nature of ind buying n behavior

8/4/2019 Nature of Ind Buying n Behavior

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Industrial Marketing

Module 3

Nature of Industrial buying and

buying behavior

Atul Atre

Dec 2009


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SUMMARY OF Module - 2

Types /Classifications of Industrial/ Business Customers are

(i) Commercial Enterprises, (ii) Government

(iii) Institutional, (iv) Cooperative societies.

Industrial Products/Services are classified into

(i) Materials & Parts, (ii) Capital Items, (iii) Suppliers & Services.

Marketing strategies differ for different product & Customer types.

Industrial / business Buyers follow one of the three purchasing

orientations : buying, procurement, or supply chain management.

Purchasing practices vary for different types of customers. It is

important to understand it for each major customer.

Types of environment are Ecological, Physical, Internal, & External,

Strategies used for managing changing external marketing environment

are : (i) Independent, (ii) Cooperative, (iii) Strategic Planning.


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Learning Objectives

Understand Organizational buying objectives.

Gain knowledge of buying activities, including

different phases in buying decision process, types of

buying situations; buygrid framework & its analysis.

Identify members of buying centers.

Understand organizational buying behavior.

Know how industrial buyers choose and evaluate

suppliers.

THE NATURE OF INDUSTRIAL BUYING AND

BUYING BEHAVIOUR


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PURCHASING OBJECTIVES OF FIRMS

Reliability in delivery. Consistent product Quality.

Lowest price (If delivery & Quality objectives are met)

Excellent pre & post sales services. Long Term collaborative relationship.

Industrial buyers try to achieve organizational purchasing

objectives & personal objectives like higher status, job

security, salary increments, promotions & social

relationships.


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Marketers must study this for developing effective

marketing strategy.

In Consumer Marketing, Household / Individual consumer

/ Buyer makes buying decisions based on certain mental

stages like (i) Problem (Need) Recognition,(ii) Information Search (iii) Evaluation

(iv) Purchase decision (v) Post Purchase Behavior

In Industrial Marketing, Buying Decision making process

is observable, involving many people in buying firm &

includes sequential activities / stages / phases, as follows:

Industrial Buying Decision Process


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Introduction and organizational buying activities

Industrial marketing strategy

Based on

Understanding every aspect

Of customers

Buying process

Industrial Marketer

Buyer

CustomerOrganization


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Introduction and organizational buying activities

What influences Organizational buyingactivities?

1.Level of experience

2.Level of information in purchasing certain productsand services

Examples:Routine buys , vast experience , no extra

information required

New buys no or less experience, information


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Buygrid model


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Buygrid model

buygrid framework- A conceptual model

that describes the organizational buying

process. It consists of two dimensions:

buyclasses and buyphases. Thebuyclasses are new task purchase,

modified rebuy, and straight rebuy. The

buyphases are need recognition, needdefinition, need description, seller

identification, proposal solicitation,

proposal evaluation and selection,orderin rocedures and erformance


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Buygrid model

buyclasses - Buying situations that are distinguished on

four characteristics: newness to decision makers,

number of alternatives to be considered, uncertainty

inherent in the buying situation, and the amount of

information needed for making a buying decision.

There are three buy classes: new task purchase,

modified rebuy, and straight rebuy. A new task

purchase is a problem or requirement that has not

arisen before such that the buying center does nothave any relevant experience with the product or

service.


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Buygrid model

buyclasses - continued

A modified rebuy is a situation such that thebuying center has some relevant experience todraw upon. The alternatives considered,however, are different, or changed from theones considered the last time a similar problemarose. A straight rebuy is the purchase ofstandard parts; maintenance, repair, andoperating items and supplies; or any recurringneed that is handled on a routine basis


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Buygrid model

Buy class

New task Modified re-buy

Straight re-buy

B

U

Y

P

H

A

S

E

1 Anticipation of problem/need and generalsolution

2 Determination of characteristics and quantity ofneeded item

3 Description of characteristics and quantity ofneeded item

4 Search for and qualification of potential sources

5 Acquisition and analysis of proposals

6 Evaluation of proposals and selection ofsuppliers

7 Selection of order routine

8 Performance feedback and evaluation


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Buygrid model

Buy classNew task Modified re-

buyStraight re-buy

B

UY

P

H

A

S

E

1 Anticipation of problem/need and generalsolution

2Determination of characteristics and quantity of

needed item

3 Description of characteristics and quantity ofneeded item

4 Search for and qualification of potential sources

5

Acquisition and analysis of proposals

6 Evaluation of proposals and selection ofsuppliers

7 Selection of order routine

8

Performance feedback and evaluation

Highly complex/multiple influences

For marketer ..most important time

Creeping

Commitment


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Buygrid model: Buy-classes

Buy-classes: buying situations1) New task: triggered by internal or external factors

New product linenew equipment

External: change in competition product or change in

customer specs

2) Modified re buy: Product improvement cost

reduction , minor changes or present supplier in

adequate

3) Straight re buy: continuing and recurring routine

response well developed choice criteria


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(B) Buying Situations / Buyclasses

3 Common types of purchases / buying situations

i. New Task / New Purchase :Here, buyers have limited knowledge and experience of thenew product/service. Hence, more information is obtained,more people are involved, risks are more, and decisionstake longer time.

ii. Modified Rebuy / Change in supplier :This situation occurs when the firm is not satisfied with theperformance of existing suppliers, or there is a change inproduct specs. Hence, the need for searching alternatesuppliers.

iii. Straight Rebuy / Repeat purchase :Here, the buying firm places repeat orders on suppliers whoare currently supplying certain products/services. Suchdecisions are routine, with less risks and less informationneeds, and can be taken by junior executives.


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(A) PHASES IN INDUSTRIAL BUYING DECISION MAKING

PROCESS / BUYPHASES

PHASE 1 :- Recognizing A problem / need.PHASE 2 :- Determining Characteristics &

Quantity of needed product / Service*.

PHASE 3 :- Developing specifications of the product*.

PHASE 4 :- Searching & Qualifying Suppliers.

PHASE 5 :- Obtaining & Analyzing suppliers offers*PHASE 6 :- Evaluating & Selecting Suppliers.

(shown on next slide)

PHASE 7 :- Selecting an order routine

PHASE 8 :- Post Purchase evaluation* These are in addition to five stages of consumer buying decision

process.


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Buygrid model: phases in purchasing process

Phase 1 ) Anticipation of problem/need and general solutionRecognition of problem

Need

Potential opportunity

( outdated product, equipment failure, un availability ofsupplies)

Marketer,

U must get in here..

U have the big advantage:This the right time
http://images.google.co.in/imgres?imgurl=http://pbskids.org/lions/words/images/knock.gif&imgrefurl=http://pbskids.org/lions/words/knock.html&h=195&w=195&sz=5&hl=en&start=2&tbnid=mKrTC4ysSOeM6M:&tbnh=104&tbnw=104&prev=/images%3Fq%3Dknock%2Bthe%2Bdoor%26gbv%3D2%26ndsp%3D20%26svnum%3D10%26hl%3Den%26sa%3DN


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Phase 2 : Determination of characteristics andquantity of needed item How to resolve situation arising out of phase 1?

Performance specification/ application requirement

( engineering or user dept prepares these)

Critical decisions/ info needs

are with user department
http://images.google.co.in/imgres?imgurl=http://www.ci.henderson.nc.us/Engineering/images/Engineering.jpg&imgrefurl=http://www.ci.henderson.nc.us/Engineering/Default.asp&h=256&w=300&sz=22&hl=en&start=9&tbnid=YDYt4aUvFxz85M:&tbnh=99&tbnw=116&prev=/images%3Fq%3Dengineering%2Bdepartment%26gbv%3D2%26svnum%3D10%26hl%3Den%26sa%3DG


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Phase 3: Description of characteristics and

quantity of needed item

1. One critical step for marketer to get into thebuying process

2. Many influencer enters

3. Only close insiders are still aware


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Phase 4: Search for and qualification of

potential sources

1. Search for alternate suppliers

2. Qualification of suppliers

3. Decision on potential vendors taken in

this phase


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Phase 5: Acquisition and analysis of

proposals

1. Proposals from qualified short listedvendors

2. Phase 4 and 5 are distinct in complex

cases but may be overlapping in routinepurchases

3. Info requirement are high


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Phase 6: Evaluation of proposals and

selection of suppliers

1. Weighing and analysis of alternate

proposals

2. Make and buy decisions

3. Terms/prices/delivery/past performance


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Phase 7:Selection of order routine

1. Forwarding PO

2. Status report

3. Receiving of consignment

4. Order routines are different for capitalgoods, direct material and in-direct

material and service


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Phase 8: Performance feedback and

evaluation

1. Review and feedback2. Vendor performance analysis

3. Revisit alternate sources if performance of

vendor is not as per original requirementin terms of QCD


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Overview of buy gridCreeping commitmentSequence of choices elimination of certain choices for

further considerations

As you go to next step, commitment level increase as it

affects value in useCreeping commitment: firmer commitment as buyermove down in buy-phases from phase 1 to phase 8

Center of gravity

As one moves down in phases , different departmentor function become more critical than others. Phase2 engineering may be CG but phase 8 , Quality andinspection may be CG.


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Marketing implications of buygrid

Marketing strategy is affected by

1. Purchasing situation2. Decision phase

In an organization, different departments andfunctions perceive buygrid differently


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Marketing implications of buygrid

Phase New task Modified re-buy Straight re-buy

1 Problemrecognition

Anticipate problem

Convince buyers ofproblem solvingcapabilities

In supplier : maintainQCD and service

Out suppliers:

Watch for trends and tapon QCD/service of insuppliers trends

In supplier: closetouch with users andbuyers

Out suppliers:Convince buyer /usersabout better value inuse proposals

2 Solution

determination

Provide technicalassistance and info

In/Out suppliers

Stress capability and tapon QCD

Problem solvingcapability demonstration

Same as above


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Marketing implications of buygridPhase New task Modified re-

buyStraight re-

buy

3 Determining needed item Provide detailproduct/service info todecision maker

Same as phase 2 Same as phase 1

4 Searching for andqualifying suppliersIn supplier: maintaindependability

Out suppliers:

Demonstrate ability toperform task

In supplier: watch forproblems

Out supplier:Demonstrate ability toperform the task

Same as phase 1


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Marketing implications of buygridPhase New task Modified re-

buyStraight re-

buy

5 Analysis proposals Understand problemNeeds

Timely proposals

Understand problem

Needs

Timely proposals

Make timelyproposals


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Product analysis for identifying info

needs of key influencersRating scale ( giving weights to each features

as applicable to target) for computers

Buying tires

1. Technical competency

2. Credit terms

3. Maintenance service


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Product info need marketing Purchase management

Tech competency .5 .3 .4

Credit terms .1 .5 .4

Maintenance .4 .2 .2

1 1 1

Buying tires : development of rating scale


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A SUPPLIER EVALUATION SYSTEM.

ATTRIBUTE/

FACTOR

WEIGHT/

IMPORTANCE

SUPPLIERS

PERFORMANCE

SUPPLIERS

RATINGSCORE

PRICE 15 0.5 07.5

QUALITY 30 0.7 21.0

DELIVERY 25 0.6 15.0

SERVICE 20 0.7 14.0

FLEXIBILIY 10 0.4 04.0

TOTAL 100 61.5


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(C) Buygrid Framework

BUYPHASES BUYCLASSES

New Task ModifiedRebuy

StraightRebuy

1. Problem Recognition Yes May Be No

2. Characteristics of Product Yes May Be No

3. Product Specification Yes May Be No

4. Supplier Search Yes Yes No

5. Analyzing Supplier Offers Yes Yes May Be

6. Supplier Selection Yes Yes No7. Order Routine Selection Yes Yes May Be

8. Post Purchase Review Yes Yes Yes


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BUYGRID FRAMEWORK ANALYSIS

All Phases are Applicable for a New Task.

Some Phases are Applicable for modified / Straight

Rebury.

New task situation is most difficult since buyers have

less knowledge, no experience & more people

involved.

Modified Rebury is not difficult situation since it has

few activities. Straight rebury situation is handled routinely, as repeat

purchases are made.


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Buying centers and multiple buying

influencers

DMU

Decision making unit: peopleinvolved in purchasing

decision process directly orindirectly


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influencers DMU is buying center in industrial

marketing consisting of

1. Group of individuals2. Common goals which decision will

help them to achieve

3. Sharing of risk arising fromdecision


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Buying centers and multiple buying influencers

A buying center (also known as a decision making unit), in

marketing, procurement, and organizational studies, is a groupof employees responsible for purchasing an item for theorganization. In a business setting, major purchases typicallyrequire input from various parts of the organization, includingfinance, accounting, purchasing, information technology

management, and senior management. Highly technicalpurchases, such as information systems or productionequipment, also require the expertise of technical specialists. Insome cases the buying center is an informal ad hoc group, but inother cases, it is a formally sanctioned group with specificmandates, criteria, and procedures. The employees that

constitute the buying center will vary depending on the itembeing purchased.


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influencersIn a generic sense, there are typically five roles within

any buying center. They are:

1. End users of the item being purchased.

2. Buyers who are responsible for the contract .

3. Influencers who try to affect the outcome decisionwith their opinions.

4. Deciders who make the final decision.5. Gatekeepers who control the flow of information.


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Objectives1. Acquisition

2. Impartation

(transmission of

information )

3. Processing

Of purchase

related info


influencers

Buying

center1. Informal

2. Cross

departmental

Decision unit



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influencers

Identifying buying center members

1. Marketing: Salability in end product

2. Manufacturing: feasibility and economicconsideration, mainly responsible for cost

reduction. Tendency to minimize changes3. R&D: New product development. early

involvement by marketing to freeze specs in theirfavor

4. General management: new /unfamiliar buyingsituation, establishing guideline and criteria


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influencers Identifying buying center members

Purchasing: not the central figure in

process of purchasing

Influence only if specifications and

suppliers are established

Major influence on negotiations and selected

types of purchases


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influencers Buying center roles

Primary roles

1. Deciders2. Influencers

Secondary roles

1. User 2. Buyer

3. gatekeepers


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influencers Who is the key buying influencer?

Who can sway the deal?

Marketers most difficult task


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(D) Buying Center roles & key members.

Roles of Buying center members are

Initiators. First recognize problem / need. Any individual inbuying firm often, users.

Buyers. Carry out purchase activities. They are purchaseofficers / executives.

User. Any person who uses the product / service.

Influencers. Influence buying decision. Technical people areoften key influencers.

Deciders. Make buying decisions. Senior executives aredeciders for high value & complex products. For straightrebuy / routine purchase, junior purchase officer can decide.

Gatekeepers. They control / filter information & meetingswith buying center members. Often, P.A. / Junior personattached to purchase head is the gatekeeper.


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(E) Identifying key members of buying centre

Sales / Marketing persons must identify important members of

buying centre. Buying centre consists of individuals and groups who take part in

buying decision making process, have common objectives & share

common risks. It is also called purchase committee, buying

committee or decision making unit.

Members of buying centre are

(i) Technical persons. Represent design, production /operations,

maintenance, Q.C., Industrial Engg. Depts.

(ii) Purchasers / Buyers. Purchase / Materials dept. persons.

(iii) Accounts / Finance persons.

(iv) Marketing persons

(v) Top management persons. G. M. & above.

(F) Organizational buying behavior


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(F) Organizational buying behavior

Industrial / business buyers are influenced by many factors.

Two most important factors are (i) Organizational factors /

task oriented objectives, like best product quality, lowestprice, dependable delivery.

(i) Personal factors / Non-task oriented objectives, such

as good increments, promotion, Job security, personal

favors. When suppliers offers are similar, buyers can satisfy

organizational objectives from any supplier. Hence,

personal factors become important.

However, when suppliers offers differ substantially, buyersgive importance to organizational factors to satisfy

organizational objectives.


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Objectives in organizational buying

Organizational goals

Organizational members influenced by

Task and non task oriented objectives

Different criteria used by organization to

rate the suppliers

Roles of buying center members


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Task oriented objectives

1. Business goal making profit

2. Technical service

3. Quality

4. Cost delivery

5. Budgetary constraints

6. Economic risk


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Task oriented objectives

1. Price : evaluated cannot be considered in isolation

2. Service: technical assistance/spares/training3. Quality: consistent, reliability, inspection

4. Assurance of supply: interruption are costly

5. Reciprocity: exchange of mutually beneficialbusiness


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Non task objectives

Personal objective : status, promotions,

salary increase, job security, socialinteraction

Friendship

Reputation

Mutually beneficial interactions


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Marketer you have to find the way:


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needs of key influencers

Product is bundle of promises to perform

These are important to few but may be incidental to other?

How about steam engine?

Product features appeal to few but not all in buying center


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needs of key influencers

Product analysis consist of

A list of criteria considered relevant to

needs of target market

Developing rating scale

Examples : engine weight important in

buses and trucks but not important forgenset buyer


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modelsDefinition

A model can be defined as a simplified

representation of reality.

It simplifies only those aspects of reality

that interest model builder.

Types of models

Just verbal

Limited Scope

Comprehensive model

d l


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models

Use of models

Assist in constructing theory that guideresearch on consumer behavior

To facilitate the learning what is presently

known Model serves structured, systematic and

logical thinking about consumer.

Identify relevant variablesIndicate their characteristics

Specify inter-relationships

M d l f d t i i iti f b i t


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Model for determining composition of org buying center :

Purchase

Needs

Buying

Mission

Time

Life cycle

Long/short

Money

Value

High/low

Buyphase

Buyclass

Other

members

Buying center

Member-shipProcurement

Transaction

FirmNew/modified/rebuy

Executive/manager/agent/

buyer/computer

Management/R&D/ Engg

Pod/Finance/Traffic/Mktg

Mngt levels

Functional

areas

Roles

Interaction

Prod/distribution /service

Capital/product/

support/consumption


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Many models have been developed to explain organizational

buying behavior. One of the comprehensive models is the Sheth

model, described below.

The Sheth model of industrial buyer behavior, shown below ,

focuses on (i) Psychological aspects of individual buyers

(Component 1), (ii) Conditions causing joint decision making

(Component 2), (iii) Conflict among those involved in decision

process & resolution of conflict

(Component 3).

Situational factors include economic conditions, labor disputes,

mergers & acquisitions. The model does not explain their

influence on buying process.


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AGA/Dec 2009F i g . : T H E S H E T H M O D E L

C o m p o n e n t ( 1 )C o m p o n e n t ( 2 )C o m p o n e n t ( 3 )S i t u a t i o

D i f f e r e n c e s a m o n gi n d i v i d u a l b u y e r sc a u s e d b y f a c t o r s :

B a c k g r o u n d o f i n d i v i d u a l s ( E d u c a t i o n ,r o l e & l i f e s t y l e ) .

T h e i r i n f o r m a t i o ns o u r c e s .A c t i v e S e a r c hP e r c e p t u a l D i s t o r t i o nS a t i s f a c t i o n w i t h

p a s t p u r c h a s e s

V a r i a b l e s t h a t D e t e r m i n ei f b u y i n g d e c i s i o n i sa u t o n o m o u s o r j o i n t :A ) P r o d u c t S p e c i f i cF a c t o r s :

T i m e P r e s s u r e

P e r c e i v e d R i s kT y p e o f P u r c h a s e

B ) C o m p a n y S p e c i f i cF a c t o r s :C o m p a n y S i z e

C o m p a n y O r i e n t a t i o nD e g r e e o f C e n t r a l i s a t i o n

M e t h o d s u s e d f oc o n f l i c t r e s o l u t i oi n j o i n t - d e c i s i o nm a k i n g p r o c e s s

P r o b l e m S o l v i n g

P e r s u a s i o nB a r g a i n i n gP o l i t i c k i n g

S u p p l i e rB r a n d C


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Webster and wind model



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Webster and wind model A buying centre makes joint purchase decisions as an

informal group. Its task consists of information acquisition,

search processes, the development of choice criteria anddecision making among alternatives. The buying centre hasthree principal aspects:1. composition: the size, hierarchical levels and functionalareas involved;

2. influence: those individuals with the most influence in thebuying process;3. roles: the identification of different roles played by

buying centre members.

A buying centre includes all members of the purchasingorganization who play any of six roles in the purchase

process:


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The model structured industrial buying processesthat are characterized by multi- person involvementlevels, extensive internal and external coordination

effort, and long lead times. An individual canfacilitate or assume more than one role in the

purchase process and several individuals may holdthe same role. The importance of the different roles

varies by buy phase and organization size.



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Isolating the important player involves:

1. Isolate the personal stakeholdersThose individuals who have an important personal stake inthe purchase decisionmaking exert more influence thanother members of the buying centre.

2. Follow the information flowInfluential members are central to the information flow thatsurrounds the purchase decision. Other members directinformation to them.

3. Identify the experts

Expertise is an important determinant of influence in thebuying centre. Those individuals who possess the mostknowledge and ask the most questions of the sales personare often influential.



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Isolating the important player involves:

4. Trace the connections to the topPowerful individuals often have direct access to topmanagement that provides a direct link to valuableinformation and resources and enhances the status and

influence of those individuals within the buying centre.

5. Understand the role of the purchasing departmentThe purchasing department is dominant in repetitive buyingsituations through its technical expertise, knowledge of thedynamics of the supplier's industry and close workingrelationships with individual suppliers.

W E B S T E R A N D W I N D M O D E L


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E n v i r o n m e n t a l V a r i a b l e s

P h y s i c a l , T e c h n o l o g i c a l

E c o n o m i c , C u l t u r a l

P o l i t i c a l a n d L e g a l

L a b o u r u n i o n s

C u s t o m e r d e m a n d s

C o m p e t i t i v e p r a c t i c e s

S u p p l i e r i n f o r m a t i o n

O r g a n i s a t i o n V a r i a b l e s

O b j e c t i v e s a n d g o a l s

O r g a n i s a t i o n S t r u c t u r e

P u r c h a s i n g P o l i c i e s / P r o c e d u r e s

E v a l u a t i o n & r e w a r d s y s t e m s

D e g r e e o f d e c e n t r a l i s a t i o n

B u y i n g C e n t r e V a r i a b l e s

A u t h o r i t y , S i z e

K e y i n f l u e n c e r s

I n t e r p e r s o n a l r e l a t i o n s h i p

C o m m u n i c a t i o n

O r g a n i s a t i o n B u y i n g D e c i s i o n s

C h o i c e o f S u p p l i e r s

D e l a y d e c i s i o n & g e t m o r e i n f o r m a t i o

M a k e , L e a s e o r b u y

D o n o t b u y

I n d i v i d u a l V a r i a b l e s

P e r s o n a l G o a l s , V a l u e s

E d u c a t i o n , E x p e r i e n c e

E x p e r t i s e , J o b P o s i t i o n

L i f e s t y l e , I n c o m e


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pros: The six buying roles help the sales person structure largescale sales in complex corporate environments. Successfulinside selling requires planning and preparation beforemaking first contact.

cons: The concept does not include the political aspect of decisionmaking. The sales person must consider multiple, oftenconflicting goals.

The model omits the selling side. A complex transaction

often requires the involvement of multiple individuals fromthe selling party, e.g. mixed teams consisting of sales peopleand product engineers. This group of actors is called theProblem-Solving Unit (PSU).

CUSTOMER SERVICE


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CUSTOMER SERVICE

Important Customer Service Elements. Carry out market survey to

understand which of the following elements of customer service are

important to customers, what service levels are expected bycustomers, the service levels offered by the firm and its competitors.

(i) Pre Sales Service : Advising, Informing,

Problem solving

(ii) During Sales Service : Product availability,ontime delivery, order cycle time, and information.

(iii) Post Sales Service : Warranty, AMC, Repair,

Installation & Training.

Develop superior service package.

Test, Set Goals, and Establish Control system


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Contemporary purchasing activities

1. JIT2. Outsourcing

3. Single sourcing

4. Value analysis

5. Buying committee


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Contemporary purchasing activitiesJIT is an inventory strategy implemented to improve the return on

investment of a business by reducing in-process inventory and itsassociated carrying costs. In order to achieve JIT the process must

have signals of what is going on elsewhere within the process. This

means that the process is often driven by a series of signals, which can

be Kanban that tell production processes when to make the next part.

O t i


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Outsourcing

Outsourcing iscontracting with another

company or person to do

a particular function.

Almost everyorganization outsources

in some way. Typically,

the function being

outsourced is considerednon-core to the business

O t i


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Outsourcing


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Buying committee


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VALUE ANALYSIS

An organized effort directed at analyzing thefunction of systems, products,

specifications, standards, practices, and

procedures for the purpose of satisfying therequired function at the lowest total cost of

effective ownership consistent with the

requirements for performance, reliability,

quality and maintainability.


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SUMMARY OF CHAPTER - 3

Industrial marketers should understand that business buyers try to

achieve both organizational & personal objectives.

Industrial buying decision process consists of eight steps / stages

(buyphases) & three types of buying situations (buyclasses).

Buygrid model combines buyphases & buyclasses.

Marketers must understand roles & key members of buying centre,including key buying influencers.

Many factors influence organizational buying behavior, but major

factors are organizational ( or task oriented ) objectives and personal

(non task oriented ) objectives.

The Sheth model of industrial buyer behavior is comprehensive,focusing of psychological & joint decision making aspects.

Webster and wind model is also widely used & comprehensive model

on buyer behavior.


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Howard Sheth model

Three level of decision making :Extensive/limited/routine problem solving orresponse behavior.

Four major components of the model

1. Input variables

2. Output variables3. Hypothetical construct

4. Exogenous ( External) variables


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Input variablesInput stimuli are two types

1. Significative : actual element of brand orproduct such as quality, price, distinctiveness

,availability, service

2. Symbolic: Projected element of brand or

product by advertisersuch as quality,

price, distinctiveness ,availability, serviceSocial stimuli created by society, group, family

Howard Sheth model


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Exogenous variablesImportance of purchase, Personality variables, Social class,

Culture, Organization, Time pressure, Financial status

InputPerceptual

construct

Learning

construct

Output

Inhibitor

Pre-

disposition


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Inputs (stimuli)

significative

The 'real' (physical) aspects of the product or service

symbolicThe ideas or images attached by the supplier

socialThe ideas or images attached to the product by society, such as reference groups.

Outputs

The consumers actions

Constructs

perceptual

Obtaining and handling information about the product or service.

learningThe process of learning leading to the decision itself


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Output variables

1. Attention: magnitude of buyers2. Information intake

3. Comprehension: buyers store of

info about brand

1. Attitude: Buyers evaluation of brands potentialto satisfy motive

2. Intention: Buyers forecast of which brand hewill buy

3. Purchase behavior : Actual purchase act bybuyer. Pre disposition modified by any inhibitors


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Hypothetical construct:

There are number of intervening variables. Two

major groups are

1. Perceptual: related to how consumer processthe information

2. Learning : related to How buyers form the

concept


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1. Perceptual: related to how consumer process

the information

Sensitivity to information: How muchinformation buyer try to regulate

Perceptual bias: How buyer distort or alter

informationSearch for information: How actively buyer

search for additional information


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2) Six learning constructs1. Motive: General and specific goal impelling

action ( taken with force or urge)

2. Brand potential of evoked set (that is inmemory and under active consideration)

3. Decision mediators: Buyers mental rules formatching and ranking purchase alternatives


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2) Six learning constructs

4) Pre dispositions: Preference towards brand as

expressed by attitude5)Inhibitors : they restrains purchasing. Typical

inhibitors are time and price

6)Satisfaction: degree to which consequences ofa purchase measures upto buyers

expectations


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Exogenous or external variables

1. Importance of purchase

2. Personality variables

3. Social class

4. Culture

5. Organization

6. Time pressure

7. Financial status

These are not well defined as external to buyer


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Model dynamic : how this work

1. Start of process: When buyer confronts input stimuli andachieves attention

2. Stimulus is subjected to perceptual bias as a results of hispredispositions as affected by motives, decision mediators andevoked set

3. Modified info will again influence these variables leading tochange in predisposition

4. Actual purchase will be influenced by buyers intentions andinhibitors

5. Purchase will lead to satisfaction that will changepredisposition.

6. With more knowledge, it will lead to routine purchase behavior


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Howard Sheth model evaluation Significant contribution in understanding CB/

organizational behavior

Different types of customer problem solving and infosearch behavior

Limitations:No sharp difference between exogenous and other

variables

Limited generality. not useful for joint family decisions

Complex model difficult to use.

nature of ind buying n behavior

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