbowles.com/courses/adv_dip/module12/chapter4/amc12_ch4_two.htm [Accessed on November 01, 2010].

Tyagi, L., C. & Kumar, A. 2004. Consumer Behaviour. Atlantic Publishers & Distribution.

Swarbrooke, J. & Horner, S. 2007. Consumer behaviour in tourism. USA: Elsevier Ltd.