Buyer Behavior, TALC, and Segmentation

Customer decision process Problem Recognition Information Search Alternative Evaluation Choice and Purchase Post-purchase Experience

Factors in B2B Buying Behavior Process Stages; see diagram below Players: roles in “Buying Center” gatekeepers, users, influencers, deciders, purchasers

More Factors in B2B Buying Behavior Needs –Organizational needs –Individual needs: role needs personal needs Nuances Variations in behavior based on industry norms, company culture, personal preferences and idiosyncrasies

Process Model Define Problem Define Solution Acquire Solution Provider Organizational Needs Clear, concise, tractable Appropriate, affordable, adaptable choice, speed, risk handled Individual’s Needs info, time, design assistance info, convenience, assurance

Process Model Develop solution Install, test, train Operate solution Organizational Needs speed, integration, easy ease, speed, comprehensive user friendly, effective, maintain-able Individual’s Needs execution assistance knowledge, learning envrnmt easy to use, easy to fix

Process Model End Result -- reach objectives Evaluate Outcomes Organizational Needs effective, efficient information Individual’s Needs recognition communication

Some Factors Influencing Process Newness / Routine-ness; Familiarity Volatility of environment Importance of end result Complexity Cost; Budget Risk Politics

AIDA Awareness – prospective customers know that the company or product exists Interest – prospective customers think they might have a need for your product Desire – prospective customers know they have a need and develop a feeling of wanting to acquire the product Action – prospective customers obtain the product Customers stages: Cognitive, Affective, Conative, But it can happen in other sequence, too, depending on the situation and product

Technology Adoption Life Cycle # New Users Time technophiles visionaries pragmatists conservatives Skeptics - laggards CHAS M

Markets in the TALC Early Market –Technophiles –Visionaries Chasm Beachhead and Bowling Alley Tornado Main Street

Marketing in the Early Market Technophiles – want to try the new toys; don’t pay much Visionaries – want to get a competitive advantage; will pay; get a customized solution

Marketing to Cross the Chasm and enter the Bowling Alley Pragmatists – want a seamless adoption; need reassurance of “whole product” Find a niche that needs the solution real badly Whole product is usually a simplified version, tailored to the niche Must be reference-able to next bowling pin Market may never reach tornado; company may never want to reach a tornado

Marketing in the Tornado Everybody wants it; buyer shifts from economic buyer to IT buyer Market wants a leader – they tend to create the gorilla Just ship it; back away from service Market structure: gorilla, chimps, monkeys (king, princes, serfs)

Marketing on Main Street Last pragmatists; conservatives They want specific features, lower prices Emphasize right features Trial and error, not market research Drive down costs and price

Market evolution Early Market High Qual Low Price Special Later Market Performance seg Cost-oriented segment Niche Extensions

SEGMENTATION: MAIN IDEAS HOMOGENEOUS GROUPS DIFFERENCES BASED ON VALUE SOUGHT IDENTIFIABLE REACHABLE

SEGMENTATION USING PREFERENCE MAPS EASE OF USE SPECIALIZATION OF FEATURES HIGH RELIABILITY AFFORD- ABILITY

SEGMENTATION USING PREFERENCE MAPS W/3rd Dimension EASE OF USE SPECIALIZATION OF FEATURES HIGH RELIABILITY AFFORD- ABILITY UPGRADE ASSURANCE CUTTING EDGE TECHNOLOGY

Choosing Target Segments How “attractive” are the various segments? –size and growth rates –identifiable; reachable –match with your strengths –underserved by competition Estimate sales and profits from each of the most attractive Target the most attractive; can you reach your goals? If not, add next most attractive, etc.