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  1. 1. The Psychology of Selling – Chapter 4 Introduction to Sales Management
  2. 2. <ul><li>Why People Buy? </li></ul><ul><li>- Economic Needs </li></ul><ul><li>Economic Needs is about making </li></ul><ul><li>the best use of consumer’s time and </li></ul><ul><li>money, as the consumer best thinks so. </li></ul><ul><li>Types of Consumers </li></ul><ul><li>- Consumers who look for lower prices. </li></ul><ul><li>- Consumers who pay extra for the convenience. </li></ul><ul><li>- Consumers who want best value for their money </li></ul><ul><li>The Economic value that a purchase offers a customer is an important factor in many purchasing decisions. </li></ul>The Psychological Influences on Consumer Buying
  3. 3. Black Box Approach Diagram –Stimulus (perangsang) – response model of buyer behavior A stimulus (sales presentation) triggers the buyers hidden mental process to respond to the stimuli, thus causing the buyer to make a purchase (response )
  4. 4. Consumer Buying Behavior <ul><li>A Model of Buyer Behavior </li></ul>
  5. 5. Consumer Buying Behavior <ul><li>Psychological Influences (1) </li></ul><ul><li>Everybody is motivated by needs and wants. </li></ul><ul><li>Needs are the basic factors that encourage a person to do something (action). </li></ul><ul><li>Wants are “ needs” that are learned during a person life, that is specific to a person’s needs. </li></ul><ul><li>E.g. A person wants to eat plain roti canai whereas other may like theirs with egg, sardine, banana, sausage etc. </li></ul><ul><li>When a need is not satisfied, it may lead to a drive. </li></ul><ul><li>A drive is a strong stimulus (something that excites) that encourages action to fulfill or reduce the need. Drives are created internally. They are reason behind certain human behavior. Marketing through product helps to satisfy a need. </li></ul>
  6. 6. Consumer Buying Behavior Fear Sadness Discomfort Anxiety Pain Stress Emotional loss Illness Harm Mocking Depression External pressure Freedom from… Acceptance Achievement Acquisition Affection Affiliation Appreciation Beauty Friendship Comfort Leisure Personal Space Uniqueness Esteem Fame Happiness Identification Knowledge Prestige Pleasure Recognition Respect Revenge Satisfaction Social Status Sympathy Variety Fun Desire for Aggression Curiosity responsible dominance Group protection Imitation Independence Love Nurturing order Personal fulfillment Playing Relaxing Power Pride Freedom Self Identity Tenderness Psychological Hunger Thirst Activity Sleep Passion Excretion Self Preservation Hot/cool Physiological Examples Types of Needs
  7. 7. The Types of Needs <ul><li>Physiological Needs – Concerned with biological needs – food, drink, rest and bodily pleasure. </li></ul><ul><li>Safety Needs – Concerned with protection and physical well being – involving health, food, medicine and physical exercise. </li></ul><ul><li>Social Needs – Concerned with love, friendship, status and esteem – things that involve a person interaction with others. </li></ul><ul><li>Personal needs – concerned with personal satisfaction. E.g. Self esteem, accomplishment, fun, freedom and relaxation. </li></ul>
  8. 8. Hierarchy of Personal Needs <ul><li>Maslow’s hierarchy of needs </li></ul>Maslow's hierarchy of needs is often shown as a pyramid consisting of five levels: the four lower levels are grouped together as deficiency needs associated with physiological needs, while the top level is termed growth needs associated with psychological needs. While deficiency (kekurangan) needs must be met, growth needs are continually shaping behavior. The basic concept is that the higher needs in this hierarchy only come into focus once all the needs that are lower down in the pyramid are mainly or entirely satisfied. Growth forces create upward movement in the hierarchy, whereas regressive forces push proponent needs further down the hierarchy. However, one of the main drawbacks in the theory is that level 3 can be reached without completing level 2, as you can have numerous friends but no security.
  9. 9. Awareness of Needs <ul><li>Awareness of Needs </li></ul><ul><li>The buying decision of the customers can be grouped into three levels : </li></ul><ul><li>Conscious Need Level </li></ul><ul><li>- Buyers are fully aware of their needs </li></ul><ul><li>- Easy to sell to these consumers. </li></ul><ul><li>- These know what they want. </li></ul><ul><li>Preconscious Need Level </li></ul><ul><li>- Buyers not aware of all their needs. </li></ul><ul><li>- Not knowing exactly what product to </li></ul><ul><li>want, but still insisting on having </li></ul><ul><li>that product. </li></ul><ul><li>- The real need of the buyer not easily </li></ul><ul><li>identifiable. </li></ul><ul><li>Unconscious Need Level </li></ul><ul><li>This is an attempt to buy a particular product not realizing its importance or value to the customer. </li></ul><ul><li>The instinct to buy may be lurking there in the mind for long time. </li></ul><ul><li>Salesperson has to determine what influencing factor in buyer’s purchasing decision. </li></ul>
  10. 10. Buyer Decision making approaches <ul><li>The most useful tool used by successful personal selling is benefit selling. </li></ul><ul><li>What is benefit selling? </li></ul><ul><li>- Where a salesperson is able to match a product’s </li></ul><ul><li>benefit to the customers, using the product’s features </li></ul><ul><li>and advantages as support. </li></ul><ul><li>These technique is also called FAB ( Features, Advantage, </li></ul><ul><li>and Benefit ) selling technique. FAB will be explained in </li></ul><ul><li>more detail in the next slide. </li></ul>
  11. 11. FAB Selling Technique (1) <ul><li>FAB (Features, Advantage and Benefit) selling technique includes the following terms: </li></ul><ul><li>- Feature: Any physical characteristics of </li></ul><ul><li>of a product. </li></ul><ul><li>- Advantages: The performance attributes </li></ul><ul><li>of a product that describes how it can be used or will </li></ul><ul><li>help the buyer . </li></ul><ul><li>- Benefit – A favorable result the buyer receives from the </li></ul><ul><li>product particular advantage that has the ability to satisfy the buyer’s need. </li></ul>
  12. 12. FAB Selling Technique (2) <ul><li>Features of the Product: </li></ul><ul><li>- All products have physical characteristics </li></ul><ul><li>as listed below: </li></ul>N.B: When making a presentation always highlight or point out the features and benefits and how the product can benefit the customer. Technology Quantity Service Terms Flavour Delivery Packaging Quality Ingredients Taste Shape Color Price Size
  13. 13. FAB Selling Technique (3) <ul><li>Advantages of a Product </li></ul><ul><li>It is always better for the salesperson to open discussion about the advantages that product’s physical characteristics provide. </li></ul><ul><li>E.g. Dove is best selling body wash in the market, it is enriched with milk to make your skin smooth and silky . </li></ul>
  14. 14. FAB Selling Technique (4) <ul><li>Benefits of the Product </li></ul><ul><ul><li>People are interested in what the product can do for them. </li></ul></ul><ul><ul><li>Presentation must give importance on how the prospect can benefit from the purchase of the product. </li></ul></ul><ul><ul><li>People are buying benefits, not features or advantages . </li></ul></ul><ul><ul><li>Benefits can practical and psychological (Non-tangible) </li></ul></ul>
  15. 15. Matching The buyer’s needs to the product’s benefit
  16. 16. Why Salesperson should emphasize on benefits? <ul><li>By emphasizing on benefits customer can better understand if your product can satisfy their needs </li></ul><ul><li>Stressing benefits in your presentation, rather than features or advantages will bring success. </li></ul>
  17. 17. How to determine important buying needs? <ul><li>Firstly when you meet a customer is to know the difference between important needs and the lesser important needs. </li></ul><ul><li>Secondly determine buyer’s important needs and focus on product benefits that will satisfy buyer’s needs. </li></ul><ul><li>Don’t stress unimportant needs in sales presentation. </li></ul><ul><li>Learn the sales concept and determine the buyers’ important needs </li></ul>
  18. 18. Common psychological needs Prevention of loss Self preservation Comfort or luxury Desire to succeed Pleasure Love for family Security Desire for gain Vanity Fear
  19. 19. Method to determine the most important needs of your prospect/customer <ul><li>L-O-C-A-T-E </li></ul>Show empathy and look from the customer’s point of view. Empathize (Stress) Ask others about the prospect’s needs. Talk to others Questions often bring out needs that the prospect would not reveal or don’t know. Ask questions A skillful salesperson may talk to others. listen to a prospect, probe with questions, make careful observation and stress product benefits. Combine Examine the prospect, study their background, understand their buying habits Observe Prospect may hint and say “ I wish I had a television like this one.” Listen
  20. 20. Using Trial Close <ul><li>The Trial Close is an important part of the Sales presentation. </li></ul><ul><li>What is a Trial Close? </li></ul><ul><ul><li>The Trial Close asks for the prospect’s opinion, not for a decision to buy. </li></ul></ul><ul><ul><li>A Trial close should be used at four important points in the selling process: </li></ul></ul><ul><ul><ul><li>After making a strong selling point in the presentation. </li></ul></ul></ul><ul><ul><ul><li>After the presentation. </li></ul></ul></ul><ul><ul><ul><li>After answering an objection. </li></ul></ul></ul><ul><ul><ul><li>Immediately before you move to close the sale. </li></ul></ul></ul>
  21. 21. Personality and Decision Making of the Buyer <ul><li>The Buyer’s Perception (1) </li></ul><ul><ul><li>Perception is the process by which a person selects, organizes and interprets information </li></ul></ul>
  22. 22. The Buyer Perception (2) <ul><li>The buyer receives the salesperson’s product information through the five senses. </li></ul><ul><li>Information are selectively retained, organized, interpreted and allowed into awareness. </li></ul>
  23. 23. Buyer Perception (3) <ul><li>A Sales presentation that appeals to the buyer’s five senses helps to clear the perception barriers. </li></ul><ul><li>Sales presentation helps in the understanding and reception of the information. </li></ul><ul><li>Selling techniques such as: </li></ul><ul><ul><li>Asking questions, using visual aids, and demonstration can draw the buyer to participate in the presentation. </li></ul></ul><ul><li>Buyers tend to be selective to the type of information received if It relates to their personal needs. </li></ul><ul><li>A buyer may resort to selective distortion (process of altering information) of the information received to suit to one’s individual needs and beliefs. </li></ul>
  24. 24. Selective Retention <ul><li>This is where buyers may remember only information that support their beliefs and attitudes, and leave out those information that have no intrinsic importance's to the buyer . </li></ul><ul><li>Two different sales message presented by two different salesperson about the same product be received differently. </li></ul><ul><li>The buyer may mentally switch off on one sales presentation to another to suit their personal preference. </li></ul><ul><li>A buyer can put a perceptual barrier anytime during a presentation. </li></ul><ul><li>Thus salesperson must be alert or timely to respond quickly any perceptual barriers. </li></ul>
  25. 25. How do customers buy?(1) <ul><li>Five stage customer decision making process: </li></ul>
  26. 26. How do customers buy?(1) <ul><li>An important element in the buying process. </li></ul><ul><li>Helps a salesperson in making selling decision. </li></ul><ul><li>Helps the salesperson to examine the whole buying process. </li></ul><ul><li>This Model (Slide 25) states that the average customer goes through all stages in every purchase transaction </li></ul><ul><li>However in repetitive purchase process may choose to skip or reverse some of the stages. </li></ul>
  27. 27. How do customers buy?(2) <ul><li>Corporate/ business buyers would give substantial forethought engaging in information search and evaluation before a purchase is undertaken. </li></ul><ul><li>A buyer process starts with a need recognition. Is there are necessity for the product to be purchased? Before the actual purchase is undertaken. </li></ul><ul><li>A “ mentally aroused or attuned” customer needs to decide how much more product information is required before he or she can make a decision to buy. If the desire or need is strong and there is that meet the customer’s expectation, then a purchase decision will be made. </li></ul>
  28. 28. Source of Customer’s information <ul><li>Personal Sources – family, friends and neighbours. </li></ul><ul><li>Commercial sources – advertising, salesperson, retailers, dealers, packaging, </li></ul><ul><li>point of sale displays </li></ul><ul><li>Public sources – newspaper, radio, television, consumer organization and publication, specialist magazine . </li></ul><ul><li>Experiential sources – handling, feeling(5 senses), examining, using the products </li></ul>
  29. 29. How does customer use information? <ul><li>The purpose of evaluation is determine whether the customer feels committed to the product. </li></ul><ul><li>Committed means the degree of preconceived (form an idea beforehand) importance and the value the product has to the customer. </li></ul><ul><li>If the customer feels committed and the product is perceived to be to be highly involving, customer would consider an evaluation based on type of purchases. </li></ul><ul><li>High Involvement Purchases – This include products that involve high expenditure or personal risk e.g. buying a heavy duty machinery, investment in properties and, securities and business. </li></ul><ul><li>Low Involvement Purchases- buying a soft drink, shopping for daily household needs is done instantaneously </li></ul>
  30. 30. Why should a Salesperson need to understand the customer evaluation process <ul><li>The salesperson is need of all kind of information in different buying situation. </li></ul><ul><li>In high involvement purchasing decision the salesperson needs sufficient reliable internal and external information. </li></ul><ul><li>Salesperson need to know the obvious feature, benefit of the product, the edge the product has over the competitor’s product. </li></ul>
  31. 31. Post purchase evaluation <ul><li>Cognitive Dissonance </li></ul><ul><ul><li>Cognitive dissonance is the uncomfortable collision of two or more clashing beliefs. It usually results in (unconscious) efforts to reduce the discomfort by modifying one's assessment of the situation. </li></ul></ul><ul><ul><ul><li>The classic example is a smoker resolving the dissonance between &quot;I want to live&quot; and &quot;I smoke cigarettes&quot; by downplaying the health risks of smoking or deciding that old age isn't worth living through anyway. </li></ul></ul></ul><ul><ul><ul><li>Malaysian Example: Young Malaysian youth engage in joyful, risky road racing swerving out through the traffic of the major cities in West Malaysia. The risk is they know they may: </li></ul></ul></ul><ul><ul><ul><ul><li>Be killed in an accident arising between their motor cycle and other motor vehicle. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Knowing that racing or speeding may cause an accident, partial or full loss of once physical body or ultimately death. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Be arrested and summon by the traffic police. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Confiscation of their motor cycle </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Conclusion: Yet this young, youthful teenagers take the risk in engaging in this dangerous risk driving, the thrill and excitement outweighs the loss of life. </li></ul></ul></ul></ul><ul><ul><li>Analysis: Cognitive dissonance gets particularly ugly when reality collides with the just world hypothesis, the belief that &quot;the world is an orderly, predictable, and just place, where people get what they deserve. </li></ul></ul>
  32. 32. Examples of Cognitive Dissonance Heavy smoker Cognitive Dissonance examples
  33. 33. FAB and Customer Choice <ul><li>Some customer may hesitate the same product again, instead choose to use a new product in place of the old one. </li></ul><ul><li>Customer may choose to switch brand sometime in the future. </li></ul>Switch brand
  34. 34. Choosing your Presentation style to suit your customer <ul><li>Make sure you understand and fine tune your presentation to suit to your prospect’s or customer’s needs. </li></ul><ul><li>The salesperson has to modify or suit his or her style to the needs of the customer. </li></ul><ul><li>Once the style is identified, its is possible to change and adapt your presentation to the buyer’s style. </li></ul><ul><li>To examine the detailed approach to selling method on personality preference types. Refer to the next page </li></ul>
  35. 35. Buyer’s Personality Style No jacket, loose tie or functional work clothes Current styles and informal Modern and crumpled Neat and conservative Dress Messy- piles of paper. Pictures of action in plant or products on the wall Warm decoration- people, scenic pictures. Antiques Abstract art, bookcases, trend charts, etc Used for computers and calculators. Has output point. Room Chaotic Personal & memorabilia Reference , theory books Neat Desk Environment Present Past Future Past, present, future Time orientation Impatient, short sighted, status seeking, self cantered, impulsive, don’t trust anybody, non-delegator Impulsive, manipulative, over personalizes, sentimental, postponing, guilt ridden, sirs up conflict, subjective Unrealistic, lubricious, dreamer, scattered, devious, out of date, dogmatic, impractical, poor listener Talkative, indecisive, Overcautious, overanalyses, unemotional, undynamic, controlled and controlling, Too serious, rigid & petty Person’s limitation Pragmatic, assertive, single-minded, technically skilled, objective – bases opinion on what he/she actually sees, perfection seeking, decisive, direct and down to earth, action orientated Spontaneous, persuasive, empathetic, grasps traditional values, probing, introspective, draws out feelings of others, loyal, active using previous style. Original, imaginative, creative, broad-gauged, Charismatic, idealist, intellectual, tenacious, ideological, conceptual, involved Effective communicator, Deliberative, prudent, weighs Alternatives, stabilizing, objective, rational, analytical, ask questions for more facts The person’s strength Active person. Deals with the world through their senses. Very deductive and energetic. People oriented. Very sensitive to people’s needs. An emotional person rooted in the past. Enjoys contact with people. Able to understand people well. Knowledgeable & future orientated person. An innovator who likes abstract principles from a mass of material. Active in community affairs by assisting in policy making, program development etc. A direct, detail orientated person. Likes to deal in sequence on his/her time. Very precise, sometimes seen as a petty minded Fact orientated . How to describe this person Senser Feeler Intuit or Thinker Guideline