Lecture 2 1

Selling and Sales Management

Lecture 2

Consumer & Organizational Buyer Behaviour

Lecture 2 2

Selling and Sales Management

• Identify the different motivations of consumer and organizational buyer

• Formulate strategies for approaching these buyers

In this Lecture, you will be able to:

Lecture 2 3

Difference between consumer & organizational buying

Fewer organizational buyers

Close, long-term relationships btw organizational buyers & sellers

Organizational buyers are more rational

Organizational buying may involve specific requirements

Organizational selling/buying may be more risky

Organizational buying is more complex

(for details, pls refer to the textbook…)

Lecture 2 4

Main Concern:

1. Who is important in the buying decision?

2. How do they buy?

3. What are their choice criteria?

4. When do they buy?

I) Consumer Buyer Behaviour

Lecture 2 5

1. Who is important in the buying decisioni) Initiator—the person who starts the process of considering a purchase

ii)Influencer—The person who attempts to influence the choice criteria on the decision

iii)Decider—the person who has the power/financial authority to make the ultimate choice

iv)Buyer—the person who conducts the actual transaction

v)User—the actual user of the product.

e.g. In a milk powder purchase, mother may be the initiator. Mother’s friends who had experience raising babies may be the influencers to persuade her to buy a certain brand. Mother again may be the decider; the buyer may be the Philippino maid, and the user is the baby.

Lecture 2 6

2. How the consumers buy?

The consumer decision-making process

Need Identification

Information Gathering

Evaluation of alternativesolution

Selection of an appropriate solution

Post-Purchase evaluation

Lecture 2 7

The consumer decision-making process (con’d)Needs--- May arise from a natural process of life, i.e. larger car is required for a family.Needs may also arise because of stimulation from sales or advertisement. Identify the needs of customer is part of successful selling.

Information Gathering--- Needs can only be satisfied after a period of information search. In the consideration of car purchase may involve visiting car, reading magazines, talking with friends or sales persons.

Evaluation of alternatives and selection of the best products---These are the dimensions used by consumers to compare or evaluate products or brands. i.e fuel economy, price, reliability, consumer’s own beliefs/attitudes on the products. It’s important for a salesperson to find out the evaluation criteria being used to judge alternative products. Also, it can be effective to try to change the evaluative criteria.

Post-purchase evaluation of decision---Salesperson should ensure the product consumers buys best matches their needs/satisfaction for the repeat purchasing. The quality of the products and the level of after-sales service play an important role in creating customer goodwill.

Lecture 2 8

II) Factors affecting the consumer decision-making process

3 Factors affecting consumer decision-making process:

The buying situation

Personal influences

Social influences

Lecture 2 9

The buying situationHoward and Sheth (1969) identified 3 types of buying situation:

1. Extensive problem-solving

When the need is new, the consumer may conduct extensive problem solving, including high degree of information search and evaluation of alternatives. In this case, salesperson can create immense goodwill by providing information and assessing alternatives in terms of how well the product’s advantages meet the consumer’s needs. This may

be rewarded by a repeat purchase.

2. Limited problem-solving

The consumer may have some experience/knowledge about the product and may intent to stay loyal to the brand previously purchase. However a certain information search or evaluation of some alternatives may still be needed for sure of making the right decision. Salesperson may be difficult to persuade the consumer to switch the product. Salesperson could only provide risk-reducing guarantees, e.g free replacement of any defective parts.

Lecture 2 10

The buying situation (con’d)

Automatic response

the consumer has always stuck to the product with a large brand name. Personal selling is not as effective as advertisement, which keeps the brand in the consumer’s mind and reinforces the already favorable attitudes towards the brand

Conclusion:A key factor deciding whether a consumer conducts extensive or limited problem-solving or automatic response is closely related to involvement with the purchase: high involvement means important purchaseextensive problem solving, and vice versa.

Lecture 2 11

Personal Influences

Personal Influences means the PSYCHOLOGY of the individual affecting the consumer decision-making process. So sellers need to aware the personality of the consumer:

• Brand personality related to individual characteristics:

“for young people” (Levis)

“intelligent”(Guinness)

“casual and comfortable”(Giordano)

• The characteristics of the consumer

•Motivation of the consumer

Lecture 2 12

Personal influence- Life Styles

Life styles refers to the pattern of living which includes consumers beliefs, activities, values and demographic characteristics such as education and income. Life style analysis is important for marketing. A company may target to a particular life-style group with a product offering, and use the advertising to enhance the vales, beliefs of this group of people. i.e media advertisement is effective on the consumers who has the information on reading habit life-styles.

Lecture 2 13

Social Influences

Social influences such as social class, reference group, culture and the family are the major influences in the consumer decision-making.

e.g. Social class: consumers have difference consumption pattern: skilled-workers spend larger proportion of income on buying house, furniture but less on entertainment.

e.g. Reference group:A group of people that influence a person’s attitude/manner. Such as the group (family, friends, colleagues…) may affect the decision on a consumer’s certain preference on a branch choice.

GIVE EXAMPLES!!!!!!!!GIVE EXAMPLES!!!!!!!!