Buyer Behaviour in Retail Context - Report Example

Buyer Behaviour in Retail Context Buyer Behaviour in retail context Consumer or buyer behaviour is an important area of marketing which should be given utmost importance. Marketing in all areas is done with the consumer in the mind, as he is the ultimate person going to use the products. The success of a business depends on the satisfaction of the customer. So understanding the consumer behaviour is very essential to improve and sustain the sales of any product. The field of Buyer behaviour deals with the factors influencing or associated with the decision making process of the purchase. There are two types of buyers. One is the purchase by the retail customer or end user spending his own money. He is the retail consumer. The second category is the purchase made on behalf of a business or any organization. Here the buyer does not spend his own money and only represents his business. He is the business buyer or consumer. The sales to the former are known as business to consumer and the later as business-to-business. There are wide variations with respect to the selling concepts and the buying behaviours of both the above. For any sales person to be successful in the process of selling, either to a direct consumer or to a business, understanding his consumer is of paramount importance. He should understand the needs and requirements of the customer and be able to evaluate the major factors that would influence the customer’s choice. This broad outline is the main similarity between selling to both the groups of buyers. More than the similarities, differences are more in the buying behaviours of a retail consumer and a business consumer. The conditions affecting the buying behavior of retail consumer are more varied in nature when compared to that of the business consumer. In this report, the selling situations to both the categories are discussed through two examples and the buying criteria, buying methods, similarities and the differences between both would be analyzed. However, before that brief descriptions about the factors associated with the buying behaviours of both the groups of buyers are given. A retail consumer takes a buying decision mainly to satisfy his requirement and for his personal use. He looks out for the personal gains and satisfaction. The main factors influencing his behaviour are psychological, social and economic in nature. These in other words can be written as internal factors such as the extent of necessity of his need, level of desire (strong or weak) to buy the product, his perception and the knowledge about the product, his lifestyle, the influence exerted by his family members in choosing the product, his ability to take his own decision, and his individual personality. The social factors include the opinions of his friends, colleagues or the cultural or social group he belongs. The marketers of the products also play an important role in his decision making process. These are the way a particular brand has been advertised, the real benefits when compared to other brands, price discounts and offers, after sales service, modes of payment and other customer experiences. Based on all these factors a retail consumer does his purchase. The process of purchase itself can again be explained in terms of five basic steps. After the customer understand and gets convinced about his need (Problem recognition), he searches for all the options and choices before him (Information search) then evaluate the options meeting his requirements (Alternative Evaluation) and finally decides the product to be purchased. Even after making the purchase, the consumer should have a feeling of having got the worth for his money (Use), satisfaction and experience a better utilization of the product (Evaluation). All these factors are intermingled and each individual is a different personality. Hence, through extensive research and studies a broad pattern of the buying behaviour of a retail consumer can be predicted. This understanding and experience can help a sales person to exactly determine the behaviour of the person in front of him. Accordingly, he should formulate his strategies to help the customer make the purchase and close his sale. As far as a business consumer is concerned, the factors associated with his buying behaviour are contrast in nature. Here a single person does not make the buying decision and neither the purchase is for his own requirement. Many different people are involved in the process. The person who finds out need for a product, one who would actually use the product (User), the person who is finding out the options and evaluate them (Influencer), the authority who will take a final decision (Decision maker) and the one who actually deals with the supplier (Buyer) are all different. In addition, sale to a business consumer is not one time in nature as with the retail consumer. The volume involved in this is also very huge. Once a sale is made, the sales person has to take all the necessary steps to ensure the continuity of the business. Therefore, in the business-to-business environment the sales person has to meet many different people for affecting a single sale. Here the purchaser is mostly an experienced person who is aware of the business trends and the industry. The sales person may have to put more efforts to change a particular view of the buyer where as not all the retail consumers are as knowledgeable. When a person makes a purchase on behalf of a business, he is not driven by any individual emotions such as the personal satisfaction of the retail consumer. He looks if the product improves his range, quality back-up, supplier credentials, margins, mode of payments and over all how this decision would improve his business. The time taken to decide a purchase is more when compared to a retail consumer. I shall consider two different sale situations, one involving a retail consumer and another business consumer. Case A: I am working in Dixon, which is a huge retail store selling all major brands of household electronic appliances, personal computers, mobile phones, cameras, camcorders and other related accessories as a sales person in the Television section. A family of four- a middle-aged couple and their children aged between 12-16 years enters the television section. They have a quick glance around the TV sets displayed. I approach them and after greetings, initiate a conversation to understand their requirement. Their requirement is a TV set for the children’s room and I understand that this is the second TV purchase for them. The father mentions his preference for a normal colour television and the price range. He expresses his desire for a particular brand as he has already been using it and is happy with the performance. I notice the boy who keeps observing a different brand. I offer to show the new models and features of other brands. Initially the father shows a bit of reluctance to have a look at the brands but from observing the eagerness on the faces of others I mildly persist and get the nod. I show the new models and explain to them. After an initial round of information and a look at working of all the models, the children exhibit a preference for a bigger size, plasma screen TV. This is different from what they had in mind. The price is very much on the higher side than what the father has indicated. The family gets in to a small discussion. I give a brochure of the plasma TV to the parents and tell the children about the advantages of the plasma screen TV, the quality of the picture, sound etc. I show them same model of different brands and explain the minor differences between them. I let them to spend some time of their own and turn my attention to the parents. They seem not convinced about the new choice. I explain to them the advantages of a plasma screen and tell them the promotional offers that are currently going in the store. Meanwhile the children are convinced about the plasma screen TV of a particular brand. They tell their parents and seem to ignore his reservations. The mother expresses her concern about the after sales service support of the brand, as they are not very familiar with it. I explain the various procedures that are in place to take care of the services and guarantee the support they would receive. The parents start comparing the prices of the different models. I understand that they can accept the new model but the price consideration weighs heavily in their mind. The parents again have a look at the working of the TV set and tell me that they would come back soon. The children and the mother look disappointed. Now I tell them the best price I can offer. I explain the benefits like discounts, gifts etc., that they would be getting if the purchase is made at that price. The father does not explicitly show his concern about the price but says that the size would be too big for the children’s room. I give a suggestion to think of some other place in the house. The mother comes up with the idea that they can keep the new TV in the living room and the old one in the children room. The children also readily agree. Father shows a puzzled look. They again get into a discussion. I understand that price is the real concern from their conversation. I offer to explain about the credit card or easy installment options. After some resistance and discussion, they accept to buy the plasma screen TV through installment mode and I agree to absorb a certain percentage of the service charges. Case B: I am employed with Triumph, manufacturers of premium clothing range for men, women and kids in the sales division of women clothing. The clothing range consists of casual corporate wear, formal wear, leather jackets, gloves and other accessories My responsibility is to secure an order from a huge retail store, which has the presence all over the country. The criterion of store selection is that it should have created a niche for itself in the premium marker space. The store should be strong enough in the product promotions and should have a good track record of affecting payments to its suppliers. After doing my initial background search for the stores, which meet my criteria, I zeroed in on Debenhams, a huge retail store with branches all over the country and deals with more than 500 International brands. I do a research about the buying process at debenhams and identify the key people involved in the buying process and decision-making. I also gather information about my competitors who sell to them, their range of products and terms and conditions. After doing my groundwork, I arrange for a meeting with the central buyer of the firm. He expresses their requirement to expand the range for their women wear section. I tell about our range of products, assurance about the quality, price, margins, credit terms and our support towards the promotional schemes. Having agreed on most terms the buyer wanted additional 5% discount. After two rounds of negotiations, we agreed on 2% discount as I offered to compensate through volume incentives and a share in their co-operative budget meant for in- store product promotions. The supply lead-time and the minimum order quantity (MOQ) were agreed upon mutually. I demanded for better shelf space and in turn offered to give “guarantee” of 30-day purchase returns. I was in contact with the purchase team through out the buying process attending to their enquiries, resistances and concerns. When I close the sale, finally I know that this is not the end but the beginning for a new relationship. I compare the above buying and selling situations. In the case of the retail customer, the customer came in with a preset mind about the product. He did not ask for a television set but rather for a particular model of a specific brand. His purchase for this product is not new. He had the knowledge and experience of the particular brand but not aware of the recent arrivals and improvement in models. The children seemed to have a different opinion from the beginning, which was obvious from their enquiries and observations. Though the father is going to make the purchase, the product was meant for the children. The kids have gathered information from their friends (reference groups) and advertisements. They wanted the TV with the latest technology and size bigger than the current one. Since I could understand their needs, I could close the sale and satisfy all their requirements. In the case of the business consumer, I had to deal with many persons in the buying department i.e. Initiator, decision maker and the buyer. The consumer is aware of the products but the buying is mostly price and demand driven. He is not the end user of the product. Since the purchase is repetitive, the buyer’s demands need to be weighed carefully for both short and long-term commercial impact for the organization as against the gain in market share. References Marketing Tutorials- Principles of Marketing - Part 4: Business Buying Behavior [on line]. Available from: http://www.knowthis.com/tutorials/principles-of-marketing/business-buying-behavior.htm Cited November 17, 2006. Marketing Tutorials - Principles of Marketing - Part 4: Consumer Buying Behavior [on line]. Available from: http://www.knowthis.com/tutorials/principles-of-marketing/consumer-buying-behavior.htm Cited November 17, 2006. Read More