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IGNOU MBA Solved Assignment MS 61 Consumer Behavior
MS-61: Consumer Behavior
Q1. How would you differentiate between organizational buying and individual buying? Taking the example of purchase of a computer for your personal use and for organizational purposes, explain the differences.
Solutions: A firm purchases goods under three situations. In a new task, the firm buys a totally new product or an existing product for the first time. This involves extensive information and supplier search. The second situation is straight re-buy. Here the firm purchases the same material from the same supplier without any alterations in the contract. And the last situation is modified re-buy. It involves modifications in the form of change in supplier, change in terms of the contract, etc. A buying center involves people from across the departments of the firm to make the buying decisions for the firm. The buying center is influenced by the individual and group factors. Hence the decisions taken by the buying center will bear these influences.
Value analysis is used in the firm to assess the value of the product to be purchased and consequently to take ‘make or buy’ decisions. It helps the firm to reduce unnecessary costs in the purchase of the product or materials. Vendor evaluation helps in choosing the right vendor. Vendor rating is performed to appraise vendors from time to time with respect to the products supplied and services rendered; it is done on the parameters of price, quality, delivery, and service. There are different factors that influence organizational buying behavior such as environmental factors, organizational factors, group factors, and individual factors.
The different models of organizational buying behavior discuss these factors with differing levels of attention being given to each. They include the Sheth model, Webster and Wind model, and the Anderson and Chambers Reward/Measurement Model. Organizational buying is a group of employees responsible for purchasing an item for the organization. In a business setting, major purchases typically require input from various parts of the organization, including finance, accounting, purchasing, information technology management, and senior management. Highly technical purchases, such as information systems or production equipment, also require the expertise of technical specialists. In some cases the buying center is an informal ad hoc group, but in other cases, it is a formally sanctioned group with specific mandates, criteria, and procedures. The employees that constitute the buying center will vary depending on the item being purchased. In a generic sense, there are typically five roles within any buying center. They are:
Final users of the item being purchased,
Responsible purchasers for the contract,
Persuader who try to affect the product decision with his/her opinions,
Final decision maker
Gatekeeper for controlling flow information.
These specialized buying centers typically receive information about the technology from commercial sources, peers, publications, and experience. In this process, top management, the IT director, IT professionals, and other users participate together to find a solution. Despite the value given to individuals on Organizational Buying Behavior, there’s been an implicit distinction in the buying behavior literature between individual buying and organizational buying. Individuals have always organized themselves and collaborated with peers to achieve their goals in the marketplace and word-of-mouth (WOM) is seen as a powerful mechanism to support it.
The purpose of the study is to address the lack of research focused on the use of WOM by individuals engaged in organizational decision making and particularly the process of information collection through WOM communication by an organizational buying center facing a “new task” purchase situation, to support the decision process. In order to answer the purpose an analysis of three cases was undertaken, using data collected through questionnaires and interviews. The main results show that WOM is highly present in B2B environment and it’s highly valuated by deciders when facing a new task type of purchase. Also, those WOM sources selected by buyers have a crucial role in shaping the acquisition process and in influencing its outcome. Individual buying criteria is crystallized in what service you need in most cases a product or product group that serves a purpose you feel you need served. This is your primary criteria.
There may be groups that want you to substitute the product with something else. Whenever there are many alternative products that serve the same purpose you have to possibility to effect secondary criteria that Have to be stated explicitly, so there is a chance of finding out whether something satisfies that criteria or not Determining whether they are met has to be either up to a group or faction or organization the individual trusts, or, done by self with the detailed data for every single item.