2020_BEC_FlipBooks

F20_Castleberry_Selling11eFlipbook_11-6-20

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Salespeople can use value analysis to get customers to consider a new product. This approach is particularly useful for the out-supplier in a straight rebuy situation. David Lenling, a sales representative for Hormel, used value analysis to sell pepperoni to a 35-unit group of pizzerias in the Cincinnati area. The owner had been using the same pepperoni and bacon topping for over 15 years and was reluctant to switch. Lenling showed how the Hormel pepperoni product cost $5 per case more but offered 1,200 more slices in a case with the same weight, which equated to an additional $12 of pepperoni, or a $7 per case net savings, enough to make about 35 more pizzas per case. The owner of the chain was unaware of these differences until Lenling actually weighed his current product. Through value analysis, Lenling was able to interrupt a straight rebuy. Further, Lenling's buyer agreed that the Hormel product tasted better and was less greasy, resulting in a better-looking and tastier pizza, which might result in customers coming back more often. Because Hormel products are of high quality and sell at a premium price, Lenling and other sales representatives have to prove that the products are worth the extra money. They use value analysis to help purchasing agents determine how much it costs to use the product rather than how much the product costs. That's why Lenling was able to win that large pizza chain's business. INDIVIDUAL NEEDS OF BUYING CENTER MEMBERS In the preceding section we discussed criteria used to determine whether a product satisfies the needs of the organiza- tion. However, buying center members are people. Their evaluations and choices are affected by their personal needs as well as the organization's needs. Types of Needs Buying center members, like all people, have personal goals and aspirations. They want to get a raise, be promoted to a high-level position, have their managers recognize their accomplishments, and feel they have done something for their company or demonstrated their skills as a buyer or engineer. Salespeople can influence members of the buying center by developing strategies to satisfy individual needs. For exam- ple, demonstrating how a new product will reduce costs and increase the purchasing agents' bonus would satisfy the purchasing agents' financial security needs. Encouraging an engineer to recommend a product employing the latest technology might satisfy the engineer's need for self-esteem and recognition by his or her engineering peers. Risk Reduction In many situations, members of the buying center tend to be more concerned about losing benefits they have now than about increasing their benefits. They place a lot of emphasis on avoiding risks that may result in poor decisions, decisions that can adversely affect their personal reputations and rewards as well as their organization's per- formance. Buyers first assess the potential for risk and then develop a risk-reduction strategy. 20 To reduce risk, buying center members may collect additional information, develop a loyalty to present sup- pliers, or spread the risk by placing orders with several vendors. Because they know suppliers try to promote their own products, cus- tomers tend to question information received from vendors. Cus- tomers usually view information from independent sources such as trade publications, review sites on the Internet, colleagues, and out- side consultants as more credible than information provided by salespeople and company advertising and sales literature. Therefore, they will search for such information to reduce risk when a purchase is important. Advertising, the Internet, and sales literature tend to be used more in the early steps of the buying process. Word-of- mouth information from friends and colleagues is important in the proposal evaluation and supplier selection steps. When making a buying decision, this woman's performance is being judged by others in the organization. Thus, she will seek to find ways to reduce her risk, while also reducing risk to the organization. FatCamera/Getty Images 76 CHAPTER 3: Buying Behavior and the Buying Process

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