Major Sales

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Carmen Neghina, Alina Oprea, Myriam Suidan - Case study - Marketing and Psychology

Who Influences Decisions?

Who Is in the Buying-Center?

Who Are the Powerful Buyers?

What Do Buyers Want?
Diagnosing Motivation
The Buyers’ Decision-making Process
Possible Outcomes

How Do Buyers Perceive a Company?

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  • Today’s case study refers to the selling process and methods of improving the process by identifying the way buyers make their purchase decisions. It will help answer questions such as … who is the actual buyer? Why isn’t it sometimes enough to have the best product in the market? Who makes the actual decision to purchase a product or a service?
  • In theory, the purchase process is rather simple. People feel a need… which they want to fulfill. For this, they go out searching for pieces of information about product that might fulfill this need. Once we know what our options are, we need to evaluate them, in order to realize which one suits our need best. Once we decide on one alternative, we make the purchase decision. The last step of the buying process is the post-purchase recognition, in which we evaluate our satisfaction with our purchase. Ofcourse, the result of the process is to increase revenue for the company. However, things are not so simple. If they were, most companies would succeed easily at selling their products. The reality is ofcourse very different, as it is difficult to attract customers, and to retain them.
  • Shedding light on consumer behavior can help organizations increase their revenues by increasing the volume of sales. Understanding why and how purchase decisions are made will allow for fewer surprises in the selling process, which is particularly important for significant purchase decisions (jet). Choosing customers that you know will be loyal can also help managers improve their selling results. All in all, we need to understand how customers think, so that we can keep them happy and loyal, making sure that we are the ones they will turn when they will need our products.
  • Most revenues come from a rather small group of buyers, who of course are of greater importance for the organization that the occasional buyer. Failing to ensure that these customers are satisfied with the entire buying process can make a company become bankrupt. Failing to observe the less tangible aspects of selling can make vendors lose sales. Aspects, such as personal aspects, complex buying behaviors, subtle needs that need to be fulfilled, emotions related to the product and the opinions of the buyer are vital for any purchase decision.
  • In order to maximize the chances of making successful sales, it is necessary to know who makes up the buying group, how the parties interact, how roles shift in the group, who has more decision power, and who has less to say in the decision making? What are the priorities of the group, and of the individuals forming the group?
  • Companies are not the ones who make the actual decisions. It is people who do. And, every individual has his or her own personality and decision drivers. To summarize it, a vendor needs to know who the buyers are, what they want, and how they actually make the purchase decision. Effective selling, requires a useful combination of the individual and group dynamics of buying, in order to predict what the buying decision making unit will do.
  • The buying managers who take up different roles in the buying decision make up the buying center. They all have various roles in the decision making process. Defining the general roles people can assume in a decision group, can help us understand the ranking and importance of every role and can facilitate a better selling process. Initiator: recognizes that some problems can be solved or avoided by acquiring a product or service (drivers: technological improvements, reducing costs – owning not leasing) Decider: say yes or no to the purchase; should be a driven person, with influence; different than signers Influencers: have a say in whether a purchase is made and what is bought; broader range for major purchases Purchaser: person actually doing the financial transaction User: persons who will get to use the product Gatekeeper: problem/product experts; select vendor offerings; control information; can be formalized: approved vendor lists
  • Reward power – refers to a manager’s ability to encourage purchases by providing others with monetary, social, political or psychological benefits Coercive power – ability to impose punishment on others Attraction power – a person’s ability to charm or otherwise persuade people to go along with his preferences Expert power – persuading people because of real or perceived expertise in some area; the skills do not need to be real Status power – comes from having a high position in the corporation; “authority”
  • Diagnosing motivation accurately is one of the easiest mgmt tasks to do poorly and one of the most difficult tasks to do well. Although most managers have experience in finding another’s wants, most are not very accurate when they really try to find out what another person wants and will do.
  • Ask the sales officer!!!!!
  • Sales-call planning is not only a matter of minimizing miles traveled or courtesy calls on unimportant prospects but of determining what intelligence is needed about key buyers and what questions are likely to produce that information. Gathering psychological info is more often a matter of listening carefully than of asking clever questions during the sales interview Sales audit should be implemented: evaluate all sales force control forms and call reports and discard any that not have been used by mgmt for planning or control purposes => Effect: it frees the sales force from filling in forms, sales mgmt from gathering forms it doesn’t know what to do with, and data processing reports on one ever requests
  • The buying managers who take up different roles in the buying decision make up the buying center. They all have various roles in the decision making process. Defining the general roles people can assume in a decision group, can help us understand the ranking and importance of every role and can facilitate a better selling process. Initiator: recognizes that some problems can be solved or avoided by acquiring a product or service (drivers: technological improvements, reducing costs – owning not leasing) Decider: say yes or no to the purchase; should be a driven person, with influence; different than signers Influencers: have a say in whether a purchase is made and what is bought; broader range for major purchases Purchaser: person actually doing the financial transaction User: persons who will get to use the product Gatekeeper: problem/product experts; select vendor offerings; control information; can be formalized: approved vendor lists
  • Make productive sales calls a norm, not an oddity: Sales personnel often do not have a good idea of why they are going on most calls, what they hope to find out, and which questions will give them the needed answers The potential psychological or other info that can be used is not always yielded Some customers are too complex Sales personnel should realize that gathering psychological info is more often a matter of listening carefully than of asking clever questions during the sales interview Sales force considers that the mgmt doesn’t want to hear what salespeople know about an account. Although the sales force file voluminous call reports and furnish other data, they simply vanish The company should always stress out that it rewards careful fact gathering, tight analysis and impeccable execution Less acceptable to make psychological estimates of buyers than economic ones Computing numbers without understanding them leads to lost sales
  • Benefits: The idea is that the marketers would move from the outer nest toward the inner using as many nests as necessary The model gives flexibility to marketers in selecting or avoiding the criteria as suited to their business. They proposed the use of the five general segmentation criteria which they arranged in a nester hierarchy: i) Demographics: industry, company size, customer location ii) Operating variables: company technology, product/brand use status, customer capabilities iii) Purchasing approaches: purchasing function, power structure, buyer-seller relationships, purchasing policies, purchasing criteria iv) Situational factors: urgency of order, product application, size of order v) Buyers’ personal characteristics: character, approach Gathering psychological data is a sensitive issue. It is less acceptable to make psychological assumptions than economic ones.
  • Major Sales

    1. 1. Who Really Does the Buying? € Carmen Neghina, Alina Oprea, Myriam Suidan Marketing BUS 202 – 24 October 2007
    2. 2. <ul><li>Marketing and Psychology </li></ul><ul><li>Who Influences Decisions? </li></ul><ul><li>Who Is in the Buying-Center? </li></ul><ul><li>Who Are the Powerful Buyers? </li></ul><ul><li>What Do Buyers Want? </li></ul><ul><ul><ul><ul><li>Diagnosing Motivation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The Buyers’ Decision-making Process </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Possible Outcomes </li></ul></ul></ul></ul><ul><li>How Do Buyers Perceive a Company? </li></ul>€
    3. 4. Needs € Information Search Evaluating Alternatives Purchase Decision Post-Purchase Recognition
    4. 5. Higher percentage of complete sales Fewer surprises in the selling purchase Improving account selection Improving selling results
    5. 6. Personal aspects Complex behavior Subtle needs Emotions Opinions
    6. 8. Who are the important buyers? What do they want? Who and how makes the purchase decision? … Combining individual and group dynamics of buying to predict what the “ decision making unit ” will do …
    7. 9. Social Roles
    8. 10. <ul><li>Powerful  invisible </li></ul><ul><li>Power ≠ organizational rank </li></ul><ul><li>Corporate authority  persuasion </li></ul><ul><li>Exercise status repeatedly </li></ul><ul><li>One dominant power base </li></ul>€
    9. 11. <ul><li>Reward Power </li></ul><ul><li>Coercive Power </li></ul><ul><li>Attraction Power </li></ul><ul><li>Expert Power </li></ul><ul><li>Status Power </li></ul>€ Push through decision Used to push or veto Veto decision
    10. 12. <ul><li>Power & formal authority  other clues about buying power. </li></ul><ul><li>Identify buying center holders  observe communications inside company. </li></ul><ul><li>Express concern  strong clues to identity of powerful buyer. </li></ul><ul><li>High power buyers  one way info centers </li></ul><ul><li>Most powerful buying center  not easily identified </li></ul><ul><li>No correlation between functional area of manager and his power inside company. </li></ul>
    11. 13. <ul><li>Very important!!! </li></ul><ul><li>Basic Rule of motivation: </li></ul><ul><ul><ul><li>All buyers act selfishly or try to be selfish but sometimes miscalculate and don’t serve their own interests </li></ul></ul></ul>What Do They Want? €
    12. 14. <ul><li>Decompose the product/service into various benefits such as … </li></ul><ul><ul><ul><ul><ul><li>Product features </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Price </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Reliability </li></ul></ul></ul></ul></ul>€
    13. 15. <ul><li>2. Segment the potential benefits into various categories </li></ul>Financial Product/ Service Social/ Political Personal Absolute cost savings Pre- and post-sales service Will purchase enhance the buyer’s standing with the buying team or top management? Will purchase increase others’ liking or respect for the buyer? Cheaper than competitors Specific features Will provide operating-cost reductions Space occupied by unit How does purchase fit with buyer’s self-concept? Economics of leasing versus buying Availability
    14. 16. <ul><li>Be unsure that desired product will bring the desired benefit </li></ul>
    15. 17. <ul><li>Method: </li></ul><ul><ul><ul><li>Continuum ranging from negative to positive </li></ul></ul></ul><ul><ul><ul><li>The placement of the company’s products and people on two axes perpendicular to each other </li></ul></ul></ul>
    16. 18. <ul><li>The vendor should try to make the buyer concentrate mainly on the promised benefits </li></ul><ul><li>The vendor should try to increase the buyer’s confidence that promised benefits will be realized </li></ul><ul><li>The vendor should try to change what the buyer wants or which class of benefits he/she responds most strongly </li></ul>
    17. 22. Buying Center
    18. 23. <ul><li>Observe communication: </li></ul><ul><ul><ul><li>The less powerful try to influence the most powerful </li></ul></ul></ul><ul><li>Decision makers are disliked by those with less power </li></ul><ul><li>Receive information from others </li></ul><ul><li>Not necessarily the most talkative </li></ul>
    19. 24. <ul><li>It is very important to consider the guidelines suggested by Bonoma: </li></ul><ul><ul><ul><li>Make productive sales calls a norm, not an oddity </li></ul></ul></ul><ul><ul><ul><li>Listen to the sales force </li></ul></ul></ul><ul><ul><ul><li>Emphasize homework and details </li></ul></ul></ul><ul><li>Consequently, taking the norms into account: </li></ul><ul><ul><ul><li>The sales personnel do not know how to handle the calls </li></ul></ul></ul><ul><ul><ul><li>The potential psychological information is often left out </li></ul></ul></ul><ul><ul><ul><li>Some customers are too complex </li></ul></ul></ul><ul><ul><ul><li>The sales force assumes that the management does not want to hear what they know about an account </li></ul></ul></ul><ul><ul><ul><li>The company rarely stresses out that it rewards careful fact gathering and impeccable execution </li></ul></ul></ul><ul><ul><ul><li>Computing numbers without understanding them leads to lost sales </li></ul></ul></ul>Gathering psychological information is a matter of listening carefully than of asking clever questions !!!!!
    20. 26.

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