MAJOR SALES : Who Really Does the Buying?
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Presentation intended to understand the real motives and incentives behind consumers purchasing behavior.
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MAJOR SALES : Who Really Does the Buying?
- 1. Habib ABOU SALEH Tamar KVATCHADZE Alexander SIKSIMOV
- 2. Introduction Factors Influencing Consumers’ Behaviors Psychology And Sales Effectiveness Psychological Factors Affecting The Buying Process Q1 - Who’s in the Buying Center? Q2 - Who Are the Powerful Buyers? Q3 - What Do They Want? Q4 - How Do They Perceive Selling Companies? Key Lessons Presentation Outline
- 3. Why Marketing/Selling Models Fails? Introduction
- 4. Factors influencing Consumers behavior: Cultural Factors Social Factors Personal Factors Psychological Factors Factors Influencing Consumers Behavior
- 5. HOW CAN PSYCHOLOGY BE USED TO IMPROVE SALES EFFECTIVENESS? Psychological Factors Affecting The Buying Process: Motivation Perception Learning Beliefs and Attitudes Psychology and Sales Effectiveness
- 6. Motivation What is It? “Motivation is what will drive consumers to develop a purchasing behavior” – Oxford Dictionary How it can be used to Affect Sales? Create, make conscious or reinforce a need in the consumer’s mind so that he develops a purchase motivation Pick out the motivation and the need to which their product respond in order to make them appear as the solution to the consumers’ need Psychology and Sales Effectiveness
- 7. Perception What is It? “Perception is the process through which an individual selects, organizes and interprets the information he receives in order to do something that makes sense” – Oxford Dictionary The perception mechanism is based on three processes: Selective Attention Selective Distortion Selective Retention How it can be used to Affect Sales? Psychology and Sales Effectiveness
- 8. Learning What is It? “The acquisition of knowledge or skills through study, experience, or being taught” – Oxford Dictionary How it can be used to Affect Sales? Apply learning theories in marketing by brands Associate good image and high demand with positive reinforcement and vice versa. Influencing Consumers' experience with products and brands Psychology and Sales Effectiveness
- 9. Beliefs and Attitudes What is It? Belief: “An acceptance that something exists or is true, especially without proof” – Oxford Dictionary Attitude: “attitude can be defined as a feeling, an assessment of an object or idea and the predisposition to act in a certain way toward that object” – Oxford Dictionary How it can be used to Affect Sales? Understand, identify and analyze the positive/Negative attitudes and beliefs Change the brand’s marketing message or adjust its positioning to change consumers’ brand perception. Psychology and Sales Effectiveness
- 10. Question 1: Who’s in the Buying Center?
- 11. Who’s is in the Buying Center? BUYING CENTER Initiator Influencer Decision Maker Buyer Gatekeeper User Initiators: Division Manager Influencers: Corporate Departments with Managers Decision Makers: Vice President Buyer: Purchasing Manager Gatekeeper: Purchasing Department User: Employees
- 12. Question 2: Who Are the Powerful Buyers?
- 13. Who Are the Powerful Buyers? Buyer-organization is not homogeneous Multiple decision makers. Who is the most powerful? Issue with accurate defining the key decision makers due to Rank Might Mislead One Dominant Center Is Shown / Others Not Seen Specifics Of Corporate Culture Power And Decision Making THERE ARE DIFFERENT TYPES OF POWER
- 14. Who Are the Powerful Buyers? (cont.) IDENTIFY POWER CENTERS BY USING BEHAVIOURAL CLUES: power & formal authority go together often, but not always look for communication patterns (rewards, threats of punishment) less power dislikes more power often is one-direction information center send others to critical negotiations no correlation between functional area and power ADJUST SELLING STRATEGY TO THE POWER TYPE OF KEY BUYER-CNETER! INFLUENCE THE KEY DECISION MAKER!
- 15. Question 3: What do Buyers Want?
- 16. What Do Buyers Want? Do diagnosis of the "wants“ Understanding the decision making process: 1st - to break-down the product /service into benefits (features, price, etc.) 2nd - to segment benefits into categories - dimensions Buyers attempt to maximize their gains & to minimize losses Dominant motives benefit / cost (example from Telecom Industry Financial Product or service Social or political Personal
- 17. What Do Buyers Want? (cont.) Selling Approach With Just Focus on Benefits Focus Buyer Attention On Shift Focus to Better than Competitor Increase Buyer's Confidence on Realization Selling strategy should influence buyer's motivation! Taking Into Account the Followings: Biases in Decision Making Process Difference between B2B and B2C Cultural Aspects
- 18. Question 4: How Buyers Perceive Selling Companies?
- 19. Consumer Perception Theory Self perception – buyers understand the motivation behind their own behavior Price perception – strongly influences customer satisfaction, perceived quality of merchandise/service and price comparison to the similar products offered by other merchants Benefit perception – buyers tend to reject general claims of benefits and demand more detailed information about the product How Buyers Perceive Selling Companies?
- 20. B2B – Buyer behaviors Four potential response modes: How Buyers Perceive Selling Companies? (cont.) Growth Mode Buyers perceive that by buying sellers product they generate growth Looking for incremental changes Positive for vendor Trouble Mode Buyers perceive that their business is failing Looking for radical solutions Positive for vendor Even Keel Mode Buyers believe their business is steady and don’t need a change Are not open to vendor’s offers Overconfident Mode Buyers wrongly perceive that they are very successful and are not responsive for changes. Not open to vendor’s offers
- 21. Understand how buyers perceive sellers by asking sales officials to estimate how important buyers judge the vendors Sellers can record judgment of products/people Marketing efforts should target positively predisposed buyers How Buyers Perceive Selling Companies? (cont.)
- 22. Making productive sales calls – sales personnel should be well- aware what they are trying to find out and have the right questions prepared Listening to the sales force – sales force is often discouraged by management’s unwillingness to listen. Simplifying the reporting system will be beneficial for both – management & sales force Emphasizing tasks and details – encouraging personnel by rewarding data gathering and careful analytics. Gathering Psychological Intelligence
- 23. Relying only on numbers without understanding the psychology will inevitably lead to lost sales. When sellers understand buying and buyers understand selling, psychology and marketing come together usefully, which leads to closed sales immediately. Conclusion: Key Lessons
- 24. Durmaz, Yakup. 'The Impact Of Psychological Factors On Consumer Buying Behavior And An Empirical Application In Turkey'. Asian Social Science. N.p., 2015. Web. 14 Apr. 2015. Mollahoseyni, A. 'Studying Impacts Of Psychological Factors On Consumers’ Buying Behavior At Iranian Chair Stores'. JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS. N.p., 2015. Web. 14 Apr. 2015. Mott, Elizabeth. 'Psychological Factors That Influence Consumer Buying Behavior'.Small Business - Chron.com. N.p., 2015. Web. 14 Apr. 2015. Perreau, Fanny. 'The 4 Factors Influencing Consumer Behavior'. Theconsumerfactor.com. N.p., 2013. Web. 14 Apr. 2015. Hammond J.S., Keeney R.L., Raiffa H., 1998 'The Hidden Traps in Decision Making'. Harvard Business Review, Sept - Oct. Mintzberg H., 1985 'The Organization as political arena'. Journal of Management Studies, 22:2 Raven B.H., 2008, 'The Bases of Power and the Power/Interaction Model of Interpersonal Influence'. Analyses of Social Issuesand Public Policy, Vol.8, No.1, pp.1-22. Heiman, S.& Sanchez, D. (1998). The New Strategic Selling. New York: Warner Books, Inc Schneider, S and Barsoux, JL (eds.) 2002. Managing Across Cultures. Prentice Hall 2nd edition Small Business - Chron.com,. 'Consumer Perception Theory'. N.p., 2015. Web. 14 Apr. 2015. The Hofstede center Web site. (April, 2015) References
Notes de l'éditeur
- There are 4 main types of factors influencing consumer behavior: cultural factors, social factors, personal factors and psychological factors. I. Cultural factors Cultural factors are coming from the different components related to culture or cultural environment from which the consumer belongs. Culture and societal environment :(Customs, traditions, habits) an individual will be influenced by his family, his friends, his cultural environment or society that will “teach” him values, preferences as well as common behaviors to their own culture Social classes: Social classes are defined as groups more or less homogenous and ranked against each other according to a form of social hierarchy. Even if it’s very large groups, we usually find similar values, lifestyles, interests and behaviors in individuals belonging to the same social class. We often assume three general categories among social classes : lower class, middle class and upper class Cultural trends: Cultural trends or “Bandwagon effect” are defined as trends widely followed by people and which are amplified by their mere popularity and by conformity or compliance with social pressure. The more people follow a trend, the more others will want to follow it. II. Social factors Reference groups and membership groups : The membership groups of an individual are social groups to which he belongs and which will influence him. Within a reference group that influence the consumer buying behavior, several roles have been identified: The initiator: the person who suggests buying a product or service The influencer: the person whose point of view or advice will influence the buying decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which group members rely on. The decision-maker: the person who will choose which product to buy. In general, it’s the consumer but in some cases it may be another person. For example, the “leader” of a soccer supporters’ group (membership group) that will define, for the whole group, which supporter’s scarf buy and bear during the next game. The buyer: the person who will buy the product. Generally, this will be the final consumer. Family: The family is maybe the most influencing factor for an individual. It forms an environment of socialization in which an individual will evolve, shape his personality, acquire values. But also develop attitudes and opinions on various subjects such as politics, society, social relations or himself and his desires. Social roles and status: The position of an individual within his family, his work, his country club, his group of friends, etc.. – All this can be defined in terms of role and social status. III. Personal factors: Decisions and buying behavior are obviously also influenced by the characteristics of each consumer. Age and way of life: A consumer does not buy the same products or services at 20 or 70 years. His lifestyle, values, environment, activities, hobbies and consumer habits evolve throughout his life. Purchasing power and revenue: The purchasing power of an individual will have, of course, a decisive influence on his behavior and purchasing decisions based on his income and his capital. Lifestyle: The lifestyle of an individual includes all of its activities, interests, values and opinions. IV. Psychological factors
- Seller awareness of and attention to the human factors in purchasing will produce higher percentages of completed sales and fewer unpleasant surprises in the selling process. Only the most advanced companies recognize the psychology of buying as a major factor in improving account selection and selling results. Buyers constantly look not only for the best deal but also for the vendor that best understands them and their needs. Due to this fact, proper understanding of this scenario along with the achieved outcomes can be of most benefits for marketing managers. Among the factors influencing consumer behavior, psychological factors can be divided into 4 categories: motivation, perception, learning as well as beliefs and attitudes.
- Motivation: Motivation is what will drive consumers to develop a purchasing behavior. It is the expression of a need is which became pressing enough to lead the consumer to want to satisfy it. It is usually working at a subconscious level and is often difficult to measure. Increase Sales To increase sales and encourage consumers to purchase, brands should try to create, make conscious or reinforce a need in the consumer’s mind so that he develops a purchase motivation. He will be much more interested in considering and buy their products. They must also, according to research, the type of product they sell and the consumers they target, pick out the motivation and the need to which their product respond in order to make them appear as the solution to the consumers’ need.
- Perception: Perception is the process through which an individual selects, organizes and interprets the information he receives in order to do something that makes sense. The perception of a situation at a given time may decide if and how the person will act. Depending to his experiences, beliefs and personal characteristics, an individual will have a different perception from another. Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic, olfactory and gustatory). It would be impossible for the brain to process all consciously. That is why it focuses only on some of them. The perception mechanism of an individual is organized around three processes: Selective Attention: The attention level also varies depending on the activity of the individual and the number of other stimuli in the environment. Lastly, people are more likely to be attentive to stimuli that are new or out of the ordinary. Selective Distortion: In many situations, two people are not going to interpret an information or a stimulus in the same way. Each individual will have a different perception based on his experience, state of mind, beliefs and attitudes. Selective distortion leads people to interpret situations in order to make them consistent with their beliefs and values. Selective Retention: People do not retain all the information and stimuli they have been exposed to. Selective retention means what the individual will store and retain from a given situation or a particular stimulus. As for selective distortion, individuals tend to memorize information that will fit with their existing beliefs and perceptions.
- Learning: Learning is through action. When we act, we learn. It implies a change in the behavior resulting from the experience. The learning changes the behavior of an individual as he acquires information and experience. How it can be used to Affect Sales? The learning theories can be used in marketing by brands. As the theory of operant conditioning which states that you can build a good image and high demand for a product by associating it with a positive reinforcement (or rather a bad image with a negative reinforcement).
- Beliefs and attitudes: A belief is a conviction that an individual has on something. Through the experience he acquires, his learning and his external influences (family, friends, etc..), he will develop beliefs that will influence his buying behavior. While an attitude can be defined as a feeling, an assessment of an object or idea and the predisposition to act in a certain way toward that object. Attitudes allow the individual to develop a coherent behavior against a class of similar objects or ideas. Beliefs as well as attitudes are generally well-anchored in the individual’s mind and are difficult to change. For many people, their beliefs and attitudes are part of their personality and of who they are. However, it is important to understand, identify and analyze the positive attitudes and beliefs but also the negative ones that consumers can have on a brand or product. To change the brand’s marketing message or adjust its positioning in order to get consumers to change their brand perception.
- The initiator (Division Manager): the person who suggests buying a product or service The influencer (Company Department along with Department Managers): the person whose point of view or advice will influence the buying decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which group members rely on. The decision-maker (Vice President): the person who will choose which product to buy. In general, it’s the consumer but in some cases it may be another person. For example, the “leader” of a soccer supporters’ group (membership group) that will define, for the whole group, which supporter’s scarf buy and bear during the next game. The buyer (Purchasing Department managed by Purchasing Manager): the person who will buy the product. Generally, this will be the final consumer. Gatekeeper (Purchasing Department): Employees who analyze company’s need and recommend likely matches with potential vendors. The user (Company Employees at all level): the person who will be using the product.
- Source: Chris Blank (http://smallbusiness.chron.com/consumer-perception-theory-40176.html) Self perception - Self perception by customers relates to values and motivations that drive buying behavior -- which is also an important aspect of consumer perception theory. For instance, a study by researchers at the University of Massachusetts at Amherst addressed how self perception shaped consumers' buying behavior. The study considered the question of whether consumers believed their buying decisions had a real effect on issues such as environmental impact. The researchers concluded that consumers' self perception was a driving factor in whether or not they placed a priority on socially conscious purchase and consumption practices. Consumers who viewed themselves as socially conscious tended to place more weight on issues such as environmental impact when making buying decisions than consumers who did not hold similar views of themselves Price perception - While mass merchandisers such as Wal-Mart emphasize low prices as an inherent virtue, upscale merchants attempt to emphasize quality and value for money to appeal to potential customers. Researchers at the School of Business Administration at LaSalle University and LeBow College of Business at Drexel University considered several factors, including price perception -- whether consumers believed they were being charged fair prices -- in determining whether online shoppers would make repeat purchases through the same website. The researchers concluded that price perception strongly influenced whether customers were satisfied with their purchases and whether they would make future purchases. Two factors that shaped price perception were the perceived quality of the merchandise or service in question and price comparisons with merchants offering similar merchandise or services. Benefit Perception - "It's good, and it's good for you." Many consumers are familiar with this phrase frequently associated with food advertising. Researchers from Marquette University, Louisiana State University and the University of Arkansas surveyed customers to determine how nutrition claims associated with food affected their perception of that food's nutritional value. The researchers found that consumers tend to reject general, unsupported claims of enhanced nutrition, especially concerning high nutritional value for foods that are traditionally viewed as unhealthy. The researchers also theorized that consumers would demonstrate a trend toward applying more scrutiny to nutrition claims and would demand more specific information about the foods they purchase
- References: Heiman, S.& Sanchez, D. (1998). The New Strategic Selling. New York: Warner Books, Inc. BUYER BEHAVIOUR IN GROWTH MODE Buyers in Growth mode perceive that by buying your product or service, they are meant to generate growth for their company. However, while these buyers recognize the need to grow, they also understand that something needs to change in order to make growth happen. This understanding is positive for potential vendors as buyers will have a positive response to offerings that they believe will help to close the gap between current reality and the growth target. The only moderating factor is that since things are going generally well, there is no desire (or perceived need) for very radical proposals. These buyers will look for incremental improvements on what they are already doing. TROUBLE MODE In Trouble mode, buyers perceive that the business is failing (that is, it is losing customers, losing money, decreasing productivity) and understand that something must change. These buyers will be very open to offerings that seem to address fundamental problems. Buyers in Trouble mode have more appetite for radical solutions than do buyers in Growth mode, but they also tend to be short on the necessary resources—such as time, people, money, and skills—to acquire and implement the solutions required to deal with their problems. EVEN KEEL MODE Buyers in Even Keel mode do not perceive a large enough gap between their position and their goal to warrant change. They believe that progress is steady and there is no urgency to change anything. As a result, these buyers are not open to vendor offerings. They do not see the value such offerings would represent or why they should go through the trouble that change represents. However, peers or more senior executives that are either in Growth mode or Trouble mode can influence buyers in Even Keel mode. It is rare for vendors to directly influence Even Keel buyers. OVERCONFIDENT MODE Buyers in Overconfident mode have a somewhat delusional outlook and perceive that they are succeeding. In fact, they believe that they are doing so well that the suggestion that your offering might improve their situation is practically an insult (even if reality suggests the contrary). The fact that buyers in Overconfident mode have such a weak grasp of reality suggests that there is trouble on the horizon as they will not be responding to changes in their situation in an appropriate manner. As a seller, there is little you can do to change the perception of buyers in Overconfident mode. You must wait, but stay informed and in touch; when they run into trouble, they might shift their buyer mode accordingly.