Purchase Decision Makers

Finally, a point to consider is, given the characteristics of your offering, what type of decision maker will most likely be interested in purchasing from you. It may be beneficial to rank your prospects based on the following classifications. While you may not be able to make this classification of the prospect prior to the first contact, if your sales personnel are sensitive to these characteristics it can strongly influence your sales strategy.

Ultra Conservative - don't rock the boat, whatever they purchase must be consistent with their current way of doing things.

• They are most likely interested in products/services that are improvements to existing offerings rather than something new.
• Once established as a customer they are seldom inclined to review alternatives.
• Very negative to technically complex offerings or offerings requiring extensive user education.
• Cost effective offerings are only of interest if they don't disturb the status quo.
• They are likely to react positively to any volume purchasing opportunities.

Conservatives - are willing to change, but only in small increments and only in a very cost effective manner.

• Will consider new products/services but only if related concept has been proven to be effective. More likely to purchase improvements to existing offerings.
• Will probably want to review competitive offerings, but will gravitate to best known offering with lowest risk decision.
• Negative to neutral when considering technically complex offerings or offerings requiring extensive user education.
• Strongly influenced by cost effective offerings and/or 'best price' opportunities

Liberals - regularly looking for new solutions, willing to make change (even major change) if the benefit can be shown.

• Will usually consider new products/services even if the related concept has not yet been proven to be effective, but only if the potential benefits can be specified and understood.
• Wants offerings that make effective use of technology, but is not interested in offerings just because they use a certain technology.
• Will always want to review competitive offerings, but will usually choose the one offering the greatest benefit, even if there is some risk involved.
• Neutral to positive when considering technically complex offerings or offerings requiring extensive user education.
• Usually concerned with keeping employees informed and educated, so will often consider educational offerings.
• Strongly influenced by offerings that most closely deliver the 'end results' desired, even if they are not the most cost effective.
• Often are on social trend bandwagons so react positively to offerings that address these needs.

Technical Liberals - enamored with the benefits provided by high tech solutions and any purchase decision will be biased by the technical content of the offering.

• Usually consider new products/services even if the related concept has not yet been proven to be effective.
• Often consider just because they use a certain technology.
• Will always want to review competitive offerings, but will usually choose the one offering the most hi-tech features, even if there is some risk involved.
• Consider themselves technically competent and will expect leading edge use of technology.
• Positive to fanatic when considering technically complex offerings even when requiring extensive user education.
• Conversion costs usually not a major concern if technical benefits are there.
• Not particularly concerned with keeping employees informed and educated, so educational offerings are not of great interest.
• Strongly influenced by offerings that most closely deliver the 'end results' desired, even if they are not the most cost effective.

Self Helpers - consistently defines/designs solutions to their problems, likes to acquire tools that help in the innovation process.

• Will usually consider new products/services, but the related concept must have been proven to be effective.
• Often consider just because they use a certain technology that is relevant to the development program they have underway.
• Will always want to review competitive offerings, but will usually choose the one offering the most effective 'do it yourself' features.
• Usually consider themselves technically competent and will expect very effective use of proven technology.
• Not especially inclined toward technically complex offerings, would rather have user friendly, but thought provoking, offerings.
• Conversion costs usually not a major concern if offering promises potential for innovation.
• Usually concerned with keeping employees informed and educated, so educational offerings are of interest.

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Seller Characteristics that can influence purchase decision:

Another form of influence is how the prospect perceives your offering and/or enterprise. If you can determine the characteristics your prospects most value in an enterprise they purchase from, you can identify those your organization possesses and promote them to the prospect.

Unique employee skills, knowledge Extensive experience with a specific market segment or field of scientific inquiry can be a powerful promotional tool. For example if an enterprise could sat, "Our scientists knows more about corn silk genetic structures than anyone in the world" they would have a strong sales statement.

Special relationships with distribution channels Product or service accessibility is a critical factor in sales success. If an enterprise could say, "Due to a unique relationship, the XYZ video stores give us more shelf space than any competitor" prospects will likely respond positively.

Customer service capabilities Prospects like to know that they can depend on post sale support from the product or service provider. A statement like, "We have more service outlets in New Hampshire than any competitor" will help secure sales.

Unique product forms. Credible uniqueness such as, "Our product is the only one that offers dynamic digi-whirling" is appealing to the market.

Manufacturing expertise. The market is always interested in purchasing from the "best". If an enterprise can confidently state, "We are the only enterprise that can manufacture molecular engineered widgets", they have created an image of being the "best".

Longevity. Reliability is important. A statement like, "We have been in business for 50 years, so you can count on us to be there when you need us" is usually a strong selling point.

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Purchase decision influencers

Once you have isolated a specific segment of the market on which to focus, then you can consider more subtle influences on the purchase decision. Some of these are:

Preference for channel of distribution

Many prospects prefer to buy through a specific distributor or wholesaler. For individuals this may be due to subtle, as well as, economic reasons. For example, an individual prospect may immediately think of Wal-Mart or Home Depot when considering an offering like yours. A business often has a preference so they can have a single communication point for all purchases. This also often results in lower purchase prices.

Number of decision makers

When selling to consumers or businesses, the more individuals or groups involved in the purchase decision, the more difficult the sale. Marketing costs for selling bread can stay low because one person normally makes the purchase decision. Car purchases are more complex because the purchase decision normally involves a husband and wife. Business sales to committees often require months to achieve a decision.

Financial strength of the prospect

Less affluent prospects may desire time payments versus a cash purchase and Chevrolets instead of Cadillacs.

Quantity/volume requirements

Restaurants will want large jars of pickles while individuals want small jars. Businesses use large amounts of electricity at predictable times.

Ability to use the offering

Trying to sell to a prospect who lacks either the knowledge or resources to properly benefit from your offering will result in a 'no sale' situation or an unhappy customer. The prospect should have knowledge and resources such as time, equipment, facilities, personnel and complementary products/services.

Commitment required

If the offering requires a high commitment in terms of time, resources or money by the customer then the target should be prospects who 'really need' the offering rather than prospects who get some, but not a lot, of benefits.

Brand awareness/users

Examples are prospects who ask for IBM compatible PC's or Pitney Bowes mailing machines or Winnebago R.V.s

Attitude toward a personality or enterprise

Reputation helps sell AT&T long distance service, IBM computers, Michael Jordan tennis shoes, etc.

Attitude toward price versus value

For example, purchasers of collectors items aren't price sensitive while purchasers of commodity items are price sensitive.

Experience with other products/services your enterprise has offered

You are looking for a reaction like "I liked your first product so I'll try your second."

Prospect bias

Examples are, 'Buy USA', I want a car with a 'solid' feel, fast cars, sweet wines, large print playing cards, etc.

Affiliation with other organizations

Such as the U.S. Chamber of Commerce, AMA, IEEE, doctors, attorneys, pastors, franchisors, entrepreneurs, etc.

After sale support expectations

It is often beneficial to target prospects who have enough expertise that they will require a minimum of after sale support.

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Segmentation of Needs For Individual Consumers

Physical Size. Offerings might be big men's clothing, golf clubs for shorter players, etc.

Creation of or response to a fad. Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.

Geographic location. Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska, etc.

Time related factors. You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM.

Demographics/culture/religion. Ethnic products would fall into this category.

Gender. Product examples are scarves for women, ties for men, etc.

Age.Product examples are toys for children, jewelry for women, etc.

Social status. This could include country club memberships, philanthropic contributions, etc.

Education. Product and service examples are encyclopedias, scientific calculators, learning to read tools and financial counseling.

Avocation.This could include products for hunting, fishing, golf, art work, knitting, etc.

Special Interests. You could target cat lovers, science fiction readers, jazz music collectors, etc.

Accessibility. Because the individual is more difficult to reach you may want to segment by urban versus rural, train commuters, people who read Wall Street Journal, etc.

Access (or lack of access) to competitive offerings. Due to high investment capital requirements or timing of market entry you may be able to capture a significant market share in a specific geographical area. Examples might be a trash service, emergency medical support, etc.

Need for specific information. Based on features or content of your offering you can target a market segment. A product might be books on how to start a business or a service might be seminars on how to quit smoking.

Need for customization. Product/service examples are home decoration, fashion wear, personal portraits, etc.

Need for quality, durability, etc.Product examples are mountain climbing gear, carpenter's tools, etc.

Degree of a product/service ingredient. Segmentation based on prospect preferences is common. An example is dark chocolate for some tastes, light chocolate for others.

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Segmentation of Needs

Then you should establish what the need is and who is most likely to experience that need. Your segmentation will be determined by a match between the benefits offered by your offering and the need of the prospect. Some "need" categories for segmentation include:

Reduction in expenses. Prospects might be businesses that are downsizing (right sizing), businesses that have products in the mature stage of their life cycle or individuals with credit rating problems.

Improved cash flow. Prospects might be businesses that have traditionally low profit margins, businesses that have traditionally high inventory costs or individuals that live in expensive urban areas.

Improved productivity. Prospects might be businesses that have traditionally low profit margins, businesses that have recently experienced depressed earnings or individuals with large families.

Improved manufacturing quality. Prospects might be businesses with complex, multi-discipline manufacturing processes.

Improved service delivery. Prospects might be service businesses in highly competitive markets, product businesses requiring considerable post-sale support or individuals in remote or rural areas.

Improved employee working conditions/benefits. Prospects might be businesses where potential employees are in short supply.

Improvement in market share/competitive position. Prospects might be new entrants to a competitive market.

Need for education. Prospects might be businesses or individuals looking for books on business planning, or seminars on Total Quality Management.

Involvement with social trends. Prospects might be businesses concerned with environmental protection, employee security, etc. or individuals who believe in say 'no' to drugs, anti-crime, etc.

Specific - relating to product/service characteristics. Prospects might be businesses or individuals interested in safety, security, economy, comfort, speed, quality, durability, etc.

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Market Segmentation

The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are "most likely" to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments.

Category of Need
The first thing you can establish is a category of need that your offering satisfies. The following classifications may help.

For businesses:

• Strategic - your offering is in some way important to the enterprise mission, objectives and operational oversight. For example, a service that helped evaluate capital investment opportunities would fall into this domain of influence. The purchase decision for this category of offering will be made by the prospect's top level executive management.
• Operations - your offering affects the general operating policies and procedures. Examples might be, an employee insurance plan or a corporate wide communications system. This purchase decision will be made by the prospect's top level operations management.
• Functional - your offering deals with a specific function within the enterprise such as data processing, accounting, human resources, plant maintenance, engineering design, manufacturing, inventory control, etc. This is the most likely domain for a product or service, but you must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. This purchase decision will be made by the prospect's functional management.

For the individual consumer:

• Social Esteem or Pleasure - your offering satisfies a purely emotional need in the consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well).
• Functional - your offering meets a functional requirement of the consumer such as a broom, breakfast cereal or lawnmower.

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Cognitive And Personal Biases in Decision Making

It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases.

• Selective search for evidence - We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions.
• Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work.
• Conservatism and inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.
• Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar.
• Selective perception - We actively screen-out information that we do not think is salient.
• Wishful thinking or optimism - We tend to want to see things in a positive light and this can distort our perception and thinking.
• Recency - We tend to place more attention on more recent information and either ignore or forget more distant information.
• Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different of sources.
• Anchoring - Decisions are unduly influenced by initial information that shapes our view of subsequent information.
• Group think - Peer pressure to conform to the opinions held by the group.
• Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.
• Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.
• Inconsistency - The unwillingness to apply the same decision criteria in similar situations.
• Attribution asymmetry - We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.
• Role fulfillment - We conform to the decision making expectations that others have of someone in our position.
• Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do.
• Faulty generalizations - In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes.
• Ascription of causality - We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equatorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves.

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Buyer ( Consumer) Decision Processes

Buyer decision processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of action from among multiple alternatives.
Common examples include shopping, deciding what to eat. Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to effect the action.

In general there are three ways of analysing consumer buying decisions. They are:

• Economic models - These models are largely quantitative and are based on the assumptions of rationality and near perfect knowledge. The consumer is seen to maximize their utility. See consumer theory. Game theory can also be used in some circumstances.
• Psychological models - These models concentrate on psychological and cognitive processes such as motivation and need reduction. They are qualitative rather than quantitative and build on sociological factors like cultural influences and family influences.
• Consumer behaviour models - These are practical models used by marketers. They typically blend both economic and psychological models.

Nobel laureate Herbert Simon sees economic decision making as a vain attempt to be rational. He claims (in 1947 and 1957) that if a complete analysis is to be done, a decision will be immensely complex. He also says that peoples' information processing ability is very limited. The assumption of a perfectly rational economic actor is unrealistic. Often we are influenced by emotional and non-rational considerations. When we try to be rational we are at best only partially successful.

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Consumer Baheviour Marketing Research

Consumer behaviour is key to the impact that society is having on the environment.As well as what people consume directly in the home and elsewhere, our fulfilment of needs and wants lies behind many of the activities that create environmental impacts, such as the production of food and other goods.While new and more sustainable technologies offer great promise, they cannot in themselves ensure sustainability. Only people's choices can lead us away from unsustainable patterns of consumption.

But there are many conflicting explanations as to why people consume:

• some economic (to do with prices and technology)
• some environmental (fulfilling physical needs such as shelter and food)
• and some cultural (consumption as central to social identity).

Methodologically, consumer behaviour research uses the following types of research designs:
Based on questioning:

• Qualitative marketing research - generally used for exploratory purposes - small number of respondents - not generalizable to the whole population - statistical significance and confidence not calculated - examples include focus groups, in-depth interviews, and projective techniques
• Quantitative marketing research - generally used to draw conclusions - tests a specific hypothesis - uses random sampling techniques so as to infer from the sample to the population - involves a large number of respondents - examples include surveys and questionnaires

Based on observations:

• Ethnographic studies -, by nature qualitative, the researcher observes social phenomena in their natural setting - observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) - examples include product-use analysis and computer cookie traces
• Experimental techniques -, by nature quantitative, the researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables - examples include purchase laboratories and test markets

Researchers often use more than one research design. They may start with secondary research to get background information, then conduct a focus group (qualitative research design) to explore the issues. Finally they might do a full nation-wide survey (quantitative research design) in order to devise specific recommendations for the client.

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Marketing ethics

Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media ethics.

Ethics are a collection of principles of right conduct that shape the decisions people or organizations make. Practicing ethics in marketing means deliberately applying standards of fairness, or moral rights and wrongs, to marketing decision making, behavior, and practice in the organization.

In a market economy, a business may be expected to act in what it believes to be its own best interest. The purpose of marketing is to create a competitive advantage. An organization achieves an advantage when it does a better job than its competitors at satisfying the product and service requirements of its target markets. Those organizations that develop a competitive advantage are able to satisfy the needs of both customers and the organization.

As our economic system has become more successful at providing for needs and wants, there has been greater focus on organizations' adhering to ethical values rather than simply providing products. This focus has come about for two reasons.

• First, when an organization behaves ethically, customers develop more positive attitudes about the firm, its products, and its services. When marketing practices depart from standards that society considers acceptable, the market process becomes less efficient—sometimes it is even interrupted. Not employing ethical marketing practices may lead to dissatisfied customers, bad publicity, a lack of trust, lost business, or, sometimes, legal action. thus most organizations are very sensitive to the needs and opinions of their customers and look for ways to protect their long-term interests.
• Second, ethical abuses frequently lead to pressure (social or government) for institutions to assume greater responsibility for their actions. Since abuses do occur, some people believe that questionable business practices abound. As a result, consumer interest groups, professional associations, and self-regulatory groups exert considerable influence on marketing. Calls for social responsibility have also subjected marketing practices to a wide range of federal and state regulations designed to either protect consumer rights or to stimulate trade

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Consumer Behavior and Marketing Strateg

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how

• The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products);
• The the psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);
• The behavior of consumers while shopping or making other marketing decisions;
• Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome;
• How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and
• How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

Understanding these issues helps us adapt our strategies by taking the consumer into consideration. For example, by understanding that a number of different messages compete for our potential customers’ attention, we learn that to be effective, advertisements must usually be repeated extensively. We also learn that consumers will sometimes be persuaded more by logical arguments, but at other times will be persuaded more by emotional or symbolic appeals. By understanding the consumer, we will be able to make a more informed decision as to which strategy to e

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Consumer Behaviour

Consumer behaviour is the study of how people buy, what they buy, when they buy and why they buy. It blends elements from psychology, sociology, sociopsychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups.

Consumer Behaviour studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Belch and Belch define consumer behaviour as 'the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires'.

Consumer behaviour also called as Consumer Psychology is a branch of applied Psychology, marketing and Organizational Behaviour. It examines consumer decision making process and ways in which they gather and analyze information from the environment. Consumer behaviour is a multidisciplinary field which is integral to Industrial Psychology and aspects of household economy studied in microeconomics.

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