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UNDERSTANDING BUYER BEHAVIOR AND WHAT BUYERS ACTUALLY BUY

UNDERSTANDING BUYER BEHAVIOR AND WHAT BUYERS ACTUALLY BUY. NEEDS, MOTIVATION AND PROBLEM SOLVING. Desired State Actual State. Gap = Need / Want. Solutions. Need / Want. Solutions. Activation / Drive (MOTIVATION). Goal – Directed Behavior (PROBLEM SOLVING). Solutions.

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UNDERSTANDING BUYER BEHAVIOR AND WHAT BUYERS ACTUALLY BUY

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  1. UNDERSTANDING BUYER BEHAVIOR AND WHAT BUYERS ACTUALLY BUY

  2. NEEDS, MOTIVATION AND PROBLEM SOLVING Desired State Actual State Gap = Need / Want Solutions Need / Want Solutions Activation / Drive (MOTIVATION) Goal – Directed Behavior (PROBLEMSOLVING) Solutions Our Job: Understand and Even Influence This Process!

  3. THE CRITICAL ROLE OF ACTIVATED BUYING MOTIVES • MOTIVATION • A need activated state within a buyer that leads to some specific goal directed behavior in the form of a purchase decision • NEED ACTIVATED STATE • The discrepancy between the actual state of being and the desired state of being • GOAL DIRECTED BEHAVIOR • The search for and acquisition of solution that brings the new actual state into line with the desired state

  4. FIVE BASIC TYPES OF NEEDS 1. Situational Needs. • Functional Needs • Social Needs • Psychological Needs • Knowledge Needs

  5. FIVE TYPES OF NEEDS • Situational Needs • Specific needs that are contingent on, and often a result of, conditions related to the specific environment, time, and place • Example • Emergency car repair while traveling out-of-town; insurance rider when an insured gets married or a child becomes a licensed driver.

  6. FIVE TYPES OF NEEDS • Functional Needs • The need for a specific core task or function to be performed - the functional purpose of a specific product or service. The need for a sales offering to do what it is supposed to do • Example • Switches open and close to control some flow; family income benefit riders guarantee an insured’s income will continue for the family in the event of the insured’s death.

  7. FIVE TYPES OF NEEDS • Social Needs • The need for acceptance from and association with others - a desire to belong to some reference group. For example, a product or service might be associated with some specific and desired affinity group or segment • Example • Polo clothing is associated with upper-income, successful people; membership in professional associations (e.g., AMA) associates the members with high professional standards and develops a sense of community.

  8. FIVE TYPES OF NEEDS • Psychological Needs • The desire for feelings of assurance and risk reduction, as well as positive emotions and feelings such as success, joy, excitement, and stimulation. • Example • A Mont Blanc pen generates a feeling of success; personal insurance addresses important psychological needs: assurance, risk reduction, caring for loved ones.

  9. FIVE TYPES OF NEEDS • Knowledge Needs • The desire for personal development and need for information and knowledge to increase thought and understanding as to how and why things happen. • Example • Product brochures, along with training and user support group meetings provide current information on products and topics of interest; knowledge about claims regulations helps an insured understand the claims process.

  10. COMPARISON OF PURCHASE DECISION PROCESS & CONSULTATIVE SELLING • INITIATING RELATIONSHIP • Gathering & studying pre-call • information • Approaching & initiating contact • Assessing situation & discovering • needs 1. Recognition of problem, need, or opportunity 2. Determine characteristics of potential solutions 3. Specification & description of potential solution 4. Search for & qualification of potential suppliers • DEVELOPING RELATIONSHIP • Select presentation format • Explain features • Confirm benefits • Handle objections • Earn and gain buyer commitment 5. Acquisition & analysis of proposals 6. Evaluation of proposals & selection of suppliers • ENHANCING RELATIONSHIP • Follow-up & assess satisfaction • Take action to assure satisfaction • Encourage critical encounters • Expand collaborative involvement • Add-value & enhance mutual opp. 7. Selection of an order routine 8. Performance feedback & evaluation

  11. DIFFERENT TYPES OF PROBLEMS:BUYING SITUATION IMPACTS BUYER & SELLER PROCESSES TYPES OF SELLING SITUATIONS Routine Extended Re-Buy Modified Rebuy New Task • DECISION TYPE • Straight Rebuy Modified Rebuy New Task • Newness of Problem Low Medium High • Information Requirements Minimal Moderate Maximum • Information Search Minimal Limited Extensive • Consideration of Alternatives None Limited Important • Multiple Buying Influences Very small Moderate Large • Financial Risks Low Moderate High

  12. THE BUYING CENTER CONCEPT:OTHER SITUATIONAL FACTORS INFLUENCING SALES PERFORMANCE • BUYERS ARE DRIVEN BY MULTIPLE GOALS • Personal Goals • Job Security • Feeling of Power • Affiliation & Respect • Personal Satisfaction • Organizational Goals • Meets Specifications and does the Job • Cost within Budget • Reliable Performance • Dependable Delivery • MULTIPLE BUYERS/INFLUENCERS ARE OFTEN INVOLVED – THE BUYING “CENTER” or TEAM

  13. THE BUYING CENTER User Initiator Gatekeeper Decider Purchaser Influencer Roles of the Business Buying Center

  14. REMEMBER: CUSTOMERS PERCEIVE PRODUCTS AS BEING MULTI-DIMENSIONAL EXPECTED PRODUCT THE “MUST-HAVE” BENEFITS THE GENERIC PRODUCT FEATURES POTENTIAL PRODUCT UNARTICULATED POINTS OF UNIQUENESS THE AUGMENTED PRODUCT THE “DELIGHTER” BENEFITS

  15. REMEMBER: CUSTOMERS PERCEIVE PRODUCTS AS BEING MULTI-DIMENSIONAL FUNCTIONAL ATTRIBUTES: PERFORMANCE FEATURES RELIABILITY CONFORMANCE DURABILITY SERVICEABILITY AESTHETICS 37% VALUE BASED SATISFACTION CUSTOMER LOYALTY (RETENTION) PSYCHOLOGICAL ATTRIBUTES: PROFICIENCY and COMPETENCE COURTESY and EMPATHY OPENNESS and COMMUNICATION ACCESSIBILITY ADAPTABILITY RELIABILITY and TRUSTWORTHINESS REPUTATION RECOVERY 63% ORGANIZATIONAL PERFORMANCE (GROWTH)

  16. MULTI-ATTRIBUTE PROBLEM SOLVING:BUYERS USE A MULTI-ATTRIBUTE EVALUATION MODEL Cutco Henckel Global Knife materialHigh carbon Carbon Stainless Steel Stain resistant Handle material Thermo-resin Polycarbonate Stainless Steel Warranty/Guarantee Forever 1-year 1-year Design Ergonomic Traditional Fashion Knife construction Full tang Partial tang Full tang # Rivets Triple Two None

  17. MULTI-ATTRIBUTE PROBLEM SOLVING:QUANTIFYING PERFORMANCE ON CRITICAL ATTRIBUTES Cutco Henckel Global Knife material10 9 8 Handle material 9 8 9 Warranty/Guarantee 10 7 7 Design 9 8 10 Knife construction 10 8 10 # Rivets 10 8 NA

  18. MULTI-ATTRIBUTE PROBLEM SOLVING:BRINGING IN THE IMPORTANCE OF DIFFERENT ATTRIBUTES Cutco Henckels Global P I PxI P I PxI P I PxI Overall Evaluation Score

  19. MULTI-ATTRIBUTE PROBLEM SOLVING:IMPLICATIONS FOR THE SALESPERSON NON-MANIPULATIVE PERSUASION THROUGH EDUCATING AND INFORMING Modify the Market Offering Being Presented. • Alter the Buyer’s Beliefs about the Offering’s Performance. • Alter the Buyer’s Beliefs about the Competitor’s Offering. • Alter the Importance Weights. • Call Attention to Neglected Attributes

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