Sales and Marketing Quiz 4
2. List and describe the three most common types of business-to-business buying situations. Page 173
Business buyer behaviour refers to the buying behaviour of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. In many business buying situations, several people work together to reach a decision. The buying centre is a cross-functional team of decision makers who often represent several departments here are three major types of business-to-business buying situations. 1) New-Task Buy - A first-time purchase of a product or service is a new-task buy . Depending on the cost and complexity of this purchase, the buying decision may require several weeks for information gathering and the involvement of numerous participants 2) Straight Rebuy - A straight rebuy is a routine purchase of items needed by a business-to-business customer. Your goal now is to simplify the buying process with the use of a straight rebuy plan. As long as the supplier continues to meet your criteria for price, quality, service, and delivery, future purchases will be routine 3) Modified Rebuy - The tide of change is a powerful force in the world of business. From time to time, your customers may wish to modify product specifications, change delivery schedules, or renegotiate prices.
9. Distinguish between emotional and rational buying motives.
Every buying decision has a motive behind it. Some buying decisions are influenced by more than one buying motive. The buyer of catering services may want food of exceptional quality served quickly so that all the guests can eat together. This customer may also be quite price conscious. In this situation, the caterer should attempt to discover the - dominant buying motive (DBM) Emotional versus Rational Buying Motives. A careful study of buyer behaviour reveals that people make buying decisions based on both emotional and rational buying motives. An emotional buying motive is one that prompts the prospect to act because of an appeal to some sentiment or passion. When customers buy expensive Harley-Davidson motorcycles, they are paying for much more than a high-flying "hog A rational buying motive usually appeals to the prospect's reason or judgment based on objective thought processes. Some common rational buying motives include quality, price, and availability of technical assistance
4. Explain how the endless chain referral prospecting and account development method works.
Every salesperson and company must develop a prospecting and account development system suited to a particular selling situation The use of referrals as an account development approach has been successful in a wide range of selling situations. Endless Chain Referrals - One approach to obtaining referrals, called the endless chain referral, is easy to use because it fits naturally into most sales presentations. A salesperson might ask for referrals by asking open-ended question which gives the person the freedom to recommend several prospects and is less likely to be answered with no response. Referral Letters and Cards - The referral letter method is a variation of the endless chain technique. In addition to requesting the names of prospects, the salesperson asks the customer to prepare a note or letter of introduction that can be delivered to the potential customer Referral Organizations. Some salespeople have found that membership in a referral organization is an effective way to obtain good leads
5. Discuss how direct-response advertising and sales letters can be used to identify prospects.
Many advertisements invite the reader to send for a free booklet or brochure that provides detailed information about the product or service. Recipients are encouraged to complete and mail the cards if they desire additional information. In some cases, the name of the person making the inquiry is given to a local sales representative for further action. Sales letters, sent by email or by Canada Post, can easily be incorporated into a prospecting plan. The prospecting sales letter is sent to persons who are in a position to make a buying decision. Shortly after the letter has been mailed (i.e., three or four days), the prospect is called and asked for an appointment. The call begins with a reference to the sales letter. To make the letter stand out, some salespeople include product information.
Explain how Maslow's hierarchy of needs affects buyer behaviour.
Maslow's Hierarchy of Needs According to Abraham Maslow, basic human needs are arranged in a hierarchy according to their strength. His theory rests on the assumption that as each lower-level need is satisfied, the need at the next level demands attention. 1) Physiological Needs - include the needs of food, water, and sleep. Maslow placed our physiological needs at the bottom of the pyramid. He believed that these basic needs tend to be strong in the minds of most people. 2) Security Needs - safety and security. Security need represent our desire to be free from danger and uncertainty. The desire to satisfy the need for safety and security can be an important buying motive. Buyers want to feel secure that their salesperson is highly ethical and the products they are considering will perform as they expect. If a customer does not feel safe and secure in a transaction, it will almost always destroy any opportunity for a successful relationship and sale to develop. 3) Social Needs - The need to belong, and other social needs , reflects our desire for identification with a group and approval from others. B2B buyers want acceptance and approval from those with whom they work, including their boss and team members. B2C buyers want approval from their friends and family members. 4) Esteem Needs - At the fourth level of Maslow's needs hierarchy are esteem needs , which reflect our desire to feel worthy in the eyes of others. We seek a sense of personal worth and adequacy—a feeling of competence. Salespeople who custom-fit a value added solution that meets and exceeds their clients' needs provide a feeling of competency to buyers in complex buying situations. 5) Self-Actualization Needs -Maslow defined the term self-actualization as a need for self-fulfillment, a tapping of one's full potential. It is the need to "be all that you can be," to have mastery over things you are doing. Developing a trust-filled, problem-solving role with a buyer concerned about finding a long-term, highly ethical, partnering style salesperson is another example of fulfilling the buyer's need for self-actualization.
6. What is networking? How might a real estate salesperson use networking to identify prospects?
Networking is the art of making and using contacts: people meeting people and profiting from the connections. here are three types of networks salespeople should nurture • Every salesperson will be well served by networking within his or her own organization • A second form of networking involves establishing contacts inside your industry. • The third form of networking involves business contacts with people outside your industry, such as bankers, government officials, developers, and other people in your community
1. According to the buyer resolution theory, a purchase is made only after the prospect has made five buying decisions. What are they?
One strength of this buying theory is that it focuses the salesperson's attention on five important factors that the customer is likely to consider before making a purchase: 1) need, 2) product, 3) source, 4) price, 5) time Buyer resolution theory recognizes that a purchase is made only after the prospect has made five buying decisions that result from specific, affirmative responses to the five key questions. 1) Why should I buy? - Realistically, it is difficult to provide prospects with an answer to this question. In many cases, salespeople fail to help customers become aware of a need. Therefore, large numbers of potential customers are not sufficiently persuaded to purchase products that will provide them with genuine buyer benefits. 2) What should I buy? If a prospect agrees that a need does exist, then a sales representative is ready to address this buying decision. He or she must convince the prospect that the product being offered will satisfy the need. In most cases, the buyer can choose from among several competing products. 3) Where should I buy? As products become more complex, customers are giving more attention to "source" decisions. In a major metro politan area someone who wants to buy a LaserJet 3160 or a competing product will be able to choose from several sources. 4) What is a fair price? Today's better-educated and -informed consumers are searching for the right balance between price and value (i.e., buyer benefits). They are better able to detect prices that are not competitive or that do not correspond in their minds with the product's value. 5) When should I buy? A sale cannot be closed until a customer has decided when to buy. In some selling situations, the customer will want to postpone the purchase because of reluctance to part with the money
Describe four group influences that affect buyer behaviour.
People around us influence our buying decisions. These group influences can be classified into four major areas: (1) role influences, (2) reference groups (3) social class, and (4) culture and microcultures. Salespeople who understand these roles and influences can develop the type of insight customers view as being valuable. 1) Role Influence - Throughout our lives, we occupy positions within groups, organizations, and institutions. Closely associated with each position is a role —a set of characteristics and expected social behaviours based on the expectations of others 2) Reference Group Influence - consists of the categories of people to which you see yourself belonging and with which you habitually compare yourself. The popular four-generation model—the matures, baby boomers, generation Xers, and generation Y's—provides an excellent example representing influences of the members of each of these age categories. Not understanding their influences often destroys some aspect of the sales process leading to a successful sale. 3) Social Class Influence - is one of society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviours. The criteria used to rank people according to social class vary from one society to another social class can have a major influence in B2C purchasing situations. The purchase of consumer products such as homes, cars, vacations, clothing, and entertainment are heavily influenced by social class membership. A home may be purchased as a vacation home or a primary residence depending on the buyer's social class. A glass of red wine will likely be purchased by a different social class member than a glass of Budweiser beer, as will be tickets to live theatre as opposed to tickets to a movie theatre. 4) Cultural Influence - ulture can be defined as the accumulation of values, rules of behaviour, forms of expression, religious beliefs, and transmitted behaviour patterns for a people or society that shares a common language and environment. Culture tends to encourage or discourage particular behaviours and mental processes
8. What is meant by the term perception ?
Perception - is the process through which sensations received through sight, hearing, touch, taste, and smell are interpreted using our knowledge and experience. Buyer behaviour is often influenced by perception. We tend to screen out or modify stimuli, a process known as - selective attention, for two reasons. First, we cannot possibly be conscious of all inputs at one time; just the commercial messages we see and hear each day are enough to cause sensory overload. Second, we are conditioned by our social and cultural background, and by our physical and psychological needs, to use selectivity. Buyers may screen out or modify information presented by a salesperson if it conflicts with their previously learned attitudes or beliefs Salespeople who can anticipate this problem of selective attention should acquire as much background information as possible before meeting with the prospect. During the first meeting with the prospect, the salesperson should make every effort to build a strong relationship so that the person opens up and freely discusses personal perceptions. Salespeople who do this have accepted one of the great truisms in sales and marketing: "Facts are negotiable. Perception is rock solid."
2. Describe three steps progressive marketers take to improve the quality of their prospecting effort.
Progressive marketers do three things to improve the quality of their prospecting effort: • Increase the number of people who board the Ferris wheel. . • Improve the quality of the prospects who board the Ferris wheel. Companies often establish quality standards that ensure a steady supply of prospects with high profit potential. • Shorten the sales cycle by quickly determining which of the new prospects are qualified prospects—qualified as to need, authority to buy, ability to pay, and willingness to purchase the product • List the major sources of prospects.
7. What does the term qualifying mean? What are the four basic questions that should be answered during the qualifying process?
Qualifying is the process of identifying prospects who appear to have a need for your product and should be contacted. Every salesperson needs to establish qualifying criteria. This process involves finding answers to several basic questions • Does the prospect or account have a need for my product? • Does the prospect or account have the authority to buy my product? • Does the prospect or account have the financial resources to buy my product? • Does the prospect or account have the willingness to buy my product?
9. When is sales intelligence important? What are the three most important pieces of sales intelligence a salesperson needs to know?
Sales Intelligence is necessary when the sale is complex and requires a long closing cycle In terms of sales intelligence, prospects and accounts expect salespeople to know answers to questions • Do you know me? - You need to know more than my name and title. Do you know my role, my goals, how I am evaluated, and how long I have been with the organization? Do you know about the projects I am working on, my style of doing business, and what the requirements are for me to meet my objectives? Do you know about previous dealings I have had with your company? Do I have a favourable opinion of your company and do you know my role and the role of other influencers in the decision-making process? • Do you know my company and my marketplace? - Do you know my company mission statement, culture, and vision for the future? Do you know clearly what we are doing, how we are performing in the marketplace, what issues keep us up all night, who our competitors are, and what they are doing? Do you know where we fit into the existing competitive landscape? Are we the leader or are we in the position of having to play catch-up to survive? Can you relate what you sell directly to what we need to accomplish our goals? Do you know who our partners are or what effect the current economy has on our business? • Do you have any special value-add? You have a product or service you think we need, but what else can you bring to the table? Are there additional resources you can bring to bear to solve my problems or improve my internal business processes? Can you educate me on how you are truly different from the other players in your area of expertise so I can support my recommendation to work with you? Can you help me build a case for return on investment (ROI)?
3. Describe the five major steps in the typical buying process. Page176
The buying process is a systematic series of actions, or a series of defined, repeatable steps, intended to achieve a result. The typical stages in the buying-decision process: 1) need awareness 2) evaluation of solutions 3) resolution of problems 4) purchase 5) implementation 1) Need Awareness - Need awareness is the first stage in the buying process. The buyer recognizes that something is imperfect or incomplete. Salespeople can add value at this stage of the buying process if they can help determine the magnitude of the customer's problem and identify a solution 2) Evaluation of Solutions - Buyers who experience need awareness usually begin searching for information that will help them evaluate possible problem solutions. Salespeople can add value at this stage by providing useful information that helps the customer make an informed choice. 3) Resolution of Problems - At this stage of the buying process, the customer is aware of a need and has evaluated one or more solutions. While the customer has decided to do something, he or she is likely to have issues and concerns that must be resolved before moving ahead. At this stage Buyers often need help to overcome obstacles that prevent them from moving to the purchase stage of the buying process. 4) Purchase - After all of the customer's obstacles and concerns have been overcome, the purchase decision is made. Professional salespeople create value in many ways at this stage of the buying process. First, they can make sure the purchase is "hassle free." This may mean working with the customer to arrange the best financing or to supervise delivery and installation of the product. Salespeople can add value by becoming a "customer advocate" within their own organization. 5) Implementation - The first sale is only the beginning of the salesperson's relationship with the buyer. Repeat sales occur when your company as supplier has demonstrated the ability to add value in various ways after the sale. Value creation can take the form of timely delivery, superior installation, accurate invoicing, follow-up contacts by the salesperson, or anything else that is important to the customer
1. According to the Strategic/Consultative Selling Model, what are the three prescriptions for the development of a successful customer strategy?
The first prescription for developing a customer strategy focuses on the customer's buying process. The second prescription focuses on why customers buy. The third prescription for developing a customer strategy emphasizes building a strong prospect base
4. List and describe three value-creation selling approaches that appeal to various types of customers. ( transnational, consultative, strategy alliance buyer )
The next step in understanding the customer's buying process is to discuss three value creation selling approaches that appeal to certain types of customers. 1) Transactional Process Buyer - are well aware of their needs and usually know a great deal about the products or services they intend to purchase. If the buyer is already aware of his or her needs, has evaluated solutions, and has no issues or concerns that need to be resolved, then the salesperson needs to focus on the purchase stage of the five-part buying process model. Do whatever is necessary to facilitate a convenient and hassle-free purchase. 2) Consultative Process Buyer - consultative salespeople focus a great deal of attention on needs awareness, which is step one in the buying process model. This is where salespeople can create the most value by helping customers gain an understanding of their problems and creating solutions that correct these problems 3) Strategic Alliance Process Buyer- Alliances are often formed by companies that have similar business interests and seek to gain a mutual competitive advantage Step one in building an alliance is a careful study of the proposed partner. This research is often coordinated by senior management and may involve persons working in the areas of sales, marketing, finance, and distribution. At some point, representatives from both companies will meet and explore the mutual benefits of the alliance. Both parties must be prepared to explain how they will add value once the alliance is formed.
10. Describe two popular models for performing an account analysis.
To effectively and efficiently manage the prospect base, sales managers and salespeople often conduct an account analysis to estimate the sales potential for each prospect. The portfolio model and the sales process model are two popular conceptual tools for performing account analyses and deciding how much time and effort, and what sales strategies, to use with the contacts in the database. Portfolio Models - involve the use of multiple factors when classifying accounts, it illustrates a typical four-cell model based on two factors: overall account opportunity for the seller and the seller's competitive position—that is, the ability to capitalize on these opportunities ------------------------------------------- Sales Process Models - also referred to as "sales funnel models," classify prospects based on where they are in the sales process. The sales process model is the total set of prospects being pursued at any given time. This six-step process model includes 1) Prospect, 2) Qualified, 3) Needs Analysis, 4) Presentation, 5) Negotiations, and 6) Closed/Service. An account might be simply a prospect who has potential but has not been contacted, a qualified prospect ready for a needs analysis, or a prospect in serious negotiations with the salesperson . In sales process model reports, clicking on any part of the funnel graph will drill down into and report all the supporting data on prospects in each stage of the sales process. Where an account is in the sales process has implications for if and when the salesperson will be able to close the sale. In any selling situation, it is important that salespeople balance their portfolio of prospects that are at various stages of the selling process. A balanced funnel enables salespeople to know how many prospects and how much revenue are needed at each stage in the sales process to meet sales projections and quotas. Salespeople need to ensure that they "work" the whole funnel so that it is always in balance. They should work on sales opportunities near the bottom of the funnel first; that is, close those that are near the end of the sales process. Then they should work on adding new prospects and those that are in the earlier stages of the sales process. Prospecting is an activity that some salespeople dislike, but if it is not given sufficient attention there is a real danger that the funnel or pipeline will empty. Finally, salespeople should work on those opportunities that are in the sales process, moving them along through the funnel and ensuring there are regular, predictable sales over time
1. List and briefly explain the common causes of customer attrition.
customer attrition—that is, the inevitable loss of customers over a period of time. Common causes of customer attrition. • The account may have a one-time need or there is an extended period of time between purchases. . • The customer may move to a new location outside the salesperson's territory . • A firm may go out of business or merge with another company. • A loyal buyer or purchasing agent may leave the position because of promotion, retirement, resignation, or serious illness. The replacement may prefer to buy from someone else. • Sales are lost to the competition.
8. What are the most common methods of organizing prospect information?
salespeople have a large assortment of computer-based systems available. Companies such as Salesforce.com, Oracle, NetSuite, Sage, and Microsoft all offer software applications designed to collect and organize prospect information. Most of these Sales Force Automation (SFA) Systems or Customer Relationship Management (CRM) Systems, as they are now known, have preset categories or fields that contain sales data on the prospect.