Question

Name and describe the types of buying situations that business customers confront and the appropriate strategy response for each. Be clear and give examples. Cite if needed

Answer 1

TYPES OF BUYING SITUATIONS THAT BUSINESS CUSTOMERS CONFRONT

A buying situation relates to the circumstances surrounding a purchase that can be defined by the quality of information and experience that the buyer has concerning the products and vendors available, as well as the effort it will take to make the purchase decision. Buyers face different buying situations every day.

There are three primary buying situations. Let's take a look at each of them in some detail.

1. Straight Rebuy

In this situation, buyer engages in the routine purchase of standard products from a familiar supplier where he doesn't make any modifications from the most recent order. That is why, it is also called as Routinized response behaviour. This is the probably the easiest buying situation for a purchaser. A perfect example is ordering some boxes of copier paper, pens, and pencils from your office supplier. It doesn't take much effort except to confirm the sales order has been satisfied.

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 customers 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's requirements ,she generally ends up buying the same brand.

2. Modified Rebuy

This is a situation where the purchaser is going to buy a similar product, but there is a significant difference in the purchase from the previous purchase. The difference may include a change in the product specifications or a new supplier. An example may be switching to a different type of software provided by a different vendor. This buying situation involves more effort because you are going to have to research product specifications and evaluate vendors, as well as possibly negotiate new contracts. Its is also known as Limited problem solving.

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's decision criteria. Continuing the example of the housewife ,assume that in her next shopping cycle ,she sees a new liquid toilet 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 help the customer to reduce the element of newness in the purchase decision. Customer perceives moderate risk in this situation.

3. New task

It is the business buying situation in which the buyer purchases the product or services for the first time. Here the buyers have lack of experience and product knowledge to make comparison of alternative products and suppliers. In such cases, the greater the cost of risk, the larger the number of decision participants and the greater their efforts to collect information will be. It is also known as Extended problem solving.
this buying situation often leads to following factors:
- It often occurs with expensive items or can be fuelled by doubts and fears
- All 7 consumer decision making stages are often used (need recognition, search for information, pre-purchase evaluation of alternatives, purchase, consumption, post-consumption evaluation and divestment)
- Dissatisfaction often leads to negative word of mouth
- A longer time is taken to decide

Buyers have various levels of experience and information to use in purchasing products and services. The same purchase in two different organizations may distinguish purchasing strategies if the buying situation is different. Therefore attention must be concentrated on buying situation.