MBA Final Report - Kishan Soalnki - Consumer Behaviour

Study of Consumer Behaviour in Insurance Services related to Construction Sector in UAE
Cover Page i
Approved Project Proposal proforma (Original) ii
Original Approved Project Synopsis(Incl CV of Project Guide) iii - ix
Originality Certificate x
Acknowledgements xi
Abstract xii
Chapter 1 - Introduction and Research Problem 1
1.1 Introduction 1
1.2 Background 1
1.2.1 Consumer Behaviour of Organisations 1
1.2.2 Consumer Buying Process in Organisations 3
1.2.3 Buying Centre 3
1.2.4 Choice Criteria 4
1.2.5 Industry selection 4
1.3 Research Area 5
1.4 Outline of the Study 6
Chapter 2 - Theoretical Framework 7
2.1 Consumer Behaviour of Organisations 7
2.2 Models of Organisation Consumer Behaviour 9
2.3 The Buying Process 11
13
16
2.3.3 Buyclasses - Organisational Buying Situations 18
2.4 The Buying Centre 19
2.4.1 Dimensions of Buying Centre 20
2.4.2 Roles in the Buying Centre 21
2.5 What are the Factors that exert Influences on the Buyers? 22
2.6 The Consumer Responses - What are consumer Responses? 24
Chapter 3 - Research Questions and Delimitations 25
3.1 Problem Discussion 25
3.2 Research Problem and Questions 26
3.3 Delimitations 26
Chapter 4 - Research Methodology 27
4.1 Research Purpose 27
4.1.1 Research Purpose for this Study 28
4.2 Research Approach 28
4.2.1 Research Approach in this Study 29
2.3.2 The Choice Criteria - Evaluations of Proposals and Supplier
2.3.1 The Buyphases - Stages of Organisational Buying Process
Table of Contents
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MBA Project Proposal no. 62033 - Roll no. 909150356 - Kishankumar J Solanki
Table of Contents
4.3 Research Strategy 29
4.3.1 Research Strategy for this Study 30
4.4 Data and Information Collection 30
4.4.1 Data and Information Collection in this Study 31
4.5 Sample Selection 32
4.5.1 Sample Selection for this Study 32
4.6 Data Analysis 33
4.6.1 Data Analysis for this Study 34
4.7 Quality Criteria 34
4.7.1 Quality Criteria for this Study 34
Chapter 5 - Empirical Data 36
36
37
39
40
41
42
45
47
49
49
Chapter 6 - Data Analysis and Findings 50
6.1 Focus area of Study & Analysis 50
6.2 Buying Process - Buy process, Choice Criteria & Buyclasses 50
6.3 Buying Centre - Dimensions and Roles 51
6.4 Factors Affecting Consumer Behavior 53
Chapter 7 - Conclusions and Recommendations 54
7.1 Conclusion of the Study 54
7.2 Recommendations for Marketer of Insurance Services 55
7.3 Suggestions for Areas for Further Research & Studies
RQ 4 -Choice Criteria when selecting the Insurance Service Provider
RQ 5 - Buyclasses in Construction Sector
RQ 6 - Buying Centre Dimensions and Roles in Construction Sector
RQ 7 - Factors influencing CBO for purchase of Insurance Services
RQ 3 - Buying process relating to procuring Insurance Services
RQ 1 - General Profile of the Consumer Segments
RQ 2 - Types of Insurance policies procured by Construction Sector
RQ 9 - General Level of Consumer Satisfaction for Current Insurance Service Provider
RQ 10 - Expectations of Consumers for preferred brand of Insurance policies &
Insurance Service Provider
RQ 8 - Brand Preference perceived by the Consumers
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Table of Contents
References
Books & Periodicals 56
Internet Sources 59
Appendix
60
61
62
63
64
65
Figures
6
10
41
48
48
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12
18
28
39
39
Figure 5.1 - Scale of Importance attached to various factors while selecting Insurance Service
provider
Appendix E - Factors Influencing the Number of Buying Influences in organisational Buying
processes
Figure 2.1 - A Model of Organisational Buying Behaviour of Services (Kotler et al.)
Figure 5.2 - Relative Market leadership perceived by Consumers (Local Insurance Providers)
Figure 5.3 - Relative Market leadership perceived by Consumers (International Alliances)
Table 2.3 - Distinguishing Characteristics of Organisational Buying Situations
Table 4.1 - Distinctions between quantitative and qualitative data (Saunders et. Al)
Appendix A - An Integrative Model of Organisational Buyer Behaviour (Sheth)
Appendix B - An Integrative Model of Organisational Buyer Behaviour (Robinson el al..,
Webster & Wind)
Table 5.1 - Organisational Buying Process for Project Specific Insurance Services & Process
Participants
Table 5.2 - Organisational Buying Process for Annual Insurance Services & Process
Participants
Appendix C - Model of Organisational Buyer Behaviour
Appendix D - Comparison of Organisational Buying Processes
Appendix F - Author's Interview Guide & Outline of Questionnaire
Figure 1.1 - Outline of the Study
Table 2.1 - Variables influencing organisational buying decision
Table 2.2 - The Buygrid Framework (Robinson et. Al)
Tables
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MBA Project Proposal no. 62033 - Roll no. 909150356 - Kishankumar J Solanki - Solanki page 1
Chapter 1 - Introduction and Research Problem
The purpose of this chapter is to give the reader an introduction and background to the
intention of this study. It will motivate and finally define the research problem.

1.1 Introduction
Organisational purchasing stands for more than half of the whole economic activity in
industrialised countries (adapted from Kotler & Armstrong, 1994). Hardly any consumer has the
buying authority as organisations and any given end product or service is made up by many
organisational purchases. Therefore it is important to understand how organisations perform
buying activities (ibid).
Consumer Behaviour of Organisations (CBO) is in essence the arrangement of how various
organisations purchase goods and services (adapted from Kotler & Armstrong, 1994). This area
is essential for the understanding of consumer needs and must be taken into consideration for
successful suppliers and service providers (ibid).
Robinson, Faris & Wind (1967) states that when understanding the consumer behaviour of
organisations, a permanent process of problem solving and decision-making must be taken into
consideration. All members in a business who become involved in such a buying process are
centred to a specific group. These processes and group members may vary when purchasing
different kinds of products or services (ibid).

1.2 Background
1.2.1 Consumer Behaviour of Organisations
Many researchers in the past have illustrated the problem of describing consumer behaviour of
organisations from different perspectives (Robinsons, Faris & Wind, 1967; Webster & Wind,
1972; Sheth, 1973). Some have termed this problem as Industrial Buying Behaviour. For the
purpose of this report, the terms Consumer behaviour of Organisations and Industrial Buying
Behaviour have similar meanings and can used interchangeably. As some researchers have
described the entire area of CBO, they have developed extensive models including
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psychological aspects of many individuals and the process that take place between them
(Webster & Wind, 1972; Sheth, 1973). The contributions of early researchers for the
development of CBO have been broad, as well as giving guidance for future researchers as to
defining the very basic rules and factors of CBO. The interactions of various factors categorised
into Environmental, Organisational, Interpersonal and Individual are affecting the organisational
buying (Webster & Wind, 1972). Product and service specific factors involve the perceived risk
of making wrong decision, type of purchase and the time aspects of the Purchase (Sheth, 1973).
Personal factors affecting the organisational buying decision are carried by individuals and there
are always some personal motives that are influenced by, for example, age, income, education
and personality (Webster & Wind, 1972, Kotler & Armstrong, 1994).
Webster & Wind (1972) claims that factors influencing CBO can be structured within two
categories of variable: task and non-task. The former are directly related to the buying problem,
whilst the non-task variables include aspects beyond the specific buying problem. Furthermore,
the task variables influence the nature of the organisational buying process, which will end up in
a buying decision (ibid).
Robinson et al., describes that in each purchasing situation, with same product or service in
mind, the individual purchasing patterns will differ depending on the buying situation, i.e. being
the first time buying of the specific product or service, or have bought it or a similar product or
service before. The different buying situations are defined by Robinson et al., as Buyclasses and
consist of new buy, modified re-buy and straight re-buy (ibid).
A major aspect of CBO is the process of procurement, the phases, steps or stages that are
identified when buying, such as searching information and pre-qualifying suppliers (Robinsons,
Faris & Wind, 1967; Webster & Wind, 1972; Sheth, 1973). Another aspect is the decision-
making group within the organisation and the different roles that these individuals or groups
play, roles such as initiator or decider. Further, critical evaluation criteria when choosing a
supplier or service provider, such as price or quality of products and services offered, plays an
important role, as well as several other factors influencing CBO ((Robinsons, Faris & Wind,
1967; Webster & Wind, 1972; Sheth, 1973; Dempsey, 1978; Bharadwaj, 2004).

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1.2.2 Consumer Buying Process in Organisations
Many researchers in the past have mapped the consumer buying process prevailing in various
organisations (e.g. Webster, 1965; Robinson et al. 1967; Kelly, 1974) and as Webster, as early
as 1965 recognised, buying decisions in organisations are made by the individuals that the
process consists of. Thus, it is needed to investigate both individuals as organisational decision
making in order to map a procurement process (ibid). The importance of describing the
industrial procurement process is clear and the very first phrase of Webster (1965) widely
referred to article is: The aim of the marketer is to influence the organisational buying process
to his advantage (adapted).
Many processes found in literature are made up by different phases or steps and mostly
described in a sequential order (Webster, 1965; Robinson et al., 1967). Common phases in these
processes are problem recognition, information search, evaluation and finally some kind of
decision phase (ibid).
In the first phase, it is either as internal need that arises within the organisation (e.g. new project
undertaken, or the project scope has been enlarged), or external need is derived from changes in
the environment of the organisation (e.g. changes in local legislation requiring mandatory
insurance for design services, extension of minimum liability period after construction, etc).
Thus, a problem that needs to be solved, and can be solved by a purchase of a product or
service, have occurred in the organisation. Generally this phase is followed by some kind of
initial information seeking regarding how to solve the problem, which is followed by gathering
information about potential supplier or service provider that may help in solving the problem.
This can occur as formal, e.g. approved suppliers list or informal by word of mouth. Naturally,
there is some evaluation of options and alternatives in order for final decision to be optimal as
possible. Different models vary from being small in extent: consists of only few phases, or being
very extensive procedure involving over ten phases (Webster, 1965; Robinson et al., 1967).

1.2.3 Buying Centre
Organisation buying rarely involves a single individual. All of the activities involving in
organisational buying are conducted by some organisational members. The organisational
members may be individuals or groups or units and perform one or more roles. Webster & Wind
(1972) have identified six different roles played by the individuals involved in organisation
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buying process. These are initiators, influencers, deciders, buyers, users, and gatekeepers.
These are classified as decision-making unit which many researchers termed as buying centre.
Depending on the type of product or service being considered for purchase, the formality of the
organisation or the environmental conditions, the members and the number of this group vary.
Generally, a more complex the buying decision, larger is the buying centre (Webster & Wind,
1972). Additionally, Johnson & Bonoma (1981) identifies some dimensions that have been
mapped within the buying centre and exerts influence on the group in different ways. Vertical
and lateral involvement, extensivity, connectedness and centrality are the five structural and
interactive dimensions that describe the involvement and force influences in, on and by the
buying centre in a buying situation (ibid).
As mentioned before, CBO is very complex and there are other factors such as buying situation,
product or service factors and personal factors that influence the buying behaviour and the
individuals that carry it out (Robinson et al. 1972, Sheth, 1972; Webster & Wind, 1972)

1.2.4 Choice Criteria
Factors such as quality, delivery, price and service are often seen as significant buying criteria
when choosing suppliers and service providers (Bharadwaj, 2004). Whether these factors are
controllable or not depends on the situation at hand. Also, the emphasis of these factors changes
depending on the buying organisation, specific buying situation and the individuals involved in
the buying decision making process (ibid).

1.2.5 Industry Selection
Researchers have recognised the fact that buying behaviour varies depending on the situation at
hand, which makes it meaningless to generalise about (Webster, 1965; Dempsey, 1978;
Bharadwaj, 2004). The buying behaviour will also vary across product or service categories;
therefore, it is interesting to map these in various areas. Thus, an industry must be chosen (ibid).

Insurance, in law and economics, is a form of risk management tool primarily used to hedge
against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a
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loss, from one entity to another, in exchange for a premium, and can be thought of as a
guaranteed and known small loss to prevent a large, possibly devastating loss. It can be
categoried in two broad categories Life and non-life. Global insurance premiums in 2008
reached to US $4.1 trillion, whereas, the Insurance premiums reached to US $4.08 Billion in
United Arab Emirates (UAE) in year 2008. The Insurance industry accounts for about 2 % of the
national GDP in UAE against global average of 7.1 %. Life Insurance accounts for 16 %
whereas, non-life insurance accounts for 84% of the total insurance premiums in 2008 in UAE.
Thus the Insurance service is a significant industry and provides high growth potential in UAE.
(Source: United Arab Emirates Insurance Report 2008 - Business Monitor International and
articles on www.uneinteract.com).

Further, the Construction sector is one of the core business activities in UAE in the non-Oil
sector. It is expected that due to global financial & economic crisis, business growth may
significantly slow down in year 2009 to be about 2 %, it is forecasted by many economists that
UAE economy will bounce back to growth in 2010.Also, there are about 50 direct insurance
firms and more than 200 intermediaries are engaged in UAE in providing insurance services.
Considering the higher growth potential in a vibrant sector of economy, it is worth to take up
study of consumer behaviour in Insurance services relating to Construction sector in UAE.

1.3 Research Area
Organisational Consumer Behaviour is an extensive area, both for the practical marketer as well
as from an academic perspective (Kotler & Armstrong, 1994). As the Insurance services relating
to Construction sector is significant and growing economic & industrial activity in UAE, it is
worth to understand the buying behaviour in this industry.
This report has the intention to provide an overview on Consumer Behaviour in Insurance
Services relating to Construction sector in UAE.

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1.4 Outline of the Study
Figure 1.1 below illustrates an outline of this study. The horizontal width is representing the
broadness of discussed areas in each chapter, and the vertical height is illustrating the sequence
on how the work has been conducted.

Chapter One
Introduction and
Research Problem
Chapter Two
Theoretical Framework
Chapter Three
Frame of Reference

Chapter Four
Research
Methodology
Chapter Five
Empirical Data
Chapter Seven
Conclusion
Chapter Six
Data Analysis
Figure 1.1:
Outline of the Study
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Chapter 2 - Theoretical Framework
The purpose of this chapter is to give an overview to the evolution of Consumer Behaviour in
Industry. The First part will prevail with classification for the chosen research area, illustrating
overall model of consumer behaviour in industry. The next part will exemplify different
perspectives on consumer buying processes. Furthermore, the concept of decision-making units
within industries will be discussed and it will followed by a brief discussion regarding choice
criteria in business buying.
2.1 Consumer Behaviour of Organisations
When we say a study of Consumer behaviour we are referring to the study of the process
involved when individuals or groups select, use or dispose of products, services, ideas or
experiences to satisfy needs and desires. A consumer may purchase, use and/or dispose of a
product or service, but these functions may be performed by different people. In addition,
consumers may be thought of as role players who need different products and services to help
them play their various roles.
Market segmentation is an important aspect of study of consumer behaviour. Consumers can be
segmented along many dimensions, including product or service usage, demographics (the
objective aspects of a population, such as age and sex) and psychographics (psychological and
lifestyle characteristics). Consumers in an industry can be grouped into roles they play in the
particular markets. Emerging developments, such as the new emphasis on relationship
marketing and the practice of database marketing, mean that marketers are much more attuned
to the wants and needs of different consumer groups. Though there are no strict rules on market
segmentation of particular industry sector like Construction, in this study, the consumers are
segmented based on specific roles they play in the Construction Industry which can be identified
as under:
Contractors: the group of Individuals or establishments which are engaged primarily for
providing contracting services for Construction of various projects. Contracting services may be
one or more of various disciplines viz. civil contractors, MEP contractors, Landscaping
contractors, & other specialist contractors who work for contractors.
Engineers & Consultants: the group of Individuals or establishments which are primarily
engaged in providing consultancy services for Construction of various projects. Consultancy
services may be one or more of various types viz. Civil, Architectural, MEP, Quantity Survey,
Project Management, Cost Management, etc.
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Master Developers: the group of Individuals or establishments which are primarily engaged on
Marketing of constructed projects who endeavour to meet collective need of end users like
individual tenants, commercial establishments etc.
Owners: the group of Individuals or establishments which are primarily concerned with
ownership of the Projects & constructed properties and provide necessary financial resources by
own or borrowed Funds.
Suppliers: the group of Individuals or establishments which are primarily engaged on providing
& making arrangement for various construction material resources viz. Cement, Steel, Sand,
aggregates, special equipments, tools, etc
Others: the group of Individuals or establishments which are not primarily engaged on activities
directly connected with Construction of Projects, but associated with Construction industry but
not does not fall into one of the above categories
It is possible that the consumer may have more than one role in the industry, but for the purpose
of this study the consumer in the Construction Industry is segmented based on prominent role
they play in the Industry as discussed above.
According to Webster (1965), since individuals are making the decisions in organisations, when,
it is necessary to examine both kind of decision-making organisational as well as individual
while one is studying the consumer buying behaviour of organisations. Also, interaction
amongst various groups and individuals also need to be examined. (ibid)
Sheth (1973) explains that not all the buying decisions are a result from a systematic decision-
making process. Ad hoc situational factors do also often result in buying decisions. For example,
some time consultant gives informal instruction to the contractor to procure specific insurances
from a particular insurance provider.
Table 2.1: Variables influencing organisational buying decisions
Task Non-task
Environmental Anticipated changes in price Political climate prevailing in the country
Organisational
Policy regarding preference for
local service provider,
Methods of personnel evaluation &
performance review
Interpersonal
Meetings arranged to set the
define specifications
Informal, off-the job interactions
Individual Desire to obtain lowest price, Personal values & needs.
Source: (adapted from Webster & Wind, 1972)

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Organisational buying behaviour is influenced by a selection of variable (Webster & Wind,
1972). These variables may be divided into four fundamental classes: environmental,
organisational, interpersonal and individual. Table 2.1 illustrates this classification and
exemplifies variables being used. The variables are also grouped into further two categories
task and non-task, which apply to all fundamental classes of variables. The task variables are
directly related to the buying problem and the non-task variables are broaden beyond the
specific buying problem. To separate variables into task and non-task are not always obvious, so
one thing being pre-dominant ought to be chosen in many cases. The correlation between these
variables illustrated in Figure 2.1 is further discussed in this chapter (ibid).
This concept has been further developed and explains that all of the CBO can be studied into
various dimensions; the buying situation, the factors that influence the situation the buying
centre, the buying process and choice criteria adopted by the organisation.
Webster & Wind (1972) describe that buying situation is created when someone in an
organisation encounter a problem. This occurs when there is difference between the wanted
outcome and the actual situation which can be resolved through some buying actions. Such
difference arises due to influence of various factors viz. Environmental Factors; Organisational
Factors; Interpersonal & Group Dynamics related Factors; Personal & Individual related
Factors; and Other Factors & Additional Influences.
All the activities that organisational members perform in a buying situation are included in
organisational buying behaviour e.g. identifying suppliers, evaluation and choosing from
different alternative offers, etc (Webster & Wind, 1972). All the members of the organisation
who participates and influence directly or indirectly are collectively termed as Buying Centre.
These members are striving for organisational and individual goals by complex interaction. The
procedure of solving the problem is regarded as a buying process (ibid).

2.2 Models of Organisational Consumer Behaviour

Many researchers have developed models to study and explain Organisational consumer
behaviour. Models developed by Robinson, Faris & Wind (1967); Webster & Wind (1972);
Sheth (1973); and Kotler P., Armstrong G., Saunders J., and Wong V., (1999) are prominent. In
this chapter, the model adapted from Kotler et al (1999) is explained below, since it is mostly
referred in literature. Other models are placed at Appendix A, B & C.
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Kotler P. and et al (1999) has provided a model of business buyer behaviour as shown in
Figure 2.1 This model may be referred as Black Box Model of Consumer Behaviour. This
has been adapted to make it applicable to services as in the instant case of this project work.
At the most basic level of this model, the marketer would like to know how the business
buyers will respond to various marketing stimuli of his best offers. The Figure shows a
model of business buyer behaviour in a typical situation. In this model, marketing and other
stimuli affect the buying organisation and produce certain buyer responses. As with the
individual consumer buying, the marketing stimuli are the 4 Ps of the Product (viz. Product,
Price, Physical distribution & Promotion) and 7Ps for service (additional 3 Ps for People,
Processes and Peripherals). Other stimuli include influential forces in the environment which
can be categoried into of Economic, Technological, Political, Cultural and Competitive.
These stimuli interact with the organisation and result into various buyer responses: Product
or service choice, Supplier choice, Order quantities, Delivery Terms & Times, Service
terms, Payment terms and like. In order to design good & effective marketing strategies, the
marketer must understand what happens within the organisation to turn various stimuli into
favourable purchase responses.

Figure: 2.1 A Model of Organisational Buyer Behaviour for Services (Source:
adapted from Kotler P., Armstrong G., Saunders J., and Wong V., (1999) Principle of Marketing, 2
nd
edition,
Prentice Hall)

Within the organisation, buying activities consists of two main parts: the buying centre,
which is made of all the people of groups involved in the buying decision making process
and the process of making buying decision. Figure 2.1 shows the model. It shows that these
main parts viz. buying centre and the buying decision process are influenced by internal
The Buying Organisation

(Organisational Influences)
The Environment
Marketing
Stimuli (4 Ps
for Products &
3 Additional Ps
for Services
Other Stimuli
Product
Price
Phy. Distrin.
Promotion
People
Process
Peripherals
Economic
Technological
Political
Cultural
Competitive
The Buying Centre

(Interpersonal and
individual influences)
Buying Decision
Process
(8 stages process)
Buyer Responses &
Choice Criteria
Product or Service Choice
Supplier Choice
Dealer Choice
Purchase timing
Purchase Amount
Service Terms
Payment Terms
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organsation, interpersonal and individual factors as well as by external environmental factors
marketing and other stimuli.
From the various models presented by different researchers, it emerge that following issues
need to be investigated while studying and defining organisation buying behaviour for any
industry:
1. The Buying Process The Buyphases, Choice Criteria and Buyclasses
2. The Buying Centre Dimensions and Roles
3. The factors that exert influences - Economic and non-economic factors
4. The Consumer Response in cases of buy and no-buy situations

2.3 The Buying Process
In the following sections, we review the studies relating to the buying process. The emphasis is
set on the buygrid model on organisational buying process presented by Robinson, Faris &
Wind (1967) due to the acceptance of the model and commonly references made for the same.
Buying is not an event, but buying can be seen as a process where separate steps, stages and/or
phases can be identified. From the time at which a need arises for a product or service, to the
purchase decision and it subsequent evaluation, a complex myriad of activities can take place in
buying organisations (Wind and Thomas, 1980).
Cyert, Simon and Throw (1956) can be seen as pioneers. They attempted to understand the
sequential nature of the buying process and documented activities involved in original un-
programmed decision process into three categories viz. Common processes, communication
processes and problem-solving processes.
Webster (1965) developed a four-element model to describe the buying process into problem
recognition; organisational assignment of buyer responsibility; search procedures for identifying
product & service offering; and establishing selection criteria.
Two years later, Robison, Faris and Wind (1967) introduced the buygrid framework. The
buygrid framework provides a frame of reference where purchasing situations are designed to be
general enough to apply to all purchases. Haas (1995) states that ...of all the models of
organisational buying behaviour that have been developed, the buygrid has been most
enduring.
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Three different premises form the foundation on which the framework is based.
Purchasing is a sequence of activities that varies in complexity and that buying can be
described as a dynamic decision process involving different functional areas and
hierarchical levels within an organisation.
The central unit of analysis is the buying situation (or buyclass) and the situation
develops as individual(s) involved recognises the existence of a need or a problem.
Procurement process is the chain of activities that must be performed in the resolution of
a buying situation.
From these premises, the buygrid framework was developed incorporating three Buyclasses and
eight buyphases, as shown in Table 2.2. The eight buyphases can occur simultaneously, but the
tendency is towards a sequence, starting at one and proceeding towards eight. A closer
Presentation of each of the eight stages will be provided in section 2.3.1 in this chapter.
.

Various researches have observed and recorded organisational buying process. Prominent
among them are Robinson, Faris & Wind, 1967; Webster & Wind, 1972; Kelly & Coaker, 1976;
Bradley, 1977 and Wind, 1978. Since, buying process suggested by Robinson, Faris & Wind
(1967) is prominently referred in research relating to organisational buying behaviour, this has
been adopted for this study and described in this report. A comparison of buying processes
suggested different researched is placed at Appendix D.
Table: 2.2 The Buygrid Framework
Buyphases - Stages of the Buying Process
Buyclasses - Buying Situations
New Task Modified Re-
buy
Straight
Re-buy
1 Problem or Need Recognition yes May be No
2 General Need Description yes May be No
3 Product or service specification yes yes yes
4 Supplier Search yes May be No
5 Proposal Solicitation yes May be No
6 Supplier Selection yes May be No
7 Order-routine Specification yes May be No
8 Performance Review yes yes yes
Source: Adapted from Robinson P. J., Paris C. W., and Wind Y. (1967) Industrial Buying and Creative
Marketing, Allyn & Bacun

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2.3.1 Buyphases Stages of Organisational Buying process
The buyers who face a new-task buying situation usually go through all stages of the buying
process. Whereas, repeat buyers who are making modified or straight re-buys may skip some of
the stages (Robinson, Faris & Wind, 1967). Following describes these eight buyphases stages:

1. Problem or Need Recognition
The buying process begins when someone in the organisation recognizes a problem or a need
that can be met by acquiring a specific good or service. Problem recognition can result from
internal or external stimuli. Internally, the organisation may decide to take up a new project that
requires specific risks that need to be considered. Sometime, the performance of the current
insurance provider may be not satisfactory or asking exorbitantly higher premium for no reason.
Externally, there may be changes in local regulations that require procuring new insurance
coverage. Like compulsory insurance for all workmen employed instead of only direct
workmen.

2. General Need Description
Having recognized a need, the buyer next prepares a general need description that describes the
characteristics and quantity of the needed product or service. For standard items, this process
presents few problems. For complex items, however, the buyer may have to work with others
Engineers, users, consultants to define the item or service. The team may want to rank the
importance of reliability, durability, price and other attributes desired in the product or service.
In this phase, the alert business marketer can help the buyers define their needs and provide
information about the value of product or service characteristics.

3. Product or Service Specification
The buying organisation next develops the detailed specification for the product or service
required, often with the help of a value analysis engineering team. Value analysis is an approach
to cost reduction in which components are studied carefully to determine if they can be
redesigned, standardized or made by less costly methods. The team decides on the best
characteristics and specifies them accordingly. Sellers too, can use value analysis as a tool to
help secure a new account. By showing buyers a better way to meet the insurance needs can turn
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straight re-buy situations into new-task situations that give them a chance to obtain new
business.

4. Supplier Search
The buyer now conducts a supplier search to find the best vendors or Insurance service
providers. The buyer can compile a small list of qualified suppliers of Insurance providers by
reviewing trade directories, doing online reviews or phoning other companies for
recommendations. The newer die buying task and the more complex and costly the item or
service, the greater the amount of time the buyer will spend searching for suppliers. The
suppliers task is to get listed in the big directories, have presence in internet and build a good
reputation in the market place. Salespeople should watch for companies in the process of
searching for suppliers and make certain that their firm is considered.

5. Proposal Solicitation
In the proposal solicitation stage of business buying process, the buyer invites qualified
suppliers / insurance providers to submit proposals. In response, some suppliers will send only a
catalogue or a salesperson. However, when the item is complex or expensive, the buyer will
usually require detailed written proposals or formal presentations from each potential supplier.
Business marketers must be skilled in researching, writing and presenting proposals in response
to buyer proposal solicitations. Proposals should be marketing documents, not just technical
documents. Presentations should inspire confidence and should make the marketers company
stand out from the competition.

6. Supplier Selection
The members of the buying centre now review the proposals and select a supplier or service
provider. During this process stage, the buying centre will often draw up a list of desired
supplier attributes and their relative importance. In one survey, purchasing executives listed the
following attributes as most important in influencing the relationship between supplier and
customer: Quality products and services, on-time delivery, ethical corporate behaviour, honest
communication and competitive prices. Other important factors include repair and services
capabilities, technical aid and advice, geographic location, performance history and reputation.
The members of the buying centre will rate suppliers against these attributes and identify the
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best supplier. They often use a supplier evaluation method with weightage for different factors
and overall scope is obtained.

7. Order-Routine Specification
The buyer now prepares as order-routine specification. It includes the final order with the
chosen supplier or suppliers and list items such as technical specifications, quantity needed,
expected time of delivery, return policies and warranties. Relating to the Insurance policies, it
may include various risk covered, limit of cover, procedure for claims settlement, period of
cover, etc. Sometimes a blanket contract that creates a long term relationship in which the
supplier promises to resupply the buyer as needed as agreed prices for a set period of time. It
may include umbrella policy which provides details of unit price of premium to be paid which
may be agreed percentage of risk coverage. This type of blanket order eliminates the expensive
process of renegotiating a purchase each time the insurance for a specific project is required. It
also allows buyers to write more, but smaller, purchase orders, resulting in lower inventory
levels and carrying costs. Such a practice of Blanket contracting may lead to more single source
buying and to buying more items from that source. This process locks the supplier in tighter
with the buyer and makes it difficult for other suppliers to break in unless the buyer becomes
dissatisfied with prices of services.

8. Performance Review
In this stage, the buyer review supplier performance. The buyer may contact users and ask them
to rate their satisfaction. The performance review may lead to the buyer continue, modify or
drop the arrangements made. The suppliers job is to monitor the same factors used by the buyer
to make sure that the seller is giving the expected satisfaction.
The above process of eight stages describes the process that typically occurs in a new-task
buying situation. The eight-stage model provides a simple view of the business buying decision
process. The actual process is usually much more complex. In the modified re-buy or straight re-
buy situation, some of these stages would be compressed or bypassed. Each organisation buys in
its own way and each buying situation has unique requirements. Different buying centre
participants may be involved at different stages of the process. Although certain buying-process
steps usually do occur, buyers do not always follow them in the same order and they may add
other steps. Often, buyers may repeat certain stages of the process.
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2.3.2 The Choice Criteria Evaluation of proposals and Supplier Selection?
In all the models for describing CBO, there is a point of choice between different alternatives
(Webster, 1965; Robinson, Faris & Wind, 1967; Kotler & Armstrong, 1994; Bharadwaj, 2004).
In order to make the best choice and succeed in business, organisations should base their choice
of supplier and service providers upon critical evaluation criteria (ibid). Four classical criteria
are quality, delivery; price and service, seemingly, the importance amongst these have changed
during the years (Bharadwaj, 2004). Some researchers have found that generally the purely
economical factors (including delivery, capability, quality, price, after sale service, technical
capability and past performance) were most significant factors (Lehman and OShaughnessy,
1974; Dempsey, 1978)
Dempsey (1978) concludes that no single vendor attribute should get a unique level of
importance and that the attributes found of mid-level importance might very well be the ones
that make the final decision fall in specific directions. Dempsey suggests the five fundamental
factors that are of most importance in organisational buying (ibid):
Vendor Stability
Basic Economic criteria
Geographic affinity
Attendance services and repairs
Assurance mechanisms for effective service delivery

Vyas & Woodside (1984) found in their inductive model of organisational choice process that
the most frequently used qualifying criteria to get approved by buyers were capacity, location
and quality (ibid). Further, Vyas & Woodside (1984) noted that:
Uninterrupted shipment is very important thus capacity and capability may be a deciding
factor
Transportation costs are significant with larger quantities, thus the location of mining,
manufacturing or storage facilities was important. Local suppliers were preferred.
The vendors ability to supply quality products was frequently referred to their existing
customers. When technically complex product the approval from others e.g. engineering
and quality control departments was needed.
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Following is the list of common criteria suggested by various researchers:
1. Adjustment to your organisations needs
2. Aid and Advice
3. Attribute toward buyer
4. Bidding compliance
5. Confidence in sales person
6. Control systems
7. Convenience of placing order
8. Data on reliability of Product
9. Delivery capability
10. Ease of maintenance
11. Ease of operation or use
12. Financial position
13. Financial terms
14. Geographical location
15. Labour relations record
16. Management organisation
17. Moral, legal and ethical issues
18. Order cycle time(between order and delivery)
19. Packaging capability
20. Performance history
21. Post-sales (repair) service offered
22. Price
23. Production facilities
24. Progress communications
25. Quality
26. Reliability of delivery date promised
27. Reputation
28. Spare parts availability
29. Supplier ability to fill emergency orders
30. Suppliers accuracy in billings
31. Technical capability
32. Technical specifications
33. Training time offered by the supplier
34. Training time required

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2.3.3 Buyclasses - Organisational Buying Situations
The organisational buyers face a whole set of decisions in making a purchase. The number of
decisions the organisational buyers make depends upon the type of buying situations. Robinson
et al. (1967) defined the business situations into three Buyclasses viz. Straight Buy, Modified
Re-buy and New Task. At one extreme is the Straight Re-buy which is fairly routing decision.
At the other extreme is the New Task, which may call for thorough research. In the middle is the
Modified re-buy, which requires some research.
New-Task: In new-task situations, the organisation is buying a product or service for the first
time. This refers to the situation triggered for the recognition of a requirement or a problem,
which have not arised before, but arised due to an internal stimulus or an environmental factor
In such situations, when the process cost & risk involved in decision making is greater, there
will be larger number of participants in the decision making process and greater their efforts to
collect information and research. The new-task situations provide the marketer greatest
opportunities as well as greatest challenges.
Straight Buy: In straight buy situations, the buyer reorders something without any modifications.
It is usually handled on a routine basis by the purchasing department. Based on the past
satisfying buying experience, the buyer simply chooses from the various suppliers on its
approved list. The IN suppliers try to maintain the product and service quality. They often lead
to automatic reordering systems which result into considerable saving of reordering time for the
purchasing department. The OUT suppliers try to offer something new or exploit dissatisfaction
so that the buyer will consider them. OUT suppliers try to get their foot in the door with a small
order and then enlarge their purchase share over time.

Table: 2.3 Distinguishing Characteristics of Organisational Buying Situations
Buyclasses (Type of
Buying Situations)
Distinguishing characteristics
Newness of the
Problem
Information
requirements
Consideration of
new alternatives
New Task High Maximum Important
Modified re-buy Medium Moderate Limited
Straight Re-buy Low Minimal None
Source: Adapted from Robinson P. J., Faris C. W., and Wind Y. (1967) Industrial Buying and Creative
Marketing, Allyn & Bacun

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Modified Re-buy: This refers to buying situation which involves somewhat familiar purchase
with some new information requirements and some further evaluation of alternatives. In a
modified re-buy situations, the buyer wants to modify specifications for products and services,
prices, terms and suppliers. The modified re-buy usually involves more decision participants
than straight re-buy situations. The IN suppliers may become nervous and feel pressured to put
their best foot forward to protect an account. The OUT suppliers may see the modified re-buy
situations as an opportunity to make a better offer and gain new business.

Even though the buygrid framework is the most widely accepted model within the research area
of the organisational buying process, it is not without criticism. The criticism is primarily
focused on the handling of the Buyclasses. Choffray & Lilien (1978) and Johnson (1981) state
that the buygrid oversimplifies a complex phenomenon, overstates role of newness in the
process and neglects important issues such as importance of acquisition. Bellizzi & McVey
(1983) concluded that the Buyclasses might be useful when explaining the general importance
of a purchasing decision; they should not be used to infer other buying behaviour concepts such
as influences on the purchases. Another study by Ghingold (1986) found that the buygrid better
represents the purchases of some products that it does for others. Though, here exists some
criticism towards the buygrid framework model, but it is still very useful for the understanding
of buying process and most referred model in the field of research on organisational buying
behaviour, the author has considered this model for understanding on the organisational buying
process in this study.

2.4 The Buying Centre
Who buys the goods and services required by business organisations? The decision making unit
of a buying organisation is called its buying centre. In other words, buying centre can be defined
as all the individuals, groups and units of the organisation that participate in the decision making
process (Robinson, Faris & Wind, 1967). The buying centre can be studied in two aspects
Dimensions of the buying centre and Roles in the Buying Centre (ibid)

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2.4.1 Dimensions of Buying Centre
Even though the concept of buying centre is widely accepted, little is known about the
dimensions of the buying centre (Wind & Thomas, 1980). Wind & Thomas, 1980 found that the
dimensions of the buying centre vary by organisations, even within an organisation and by
buying situation. Size of the buying centre was influenced by perceived product importance,
degree of routine in the purchase and the resources available to carry out the purchase (ibid).
Findings of Wind & Thomas (1980) concerning the composition of buying centre are as under:
The multi-person nature of the purchasing decision is clearly evident.
The responsibility for the buying decision is shared among two or more positions, which
increases the complexity of the process.
The findings show a low involvement by the research librarian and a high involvement
of the purchasing agent.
Differences are found due to organisation size. As the size of the organisation increases
from small (1-99 employees) to medium sized (1100-999 employees) or large 9over
1000 employees), the responsibility shifts down in the organisation.
Johnson and Bonoma (1981) hypothesized that five dimensions of buying centre could be
specified and measured. These dimensions are as under (ibid):
Vertical involvement This refers to the number of organisations authority hierarchy
exerting influence and communications within the buying centre. There are six levels of
authority defined as:
Ownership (Board of Directors)
Top Management (CEO, President, Chairman, SBU Head & like)
Policy level Management (Functions Vice Presidents, General Managers)
Upper level operating management (Directors, Managers)
Lower level operating management (Supervisors, Product Managers)\
Production Work/Clerical employees
Lateral involvement This refers to the number of separate departments, divisions, or
firm functional areas involved in the purchase decision.
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Extensivity This is characterised by the total number of individuals involved in the
buying communication network.
Connectedness This corresponds to the degree to which the members of the buying
centre are linked with each other by direct communications concerning the purchase.
Centrality This refers to the degree of centralisation of the purchasing manager in the
buying communication network.

2.4.2 Roles in the Buying Centre
There are several roles identified between members in a buying centre (Webster & Wind, 1972).
These roles are: initiators, influencers, deciders, buyers, users and gatekeepers.
Initiators: the individuals & groups within the organisation who first recognize the need
for a service or product. For example, the Project Manager incharge of the project may
be the first amongst the individuals who recognize the need for insurances required for
the project. With his technical & site commercial team he initiates the process for
procuring the insurances by filling up the required proposal forms alongwith necessary
details required. In some organisations, the Contracts or Tender department initiates this
process due to their prior knowledge about the requirements considered during the
tendering process.
Influencers: the individuals or groups who affect the buying decision either directly or
indirectly. They often define the specifications and also provide information for
evaluating alternatives. Technical personnel familiar with risk management for the
projects and consults specialist on insurances may affect the buying decision regarding
various insurance requirements.
Deciders: the individuals and groups who have formal or informal power or authority to
select or approve the final suppliers. In routine buying, the buyers are often the deciders
or at least approvers. For all projects in UAE, there are requirements to get prior
approval from the consultant before selecting the supplier and apply to insurance
supplier also.
Buyers: the individuals and groups with formal authority to select the supplier and
arrange terms of purchase. Buyers may help shape the product and service specifications,
but they play their most important role in selecting vendors and in negotiating. In more
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complex purchases like insurance policies of professional indemnities, buyers might
include high level officers participating in the negotiations.
Users: the individuals and groups within the organisation who will use the product or
service. The project Manager in-charge of a project may be the user for the insurance
services procured for the particular project.
Gatekeepers: the individuals and groups who control the flow of information from the
buying centre to others. For example, purchasing agents often have authority to prevent
salespersons from meeting users or deciders. Other gatekeepers include technical
personnel and even persona secretaries.

The buying centre is not a fixed and formally identified unit within the buying organisation. It is
a set of buying roles assumed by different people for different purchases. Within the
organisation, the size and make-up of the buying centre will vary for different products and
services and for different buying situations.
The buying centre concept presents a significant marketing challenge. The business marketer
must learn who participates in the decision making process, each participants relative influence
and what evaluation criteria each decision participant uses.

2.5 What are the Factors that exert Influences on the Buyers?
Organisational buyers are subject to many influences when they take their buying decisions.
Some marketers assume that the strongest influences are economic. They think buyers will
favour the supplier that offers the lowest price of the best product or the most service. They
concentrate on offering strong economic benefits to buyers. However, organisational buyers
actually found responding to both economic as non-economic factors.
When suppliers offers are very similar, organisation buyers have little basis for strictly rational
choice. Because they can meet organisational goals with any supplier, buyers can allow personal
and non-economic factors to play a larger role in their decisions. However, when competing
products and services differ greatly, organisational buyers are more accountable for their choice
and tend to pay more attention to economic factors. These influences can be grouped as:
environmental, organisational, interpersonal and individual.
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Environmental Factors: Organisational buyers are influenced heavily by factors in the current
and expected economic environment, such as the level of primary demand, the economic
outlook and the cost of money. As economic uncertainty rises (as we see in current situation of
global economic crisis), organisational buyers cut back on new investments and attempt to
reduce their inventories. Organisational buyers are influenced by other environment factors of
changes and developments in technological, political and regulatory system, legal, competitive
and culture and customs prevailing in the local market. The business marketer must watch these
factors, determine how they will affect the buyer and try to turn these challenges into
opportunities.
Organisational Factors: Each buying organisation has its own objectives, policies, procedures,
structure and systems, which must by understood by the business marketer. Questions such as
how many people are involved in the buying decision? What are the Companys policies and
limits on its buyers? In addition, the business marketer should be aware of the organisational
trends in the purchasing area like: upgraded purchasing, Centralised purchasing, long-term
contracts, extranet exchanges, Just-in-Time Production systems & purchasing performance
evaluations.
Interpersonal Factors: The buying centre usually includes many participants who influence
each other. The level of authority within the organisation the participant enjoys, his status
compared to other participants, empathy & persuasiveness of the individuals are some of the
group dynamics that play a role in the buying decisions. The business marketer must understand
these interpersonal & group dynamic factors that are affecting the buying decision making
process.
Individual Factors: Each participant in the organisational buyingdecision process brings in
personal motives, perceptions and preferences. These individual factors are affected by personal
characteristics such as age, income, education, professional identification, personality and
attitude towards risk.

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2.6 The Consumer Response - What are the Consumers responses?
When subjected to various stimuli, and under influence of various factors, there may be various
responses expected from the Organisational consumer. These responses can be categoried into
following categories:
Decide whether to buy the product or service or not to buy?
If decided to buy, then further responses can be
Place order on Supplier or service provider
Place order for specific brand from the selected supplier
Agreement to provide product or services through particular dealer
Agreement on supply of Product or Services delivery
Agreement on total amount for Products purchase or services
Agreement on unit prices and duration of validity of rates
Agreement on Payment terms

If the organisation decided not to buy, then following responses can be expected:
Issue of regret letters to unsuccessful supplier
Return of any bonds collected as part of offers from unsuccessful suppliers
Retention of information collected for future use.

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Chapter 3 Research Questions and Delimitations
Based upon the theory in previous chapter and discussions in the first chapter, further problem
discussion and a frame of reference will be presented in this chapter.
3.1 Problem Discussion
Based upon many researchers industrious work, organisational buying behaviour stands for an
important part in the progress and success of businesses (Robinson, Faris & Wind, 1967;
Webster & Wind, 1972; Sheth, 1973; Kotler & Armstrong, 1994). It is also important to create
generally applicable formulas to describe the area, something that is indicated by various models
developed in the field of Consumer Behaviour or Organisations (CBO) (ibid).
Wind & Thomas (1980) states that two of the most important parts of CBO are the buying
process and the buying centre. Another important issue in CBO is the criteria on which the
buyers in organisational situations base their decisions on (Bharadwaj, 2004).
The importance of understanding of these factors in different organisational markets have been
emphasised as well here as in previous chapters. The growth witnessed for the Insurance
services relating to Construction sector in UAE and looking to the potential for further growth,
the purpose of this study can also be formulated on the similar references.
It is observed that there are major components or groups of the Industry we are studying. For
example, the Construction sector is generally composed of Contractors, Consultants,
Developers, and Owners as its major components. Hence, it is worth to describe the major
components of the Construction Sector in UAE.
Further, Insurance related services and policies are very vast subjects and all type of Insurance
policies may not be relevant for Construction sector. Hence, it is useful to look into various
types of Insurance policies generally procured by the participants of the Construction sector
As part of the study, it is expected that the author may notice any brand preference for particular
insurance service provider. It is worth to record such details if noticed in this study.
While studying the factors that affect the consumer behaviour, the level of consumer satisfaction
for the current insurance service provider and what may trigger to look for alternative service
provider may also provide useful information to the marketer. Hence, the author has considered
recording general consumer satisfaction for the current insurance service provider and what are
expectations of the consumers from their preferred Insurance policies & service provider.
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3.2 Research Questions
The purpose of this study is to investigate how consumer behaviour in Insurance services
relating to construction sector in UAE can be described. This formulates the research problem
(RP) which is concretised by nine research questions (RQ. 1-6), which are illustrated in figure
3.1.

Figure 3.1 - Research Problem and Questions

3.3 Delimitations
It is not significant to broaden the research problem to include other industries and services
since the buying behaviour and choice criteria may be significantly different in each products
and services. Also consumer behaviour may be different amongst geographical locations due to
difference in environmental and other relevant factors. Further, since the current study will be
exploratory & cross-sectional in nature, it identifies the buying behaviour of Consumers of
Insurance services in UAE as a snapshot only. Also, the sampling method used is convenience
sampling due to time & cost restrictions, may not provide accurate results. The user of the study
is advised to have further in-depth studies to confirm the results obtained under this study. Also,
longitudinal study (same consumers over a period of time) may also be required to determine
how the buying behaviour of consumers changes over a period of time.
RP: How the consumer behaviour in Insurance services relating to
Construction Sector in UAE can be described?
RQ. 1: What is the general profile of Consumers and consumer segments?
RQ. 2: What types of Insurance policies are procured by various consumer segments?
RQ. 3: How the Buying Process can be described relating to procuring Insurance services?
RQ. 4: Which are the most important Choice Criteria when selecting the insurance provider?
RQ. 5: How the Buyclasses can be described in Construction Sector?
RQ. 6: How the buying centre roles can be described in Construction Sector?
RQ. 7: What are the factors that influence the consumer behaviour for purchase of Insurance
Services?
RQ. 8: Is there any brand preference amongst the consumers?
RQ. 9: What is general level of consumer satisfaction for the current Insurance service
provider?
RQ. 10: What are the expectations of Consumers for preferred brand of Insurance Policies &

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Chapter 4 - Research Methodology
This chapter is presenting the research technique and methodology used for this study. It is
describing the procedure the author went through when gathering data and information
required for analysing the research questions. First this chapter covers the theoretical research
purpose, approach and strategy, then data collection and the way of analysing results, and
finally, it describes problems with methodology. Each section ends with an explanation of the
adapted design used in this study.
4.1 Research Purpose
The purpose of research may be exploratory, descriptive or explanatory (Yin, 1994). These
purposes do not need to be treated separately. It is possible to use more than one strategy for a
research project, depending on the purpose of the research (Saunders, Lewis & Thornhill, 2000).
An Exploratory research aims to define questions and hypotheses of a study (Yin, 1994). This
kind of research is carried out when there is not much knowledge about the situation (Sekaran,
1992). Since, exploratory research proved a very flexible method, it is quite suitable form when
investigating a problem or look at a problem from a new angle, wherein widespread preliminary
work is required to get initiated in the subject (Gummesson, 1991). According to Saunders,
Lewis & Thornhill (2000), there are three ways for conducting exploratory research a. search
for literature; b. talking to experts; and c. conducting focus group interviews
Descriptive research can work as a forerunner to exploratory research, in order to get a good
picture of the phenomenon (Saunders, Lewis & Thornhill, 2000). Description is a matter of
collecting information through observation and reporting, or reading works of others and
summarising it (Gummesson, 1991). Description does not aim to find causes to a problem, but
rather to describe a phenomenon within its context, and can be used for describing
characteristics (Yin, 1993). Gummesson (1991) points out that since description is a matter of
observing and summarising other peoples works, sometimes it is thought as a less prestigious
research method in scientific circles. Gummesson (1991) did not fully agree on this and believes
that descriptive method is a matter of using it in a correct way and proper analysis should always
included in such research. Saunders, Lewis & Thornhill (2000) noted that descriptive method
should be thought of as a means to an end, rather than as end in itself.
Explanatory research presents data that explains the cause and effect relationship and is suitable
for designing and conducting more complex case studies (Yin, 1993). Yin believes that since it
is easier to draw pattern of matching of several sequences, this kind of research can facilitate
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theory testing with a rich and extensive data collection efforts (ibid). Saunders, Lewis &
Thornhill (2000) recommend using this method for testing correlations; to be able to get better
picture of relationships. However, Yin (1993) points out that it might be hard to be precise when
measuring and describing these relationships.
4.2.1 Research purpose for this Study
With regard to the preceding discussion about research purpose, the author conclude that .since
it is the purpose of this study is to acquire knowledge of the research area, this study can be
considered as exploratory in nature to some extent. Also, the overall purpose of this study is to
gain understanding by describing the area of study in theory as well as in reality, this study is
mainly descriptive in nature. Furthermore, as some conclusions are drawn in the attempt to
answer the research questions, one (marginally) part of this study can be considered as
explanatory also. Hence, purpose of this study is mainly descriptive with some elements of
exploratory as well as explanatory.

4.2 Research Approach
Saunders, Lewis & Thornhill (2000) claim that practically all research includes some numerical
data or information that is being used to help researchers examine their research problem. When
researchers are gathering and approaching the information, it is done in either quantitative or
qualitative manner. The Quantitative method is based on collecting and measuring numerical
information in an objective view. On the other hand, the qualitative methods are focused to seek
a deeper understanding of the research problem in subjective and theoretical view. Saunders et
al have developed a framework for significant distinctions between quantitative and qualitative
data please refer to Table 4.1 (ibid).
Table 4.1 : Distinctions between quantitative and qualitative data (adapted from Saunders,
Lewis & Thornhill, 2000)
Quantitative Data Qualitative Data
Based on meaning derived from
numbers
Based on meanings expressed through words
Collection results in numerical and
standardised data
Collection results in non-standardised data
requiring classification into categories
Analysis conducted through the use of
diagrams and statistics
Analysis conducted through the use of
conceptualisation and models

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4.2.1 Research Approach for this Study
The author has chosen to approach this study with a qualitative research point of view. This is
due to the research problem and questions which can be answered with a method representing a
deeper understanding rather than measuring quantitative data. The approach to this study led to
that the gathered information was expressed through words with non-standardised data and was
analysed using existing concepts as stated in Table 4.1.
4.3 Research Strategy
According to Saunders, Lewis & Thornhill (2000), research strategy is the general plan of how
the researcher will go when answering the research problem and questions, containing clear
research objectives and detailed information about the sources from where the information was
collected. The constraints of significant factor like limits of time, cost etc should also be
considered. Saunders el al also mentions different kinds of research strategies. The most
common strategies generally followed by researchers are case studies, surveys, experimental and
desktop research (Robson, 1993; Kotler & Armstrong, 1994; Saunders et al, 2000)
Robson (1993) described case study as the development of detailed, intensive knowledge about
a single case. This strategy is beneficial when the researcher wishes to gain a deeper
understanding of the concept of the research and the process being examined. Saunders et al
(2000) states that case study is a valuable method to investigate existing theory in which the
information collection methods might differ between case studies, for example, methods like
questionnaires, interviews, observations and documentary analysis are being used. Simple, but
well composed case studies can make it possible to challenge existing theory and become base
of new hypothesis as well (ibid).
Kotler & Armstrong (1994) states that survey research is the best approach for gathering
information when the problem area is already studied and research problem is somewhat
structured. The main advantage of surveys is its flexibility where it can be used to gather many
different categories of information in many different marketing circumstances. Most commonly,
it is also the fastest and cheapest alternative to obtain large amounts of data. The negative
aspects of research surveys are the unwillingness to respond or dishonest answers to please the
researcher (bid).
Further, Kotler & Armstrong (1994) states that the purpose of experimental research is to
explain cause and affect relationships. This is done with an experimental variable, trying to find
existing provable relationships. Sometimes, the researcher finds it enough to solve the
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investigated problem through existing literatures and studies. Researches that are made with
existing literature and former studies can be called desktop researches (ibid).

4.3.1 Research Strategy for this Study
The research questions answered in this study are of the nature that they are varying between
situations and industries. Therefore the author was in need of a research strategy that gives him
industry specific information to gain deeper understanding of the concepts and processes being
examined. Due to Saunders, Lewis & Thornhill (2000), the Interviews with generally structured
questionnaire, can be used beneficially under these circumstances. Hence, the obvious choice of
the author to follow strategy of using the Interviews with generally structured questionnaire for
the purpose of this study.

4.4 Data and Information Collection
Saunders, Lewis & Thornhill (2000) explains that when gathering data and information to meet
the objectives for the research questions, there are two options Primary data and Secondary
data.
As per Lekvall & Wahlbin (1993); Kotler & Armstrong (1994), primary data is information
collected for the specific purpose at hand. Kotler & Armstrong (1994), states that Primary data
can be collected through questionnaire, telephone/personal interviews, observations and
experiments. Lekvall & Wahlbin (1993) mentions two comprehensive methods for collecting
primary data as field and laboratory based researches.
According to Lekvall & Wahlbin (1993); Kotler & Armstrong (1994), the secondary data are
information collected from former existing studies and literature, and gathered for another
purpose. Kotler & Armstrong (1994) continues to further explain that the main advantage of
using secondary data is that it is fairly inexpensive.
Mason (1996) mentions different kinds of possibilities when searching for primary sources to
use, one of them is interviewing adequate persons. The benefits when choosing interviews are
that people can contribute with their knowledge, experience, interactions, memories, thoughts,
ideas and feelings that are not reachable in other ways of collecting information. When
gathering primary data through interviewing, Wengraf (2001) stresses following points to
consider:
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Research interview is designed for the purpose of improving knowledge
It is a special type of conversational interaction, with particular features to
understand
It has to be planned and prepared for as other forms of researches, it is a co-
production by the interviewer and the respondent.
It is supposed to go in depth into matters relevant for the research study.

Lekvall & Wahlbin (1993) contributes that interviewing can be done in three different ways:
personal interviewing, telephone interviewing and interviewing through written letters. To
accomplish the interviews, written letters are the most time-consuming and telephone
interviewing the fastest, while personal interviewing is somewhat in between these two. The risk
for reduction is high through written letters and most reliable way is through telephone or
personal interviewing. The same proportion is true for the control of who is answering where
written letters lack this control. Another important aspect is the flexibility and the ability to
restructure questions through the interview, the personal interviewing is bit better than telephone
interviewing, while interviewing through letters does not support this at all (ibid).
4.4.1 Data and Information Collection in this Study
When collecting data and information for investigations the research questions, the author has
chose telephone interviews as primary data source. Due to the intricate research area and
qualitative research approach, it is the natural choice to use telephone interview as a primary
data collection method. Also, this method of data collection has benefits of keeping distance
from the respondents, the ability to record it and the fast response. To enable contact with
possible interview respondents, procurement departments of some prominent organisations
operating as Construction sector participants (viz. Contractors, Consultants, Master Developers
and Owners) in UAE after getting their contact details from the websites of such organisations,
database of local websites www.ameinfo.com and www.uaeinteract.com; and yellow pages.
First, an introduction e-mail describing the purpose of this study was sent to the respondents and
later on through personal meetings. Through these initial meetings most suitable respondents
were located. An interview guide and outline of questionnaire was developed together with the
project guide. This is placed at Appendix of this study report. The interviews were performed
and responses recorded by the author. Wherever, there was missing information due to time
constraints, the interview was carried out in more than one session in few cases. Average time
for completing one interview was about 30 minutes. Total number of respondents was 102. This
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represented the base of information that was later on analysed, through comparison of the
empirical findings with the chosen theory, and finally concluded with findings of this report.
The literature research and secondary data research was made with internet searches on websites
of www.rediff.com, and www.wikipedia.org, The initial words used in search span were:
industrial/organisational buying behaviour, consumer behaviour models, Insurance services
marketing, Construction sector, UAE, choice/selection criteria, buying decisions. The articles
found here led through their references to further, even more relevant, findings. An introduction
to the insurance industry & Construction sector was made with reading local databases of
www.ameinfo.com, and www.uaeinteracti.com.Also, initial discussion with the Project guide
has also provided insights about this which proved very useful for conducting the study. Also,
websites of the respondent organisations have provided useful information. The author received
printed materials, computer files power point presentations and other data formats containing
information about the market from these sources. The information received was used to gain
knowledge about the market situation and business activities that organisational buyers face in
this industry sector.
4.5 Sample Selection
When the sources of evidence have been chosen, the next step is to decide about appropriate
sample(s). Miles and Huberman (1994) suggested that sampling in qualitative research involves
two actions boundary setting and creation of frame of reference so as to manage the study
and focus on important areas to be included in the research. This approach may help the
researcher in optimising his efforts in terms of time and cost and yet best results.
4.5.1 Sample Selection for this study
In this study, the author has attempted to follow the recommendations of Miles and Huberman
(1994) regarding sample selection.
Boundary setting: Given the limits of time and means, the author decided to concentrate on
reputed organisations who are operating in emirates of Dubai, Abu Dhabi & Sharjah, which are
the major part of United Arab Emirates (UAE) and represents more than 90 % of construction
sector in UAE. The author limited the study to cover insurance policies of Contractors All
Risks (CAR), Workmen Compensation, Plant & Machineries, Staff Medical, Professional
Design Liabilities and Decennial liabilities.
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Creation of Frame of Reference: This action enabled the author to uncover, confirm and qualify
the fundamentals of this study. Besides, this it helped the author to keep a track on collecting
data and information for important issues on each of the research questions. The frame of
reference has been explained in chapter 3 of this report.
4.6 Data Analysis
In order to answer our research questions, the collected data need to be thoroughly analysed. Yin
(1994) explains that every investigation should start with a general analytical strategy, allowing
the researcher to decide what to analyse and why. He continues by discussing how this could be
done, namely through examining, categorising, tabulating or otherwise recombine the evidences.
Saunders, Lewis & Thornhill (2000) and Yin (1994) claim that there is no traditional way of
analysing qualitative data and therefore it is more time consuming to analyse such data
compared to quantitative data. Miles nd Huberman (1994) recommend that the collected data
should be analysed in three stages:
Data Reduction: This stage of qualitative data analysis selects, abstracts, simplifies,
focuses and transforms the collected data. The purpose is to organise the data so that it
can be verified and final conclusions can be drawn.
Data Display: When reducing the data, it should be displayed in an organised and
compressed way to enable easy conclusion drawing.
Conclusion Drawing: In this the researcher decides the meaning of occurrences, noting
regularities, patterns, explanations, possible configurations, casual flows and
propositions.
It is important to make sure that the analysis is of highest quality possible, and it can be done by
following four principles recommended by Yin (1994) which are:
1. Consider as much evidence as possible to get and no loose ends have been left in the
interpretation
2. All major rival interpretations of the subject should be included
3. The most significant aspects of the case study need to be addressed
4. Authors own expert knowledge, on the studied issue or similar ones, should be brought in.
The way researches deal with collected data is decisive for the quality of the research. The real
challenge in qualitative studies involves the process of using the data collected rather than the
process of collecting the data itself (Wolcott, 1994).
Marshall & Rossman (1989) note that in a qualitative research, any structuring and organisation
of information was impossible prior to the completion of data collection. Moreover, the
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collected data need to be converted into some interpretative form before it could be analysed
(ibid).
4.6.1 Data Analysis for this Study
After the data collected in this study, the author has structured it according to selected theories
with the aim of reducing data. This enabled to sharpen, sort, focus, discard and organise data in
a more efficient manner. Furthermore, a comparison with the frame of reference was conducted
to see that sufficient data are collected and all areas are covered. Some research questions are
relating to note priority of factors that influence the consumer behaviour and any brand
preference, data for such questions are tabulated. Also, there is one research question to find any
leading brand of insurance, data for this are displayed in the form of pie chart.
Conclusion drawing was the final stage of data analysis. This was performed by noting
regularities, patterns, explanations, possible configurations, casual flows and propositions.
However, the author tried to draw such conclusions lightly while maintaining both openness and
a degree of scepticism.

4.7 Quality Criteria
When gathering information used to draw scientific conclusions, meanings from the data should
be tested for plausibility and ability to truthfully confirm its consistence (Miles & Huberman,
1994). Saunders, Lewis & Thornhill (2000) contributes that to reduce errors and receiving the
wrong answers, attention has to be emphasized on two particular research issues reliability and
validity of data.
The validity describes how well the collected data covers the actual area of investigation
(Lekvall & Wahlbin, 1993). Zikmund (1994) refers validity as the ability to measure what is
intended to be measured. Reliability on the other hand is the degree to which evaluated data is
free from arbitrary errors (ibid)
4.7.1 Quality Criteria for this Study
The interview guide and outline of questionnaire alongwith the introduction about the objectives
of the study was sent to the respondents before the actual interview. This was done so that the
respondent could get a reflection to the content and be prepared for the interview questions. The
interview guide and outline of the questionnaire was reviewed with the project guide before
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sending out to the respondents. An outline investigation about the interviewed organisations was
made before the actual interview, primarily form their own website and through annual reports.
The interview method gave the author the opportunity to further explain and clarify questions
that were unclear to the respondent, which did happen. Additionally to writing documentations
during the interview, the author also recorded the discussions to later on make sure that nothing
was missed out. At the end of the interview, the respondents were asked to answer possible
complementary questions at a later stage.
Naturally increase credibility would be achieved if not for the constraints, mentioned in the
delimitations in chapter 3 of this report.
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Chapter 5 - Empirical Data
This chapter will present the theoretical data collected through telephonic interview with
consumers who belongs to Construction Industry in UAE and actively engaged in procuring
insurance services for his firm. Furthermore, this chapter will give the reader a short
introduction of the Insurance service providers operating within UAE and dealing with
construction sector. The structure of this chapter is mainly according to the interview guide
made to facilitate for the respondent. The chapter will end by presenting the empirical findings.

In this chapter, we shall refer to the empirical studies made to selected organisation each from
the main segments of the Construction sector in UAE. The author selected few Contractors,
Consulting offices and Master Developers for this purpose.

RQ. 1 - General Profile of the Consumer Segments
The Construction sector in UAE can be categorised in major segments comprising contractors,
Consulting offices, Master Developers and Owners.
The Contracting organisation typically has head office located in Dubai and business operations
spread over various emirates in UAE. The organisation undertakes construction projects of
residential, commercial and infrastructure works as Contractor. Recently one project they got is
based on Design & Build. It employed about 2500 trade workers and 260 staff. Annual turnover
for year 2008 equivalent of US$ 650 Million and expected turnover for year 2009, equivalent of
US $ 460 Million. The reduction in turnover is mainly due to current economic crisis. It is
observed most of the contracting organisation have similar characteristics, with some
organisation having presence in Middle East countries, with head quarter in UAE. Also, few
organisations with global operations with head quarter outside of UAE are found. But in terms
of insurance requirements, all contracting organisations exhibit similar characteristics.
The Consulting office has global operations with main head quarter in London, UK and regional
office in Dubai for operations in Middle East, major share coming from operations in UAE.
They provide consultancy services for design, engineering and supervision for residential,
commercial and infrastructure projects. Annual professional fees from UAE operations were
equivalent of US $ 52 Million and US $ 43 Million in years 2008 & 2009 respectively. They
employed about 215 professional staff and 60 support staff.
The Master Developer is a group of companies engaged trading and real estate business in UAE
with operations in other Middle east countries (Head quarter being located at Abu Dhabi, the
capital of UAE), They are engaged on development projects in Residential and commercial
complexes. Total asset base was about US $ 6,450 Million as on 2008.they employed about 46
professional staff and 340 support staff.
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RQ. 2 - Type of Insurance policies procured by Construction Sector
Construction is a high risk industry. Accidents, including personal injuries and property damage,
happen all the time.
The Insurance policies procured by construction sector mainly depends on the particular
business risk they carry. Different segments have different business risks, which includes
physical loss or damage to works, plant, equipments, and materials during the course of
construction.
The Contracting organisation typically has high risks on account of complex nature of
construction projects, which involves high capital cost, long duration, high uncertainties for
achieving completion date, shortage of various resources, possibility for causing damage to self
& third party properties. It is observed that the Contracting organisation typically procures
following major insurance policies:
Contractors All Risk Policies Sometimes called as Builders Risk or Erection All Risks
policies - separate for each project. This is typical policy is similar for different projects
providing insurance for different business risks, which includes physical loss or damage to
works, plant, equipments, works of sub-contractors and materials during the course of
construction; project delays; third party liabilities; and business interruptions. The variable
factor is Contract value & special circumstances specific to the project. The Insurance
premium is found about 0.5 to 1.0 percent of the contract value for cover of 12 month period
Workmen Compensation policies Umbrella cover for all workers in UAE and separate
policies for each project. This is typical policy taken on annual basis with variable number
of trade workers covered for each project. The typical premium is 1 percent of the annual
expected salary for the workers engaged.
Plant & Machineries policy Common Annual Policy for all plant & equipments in UAE.
The typical premium is 0.6 percent of the replacement value of
Professional Indemnity policy for Design & Build Project specific policy for Design &
Build project. This is new trend for the contractor. The premium for one policy undertaken is
found to be 0.75 % of the amount of liabilities covered for a period of 12 month.
Staff Medical policy Common annual policy for staff categories. The premium is found to
be about US $ 2100 per staff for a period of 12 month
Motor Vehicle policies Annual Umbrella policy with separate cover for each motor vehicle
owned by the organisation. The annual Insurance premium varies from US $ 200 to 900
depending on the type of motor vehicles
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Transit Insurance policies are required when project cargo is imported from other countries.
This is obtained occasionally.
Decennial Liability policy project specific policy providing insurance cover for latent
defects for period commencing from end of defect liability period until minimum 10 years
thereafter. This is new kind of insurance policy required to meet requirements of recent
amendments in the UAE Civil Code in 2006. The Insurance premium for typical policy is
found to be 1 to 1.5 % of the Project cost.
The Consulting Office typically has high risks on account of professional services for design and
engineering of complex construction projects. The risk coverage is for damages claimed when
structure fails for reason of faulty designs. It is observed that the Contracting organisation
typically procures following major insurance policies:
Professional Indemnity policy for Engineering Design & Supervision Global Umbrella
policy covering global operations with specific coverage for UAE Operations. The premium
for policy undertaken is found to be 1.25 % of the amount of liabilities covered for a period
of 12 month.
Workmen Compensation policies Annual cover for all employees in UAE. This is typical
policy taken on annual basis with variable number of trade workers covered for each project.
The typical premium is 1.25 percent of the annual expected salary for the workers engaged.
Office Equipments policy Common Annual Policy for all Office equipments in UAE. The
typical premium is 1.5 percent of the replacement value of office equipments.
Staff Medical policy Common annual policy for staff. The premium is found to be about
US $ 2100 per staff for a period of 12 month
Motor Vehicle policies separate cover for each motor vehicle owned by the organisation.
The annual Insurance premium varies from US $ 200 to 900 based on motor vehicles
The Master Developer and Owners typically has high risks for the overall project developments.
It is observed that the Contracting organisation mainly procures following insurance policies:
Project All Risk Policy Umbrella policy covering all risk for the project development, loss
of income, risks for war, natural calamities etc Generally, the Master developer or the Owner
negotiate this policy from single insurance provide for the project Contractors All Risk;
professional indemnity and other project specific policies. The premium for policy
undertaken is found to be 0.5 to 0.75 % of the amount of liabilities covered for 12 month.
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Workmen Compensation policies Annual cover for all employees in UAE. This is typical
policy taken on annual basis with variable number of trade workers covered for each project.
The typical premium is 1.25 percent of the annual expected salary for the workers engaged.
Staff Medical policy Common annual policy for staff. The premium is found to be about
US $ 2100 per staff for a period of 12 month.
RQ. 3 - Buying process relating to procuring Insurance services
It is observed that buying process for procuring Insurance services prevailing in the construction
sector in UAE comprises 12 identifiable stages of buying process. The buying process alongwith
involvement of process participants is summarised in tables 5.1 and 5.2 for Project specific
Insurances and other Annual insurance policies respectively.

Table 5.1: Organisational Buying Process for Project Specific Insurance
Services & Involvement of Process Participants
Buying Process stage
Process Participants
PM CM TM
RM/
HSE
Buyer
F&A Top
Owner
1. Trigger Process
Y Y Y
May
N Y
May
N
N Y Y Y N Y Y N
3. Information Search
N Y Y Y Y Y
May
N
4. Insurance Provider Search
N
May
N N Y Y Y
May
5. Initial Proposal Solicitation
N
May
N N Y Y
May
N
6. Detailed Insurance Service
Specification
May
Y N Y
May
Y Y
May
7. Detailed Proposal Solicitation
N
May
N N Y Y
May
N
N Y N Y Y Y Y
May
9. Buying Decision
N
May
N N Y Y Y
10. Order Placement
N
May
N N Y Y Y
May
11. Post-purchase Behaviour May
Y N
May
Y Y
May N
12. Performance Review May
Y
May
Y Y Y Y Y

Legends: PM Project Manager, CM Contracts Manager, TM Tendering Manager, RM Risk
Manager, HSE Health, Safety & Environment Manager, Buyer Buying or Procurement
Department, F&A Finance & Accounts Department, Top Top Management level
Executives, Owner Owners Group
Participation: Y Normally participates, May May participate,
N normally do not participate in the process

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Table 5.2: Organisational Buying Process for Annual Insurance Services &
Involvement of Process Participants
Buying Process stage
Process Participants
PM CM
HR/
Plant
RM/
HSE
Buyer
F&A Top
Owner
1. Trigger Process May May May May
N Y
May
N
N
May May
Y N Y Y N
3. Information Search
N
May N
Y Y Y
May
N
4. Insurance Provider Search
N
May N
N Y Y Y
May
5. Initial Proposal Solicitation
N
May
N N Y Y
May
N
6. Detailed Insurance Service
Specification
May
Y N Y
May
Y Y
May
7. Detailed Proposal Solicitation
N
May
N N Y Y
May
N
N Y N
May
Y Y Y
May
9. Buying Decision
N
May
N N Y Y Y
10. Order Placement
N
May
N N Y Y Y
May
11. Post-purchase Behaviour May
Y
May May
Y Y
May N
12. Performance Review May
Y
May
Y Y Y Y Y

Note: In case of re-buy situation many of the above process stages are skipped as per available
time and organisation policies

Legends: PM Project Manager, CM Contracts Manager, HR HR Manager, Plant Plant &
Machinery In-charge, RM Risk Manager, HSE Health, Safety & Environment
Manager, Buyer Buying or Procurement Department, F&A Finance & Accounts
Department, Top Top Management level Executives, Owner Owners Group
Participation: Y Normally participates, May May participate,
N normally do not participate in the process

RQ. 4 - Choice Criteria when selecting the Insurance Service Provider
Reputation; price (premium) of the insurance policy; Pre-sale services & Technical services;
local presence; and International Alliance are most importance choice criteria being considered
when encountered for first time in order of importance. Other important criteria being
considered are Quality, After sales service, Financial strength, Delivery time, and Faster claim
settlement service. The details of relative importance on a scale of 1 to 10 (1 for least important
and 10 for most important) is shown in Figure 5.1
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Figure: 5.1 Scale of Importance attached to various factors when selecting the Insurance
Service Provider
Whereas, at the time of renewal, important criteria considered are financial strength, After sale
service, Presale service are considered most important criteria.

RQ. 5 - Buyclasses in Construction Sector
As discussed in Chapter 2 of this report, buyclass refer to the situation of buying decision. The
author observed that the situation for project specific Insurances procurement have tendency
towards new Task. This is mainly due to each project is unique involving multi-parties viz.
Contractors, Consulting Office, Master Developer and Owner Groups. Also, the Projects are of
longer duration ranging from 2 years to 5 years; besides subjected to unique and complex
project risks
Whereas, for annual policies for Workmen compensation, Staff Medical, Professional Indemnity
for Design offices, show tendency for Modified Re-buy skewed more towards straight re-buy.
However, when the organisation is new, these policies also exhibit tendency of New Task.

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RQ. 6 - Buying Centre Dimensions and Roles in Construction Sector
As discussed in Chapter 2 of this report, the buying centre can be described in the form of
dimensions and various roles of the participants that comprise the buying centre.
Buying Centre Dimensions:
The observations regarding five dimensions of buying centre relating to consumer behaviour in
insurance services in the construction sector of UAE are described as under (Johnston &
Bonoma, 1981):
Vertical involvement: As reported in this study in this chapter (RQ 3), there is high concern for
public safety and environment protection besides strict legal requirements and hence various
insurance policies are obtained by different organisations to minimise the risk as part of risk
management policies of the organisation. Also, the amount of premium is high, there is tendency
of involvement of ownership groups and the vertical involvement is seen from all six levels of
the organisation.
In respect of Contracting Organisations, it is observed that able for project specific
insurance policies for Contractors All Risk, Professional indemnity for Design & Build
and in decisions involving change in insurance service provider and amount of indemnity
coverage in respect of other annual insurances workmen compensation, staff medical, etc.
In routine decisions, there is less involvement from Owners, Top Management & Policy
level management.
In respect of Consulting Offices, it is observed that involvement of owners & Top
management is more for decisions relating to change of Insurance service provider and /or
change of risk coverage. Since, most of the insurance requirements are annual policies, and
are routing, but involving large amount, involvement upto policy level management is
observed in most cases. In few cases involvement of owners is found in all decisions,
mainly due to small size of the organisation with local presence in UAE only.
In respect of Master developers & Owners, tendency of involving owners is high in respect
of decision for insurance provide and risk covered for umbrella policies. Since, the
insurance requirements for workmen compensation, Staff medical etc are annual policies,
and are routing, but involving large amount, involvement upto policy level management is
observed in most cases.
Lateral involvement: Since, there is high tendency for centralised purchase for insurance policies
in all organisation types, generally there is fewer departments are involved mainly Finance &
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Accounts; Procurement; and HSE/Risk Manager participate for annual policies. However, when
project specific insurances are required like Contractors All Risk and Professional indemnity
for Design & Build, participation from Tendering, Project team & Contracts manager is
observed in most organisations.
Extensivity: As reported earlier, there is tendency for centralised purchasing for insurance
policies, and time to procure insurance is limited, generally 5 to 6 individuals are involved in
most cases. When involvement of Owners group is required, the number increases to 8 to 10
individuals in the process.
Connectedness: As reported earlier, there is tendency for centralised purchasing for insurance
policies, time to procure insurance is limited, and number of individuals involved in the process
is relatively low, there is high level of direct communication between them.
Centrality: It is observed that due to specialist & complex nature of the service besides, less time
available for decision-making, there is high tendency for centralisation.
Buying Centre Roles
The observations regarding various roles being played by various individual (s) or
Department(s) has been summarised as under:
Initiators - In most case, two stage processes is observed. In the contracting organisations, the
process of buying initiates in two stages - initially at the time of bidding and second at the time
when contract is awarded. At the first stage the purpose is to know the probable cost that needs
to be considered for risks specific for the project works. The Tendering department or Contracts
department normally initiates the process to obtain initial quotations for project specific
insurance requirements for Contractors All Risk as well as Professional Indemnity for Design
& Build. Second stage arises when contract is awarded to the contracting organisation. At the
time of this second stage the contracting organisation proceed for actual buying for the
insurance policy required for project specific risk coverage. Normally, the Project Manager or
the Contracts Department initiates the process in this stage by filling up proposal forms with
necessary details about the project. In case of annual policies, normally the straight re-buy
situations arise wherein Finance & Accounts Department initiate the process few days before
renewal time. In case of Consulting offices, it is observed that Finance department initiates the
process, since most requirements are annual policies. For Master Developers and Owners
organisations, Project specific policy information is collected by Project Manager. For Annual
policies, Finance & Accounts department initiate the buying process.
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Influencers,- It is observed that the Contracts Department, HSE Manager, Finance & Accounts
Department from within the Contracting Organisations and Project Managers of Consulting
Offices and Master developer /Owners influence ton risk coverage and selection of Insurance
service provider for project specific insurances. In few cases, Project Managers of the
Contracting organisations also found influencing the buying. Also, Plant & Machineries in-
charge indirectly influence the process in contracting organisations.
Deciders - It is observed that in respect of project specific insurance polices, the Contracts
department, Finance & Accounts Department and top management level executive make the
decision. Approval of Owner is taken when insurance premium is in excess of equivalent of US
$ 100,000 or in cases involving change of Insurance provider
Buyers - This role is most cases played by corporate Finance & Accounts department
Users - The users of project specific insurance policies are project manager in-charge of the
specific project. Plant & Machineries in-charge uses insurance for Plant & Equipments. HR
manager uses workmen compensation & Staff medical insurances.
Gatekeepers It is observed that in most cases the gatekeeper remain the Finance & Account
department. In few cases, the Contracts department also play this role.
It is worth to note that in some large contracting organisations, there is dedicated team of 3
persons undertake all the above roles, with participation of top management level executive in
decision approvals. In such cases, the individuals of the team are having vast experience in
insurance matters. With such observations, the buying process participants relating to insurance
services can be categorised as under:
Owners which include group of individual(s) that providing capital and hold ownership of the
organisation and designations include Owner, Chairman, Partner, Shareholders, etc.
Top Management Executive which include individual(s) in-charge of organisation or atleast
project divisions and designations include President, Managing Director, General Manager, etc
Project Managers which include individual(s) in-charge of project operations generally single
project and designations include project Manager, Construction Manager, Project Engineer,
Resident Engineer, Site Agent and like
Contracts Managers which include individual(s) in-charge of overall contracts management of
one or more projects in the organisations and designations include Contracts Manager,
Commercial Manager, Contracts Engineer, Quantity Surveyors, and like
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Tendering Managers which include individual(s) in-charge of estimation and tendering for
various projects in the organisations and designations include Tendering Manager, Estimation
Manager, Proposal Manager, Business Development Manager, and like
Risk Managers which include individual(s) in-charge of overall Risk management of one or
more projects in the organisations and designations include Risk Manager, Risk advisor, and
like
HSE Managers which include individual(s) in-charge of overall Health, Safety and Environment
management of one or more projects in the organisations and designations include HSE
Manager, Safety Manager, and like
Finance & Account Managers which include individual(s) in-charge of overall Financial
management and Accounting of one or more projects in the organisations and designations
include Finance Manager, Accounts Manager, and like
Plant Managers which include individual(s) in-charge of overall management of plant &
equipments for one or more projects in the organisations and designations include Plant
Manager, plant Engineer, and like
HR Managers which include individual(s) in-charge of overall Human Resources and personnel
management of one or more projects in the organisations and designations include HR Manager,
Administration Manager, personnel Manager, and like
Buyers which include individual(s) in-charge of overall procurement management of one or
more projects in the organisations and designations include procurement Manager/Engineer, etc

RQ. 7 - Factors influencing CBO for purchase of Insurance Services
The factors that influence CBO for purchase of Insurance policies can be categoried into
Environmental; Organisational; Interpersonal & Individual:
Environmental Factors
This can be further subdivided into Economic (Marketing stimuli) and Non-economic.
Economic (Marketing Stimuli) factors that affect the consumer behaviour of organisations while
purchasing insurance services observed are mainly the 7 Ps of marketing mix for services
which are Product; Price; Place or physical distribution; Promotional activities; People involved
in insurance service; Process of Service delivery; and physical Peripherals.
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Product refers the characteristics of the Service in terms of different insurance policies, risk
coverage provided and related terms and conditions attached. Different insurance policies
purchased and associated risk coverage and other characteristics are described in answer to RQ 2
of this chapter. Most of the Contracts between Contractors and Master developers/Owners ; and
between Consultants and Master developers/Owners specify in detail various insurance
requirements in terms of risk coverage, value of liabilities; period of cover required and related
responsibilities for the Project works
Price refers to the amount of insurance payable for respective insurance policies. The amounts
in terms of percentage of project cost as well as total amount for particular policy are relevant
factors in this regard. It is observed that generally the cost of insurance service for a project is
about 1 % of the Project cost and mostly considered a significant factor in most organisations.
Place or Physical distribution refers to the office locations and its accessibilities to the
consumers. Efforts on this aspects lead to build reputation and perceived image of the service
quality.
Promotional activities refer to the marketing efforts, general advertising and publicity about the
insurance provider and their service offerings. Efforts on this aspects lead to build reputation
and perceived image of the service quality.
People involved in the service delivery; Process of service delivery and physical Peripherals
collectively contribute for determining quality of Insurance service and lead to reinforcing the
perception of the reputation and public image about the service providers strengths.
Effective coverage for required insurance coverage and perception of good reputation and better
quality of service are found to be very important factors besides price of the insurance services
Non-economic environmental factors refer into changes and developments in technological,
political and regulatory system, legal, competitive and culture and social customs prevailing in
the local market. It is observed that that is high concern for public safety and environment
protection. This calls for obtaining Contractors All Risk, Plant & Equipment insurances and
staff medical policies. Also, the legal system is highly credible and one of the best effectively
regulated legal system in the world. Legislations require providing effective protection for
workers which have provided for mandatory procuring Workmen Compensation, motor vehicles
and Professional indemnity policies. Also, it is observed that there is preference for local service
provider with high reputation and sound financial capacities.
Organisational Factors:
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Each buying organisation has its own objectives, policies, procedures, structure and systems
regarding procurement of any services. Organisational policies towards risk management;
health, safety and environment (HSE); Tendency for legal compliance, Centralised
procurements, long-term contracts also influence the consumer behaviour. It is observed that
due to general high concern for public safety and environment and strict legal rules, most
organisations have policies & procedures for centralised procurement for insurance services.
Interpersonal Factors:
The buying centre usually includes many participants who influence each other. The level of
authority within the organisation the participant enjoys, his status compared to other
participants, empathy & persuasiveness of the individuals are some of the group dynamics that
play a role in the buying decisions. As noted above, there is general high concern for public
safety and environment and strict legal rules, most organisations have policies & procedures for
centralised procurement for insurance services; which exert high pressure on the persons
responsible for legal compliance and HSE.
Individual Factors:
Each participant in the organisational buyingdecision process brings in personal motives,
perceptions and preferences. These individual factors are affected by personal characteristics
such as age, income, education, professional identification, personality and attitude towards risk.
About 80 % of the population is expatriates from different nationalities and there is high
tendency for legal compliance and reducing risk to minimum level as possible.

RQ. 8 - Brand Preference perceived by the Consumers

On side line of the study, author thought it appropriate to record any brand preference. It is
observed that there is general tendency for local brand followed by regional brands. It is
observed that Consumers have preference for ADNIC, Arab Orient Insurance, Dubai Insurance
and Oman Insurance in order of preference. This is shown in Figure 5.2
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ADNIC
Arab Orient
Dubai Insurance
Oman Insurance
ARIG
Emirates Insurance
Arab Islamic
ADNIC
Arab Orient
Dubai Insurance
Oman Insurance
ARIG
Arab Islamic
Emirates Insurance

Figure 5.2 Relative Market leadership perceived by Consumers - (Local Insurance Providers)

Also, among the international brand, HSBC enjoy brand preference. This is shown in Figure 5.3.
AIG
Allianz
HSBC
AIG
Allianz
HSBC

Figure 5.3 Relative Market leadership perceived by Consumers - (International Alliances)

Though there is some sort of brand preference, the author not attempted to look for any
reasoning behind such preference.

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RQ. 9 - General Level of Consumer Satisfaction for current Insurance
Service provider

While discussing with various organisations, it is observed that there is high level of repeat
purchase from the current insurance provider. Apparently, this shows high level of consumer
satisfaction, but in realism, this is not the case. This is due to little brand difference and high
cost of changing the insurance provider. Also, the total cost of insurance is about 1 % of the
total revenue. Generally, the satisfaction level is considered to be average.

RQ. 10 - Expectations of Consumers for preferred brand of Insurance
Policies & Insurance Service Provider
Many consumers of the insurance policies indicated that generally the insurance policies
available are short of their expectations. The wordings for risk coverage are sometimes not fully
matching with required by the Client. Also, when Master developer and Owner group arrange
for umbrella cover for the overall development covering many contractors and consultants, they
loose bargaining power with the insurance provider. In such cases, the Contractors and
Consulting offices expect that the Master Developer and Owner group arrange for all project
specific Insurances of entire Project development and avoid duplication of coverage which help
cost saving of the project to some extent. This apply to Project All Risk Policies for
Construction and latent defects (which is referred in UAE as Decennial Liability as per recent
amendment of 2006 made in UAE Civil Code)
Further, it is expressed by many organisations for having better pre-sale services and support of
Insurance provider to understand project risks and offer solutions for overall risk management
for the organisation as well as projects which help minimise project delays and cost overrun.
Also, many consumers expressed requirements for simplified procedures for proposals and
claims settlement by the Insurance service provider.

With the above, the author believes that consumer behaviour in Insurance sector of Construction
Sector in UAE has been described. However, there are some areas that need to be studied further
as mentioned in last chapter while discussing areas for further research.
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Chapter 6 - Analysis and Findings
In this chapter the empirical data presented in previous chapter will be analysed. Similarities
and differences between theory and empiric will be brought up and discussed.

6.1 Focus area of study & Analysis
In this study the main focus areas on studying & understanding remain the following:
Buying Process The Process, Choice Criteria & Buyclasses;
Buying Centre - Dimensions and Roles; and
Factors influencing consumer behaviour.
Other issues like general profile of consumers, various Insurance policies procured provide
general descriptions to appreciate main issues relating to focus areas. Whereas, the brand
preferences, Consumer satisfaction level & consumer expectations from the insurance services
are recorded on the side line the study as the author thought it fit to record them in this report.

6.2 Buying Process Buy Process, Choice Criteria & Buyclasses
Buying Process observed in the construction sector in UAE is described in Chapter 5 of this
study in Table 5.2 and 5.3. The author observed the buying process prevailing can be described
in 12 distinct stages as listed in these tables. The assessment done at two main steps of
contracting one at the time of Tender bidding and the other when contract is awarded. Thus,
there is some deviation in the buying process as generally stated in different models of
organisational buying behaviour. This is mainly due to the business process in the Industry.
Also, it may be worth noting that the buying process is generally found to follow the sequential
process. However, the time consumed in various may vary according to buyclass.
Among various Choice Criteria adopted by most participants of the Construction sector,
Reputation of the Insurance provider is found to be at the top in the list of choice criteria. This is
something different than generally found at top in the list of choice criteria viz. Price & Quality.
Due to limited number of Insurance provider in the market and relatively lesser brand
difference, the number of offers considered remain very low and more than 4 offers are
considered in few occasions.
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Regarding Buyclasses, There is new task situation arise when development of new project is
being considered by the Master Developers and Owner Group. Such situation also arises when
the organisation is new entrant in the construction industry. Most of the buying situations are
similar to those classified as Modified Re-buy. However, the level of intensity of this
classification varies. Straight Re-buy situation is rare. This may be due to the reason of
complexity of the insurance requirements as a tool for Risk Management for Construction
Projects.

6.3 Buying Centre Dimensions and Roles
Buying centre can be analysed in two ways Dimensions and Roles played by various process
participants. This is summarised below.
Dimensions:
In this study, the various dimensions can be summarised as under:
Vertical involvement The buyclass is mostly modified re-buy and amount of insurance
premiums are generally high there is tendency of higher vertical involvement.
Lateral involvement Due to relatively complex process of risk management involving
organisation wide implications, there is tendency for higher lateral involvement from various
departments.
Extensivity Since the complex process of Risk management requiring specialist knowledge,
there is tendency for less number of individual partipate in the process.
Connectedness Due to less number of individual participants in the buying process and mostly
centrally located, there is high level of connectedness among the process participants.
Centrality Due to complex process and high amount involved for procuring insurance polices,
there is high tendency of centrality.
The above observations suggests matching of reality with the concept as suggested by Johnston
& Bonoma, 1981
Roles:
The author observed distinct roles in the Buying Centre which are described as under:
Owners which include group of individual(s) that providing capital and hold ownership of the
organisation and designations include Owner, Chairman, Partner, Shareholders, etc.
Top Management Executive which include individual(s) in-charge of organisation or atleast
project divisions and designations include President, Managing Director, General Manager, etc
-----------------------------------------------------------------------------------------------------------------------------------------
Project Managers which include individual(s) in-charge of project operations generally single
project and designations include project Manager, Construction Manager, Project Engineer,
Resident Engineer, Site Agent and like
Contracts Managers which include individual(s) in-charge of overall contracts management of
one or more projects in the organisations and designations include Contracts Manager,
Commercial Manager, Contracts Engineer, Quantity Surveyors, and like
Tendering Managers which include individual(s) in-charge of estimation and tendering for
various projects in the organisations and designations include Tendering Manager, Estimation
Manager, Proposal Manager, Business Development Manager, and like
Risk Managers which include individual(s) in-charge of overall Risk management of one or
more projects in the organisations and designations include Risk Manager, Risk advisor, and
like
HSE Managers which include individual(s) in-charge of overall Health, Safety and Environment
management of one or more projects in the organisations and designations include HSE
Manager, Safety Manager, and like
Finance & Account Managers which include individual(s) in-charge of overall Financial
management and Accounting of one or more projects in the organisations and designations
include Finance Manager, Accounts Manager, and like
Plant Managers which include individual(s) in-charge of overall management of plant &
equipments for one or more projects in the organisations and designations include Plant
Manager, plant Engineer, and like
HR Managers which include individual(s) in-charge of overall Human Resources and personnel
management of one or more projects in the organisations and designations include HR Manager,
Administration Manager, personnel Manager, and like
Buyers which include individual(s) in-charge of overall procurement management of one or
more projects in the organisations and designations include procurement Manager/Engineer, etc
Thus, there are some specific roles like contract management which are unique for construction
sector and are somewhat different than those suggested by various researchers who provided
general role descriptions.

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6.4 Factors Affecting Consumer Behaviour
Various factors affecting consumer behaviour are listed in Chapter 5 of this study. Study of
these factors suggests resemblance to that categoried by Kotler et al, 1994. However, the
intensity of various factors may not be same as described. It is observed that high requirements
of legal compliance and higher concern for safety and environment are prominent factors that
drive for procuring various insurance policies.

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Chapter 7 - Conclusions, and Recommendations
Based upon analysis and findings, this final chapter will include conclusions of the studied
buying characteristics in consumer behaviour in insurance services related to construction
sector in UAE. It will also consist of recommendations for marketers in this industry as well as
for further research. For marketers of Insurance services facing these consumers of
Construction sector in UAE, it is very important to be aware of their buying process, buying
centre (and the roles that might arise here) and choice criteria mostly used by consumers. The
awareness and understanding of this can efficiently simplify the marketing process and facilitate
the product presentations and better meet the consumers needs and values.

7.1 Conclusion of the Study
This study has provided an opportunity to study and understand the Consumer Behaviour in
Insurance services relating to Contraction Sector of UAE. The author observed similarities with
models suggested by prominent researchers in the field of organisational consumer behaviour
studies. Also, where differences observed between the theory and actual practice are highlighted
wherever possible. The author suggested buying process comprising 12 distinct stages to
appropriately reflect the prevailing situation in construction sector. Further, there are typical
roles of participants are described that are unique to Construction sector. There are various area
of study which could not be undertaken due to constraints of time, but are suggested later in this
chapter in section for areas for further studies.

7.2 Recommendations for Marketer of Insurance Services
The unique characteristics of construction sector especially high concern for health, Safety and
environment; and tendency for centralised procurement, may help the marketer of Insurance
service provider to tailor their marketing strategies to address these concerns.
Further, though the premium for insurance policies as a percentage of project cost is low, the
amount involved in Insurance is significantly higher and hence, there is high level of vertical &
lateral involvement.
Also, it is observed that there is high expectation of consumers to provide better pre-sale and
technical services at least to support in risk management tool, the marketer need to provide
higher level of technical services both in pre-sale & after-sale services.
-----------------------------------------------------------------------------------------------------------------------------------------
Last, but not the least, the main purpose of the insurance policies are procured by the
Construction sector organisations is to use it as tool for Risk Management of Various Project
they are involved in. This pose challenges for marketer to address the real need of risk
management instead of considering simply selling simple services.

7.3 Suggestions for Areas for Further Research & Studies

In this study the author has attempted to understand the Consumer behaviour of various
organisations operating in Construction sector of UAE relating to Insurance Services. Though
this study provides valuable insights to the prospective readers, the author suggests following
areas for further research & studies:
Since, the Insurance policies are procured as a tool for Risk Management for complex
process of Construction, the research to relationship of Insurance Policies and Risk
Management for Construction Projects would be very useful.
This study is based on current situations only like a snapshot (occurring at one point is time),
further studies can be made for understanding changes of buying behaviour longer period of
time. Such studies may help to explore how such changing pattern over time may affect the
buying decision-making process.
Also, this study is made at the time when overall apprehension of global recession and
economic crisis. It would be worth researching to observe effect of changing overall
economic conditions like booming economic conditions, steadily growing economy etc.
Further, this study is based on consumer behaviour prevailing in UAE market and may be
applicable to markets in countries showing similar culture and geographic conditions. It
would be worth research in comparative studies covering other parts of the globe viz.
Developed countries like US, UK, etc; Emerging economics like China, India, etc; and
Underdeveloped economies.
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Internet Sources:
1. www.ameinfo.com
2. www.uaeinteract.com
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4. www.arabianbusiness.com
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