qwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwe rtyuiopasdfghjklzxcvbnmqwer tyuiopasdfghjklzxcvbnmqwert yuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyu iopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopa sdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasd fghjklzxcvbnmqwertyuiopasdf A Report on ‘The Buying Decision Process’ Submitted to Ms. Ankita Soni

Buying Behaviour

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Buying Behaviour

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Page 1: Buying Behaviour


A Report

on‘The Buying Decision


Submitted to

Ms. Ankita Soni



Page 2: Buying Behaviour


Riaz Ahemad



1 Buying Decision, why to buy 3

2 consumer Buying Behavior, general model 6

3 Consumer Buying Process 11

4 Segmentation 12

5 Buying situation 15

6 Swot analysis 17

7 Conclusion 20

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Buying Decision Process

Why People Buy

Marketers spend millions of dollars trying to understand why people buy products and services.

Sometimes it seems that there is no reason for a purchase, but in reality there is always a reason.

Many factors are involved in a customers' buying decision, any one of which can become the

deciding factor, such as:

Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social status;

preference for buying increases with price.

Snob effect: Desire to buy something nobody else has; preference for buying increases with

rarity or scarcity.

Bandwagon effect: Desire to buy something everybody else is buying; preference for buying

increases with perceived popularity.

Economic-To enhance their lifestyle or to fulfill two of Maslow's needs: physiological (food,

shelter) and Safety and Security.

Psychological-This is the study of how people interact with the environment, products are

consumed to enhance their well being, for example air fresheners, furniture and convection


Sociological-The study of the thoughts, feelings, and behaviors of group interaction, especially

in a social setting. People want to feel accepted and loved by their peers and they need to

consume products that will appeal to their chosen groups. For example a consumer wants to join

a kayaking team would have to purchase the proper gear, clothing and maybe even music genre

in order to fit in with the group.

Practical-Consumers purchase products because they need them to survive, such as shoes and


Impractical-is the opposite of practical, purchasing products that are not necessary.

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Rational-Purchases are made with logical, thought out reasoning.

Irrational-products are purchased for foolish or absurd reasons.

Factual-Purchasing products based on researched reports.

Emotional-purchasing products based on feelings

Buy to satisfy a need (for a reason).

Buy to satisfy a want (desire).

If a marketer can identify consumer buyer behaviour, he or she will be in a better position to

target products and services at them. Buyer behaviour is focused upon the needs of individuals,

groups and organisations.

It is important to understand the relevance of human needs to buyer behaviour (remember,

marketing is about satisfying needs).

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Let's look at human motivations as introduced by Abraham Maslow by his hierarchy of needs:

The hierarchy is triangular. This is because as you move up it, fewer and fewer people satisfy

higher level needs. We begin at the bottom level.

Physiological needs such as food, air, water, heat, and the basic necessities of survival need to be

satisfied. At the level of safety, man has a place to live that protects him from the elements and

predators. At the third level we meet our social and belongingness needs i.e. we marry, or join

groups of friends, etc.

The final two levels are esteem and self-actualisation. Fewer people satisfy the higher level

needs. Esteem means that you achieve something that makes you recognised and gives personal

satisfaction, for example writing a book. Self-actualisation is achieved by few. Here a person is

One of a small number to actually do something. For example, Neil Armstrong self-actualised as

the first person to reach the Moon.

The model is a little simplistic but introduces the concept a differing consumer needs quite well.

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To understand consumer buyer behaviour is to understand how the person interacts with the

marketing mix. As described by Cohen (1991), the marketing mix inputs (or the four P's of price,

place, promotion, and product) are adapted and focused upon the consumer.

The psychology of each individual considers the product or service on offer in relation to their

own culture, attitude, previous learning, and personal perception. The consumer then decides

whether or not to purchase, where to purchase, the brand that he or she prefers, and other


The Buyer Decision Process.

Buyer decision processes are the decision making processes undertaken by consumers in regard

to a potential market transaction before, during, and after the purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of action from

among multiple alternatives. Common examples include shopping and deciding what to eat.

Decision making is said to be a psychological construct. This means that although we can never

"see" a decision, we can infer from observable behavior that a decision has been made. Therefore

we conclude that a psychological event that we call "decision making" has occurred. It is a

construction that imputes commitment to action. That is, based on observable actions, we assume

that people have made a commitment to effect the action.

In general there are three ways of analyzing consumer buying decisions. They are:

Economic models - These models are largely quantitative and are based on the assumptions of

rationality and near perfect knowledge. The consumer is seen to maximize their utility. See

consumer theory. Game theory can also be used in some circumstances.

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Psychological models - These models concentrate on psychological and cognitive processes such

as motivation and need recognition. They are qualitative rather than quantitative and build on

sociological factors like cultural influences and family influences.

Consumer behavior models - These are practical models used by marketers. They typically blend

both economic and psychological models.

General model

A general model of the buyer decision process consists of the following steps:

1. Problem recognition;

2. Information Search

3. Evaluation of Alternative

4. Purchase decision

5. Purchase

6. Post-purchase behavior/buyer's remorse (cognitive dissonance)

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Problem Recognition:-

The buying process starts when the buyer recognizes a problem or need triggered by Internal

or external stimuli. Marketer need to identify the circumstances that trigger a particular need by

gathering information from a number of consumers. Particularly for discretionary purchases

such as luxury goods, vacation packages and entertainment options.

Information Search:-

Consumers search for a limited amount of information for a product before buying.

Sources of information include:

1. Personal sources

2. Commercial sources

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3. Public sources

4. Personal experience

The relevant internal psychological process that is associated with information search is

perception. Perception is defined as 'the process by which an individual receives, selects,

organizes, and interprets information to create a meaningful picture of the world'

Evaluation of Alternatives

The third step of the "Buyer Decision Process" is the "Evaluation of Alternatives."During this

stage of the process, a consumer arrives at a final set of brand choices and then must evaluates

them based on their own individual needs, and on the specific buying situation. Companies

respond to this buy researching how various consumers evaluate brand alternatives, and adjust

their marketing accordingly.

Verizon has made a big attempt to change how customers evaluate them when choosing between

cell phone providers. Verizon has been at a big disadvantage in the smart phone market because

of AT&T exclusive right to distribute the iphone. They have responded with a marketing

campaign that focuses on how much larger their 3g coverage is then AT&T's. This is because

smart phones require a fast internet connection to be of much use. So while AT&T may have the

hottest phone, it may run extremely slow in many places where a consumer would want to use it.

What’s the point of having a cool phone if you can only use it in a few places? That is the

question Verizon wants consumers to ask themselves when they are evaluating brand


Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase decision.

Sometimes purchase intention does not result in an actual purchase. The marketing organization

must facilitate the consumer to act on their purchase intention. The organization can use variety

of techniques to achieve this. The provision of credit or payment terms may encourage purchase,

or a sales promotion such as the opportunity to receive a premium or enter a competition may

provide an incentive to buy now. The relevant internal psychological process that is associated Page | 9

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with purchase decision is integration. Once the integration is achieved, the organization can

influence the purchase decisions much more easily.

Post purchase evaluation

It is common for customers to experience concerns after making a purchase decision. This arises

from a concept that is known as “cognitive dissonance”. The customer, having bought a product,

may feel that an alternative would have been preferable. In these circumstances that customer

will not repurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade the potential

customer that the product will satisfy his or her needs. Then after having made a purchase, the

customer should be encouraged that he or she has made the right decision. It is not affected by


Internal influences

Consumer behavior is influenced by: demographics, psychographics (lifestyle), personality,

motivation, knowledge, attitudes, beliefs, and feelings. Consumer behavior concern with

consumer need consumer actions in the direction of satisfying needs leads to his behavior of

every individual depend on thinking

External influencesPage | 10

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Consumer behavior is influenced by: culture, sub-culture, locality, royalty, ethnicity, family,

social class, reference groups, lifestyle, sex and all.

The black box model shows the interaction of stimuli, consumer characteristics, and decision

process and consumer responses. It can be distinguished between interpersonal stimuli (between

people) or intrapersonal stimuli (within people). The black box model is related to the black box

theory of behaviorism, where the focus is not set on the processes inside a consumer, but the

relation between the stimuli and the response of the consumer. The marketing stimuli are

planned and processed by the companies, whereas the environmental stimulus is given by social

factors, based on the economical, political and cultural circumstances of a society. The buyers’

black box contains the buyer characteristics and the decision process, which determines the

buyer’s response.

The black box model considers the buyers response as a result of a conscious, rational decision

process, in which it is assumed that the buyer has recognized the problem. However, in reality

many decisions are not made in awareness of a determined problem by the consumer.

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Consumer Buying Behavior

Consumer behavior is the study of when, why, how, and where people do or do not buy

product. It blends elements from psychology, sociology, social anthropology and economics. It

attempts to understand the buyer decision making process, both individually and in groups. It

studies characteristics of individual consumers such as demographics and behavioral variables in

an attempt to understand people's wants. It also tries to assess influences on the consumer from

groups such as family, friends, reference groups, and society in general.

Customer behavior study is based on consumer buying behavior, with the customer playing the

three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for

customer behavior analysis as it has a keen interest in the re-discovery of the true meaning of

marketing through the re-affirmation of the importance of the customer or buyer. A greater

importance is also placed on consumer retention, customer relationship management,

personalization, customization and one-to-one marketing. Social functions can be categorized

into social choice and welfare functions.

Segmentation, Demographics and Behavior

Segmentation is the process of breaking down the intended product market into manageable

groups; it can be broken down by:

1. Relationship

2. Customer Type

3. Product Use

4. Buying Situation

5. Purchasing Method

6. Behavior

7. Geographic LocationPage | 12

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8. Demographics

9. Psychographics



1. Needs—economic, functional, psychological, social.

2. Benefits--quality, service, economy, convenience, speed.

3. Attitude toward product--Enthusiastic, positive, indifferent, negative, hostile.

4. User status--Nonuser, ex user, potential user, first time user, regular user.

5. Loyalty status--None, medium, strong, absolute.

6. Brand Familiarity-Unaware, aware, informed, interested, desirous, intending to buy.

7. Occasion--Regular occasion; special occasion, convenience, comparison shopping,

unsought product.

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8. Type of problem solving needed-routine, limited, extensive.

9. Information required-low, medium, high.

Geographic Location

1. Region of world, country— North America, South America, Africa, Asia, Europe.

2. Regions within that country— (For Example USA) Pacific Northwest, South, Midwest,

New England.

3. Size of city— population under 5,000 people to 4 million or more.

4. Urban vs. rural— country, city, large city = more resources, more independence;

country=more dependence on neighbors and pooling resources.

5. Climate— cold, hot, rainy, desert, beaches, mountains.


1. Income— under $5,000 to $250,000+ a year.

2. Gender— male, female, neither, both.

3. Age— Infant, toddler, preschool, between (age 8 to 12), teen, college age, 20, 30, 40, 50,

60, 70-90.

4. Family size— 1 person, 2, 3, 4, 5 or more.

5. Family life cycle— young, single, engaged, DINKS (double income no kids), SINKS

(single income no kids), married with kids (babies, toddler, elementary school age, teen,

older), recently divorced, empty nester (children have moved out), same-sex couples,

single parents, extended parents (grandparents raising their grandchildren), retired (either

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wealthy or Medicare dependent/poor). There are also Boomerang Kids (adult children

have moved back home), Cougar/Silver Fox (Cougar is a 40-60 year old wealthy, single,

career driven woman seeking a younger man; Silver Fox is a 40-60 year old wealthy,

single, career driven man seeking a younger woman).

6. Job— unemployed, housewife, part-time, full-time, student, professional, craftsperson,

farmer, retired.

7. Education— grade school or less, some high school, high school graduate, some college,

college graduate, graduate degrees.

8. Religion— Christian, Jewish, agnostic, atheist, Muslim, Islam etc.

9. Race— White, Black, Asian, Hispanic, Native American, mixed race, etc.

10. Culture/nationality—American, French, English, African, Russian, Indian etc.

11. Generation— (For Example USA) GI Generation, Silent, Matures, Baby Boomer, Gen X,

Gen Y, Boomlets.


1. Lifestyle— interests, hobbies, activities, interests, opinions, values, media preferences.

Everyone has two lifestyles, the one they are in now, and the one they desire to be in,

which is usually better than the current one. Almost all decisions are influenced by the

buyer’s current and desired lifestyle.

2. Personality traits

o Sincerity.

o Excitement.

o Competence.

o Sophistication.

o Ruggedness.

Social class— lower, middle-low, middle, middle-upper, upper, upper-upper, working class, blue


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Buying Situation

1. Buying situation— Rebuy, modified Rebuy, new purchase


It is not only products differ. Even the buying situation differs. Each time the buyer is to take a

purchase decision ,it may or may not be the same as the previous one. The differentiation

between the two buying situations may be caused by the absence of any or all of the following


2. Awareness about competing brands in a product group.

3. Customer has a decision criterion and Customer is able to evaluate and decide on his


4. Viewed against these parameters ,one may observe that it is not the product that

differentiates one buying situation from another; rather it is the time that the buyer spends

in learning and evaluating the alternatives or finally selecting one of them .Howard and

Sheth have described these buying situations as being:

5. Routines response behavior

6. Limited problem solving and extensive problem solving.

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Routines Response Behavior or Straight Rebuy

This is a buying situation characterized by the presence of all the above three criteria for

differentiation .In other words, here the customers is aware of his or her choices, knows what he

is looking for, as his or her decision is based on personal experience of either self or others.

Generally, the customer spends little or no time choosing an alternative .Brand loyalty is

relatively higher here. Moreover, this is a buying situation where a customer perceives a low risk

in buying the product and/or the brand. Consider the typical shopping behavior of a

housewife .She goes to the grocer or a supermarket and spends much less time in selecting her

toiletries, beverages like tea or coffee and other food products. For each time she goes to buy her

family requirements, she generally ends up buying the same brand.

Limited Problem Solving or Modified Rebuy

This is a buying situation with a difference .This could be for example, introduction of a new

brand or product often requiring a change in the customer decision criteria. Continuing the

example of the housewife ,assume that in her next shopping cycle ,she sees a new liquid toilet

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soap which promises to keep her skin soft and moisturized .the brand also promises to give

vitamin E, which the manufacturer claims is required in temperate conditions.

The liquid toilet soap brand is available in four fragrances .The pack can be refilled every time

the soap gets fully consumed .Now this introduction is likely to change her decision and may be

the choice criteria. If she spends some time in evaluating the liquid toilet soap against the normal

bar soap and then decides to try it, we conclude that for her it was a limited problem solving

situation. As can be seen, this buying situation will often lead to a trial purchase. The customer

may even decide to continue with her current product selection. Generally it has been observed

that brand extension strategy helps the customer to reduce the element of newness in the

purchase decision. Like, for example Unilever deciding to introduce liquid toilet soap under its

most popular brand name lux. It may be remembered that customer perceives moderate risk in

this situation.

SWOT Analysis Dell

1. Strengths.

2. Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess

of $1 billion US, representing a growth of around 28%. For the last couple of years it has

held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand

is one of the best known and renowned computer brands in the World.

3. Dell cuts out the retailer and supplies directly to the customers. It uses information

technology, and Customer Relationship Management (CRM) approaches to capture data

on its loyal consumers. So a customer selects a generic PC model, and then adds items

and upgrades until the PC is kitted out to the customer's own specification. Components

are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour.

You can even keep track of your delivery by contacting customer services, based in India.

The finished goods are then dropped off with the customer by courier. Dell has total

command of the supply chain.Page | 18

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1. The company has such a huge range of products and components from many suppliers

from a plethora of countries, that there is the occasional product recall that can cause Dell

some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a

fear that they could overheat, causing electric shocks or fires.

2. Dell is a computer maker, not a computer manufacturer. It buys from a group of

concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in

terms of business operations, allowing Dell to focus on marketing and logistics, the

company is reliant on a few large suppliers, and to an extent is locked in for periods of

time (i.e. unable to switch supply dues to the lack of large suppliers in the World).


1. Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell

remained the company's Chairman. Despite founder Dell's massive success, new blood

and a change in management thinking could lead the company into a new, even more

profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst

studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992,

and will be a tough act to follow.

2. Dell is pursuing a diversification strategy by introducing many new products to its range.

This initially has meant good such as peripherals including printers and toners, but now

also included LCD televisions and other non-computing goods. So Dell competes against

iPod and other consumer electronics brands.

3. Dell is making and selling low-cost, low-price computers to PC retailers in the United

States. The PC's are unbranded and should not be recognized as being Dell when the

consumer makes a purchase. Rebranding and rebidding for retailers, although a departure

for Dell, gives the company new market segments to attack with the associated marketing



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1. The single biggest problem for Dell is the competitive rivalry that exists in the PC market

globally. As with all profitable brands, retaliation from competitors and new entrants to

the market poses potential threats. Dell sources from Far Eastern nations where labour

costs remain low, but there is nothing stopping competitors doing the same - even

sourcing the same or similar components from the same or similar suppliers. Remember,

Dell is a PC maker, not a PC manufacturer.

2. Dell, being global in its marketing and operations, is exposed to fluctuations in the World

currency markets. Although it is a very lean organization, orders do have to be placed

some time ahead due to their size or value. Changes in exchange rates could leave the

company exposed to potential losses in parts of its supply chain.

3. Dell's commitment to customer value, to our team, to being direct, to operating

responsibly and, ultimately, to winning continues to differentiate us from other

companies. The Background section provides critical information and history.












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Product Economic Attitudes Problem




Price Technological Motivation Information


Brand choice

Place Political Perceptions Alternative




promotion Cultural Personality Purchase




Demographic Lifestyle Post-





natural Knowledge


Buying decision process is a most important step which buyer undergoes it before buying a

product. Here we do see that how is strength of Dell computer and its unprecedented services in

terms of its long running battery and online internet based sells and distribution channel,

Quality and Durability has been affecting the Dell product buying. Buyer buy the product when

does he feels Perceived values from it.

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