Urban Customers, Purchasing Process, and Value-Buying!

In this article, you will learn about the typical purchasing process and the underlying value-buying for customers. This will help urban dwellers and modern customers to be smart customers by adopting a standard and scientific framework in future purchasing and be able to handle an ever-growing list of competitive alternatives.

As a customer, we purchase products and services regularly to satisfy our needs, once recognized.  Also, we attempt to maximize the received value against the money spent and thereby minimizing the associated risks. For general household products or grocery items like washing powder, soaps, pulses, etc., which come under routine purchases, it is relatively easier to buy as we have learned and experienced the products, the brands, and the purchasing process over the years. So we purchase them with less involvement and satisfy our variety-seeking nature while managing the associated risks (generally low risks).

However, buying an expensive or new product/service poses greater risks to us and needs higher cognitive involvement to take a decision. We require lots of information search and a complex evaluation exercise (knowledge of both the product and the purchasing process) while making a decision to buy such items.

Purchasing Process : Stages in Customer Purchasing Cycle

Buying cycle of customers includes Need Recognition, Information Search, Alternative Evaluation, Purchase, and Post Purchase Evaluation/Behavior

A purchasing process can be quickly understood as a well classified and defined set of steps including the following:

  1. Need Recognition
  2. Information Search
  3. Alternative Evaluation
  4. Purchase
  5. Post Purchase Evaluation/Behavior

As a customer, we knowingly or unknowingly, follow the above steps (partially or fully). The underlying intent is to maximize the value and minimize the risk. The value can be considered high if, the feature benefits, functional benefits, and emotional benefits from that purchase are higher as compared to the value of total money spent. Also, the risk can be minimized by taking steps necessary to reduce the probability of a decision going wrong for example buying from a trusted brand or from a trusted store etc…

Further, buying a service poses even more challenges to the buyers. Services are created and delivered concurrently and generally can’t be tested before buying it. Hence, either self-experience (Experience Goods) and post-purchase evaluation or word-of-mouth feedback are considered to take a decision. And for certain services (credence goods), it is not possible to tangiblize/gauge a service quality even after experiencing it and there you need a subject expert advice to make a decision.

Value Addition by Technology in Purchasing Process

In the current times, the sale and purchase of products and services are highly influenced by technology. It is playing a greater role in our lives today; exposing us to newer and newer products and services on daily basis. Technology has transformed the entire value chain by:

  • Satisfying efficiently and effectively our basic or aspirational needs
  • Market expansion through creating newer needs by bringing global cultures closer resulting in a unique amalgamation of societies
  • Business Integration by networking of global businesses to serve worldwide communities and provide them all the information and goods that they need
  • Empower product manufacturers and service providers to connect with prospects in a much-personalized manner assisting them to look and evaluate the products based on their historical searches, choices, and likelihood to buy
  • Providing customer forums and platform to facilitate an open feedback channel for the whole community….

Recently, Covid-19 has caused a disruption in our lives and lifestyles, influencing drastically the way we live, we work, we eat, we buy & sell, we communicate and engage with people, etc.. It seems that this pandemic has forcefully emphasized the role of technology in our lives for further deeper penetration.

Home Automation Using Smart Phones

If we think a bit, we may realize that smartphones silently got connected to our lives as a new member and a sign of modern life, lifestyle, and a need. It expanded itself after landing into our lives to become a more personal assistant and a one-stop solution for entertainment, gaming, communication (call, text, video), task management, schedule management, etc.. Now it is playing an extended role to make our businesses smart-business and homes smart-home.

With the advancements in technology in terms of cloud computing, Artificial intelligence, machine learning, deep learning, internet of things, etc., whereby, the smartphone is getting networked with household appliances like electrical lights, dishwashers, AC, TV, Vacuum cleaners, CCTV, etc. our life is getting surrounded with connected devices. These devices and appliances are also getting more intelligent in themselves; helping urban families to be more independent, more empowered, and able to bring more convenience to their lives and efficiently manage the subtle challenges posed by urban living esp. after Covid-19.  

The adoption of smart appliances has grown over the years and is highly accelerated due to the Corona virus pandemic. It is evident with the sales data of household appliances amid COVID-19 lock-down, which reflects a recent surge in the purchase of home appliances in India. For a leading Dishwasher company in India, the sales of dishwashers during lock-down grew by 250 percent as compared over the same time last year. Sales of washing machines, microwaves. and big-sized refrigerators also got almost doubled for major brands in India during the lock-down.

This above trend is likely to sustain and the demand for the above smart home appliances is expected to continue in the future. This expanding market is attracting more and more manufacturers to compete in the market and offer different models with certain USP targeted for a certain group of potential customers.

On one hand, manufacturers are well aware of the targeted customers, their products, and the positioning of their products, the customers on the other hand are not able to judge their requirements and their correct segment. Also, they get puzzled by the abundance of related data available online and a large number of competing brands offering similar products as alternatives.

The easy availability of huge data (from both reliable and unreliable sources) requires lots of rational thinking and analysis capability to filter in relevant information matching the right customer with the right product. Hence, for modern customers to be smart customers, they need sufficient competence and strategy to manage the available options and obtain maximum value and minimize the associated risks.

Analysis and Value-Buying

Modern customers can become Smart customers by adopting a more scientific and smart way to analyze the products which are based on optional analysis and focus on value buying. With certain transactions and experience, the customer can develop a sustainable competence to evaluate and finalize the needed option/product and master the art of value buying.

As a strategy of value buying, the customers can evaluate the options on the following factors (also indicated earlier in the article)

Feature Benefits: Lower Order Value
  • Latest and special features in a smart phone (certain special features may be used rarely)
  • Lighter weight, sleek design, WiFi and high processing, RAM and storage capacities in a Laptop
  • Push-Button Start, automatic gear, automatic emergency braking, blue tooth etc. in a car etc. …….
Functional Benefits: Medium Order Value
  • Phone with higher battery backup to handle more calls per charging cycle
  • Smart phone with larger screen size for better video experience
  • High end graphics card to efficiently manage gaming software development etc. …….
Emotional Benefits: Higher Order Value
  • Established brands known for quality are expected to reduce customers’ risks
  • Good brands help users to create a good reputation in society and their social circles
  • Help users to inherit qualities (perceptually) of brands while using them etc. …….

Based on the classification of competing products according to the above benefits vis-a-vis analysis of the priorities, preferences, and constraints of buyers, the buyer can select the right brand for which he is the right/target customer and get himself/herself found by the respective manufacturer.

This may be one way by which the decision can be reached and the final option can be selected with higher efficiency and effectiveness, leading to Value Buying and transformation of modern customers into smart customers.

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