Exchange Functions Of Marketing

Exchange functions of marketing include buying and selling of goods and services.

1. Buying
Buying of goods or services is the first and important function of marketing process. Producers, intermediaries, wholesalers and retailers do this function. They buy, assemble and sell. Producers buy raw materials or semi-finished goods to produce finished goods and intermediaries buy goods to resell. Ultimate consumers buy goods to use from producers directly or intermediaries.

Different functions involve in buying goods, like making buying plan, deciding the quality and quantity of the goods or services to be bought, selecting proper channel for supply, etc. To establish business contact with suppliers, and to sign contract on different terms and conditions such as quality, quantity, price, delivery date, etc. with them are also the activities of buying function. Buying function is not easy as it is seen. For this, buyers need to have special knowledge and experience.

2. Selling
Selling of goods or services is the other important as well as complex function of marketing. Under this, goods and services are handed over to buyers.This function is important for producers, intermediaries, consumers, and general public. In face, existence of any business firm is not possible without selling. As the main objective of every business firm is to earn profit from selling goods or services, there is no meaning of business and other marketing functions without selling. Consumers get necessary goods or services through selling and their needs are satisfied. Because of the increase of needs and wants, production of goods has increased. as a result the problem of selling has also gradually become complex.

Functions Of Marketing

The functional scope of marketing is very wide. Various activities need to be performed in the process of transferring goods or services from producers to consumers. The same, on the whole, is called marketing function. We find different views among marketers about classification of marketing functions. In the list of these functions we can find 4 or 5 to 20 or 30 functions of marketing. So many that, Franklin W. Ryan had listed 120 functions of marketing.

The functions of marketing mentioned by different specialists can be divided into four categories and discussed for making study easy. They are i). exchange functions, ii) physical distribution functions, iii) facilitating functions and iv) research and development functions.

1. Exchange Functions
Exchange function of marketing means the activities of exchanging or buying and selling of goods or services in a way that ownership of goods or services is transferred from one person to another.

2. Physical Distribution Functions
The physical distribution function include transportation and storage of goods. Until the goods have been sold out they should be kept safe, and after selling they should be transported from one place to another.

3. Facilitating Functions
These are other functions to facilitate above functions of exchange and physical distribution of marketing. Standardization and grading, finance management and risk taking are the important facilitating function of marketing.

4. Research And Development Functions
Besides the above mentioned functions, research and development functions should also be done in marketing. These functions include product planning and development and market information and research activities.

Roles Of Customers In Marketing Process

The focus of marketing process is consumers. The main objective of marketing process is to satisfy them. The role of customers in demand, price, quality, model and type of products and determination of delivery point becomes very important. They provide important information to intermediaries and producers. As the payment made by the consumers for the products finally reaches the sources, i.e the hand of producers and suppliers of raw materials, the consumers or customers' role becomes the most important to give dynamism to the business world and to the economy as a whole.

Roles Of Facilitating Institutions In Marketing Process

The role of facilitating institutions becomes important in marketing process. Transport companies, banks, finance companies, insurance companies, advertising agencies, market research firms, warehouse management companies etc. play very important role in marketing process. In the absence of these institutions, distribution remains incomplete. Such institutions play their special roles in marketing.

1. Transport Companies
Transport companies help carrying goods from one place to another. They take responsibility to carry goods from producers to the consumers. In this way, they create place utility of products.

2. Banks And Financial Institutions
Banks and financial institutions provide necessary capital to business firm. Finance plays decisive role in both production and distribution of goods and services.

                    Also Read: Roles Of Customers In Marketing Process

3. Insurance Companies
Insurance companies provide important service to business firms. They bear risk of any loss of goods from shop, from warehouse or while transporting and ensure distribution of goods.

4. Advertising Agencies
The advertising agencies, which are operated to help in the promotion of business, make promotional plans, programs and campaigns of the business firms and implement them.

                      Also Read: Roles Of Producers And Suppliers In Marketing Process

5. Warehousing Companies
The consumers, at a time, do not consume all the products produced by business firms. On the other hand, warehouse is indispensable to keep necessary raw materials, semi-finished and even finished products safe. So, warehousing companies play an important role to maintain balance between demands and supply, manage regular supply and create time utility of the goods.

6. Market Research Firms
Market research firms collect information from market and consumers about needs and wants, market and product trend, demand situation, competitors' strengths and weakness, effectiveness of distribution strategy, etc. analyze them and provide important information to the business firms.

Role Of Marketing Intermediaries In The Marketing Process

The marketing intermediaries include distributors, agents, wholesalers, retailers etc. The role of intermediaries becomes very important in distribution of goods or services in marketing process. Their role can be mentioned as follows:

1. Search For Potential Buyers
Marketing intermediaries search for prospective buyers of the goods or services.

2. Title Of Ownership
The role of intermediaries becomes very important in marketing process. They make producers free from worry about sale of their products by taking ownership of the product.

                         Also Read: Roles of Customers In Marketing Process

3. Communication Link
Marketing intermediaries establish communication link between firms and market, viz producer and consumers.

4. Wide Range Of Product
Marketing intermediaries collect different goods or services from different producers and supply them to the consumers.

                    Also Read: Structure Of Marketing Process

5. Economy
Marketing Intermediaries purchase huge amount of products at a time and supply to different customers. This minimizes distribution cost. As a result, the goods or services become comparatively cheap in price.

6. Feedback
Marketing intermediaries can receive regular reactions and experience of consumers about the products. Then they give information to the producers about the reactions and experience of the consumers. This gives chance to the producers to make necessary improvement in the quality of the product.

Structure Of Marketing Process

Many activities need to be performed in the process of carrying goods or services from producers to the customers. Under this include marketing functions such as purchase of raw materials and other necessary supplies, production process, storage of products, sale and delivery etc. In the process of performing such functions different parties involve in it. Besides the business firm, the role of suppliers, customers, distribution channels, market competition etc. becomes very important.
Under marketing process include both mental and physical aspects. Analysis of marketing environment and opportunity, recognition of customers' needs and wants, customers' knowledge about the goods or services of firm, etc. include in mental aspect. Under physical aspect include the functions such as collection of materials and other necessary goods from suppliers; and delivering right quantity of goods to the customers through proper means of transport at right place at right time at reasonable price.
The activities involved in marketing process can be divided mainly in three parts. They are concentration, equalization and dispersion. The integration of all the three activities is marketing process.

1. Concentration
Construction includes : Analysis of marketing environment, Analysis of marketing opportunities, Identification of customers' needs and production of desired goods and services.

2. Equalization
Equalization includes: Matching product with needs and wants, matching supply with demand, develop marketing program and performing marketing program.

3. Dispersion
Dispersion includes: Movement of goods and services from producer to customers, involvement of marketing intermediaries, perform marketing activities, transfer of ownership from seller to buyer and need satisfaction.

Roles Of Producers And Suppliers In Marketing Process

Producers and suppliers of goods and services have very important role in marketing process. Without production of goods, sales becomes impossible. Even if the firm itself is production unit, the suppliers' service is essential for the supply of necessary raw materials, labor force, capital, machines and equipment etc. So, the role of producers and suppliers can be mentioned as follows:

1. Market anticipation
Before producing any goods, the producers should first identify the needs of consumers. For this purpose relevant information are collected from different sources and analyzed. Market research is carried out to anticipate demand.

                       Also Read: Structure Of Marketing Process

2. Operations
After consumers' needs have been identified, the producer makes plan for the production of the goods, makes arrangement for the regular supply of raw materials and other necessary things from suppliers.

3. Pricing
After the goods have been produced, price of goods is determined. Generally,selling price is determined on the basis of production cost and profit margin.

                    Also Read: Roles Of Customers In Marketing Process

4. Promotion
Different promotional activities such as advertisement, publicity, personal contact, public relation etc. are conducted to give information to the customers about goods or services.

5. Distribution
The producers use different distribution channels to supply goods to the ultimate consumers. In this process, the ownership of goods or services is transferred to the buyers.

Satisfaction Of Demand

The objective of business firm cannot be achieved only by creating demand. If the customers are not satisfied with the goods or services supplied, they cannot be permanent customers of the firm. So, if the relative benefit from the goods or services is more than the price paid then there customer value is created. The customers' decision of selection of goods is directed by customer value. A marketer should include different prices with the goods or services brought in the market.

Customer value creates customer satisfaction. The customers expect certain benefit from the goods while buying goods. If the goods is found satisfactory in use as expected, customers feel satisfied. Otherwise, they become unsatisfied. Similarly, if the goods or services work better than expected or created more value, they become more satisfied.

Customer Satisfaction = Perceived Performance/Desired Performance

Satisfied customers become loyal to the brand or they love brand. They tell their experience of the goods or services to others. So, success of any business firm depends on matching the performance of goods or services with customers' expectation.

Concept And Methods Of Demand Creation

Concept Of Demand Creation
It is very important to create demand for goods or services in selling process. Goods or services cannot be sold out only identifying potential customers and contacting them. They should also be motivated to buy. Different promotional activities conducted to sell goods or services may be called creation of demand. In other words, all the special efforts directed to stimulate desire for goods with the ultimate objectives of sale at a profit may be called demand creation.

Every firm tries to increase sale volume of products at certain price through the use of promotional techniques. Specially, promotional activity is the practice related with information, message, motivation and persuasion. The practice of giving information about the product to customers, persuade and induce them to buy the product and set positive influence in them towards the product as well as firm is called promotional effort. Demand for products or services can be created through promotional activities.

                             Also Read: Meaning Of Primary And Secondary Demand

Methods Of Creation Of Demand
There may be different methods of demand creation for goods. Among them the main methods are as follows:

1. Personal Selling
Personal selling is very important method of demand creation. To have personal talks or communication with prospective customers in order to persuade them to buy goods or services is called personal selling. In other words, personal selling is defined as an oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales.
Personal selling is a method of direct communication. In this method seller or sales representative negotiates directly with customers, presents information to them, and motivates them to buy products. In this way demand is created.

2. Advertising
The other method of demand creation is advertising. The customers are given information and messages about new goods or services to arouse curiosity in them to buying the products. Advertisement is such a non-personal communication process through which demand for goods or services can be increased in market.

                              Also Read: Concept Of Needs, Wants, Drive And Demand

3. Sales Promotion
Besides personal selling and advertising, there are other methods to create demand. They are called sales promotion efforts. Sales promotional activities such as display and decoration of products, trade-fair, exhibition, free distribution of sample, discount on additional purchase, gift programs, etc. are the other methods of demand creation. Such efforts motivate customers to buy products, which increases sales volume.

In this way, the above methods are used to create demand. Appropriate method of demand creation can be applied according to the objective of the firm, functional area, scope, nature of product, market competition etc.

Meaning Of Primary Demand And Secondary Demand

Demand may be specific or general. The demand made by certain individual for certain goods or services is called specific demand. The market demand as a whole is called general demand. The Aggregate demand of all customers is market demand.

Primary Demand
The aggregate demand for certain goods or services of all brands to satisfy particular type of need is called primary demand. Such demand is common. The aggregate demand for goods or services sold by any industry is primary demand. For example, aggregate demand for noodles of different brands is primary demand. The aggregate demand of all brands of noodles produced and sold by different firms is primary demand of the noodle industry. Increase in aggregate demand means increase in demand for the product of all firms. So, it is necessary as well as important for each firm to have knowledge about primary demand and analyze it, because the goods to be sold by a firm is a part of aggregate demand. On the other, it is necessary for firms to analyze primary demand to find out who the buyers of the goods are, why and how they buy goods. From such analysis, opportunity can be identified to increase production volume of particular goods or particular class products.
Secondary Demand
Secondary demand is very specific. The demand for goods or services produced by only one firm is called secondary demand. Secondary demand is analyze to know how high is pressure of demand for what brand among certain class of products. This analysis is also useful to know why the consumers select only specific brand among various available brands. On the basis of the conclusion drawn from analysis, marketing manager becomes able to take proper marketing decisions on market segmentation, promotional effort, distribution channel etc.

In this way primary demand covers aggregate demand for all brands of particular products, while secondary demand covers only specific brand of certain class of product.

Concept Of Needs, Wants, Drive And Demand

Concept Of Need
The starting point of marketing is human needs. Foods, clothes, air, shelter, water, sex are human needs. Similarly, human beings desire to have education, entertainment, security, relationship etc. The needs of human beings can be classified in physiological security, social and other needs.

Concept Of Wants
The desire for fulfilling needs is called want. The things to satisfy needs are different from person-to-person and society-to-society. However, culture, social class, individual personality, preference etc. direct wants.

                                 Also Read: Satisfaction Of Demand

Concept Of Drive
When needs reach a decisive level, then the stage of anxiety arises in consumers. This is called drive. Drive forces consumers to conduct such activities that can reduce the level of anxiety related with needs. They can reach this level only by taking initiative to get such goods or services to satisfy the needs.

Concept Of Demand
Demands are those human needs, which are supported by ability and readiness to buy them. Even though human needs are unlimited, due to limited resources goods or services should be selected which can give maximum satisfaction and utility.

                              Also Read: Concept And Methods Of Demand Creation

Marketing does not create needs, but it can affect wants. The needs emerge in persons through physical, social and personal processes. It can affect wants by providing proper goods or services to satisfy the needs according to the cultural, social and personal context. Marketing can affect demand by providing different quality goods of different prices.

Meaning Of Buying Motives Of Consumers

There are different kinds of consumers. So, their wants and needs are also different. They buy goods or services to satisfy their needs. The causes and factors which stimulate consumer to buy certain goods or services is called buying motives. In fact, the motivating factor to direct consumer behavior is buying motives.

Identifying buying motive of consumer is a difficult task for business entrepreneurs. There are various factors to induce consumers to buy any product. Profit, fear, dignity, pride, fashion, entertainment, love, health, facility, curiosity, habit, security, utility etc. lead persons to buy products. Among them profit, fear and pride are the three major motivating factors. Such motives may be different from person to person. However, all the factors are important.

                             Also Read: Concept And Meaning Of Buyer Behavior

Classification Of Buying Motives
Different scholars have classified buying motives of consumers in differently. We can classify the buying motives in the following way:

1. Emotional Buying Motive
Emotional buying motive depends on the emotion, feeling and attitude of the consumers. This type of motive is purely a psychological aspect of a person. This type of buying motive may be different from person to person. Under this include:
* Fear
* Love and affection
* Curiosity
* Fashion
* Possession

2.Rational Buying Motive
All the consumers do not buy any goods or services with emotional motive. They become thoughtful, consider carefully their needs, priority, financial capacity etc. study and analyze the necessity, utility, price etc. of the goods or services. Then they make final decision to buy or not. The consumers become logical, rational, apt and knowledgeable. Such quality of the customers can be seen in their buying decision. The customers buy goods or services considering cheapness, health and security, utility, comfortable etc.

3. Prestige Motive
Prestige motive is related with the want of consumers for promotion of self-image and protection of their ego. Under this, vanity and pride are motives of consumers.

                       Also Read: Buyer Behavior Process Model

4. Patronage Motive
Patronage motive describes why certain customers buy specific brand goods, but not other brands and always buy necessary goods only from particular shop. So, under this motive include brand loyalty and store loyalty.

In this way consumer buy goods or services due to emotional motive, rational motive, prestige motive and patronage motive.

Buying Process Of Non-institutional Customers

If consumers buy goods or services for personal use or domestic use, this called consumer market. In consumer market, only consumer goods or services are bought or sold. While buying necessary goods, every consumer adopts certain process. The activities before buying, during buying and evaluation after buying of goods include in buying process.

Five stages can be mentioned in consumer buying process as follows:

1. Problem Or Need Recognition
The buying process of consumers starts from need recognition or problem identification. Consumers feel tension or unease after need or problem has been recognized and until it has not been solved. Such need or problem may start or recognized by the persons themselves or through initiators or communication media. The psychological aspects like motivation and perception may create consumption problem. Experience of certain event, or situation also create need or problem. For example, woolen cloth is felt a need in cold winter and cold drinks in summer.

                        Also Read: Concept And Types Of Customers

2. Search For Alternative Solution
After the needs have been recognized, consumers search for goods and alternative brands. They should take adequate information about the goods, brand and sellers to that their need can be satisfied. Alternatives can be identified through general remembrance or search. Customers can develop loyalty to goods or brands by learning process. While searching for alternatives to satisfy the needs, the customers should take help of both internal and external sources of information. The customers can get knowledge and information about goods using method, brand, sellers, available place through personal sources like family, friends, relatives, neighbors etc. through business sources like advertisement, decoration an display, packaging etc. and through public sources like radio, TV. newspapers etc.
3. Evaluation Of Alternatives
Consumers seek for proper alternatives to satisfy their needs. They get adequate knowledge and information about different products, brands, sellers etc. Then the evaluation stage of alternatives starts. Before taking buying decision, customers should determine certain criteria for evaluation of each alternative. They can determine only one or more than one criteria to compare each alternative.

                Also Read: Types Of Non-institutional Customers

4. Purchase Decision
If the evaluation and mind make up is positive, the consumers select the product or brand. The buying decision is affected by financial position, culture and sub-culture of their society, tradition, reference group, family influence, social class, personality and other situational factors. If the product of certain brand, which has been supposed to be the best, is not available, the customers may buy any other acceptable brand.

                                Also Read: Buying Process Of Organizational Customers

5. Post-purchase Behavior
Post-purchase behavior is the last stage of consumer buying process. Consumer's behavior does not end only after buying any product. Rather it continues as the post purchase behavior. The consumer uses the newly bought product and after sometimes s/he experiences satisfaction of dissatisfaction with it. If s/he has experienced full satisfaction with the product, s/he purchases the product repeatedly. S/he also tells relatives, friends and neighbors about his/her experience with the product. In this s/he becomes an opinion leader who also may affect buying decision of others.

Characteristics Of Non-Institutional Customers

Institutional and non-institutional customers are different from each other in different ways. The characteristics of non-institutional customers are as follows:

1. Buying Objectives
The individual or non-institutional customers buy goods or services for ultimate use or satisfy their needs. The buying objective of such customers is not to earn profit by reselling the goods or services.

2. Variety Of Goods
Different goods are needed to use to satisfy personal or family needs. On the other, different consumers demand for different goods or services to satisfy their needs. Institutional or intermediary customers play great role in identifying needs and wants of consumers and supplying the needs to them.

                       Also Read: Concept And Types Of Customers

3. Number Of Customers
The number of individual customers remain large. Almost all the world's people are non-institutional customers. They are living scattered in different parts of the world. Producers or intermediary businessmen should pay attention to supply their needs.

4. Quantity Of Purchase
Although non-institutional customers buy various kinds of goods, the quantity of goods remains small. Non-institutional customers buy only the necessary quantity of goods, which they need for regular use.

                        Also Read: Types Of Non-institutional Customers

5. Purchase Decision
Non-institutional customers take buying decisions by themselves. Sometimes they can consult with their family members or friends. They need not fulfill any formality like institutional customers. Buying decision of non-institutional customers is affected by their age, occupation, income level, education, gender etc.

Buying Process Of Organizational/ Institutional Customers

Organizational/Institutional buyer passes through different stages to buy goods or services. Marketers should know the organizational buying process along with how his customers buy goods or services. Generally, following stages include in organizational or institutional buying process:

1. Need Recognition
The first stage of organizational buying process is to recognize problem or need. Such problem or need is recognized due to internal reasons such as unsatisfactory performance of existing machines and equipment, dissatisfaction with latest purchase, lack of cost saving opportunity etc. within the organization itself. Similarly, the external reasons such as announcement of new product, consultation of supplier with sales representative, newspaper advertisement, trade fair etc. also motivate to buy a new product. A successful marketer tries to understand the problems or needs of his institutional customers and uses making program that can to identify problems.

                        Also Read: Concept And Types Of Customers

2. Determination Of The Product And Buying Specifications
After problem or need is recognized, an imagination of the product can solve the problem comes to mind. Such imagination should be able to reflect the features of the product. In this stage, help of consultants, engineers, designers, researchers, developers, producers, sales specialists etc. to find out the product or solving the problem. In this stage of buying process, special specifications such as quantity, quality, price, mode of payment etc are determined.

                       Also Read: Types Of Non-institutional Customers

3. Search For Qualified Supplier
In the third stage of institutional buying process, a capable supplier of the necessary goods is searched. Purchase agent can seek capable supplier in consultation with related employees. Potential supplier is searched and proposal demanded by looking the record of the company, contacting with suppliers for information, requesting acquainted suppliers to send their proposal, looking in price list or looking in different business publications etc.

4. Analysis And Evaluation Of Supplier's Proposal
In this stage, evaluation and analysis of the proposals submitted by different suppliers is made. The suppliers can submit their proposals in both written and oral form. The business organization can uses this opportunity to promote its products. It also can make efforts to prove its products to be better in quality, price, durability and other advantages than the products of other companies. In such situation, buying organization should do vendor analysis for systematic evaluation of potential suppliers. The received proposals should be comparatively evaluated on the basis of price, quality, goodwill, services, delivery capacity and personal relation with buyer etc.

                               Also Read: Characteristics Of Non-institutional Customers

5. Selection Of suppliers And Purchase Order
After detailed evaluation of the proposals, the buyer can negotiate for better terms, conditions and price before taking final decision. The buyer should take decision whether to buy all the materials from a supplier or use different suppliers. If more suppliers are used, the buyer need not have to depend on the single supplier. It also gives opportunity to evaluate and compare the services, delivery capacity, time etc. of all suppliers. After a proper supplier has been selected, purchase order is to the supplier. In this stage, packing, mode of transport and delivery, condition of credit facility, mode of payment, services agreement etc. are determined.

6. Evaluation Of Performance
In the last stage of organizational buying process, products as well as performance of supplier is evaluated. In comparison of personal consumers, the activity of organizational buyers becomes very formal, directed and clear after buy any products. They evaluate the quality and performance of the product supplied by a supplier. evaluation of the products is useful for both supplier an buyer. It also helps to maintain quality and ensure satisfaction of the buyers.

Significance Of Buyer Behavior Analysis

There are several reasons for understanding buyer behavior. Buyer behavior analysis helps an organization in efficient use of marketing resources, location of new marketing opportunities, selection of market segments, product positioning, market research, and improvement of marketing strategy.

1. Efficient Use Of Marketing Resources
The main objective of understanding buyer behavior is to develop efficient use of marketing resources. The goal of marketing is to understand, meet and satisfy target customers' needs and wants. It is important for the marketing executives to find answers to such questions such as why customers buy a product and how they respond to marketing inputs such as price, quality, service, availability, styles, images etc. buyer behavior analysis helps the marketing executive to find answers to those questions.

                       Also Read: Concept And Meaning Of Buyer Behavior

2. Location Of New Marketing Opportunities
The study of buyer behavior helps the business organizations to locate customer groups with unmet and unsatisfied needs and desires. An organization can effectively and profitably meet new buyer needs arising in the market due to a change in per capita income,  geographic, social and psychological mobility of people and cross cultural exchanges.

3. Selection Of Market Segments
Buyer behavior analysis helps to identify and categorize the need and desire clusters in the market in terms of geographic, demographic, psychographic, and behavioral variables thus giving and organization well-demarcated market segments. The organization can select the market segments based on their size, growth and profit factors.
4. Product positioning
Product positioning is the process of presenting the product to buyers in such a manner that they would perceive meaningful differences between a brand and competing brands. The differentiated brand has higher competitive advantage because it is recognized by buyers as different from other brands. Buyer behavior analysis helps an organization to study how buyers perceive different brands of products sold in the market. Once buyers' images of the brands are studied and profiled, the organization can select an appropriate position for its brand.

              Also Read: Concept And Characteristics Of Organizational Buying Behavior

5. Market Research
Market research analyzes buyers and marketers; and provides information feed-back to the marketing decision makers. Market research is also used for predicting the behavior of customers. Market research cannot be conducted without the knowledge of buyer behavior principles.

                     Also Read: Buyer Behavior Process Model

6. Improving The Marketing Strategy
Buyer behavior analysis places the organization in a good position in the competitive market. It gives valuable information feedback to the firm on the changes in consumer needs, preferences and buying power. This information can be effectively utilized by the firm to design a marketing strategy to deal effectively with the changes.

Buyer Behavior Process Model

Buyer behavior can be viewed as an input-processing-output model. in this model, the buyer receives inputs from the marketer and the environment, processes them, and transfer them into outputs in the form of responses.

1. Inputs
The inputs are received from two sources- the marketing firm and the environment. The marketing inputs are in the form of marketing mix - product, price, place and promotion. The inputs from the environment are in the form of economic, demographic, technological, and socio-cultural forces.

2. Processing
The inputs from the marketing firm and the environment are processed by the buyer. The processing is influenced by the buyer's own personal, psychological, and socio-logical characteristics. The buyer goes through a five stage purchase decision process that involves need recognition, search for information, evaluation, purchase, and post purchase evaluations.

3. Outputs
The outputs are the results of the processing and are seen in terms of the major responses from the buyer. The responses reflect in the form of various choices such as product brand, store, and purchase amount.

Concept And Characteristics Of Organizational Buying Behavior

Concept Of Institutional Or Organizational Buying

Buyers' behavior can be divided into two types as consumer buyer behavior and organizational buyer behavior. The ultimate consumers buy goods or services for consumption and different organizations buy goods or services for different purposes. Organizational buying means the activity of buying goods or services by organizations.

An organization may be any industry, which buys raw materials necessary for production of finished goods, machines, machine parts, other supplies etc. Similarly government organizations such as ministry, departments, divisions etc. buy goods or services for their use. Hospitals, schools, campuses, financial institutions etc need to buy necessary materials, fuel, various supplies, construction materials and other goods or services. Wholesalers, retailers, distributors , resellers etc. buy goods or services to produce finished goods, resale, ultimate use etc., this called organizational buying and the buying behavior of organization is called organizational buying behavior

                       Also Read: Concept And Meaning Of Buyer Behavior

Characteristics Of Organizational Buying Behavior

1. Derived Demand
Organizational buying is based on derived demand. Demand made by the ultimate consumers creates demand for industrial goods or services. For instance, demand of electricity generator is determined according to the demand made by the consumers. Demand of organizational buyer changes in keeping with the changes in consumers' demand.

2. Geographical Concentration
Organizational buyers remain concentrated in certain geographical area whereas consumers' market remains scattered all around. Producers want to establish industry near by supply source. Mostly, industrial market is determined considering transport facilities and cost. Along with this, raw materials, labor supply, climate condition etc. are also considered.

                    Also Read: Buyer Behavior Process Model

3. Few Buyers And Large Volume
The number of organizational buyers remains small but volume of sale is large. So, organizational marketers focus on their efforts on very small number of main buyers who buy goods or services in large volume paying bug amount of price.

4. More Direct Channel Of Distribution
High quantity of consumer goods or services is sold out through complex structure of wholesalers and retailers. This structure keeps producers and consumers separate or it works as the bridge between them. but in organizational selling, direct contact is established between buyers and sellers. The organization, which buys in large volume, buys necessary goods directly goods from producers.

5. Rational Buying
Organizational buyers use rational in buying goods or services compared to the ultimate consumers. They want to take more information about the features, quality, technical use, utility etc of products. Organizational buyers become aware of quality, services, delivery, price etc. of any products.

                           Also Read: Significance Of Buyer Behavior Analysis

6. Professional buying
Compared to consumer buyer, organizational buyers become systematic, rational and professional. Buying agents become skilled professional. They should take frequent trainings on buying process, contract, material management and legal aspects of buying. Professional buyers develop formal methods of buying.

7. Complexity
Under organizational buying process, different persons participate in buying decision. So it becomes difficult to take buying decision. While taking decision on buying, it becomes necessary to know the role of users, motivator, decision maker and buyer whose effect goes on buying process.

Types Of Non-institutional Customers

Following are the types of non-institutional customers or buyers:

1. Silent Customers
2. Talkative Customers
3. Argumentative Customers
4. Suspicious Customers
5. Undecided Customers
6. Decided Customers
7. Cunning Customers
8. Price Conscious Customers
9. Impatient Customers
10. Impulsive Customers
11. Nervous Customers
12. Untruthful Customers
13. Friendly Customers
14. Ill-mannered Customers
15. Procrastinating Customers
16. Favored treatment Customers

In this way non-institutional customers are of different types. A successful businessman or seller should deal with the customers clearly identifying their types and recognizing their needs.

Concept And Meaning Of Buyer Behavior

The buyer behavior relates to the purchase behavior of individuals, groups and organizations who buy products to meet their needs and solve problems. buyer behavior may be defined as the decision process and acts of people involved in buying and using products. There are two facets of buyer behavior analysis as follows:

1. Consumer Behavior
Consumer behavior refers to the buying behavior of ultimate consumers, those people who purchase products for personal or household use. Consumer behavior is more complex as individuals are influenced by rational, emotional, and social forces.

2. Organizational Buyer Behavior
Organizational buyer behavior refers to buying process and decisions of business organizations, social institutions and government. Organizational buying behavior is less complex than consumer buying as it is mostly driven by reasons and logic.

Buyer behavior is the study of how individuals and groups make their decisions to use their resources in terms of time, money and effort. It includes the study of various aspects of buying, using, and disposing products and services.