Customer Purchasing Behavior/the Buying

Process

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)

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?

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?

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?

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?

a) Reputation, respect of the school

b) Use of progressive technology and career opportunities

c) Diversity of experiences and choices for majors

d) Extent to which the school seems to provide a fun, welcoming, supportive environment

e) Extent to which the school offers challenging courses

Buyer Decisions Salesperson 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)

Types of Buyers and Purchaser

Aspect Organizational Buyer End User Buyer

Purpose of purchase Organizational use/benefit or resale (by ‘distributor’)

Personal use/benefit

Buyer Often a group Individual

Purchase factors Product specifications

Technical factors

Rational criteria

Brand reputation

Personal recommendationsEmotional criteria

Decision time Often lengthy Usually quick

Alternative situations 1) First-time

2) Straight rebuy

3) Modified rebuy

1) Habitual, low cost, experiential

2) Variety seeking

3) Complex, high cost

Source: Reece & Manning

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)

Specific Reasons People Buy:

Economic Psychological Sociological Practical (impractical) Rational (irrational) Factual (emotional) Attitudes, opinions, feelings, beliefs

More Reasons Why People Buy To Increase

Sales Profit Satisfaction Confidence Convenience Pleasure Production

To Protect Investment Self Employees Property Money Family

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

Maslow’s Hierarchy of Human Needs & Sales ImplicationsNeed

Physiological

Security

Social

Esteem

Self actualization

+’s Gained

Health, comfort, ease, pleasure

Safety, protection,stability, confidence

Acceptance, popularity,attention, compliments

Pride, prestige, recognitionworthiness, success

Creativity, growth, Accomplishments, potentialContributions, independence

-’s Avoided

Sickness, displeasure,discomfort, inconvenience

Worry, loss, danger, fear

Rejection, dislike, criticism, embarassment

Failure, inadequacy,guilt

Boredom, dependence, unfilled potential,restraints

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.

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

Motivational Selling

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

The Buying Process

1. Problem/need recognition Real or imagined

Customers often unaware there is a better way . . .

2. 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

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

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.

Alpha Computer Multiattribute Evaluation Example

WANT IMPORTANCE WEIGHT

X PERFORMANCE RATING

= BENEFIT POINTS

Reliability 4 5 20

Weight 2 8 16

Size 3 8 24

Speed 7 3 21

Internal Memory 6 3 18

Monitor Display 5 2 10

Keyboard 1 5 5

Service 3 7 21

TOTAL 135

Computer

Brand

Tot. Benefit

Pts.

÷ Cost = Value (Benefit pts.

Per $ Cost)

Alpha 135 1,050 0.13

Beta 150 1,100 0.14

Delta 120 1,150 0.10

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

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

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

Product Adoption/Diffusion Customers vary by how quick they adopt a

new product or new idea Categories

1. Innovators (first 2-3%)2. Early adopters (next 13-14%)*3. Early majority (next 33-34%)4. Late majority (next 33-34%)5. Laggards (last 15-16%)*often opinion leaders (i.e. good farmers, community

leaders, influential, etc.)

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)

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)

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.)

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)