Identification and Behavior
Do you know who your buyers are? Do you understand why they
buy your products or services? Assuming that other factors in
making the product available (distribution) and known to
the buyer (advertising and promotion) are in effect,
influences on the buyer may be catalogued by:
- psychology of wants and needs
If your target buyer is also the end user of your products
and services, then demographic, lifestyle, and other target
buyer identification and classification are appropriate.
However, if intermediate buyers are involved prior to products
reaching the end user, other influences may be important.
For example, consumer packaged goods such as food, health,
and beauty aids and household products may be initially
purchased in large amounts by a master distributor, who sells to
local/regional distributors. These local distributors often sell
to a wholesale buyer representing a chain of stores. Finally,
individual store managers decide to buy and stock the product
before the consumer ever has a chance to buy the product.
Other buyer influences may be at work under these
- Profitability of the item: The higher the margin
and dollar profit per item vs. competitive category
products, the more likely the trade will accept it,
regardless of product quality.
- Discount deals available: They can increase margin,
volume, and velocity of the item. For example, 10 percent to
25 percent off invoice each quarter for all purchases during
the period are typical discounts for grocery and drug
- Advertising and promotion support programs:
Multi-media TV, radio, print and PR support, plus heavy
consumer couponing, sweepstakes, and contests are typical
consumer packaged goods programs that may be run one to four
- Other cash deals: For example, new item
"Slotting Fees" are the subject of controversy and
frustration for many manufacturers supplying grocery, drug,
and mass merchandiser retailers. Slotting fees are cash
payments and/or free goods that are not refundable, even if
the products are dropped after six months by the retailer.
Slotting fees range from a few hundred dollars to over
$25,000 per item in some chains.
- Free goods available: For example, one case per
store is common for new grocery item distribution.
- Personal buyer/seller relationships: There will
always be personal relationships influencing buying
decisions as long as there are people selling to people.
That's why you hire good salespeople!
- Sales incentive programs: These programs may spur
salespeople on to greater productivity and sales of a
particular item or offering.
For example, grocery buyers of consumer packaged goods may
have strict profit margin guidelines (e.g., minimum 25 percent
on discount retail price programs), and minimum discount
thresholds that they will accept (e.g., at least 10 percent off
invoice). Buyers are also heavily influenced by brand
advertising and promotion support programs (e.g., coupons in
local newspapers on the promoted brand). For new products, cash
payments to the stores for each new item (e.g., $500 to over
$25,000 per item) and free case goods on each new item for each
store are common for larger chains.
The more exact the identification of your target buyer, the
more efficient your marketing programs will be in generating
sales from regular or heavy users. For our purposes, we will
divide target buyers into two groups:
- end users who are the ultimate
consumers or users of the product or service
- channel buyers who are
intermediary buyers between the company and the ultimate