The Customer Buying Cycle
A lot goes into a consumer's decision to buy. In fact, it can be looked at as a process. According to MIT Media laboratories, the Consumer Buying Process consists of five elements: Need Identification, Product Brokering, Merchant Brokering, Negotiation and Purchase, Product Service and Evaluation.
Need Identification–In the first stage of the buying process, the consumer becomes aware of some unmet need. This need could be realized either through passive or active means. The passive means would be an advertisement–TV, radio, or direct mail–aimed at him or her personally. The active means would be if he or she has asked to be notified about an upcoming or periodic event.
Product Brokering–After a need is realized, the consumer embarks on a process of retrieving information to help determine what to buy. This includes the evaluation and comparison of products based on manufacturer, institutional, and consumer provided information. The result is a consideration set of products. A consideration set for a product would include its price, delivery options, any warranties or guarantees, return policies, customer support, color or size, and so on.
Merchant Brokering–At this stage in the process, the consumer compares the consideration set with merchant-specific information to help determine whom to buy from. This includes the evaluation of the merchants themselves–price, convenience, availability, service, warranty, delivery time, reputation, security, and other factors. Some of this information will undoubtedly come from the merchant. Other information will come from the consumer community and independent organizations that provide information on merchants.
Negotiation and Purchase–At this stage in the process, the terms of the purchasing transaction are discussed and finalized. The purchase of the product signals the end of the negotiations stage and then delivery options are discussed. This stage of the process might or might not be included in the negotiation stage. Shipping and handling costs could influence the final purchasing price.
Product Service and Evaluation–The last stage in the process involves product service, customer service, and a self-evaluation of the satisfaction of the overall buying experience. This experience can be communicated to the merchant, consumer-oriented organizations, other shoppers, and the shopping community.
A company has the opportunity to collect information on the consumer during this entire process. That information can be used to differentiate the company and provide the information service to the consumer. Let's take a look at what kinds of information can be collected and then offered to consumers to help them through the Customer Buying Process that an e-business can use to position itself in a market niche and differentiate itself from the competition.