Buyer Behavior Buy Services and Buy Products.

Buyer Behavior

Buy services and buy products. Intangible vs. Tangible.

Tangible products are products that you can purchase contain a tangible good or service that you can actually hold. The easiest way to think about such a good is that is undifferentiated and something like a commodity. Basic goods such as food, coffee, corn, certain materials such as steel and aluminum can all be considered commodities. This means that there is very little difference with the quality and the buyer can select virtually and one of the products available and it will be nearly identical to any other product in the same group of commodities. Therefore, when a consumer purchases a commodity like product then they are purchasing a product with a purely tangible price.

Products that are differentiated or branded can include an intangible portion of their price by contrast. This represents the price that the buyer is willing to pay beyond what an undifferentiated product would cost. There are many ways a company can differentiate their products in order to charge an intangible premium. Some of the points of differentiation can be produced by branding, by quality, by design, or by some combination of factors. For example, Starbucks sells premium coffee at a price much higher than the market price for a commodity premium coffee. Starbucks is able to do so because consumers trust their brand and are will to pay more, an intangible portion of the price, for their branded goods.

Figure 1 - Intangible Effect on Supply and Demand (Gallagher & Savard, 2009)

In the e-commerce market, what consumers can buy and what can't?

The state of e-commerce has evolved rapidly. Most of the products that can be found locally can also be found online. Even traditional brick and mortar local small businesses usually have a website that includes most of their products and services. Yet there are two basic categories of products that have yet to reach a point online in which they are popular. One category is the products that you need to see in person to be able to appreciate. These may include items such as clothing, jewelry, perfume, or foods. Many consumers wish to buy products based on a physical interaction with them before they make their purchases.

The other category consists of things that are regulated or are associated with legal restrictions. One of the best examples of such goods are drugs; both legal and illegal. There are many legal restrictions that are in place for shipping drugs and many companies cannot comply with these regulations for online sales. For example, alcohol is still difficult to sell online however there are companies that are trying to establish local partners to sell wine and liqueurs in a similar model as FTD Flowers has established (All Business, N.d.)

How companies can influence their decision making?