Customer Purchasing Behavior/the Buying Process

1. Customer Purchasing Behavior/the Buying Process

2. Major Faux Pas Results in Lost Sale • Selling overseas (or to foreigners visiting the U.S.) demands a high degree of cultural sensitivity. Steve Waterhouse, affiliated with Waterhouse Group of Scarborough, Maine, learned this lesson the hard way. He had been courting a Tokyo-based meeting planning company for six months. Finally, he arranged a meeting with the company’s representative who was attending a national convention in the U.S. What breach of etiquette by Mr. Waterhouse resulted in the loss of a $100,000 sale? Source: Selling Today, by Manning and Reece (10th ed., p. 40)

3. I’m Looking for a New Computer • John is a salesperson for Micro Solutions, a retail business, that sells personal computers and related products and services. John is about to meet and greet Alex who “is in the market” for a new computer. What should John know about Alex and how he is likely to make a computer purchase decision?

4. Your Price Is Too High! • Martha is a sales rep for Central Hibreds. The seed varieties she sells typically sell at prices that are in the upper quartile for the market. What can Martha do to deal with the “high price” objection from a customer?

5. What You ‘Gonna’ Sell? • Susie calls on buyers for ‘distributors’ who resell her company’s products to their customers who are the end users. Should she emphasize end user benefits to her buyers?

6. Trivia Q • Recent surveys of prospective ISU students reveal which of the following is reported as the most important factor to them in selecting a college? • Reputation, respect of the school • Use of progressive technology and career opportunities • Diversity of experiences and choices for majors • Extent to which the school seems to provide a fun, welcoming, supportive environment • Extent to which the school offers challenging courses

7. Buyer DecisionsSalesperson Implications Why buy? How to present? What to buy? What to offer? How to buy? When to sell? (=> often difficult) (=> need to be a buying facilitator)

8. Types of Buyers and Purchaser Source: Reece & Manning

9. Every customer is a highly unique and complex human, yet there are many things customers have in common when it comes to buying: • Buy from people they like • Buy from people they trust • Want to feel secure and important • Naturally suspicious of salespeople • Want proper ‘chemistry’ or human relationship • Respect and acceptance must be earned • Propensity for loyalty if treated well • Expect technical competence and professionalism from salesperson • Many factors involved in their buying decision, any one of which can become the deciding factor • Buy to satisfy a need (for a reason)

10. Specific Reasons People Buy: • Economic • Psychological • Sociological • Practical (impractical) • Rational (irrational) • Factual (emotional) • Attitudes, opinions, feelings, beliefs

11. More Reasons Why People Buy • To Make • Money • Satisfied customers • Good impressions • To Improve • Customer relations • Employee relations • Image • Status • Earnings • Performance • To Reduce • Risk • Investment • Expenses • Competition • Worry • Trouble • To Save • Time • Money • Energy • Space • To Increase • Sales • Profit • Satisfaction • Confidence • Convenience • Pleasure • Production • To Protect • Investment • Self • Employees • Property • Money • Family

12. Maslow’s Hierarchy of Human Needs & Sales Implications Need Physiological Security Social Esteem Self actualization +’s Gained Health, comfort, ease, pleasure Safety, protection, stability, confidence Acceptance, popularity, attention, compliments Pride, prestige, recognition worthiness, success Creativity, growth, Accomplishments, potential Contributions, independence -’s Avoided Sickness, displeasure, discomfort, inconvenience Worry, loss, danger, fear Rejection, dislike, criticism, embarassment Failure, inadequacy, guilt Boredom, dependence, unfilled potential, restraints

13. Some Non Traditional Buying Motives • Conspicuous consumption or status effects: • Lavish spending for the purpose of displaying wealth or social status; preference for buying increases with price. • Snob effect: • Desire to buy something nobody else has; preference for buying increases with rarity or scarcity. • Bandwagon effect: • Desire to buy something everybody else is buying; preference for buying increases with perceived popularity. Note: These effects are anomalies within D theory that normally assumes individual preferences are independent of price or other consumers’ decisions.

14. Sell “Value” • Buyers want product solutions that add value which means a salesperson needs to: • Sell benefits (and solutions) • Be product experts • Be able to develop product “packages” tailored to individual customer needs

15. Motivational Selling = Discovering what the dominant buying urge is (often hidden) and tailoring the sales presentation to address that drive.

16. The Buying Process • Problem/need recognition  Real or imagined  Customers often unaware there is a better way . . . • Information search  Extent depends on  Sources - Cost and risk - media (print, broadcast) - Frequency of purchase - public agencies - Style of customer - friends/neighbors - Level of trust w/salesperson - salespeople

17. The Buying Process 3. Evaluate alternatives  like info search, extent varies  salesperson’s role - clarify info - correct misconceptions - explain nuances, details, benefits 4. Purchase & evaluation

18. Multiattribute Evaluation Model of Alternatives • A buyer views a product as a collection of characteristics, attributes or benefits. A buyer’s overall assessment of a product’s performance rating x the buyer’s importance rating for each benefit associated with the product.

19. Alpha Computer Multiattribute Evaluation Example

21. Multiattribute Implications for Salespeople • Brands the customer is considering • Attributes or benefits being considered as well as their relative importance to the customer • The customer’s performance rating of each product on each dimension

22. Alternatives for influencing a customer’s perceived value of your product: •  performance rating of your product •  performance rating of competitor’s product •  or  importance rating • Add an attribute previously not considered •  price

23. Purchase & Post-Purchase Observations • Let the buyer make the uncoerced purchase decision • The purchase decision is rational to the buyer (i.e. expect to gain more than they give up) • Post purchase dissonance often sets in: • Doubts/wonders: • Right thing to do? • Smart buy? • Need justification, reinforcement (e.g. ads, others) • Post purchase dissonance often caused by: • Misunderstanding • Miscommunication • Misuse • Unrealistic expectations • Positive post purchase evaluation • Enhanced by salesperson’s presence • Is the 1st step in the next sale

24. Product Adoption/Diffusion • Customers vary by how quick they adopt a new product or new idea • Categories • Innovators (first 2-3%) • Early adopters (next 13-14%)* • Early majority (next 33-34%) • Late majority (next 33-34%) • Laggards (last 15-16%) *often opinion leaders (i.e. good farmers, community leaders, influential, etc.)

25. Sales Quotes: Buying Process/Purchasing Behavior • When dealing with people, remember you are NOT dealing with creatures of logic, but with creatures of emotion. (Dale Carnegie) • People don’t buy services, products or ideas. They buy because they have imagined how using them will make them FEEL. (The One Minute Sales Person) • Sell the sizzle, not the steak. (Elmer Wheeler)

26. Sales Quotes: Buying Process/Purchasing Behavior • A chain is only as strong as its weakest link. Likewise, a salesperson’s performance will only be as strong as his or her weakest step in the selling process. • It takes confidence to make a buying decision. But how can a prospect have confidence in you, your product, and your company unless you first have that confidence? (Sales Upbeat, Feb. 2, 1995)

27. Sales Quotes: Buying Process/Purchasing Behavior • Selling is information. Selling is finding out what the customer needs. (Wililam Devaney, Pres., Stanley-Vidmar) • One job of a salesperson is to help people buy. • Most people readily agree that they love to buy things, but hate to feel ‘sold’. (Mike Bosworth, Solution Selling, Inc.)

28. Sales Quotes: Buying Process/Purchasing Behavior • We would like the business card of sellers we train to read ‘Buying Facilitator’. (Mike Bosworth, Solution Selling, Inc.) • I am the world’s worst salesperson; therefore, I must make it easy for people to buy. (F.W. Woolworth) • “We don’t SELL you tires. We help you BUY tires.” (In-store ad, Tires Plus)