Understanding BuyersUnderstanding Buyers

Module ThreeModule Three

Understanding BuyersUnderstanding BuyersAn Expert’s Viewpoint:An Expert’s Viewpoint:

Nick LaRoche is an account executive for S.K.K.R., a Nick LaRoche is an account executive for S.K.K.R., a manufacturers’ representative group selling Weber-manufacturers’ representative group selling Weber-Stephens Products. Nick makes an effort to understand his Stephens Products. Nick makes an effort to understand his buyers and the way they do business. For example, Nick buyers and the way they do business. For example, Nick found a way to help one of his customers increase profits found a way to help one of his customers increase profits simply by changing the way they purchased Weber simply by changing the way they purchased Weber products.products.

ActionAction

Understanding BuyersUnderstanding BuyersAn Expert’s Viewpoint:An Expert’s Viewpoint:

The amount Nick sold to this account soon doubled. The amount Nick sold to this account soon doubled. The relationship between Nick and the buyer has The relationship between Nick and the buyer has continued to grow since the purchasing change. The continued to grow since the purchasing change. The buyer has realized increased sales revenue and profits buyer has realized increased sales revenue and profits while Nick has enjoyed watching this account grow in while Nick has enjoyed watching this account grow in total volume.total volume.

ResultResult

Categories of BuyersCategories of Buyers

FirmsFirms

InstitutionsInstitutions

GovernmentsGovernments

Non-Profit OrganizationsNon-Profit Organizations

Consumer MarketsConsumer Markets

Business MarketsBusiness Markets

Distinguishing Characteristics of Distinguishing Characteristics of Business MarketsBusiness Markets

• Concentrated DemandConcentrated Demand• Derived DemandDerived Demand• Higher Levels of Demand FluctuationHigher Levels of Demand Fluctuation• Purchasing ProfessionalsPurchasing Professionals• Multiple Buying InfluencesMultiple Buying Influences• Close Buyer-Seller RelationshipsClose Buyer-Seller Relationships

Buying Decision ProcessBuying Decision Process

Recognition ofRecognition ofthe Needthe Need

Recognition ofRecognition ofthe Needthe Need

Determination of Determination of Desired CharacteristicsDesired Characteristics

Determination of Determination of Desired CharacteristicsDesired Characteristics

Description ofDescription ofDesired CharacteristicsDesired Characteristics

Description ofDescription ofDesired CharacteristicsDesired Characteristics

Search and QualificationSearch and Qualificationof Potential Sourcesof Potential Sources

Search and QualificationSearch and Qualificationof Potential Sourcesof Potential Sources

Acquisition & AnalysisAcquisition & Analysisof Proposalsof Proposals

Acquisition & AnalysisAcquisition & Analysisof Proposalsof Proposals

Evaluation of ProposalsEvaluation of ProposalsSelection of SuppliersSelection of Suppliers

Evaluation of ProposalsEvaluation of ProposalsSelection of SuppliersSelection of Suppliers

Selection of anSelection of anOrder RoutineOrder Routine

Selection of anSelection of anOrder RoutineOrder Routine

Performance Feedback Performance Feedback and Evaluationand Evaluation

Performance Feedback Performance Feedback and Evaluationand Evaluation

Needs Gap – An Example from theNeeds Gap – An Example from theLife of a College SeniorLife of a College Senior

Actual StateActual State

Desired StateDesired State

NeedsNeedsGapGap

I have a job.I have a job.

I do not haveI do not havea job.a job.

Multi-Attribute ModelMulti-Attribute Model

Assessment of Assessment of Product or Supplier Product or Supplier

Performance (P)Performance (P)

Assessing the Relative Assessing the Relative Importance of Each Importance of Each

Characteristic (I)Characteristic (I)

The base scoreThe base score

The weightThe weight

PP II PxIPxI

PP II PxIPxI

Multi-Attribute Model: an ExampleMulti-Attribute Model: an Example

On-line Resume On-line Resume ServiceService

Campus Career Campus Career ServicesServices

NetworkingNetworkingOpportunitiesOpportunitiesExposureExposureof Resumeof ResumeQuality Quality ControlControl

NetworkingNetworkingOpportunitiesOpportunitiesExposureExposureof Resumeof ResumeQuality Quality ControlControl

.5.5

.3.3

.1.1

.5.5

.3.3

.1.1

88

44

44

44

88

66

22

2.42.4

.4.4

44

1.21.2

.6.6

4.84.8

5.85.8

Employing Buyer Evaluation Procedures Employing Buyer Evaluation Procedures to Enhance Selling Strategiesto Enhance Selling Strategies

• Modify the Product Offering Being ProposedModify the Product Offering Being Proposed

• Alter the Buyer’s Beliefs about the Proposed Alter the Buyer’s Beliefs about the Proposed OfferingOffering

• Alter the Buyer’s Beliefs about the Competitor’s Alter the Buyer’s Beliefs about the Competitor’s OfferingOffering

• Alter the Importance WeightsAlter the Importance Weights

• Call Attention to Neglected AttributesCall Attention to Neglected Attributes

Complex Mix of Business Buyer NeedsComplex Mix of Business Buyer Needs

Buyers’Buyers’Level of Level of

SatisfactionSatisfaction

Psychological Psychological AttributesAttributes““Delighters”Delighters”

Functional Functional AttributesAttributes

““Must-Haves”Must-Haves”

63%63%Level of InfluenceLevel of Influence

On Buyers’ SatisfactionOn Buyers’ Satisfaction

37%37%Level of InfluenceLevel of Influence

On Buyers’ SatisfactionOn Buyers’ Satisfaction

Characteristics of theCharacteristics of theThree Types of Buying DecisionsThree Types of Buying Decisions

Straight Straight RebuyRebuy

Modified Modified RebuyRebuy

New New TaskTask

Newness of Problem or NeedNewness of Problem or Need

Information RequirementsInformation Requirements

Information SearchInformation Search

Consideration of New AlternativesConsideration of New Alternatives

Multiple Buying InfluenceMultiple Buying Influence

Financial RisksFinancial Risks

LowLow

MinimalMinimal

MinimalMinimal

NoneNone

Very SmallVery Small

LowLow

MediumMedium

ModerateModerate

LimitedLimited

LimitedLimited

ModerateModerate

ModerateModerate

HighHigh

MaximumMaximum

ExtensiveExtensive

ExtensiveExtensive

LargeLarge

HighHigh

Low Low AssertivenessAssertiveness

High High AssertivenessAssertiveness

Low Low ResponsivenessResponsiveness

High High ResponsivenessResponsiveness

Communication Styles MatrixCommunication Styles Matrix

AnalyticalAnalytical DriverDriver

AmiableAmiable ExpressiveExpressive

Slow PacedSlow Paced Fast PacedFast Paced

Relationship OrientedRelationship Oriented

Task OrientedTask Oriented

Types of Purchasing DecisionsTypes of Purchasing Decisions

• Straight Rebuy Buying SituationStraight Rebuy Buying Situation– Routinized Response BehaviorRoutinized Response Behavior

• Modified Rebuy Buying SituationModified Rebuy Buying Situation– Limited Problem SolvingLimited Problem Solving

• New Task Buying SituationNew Task Buying Situation– Extensive Problem SolvingExtensive Problem Solving

Buying Center MembersBuying Center Members

• InitiatorsInitiators

• UsersUsers

• GatekeepersGatekeepers

• InfluencersInfluencers

• DecidersDeciders

• PurchasersPurchasers

The roles in the The roles in the buying center work buying center work together to affects together to affects the outcome of the the outcome of the purchase decision.purchase decision.

Current Developments in PurchasingCurrent Developments in Purchasing

Increasing Use of Information TechnologyIncreasing Use of Information Technology

Relationship Emphasis on Cooperation Relationship Emphasis on Cooperation and Collaborationand Collaboration

Supply Chain ManagementSupply Chain Management

Target PricingTarget Pricing

Increased Importance of Knowledge and CreativityIncreased Importance of Knowledge and Creativity