Exchange Behavior in Selling and Sales Management
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Exchange Behavior in Selling and Sales Management

Peng Sheng, Aziz Guergachi

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eBook - ePub

Exchange Behavior in Selling and Sales Management

Peng Sheng, Aziz Guergachi

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About This Book

Exchange Behavior in Selling and Sales Management presents a pragmatic and easy-to-implement framework for the successful operation of selling and sales management. Focused specifically on the value-exchange behavior of buyers and sellers, the book is composed of eight fundamental building blocks, which provide: * A revolutionary framework to describe the dynamics of consumer and organizational buying processes * A scientific, analytical approach to the personal elements in selling * A much needed insight into the personal interactions between buyers and sellers, both the implicit and explicit * A new and unique structure which integrates psychographic data mining and modeling techniques in a sales context, for the first time Exchange Behavior in Selling and Sales Management reflects selling and sales management practices within the field, based upon the extensive experience of the authors and other contributors. It is essential reading for advanced students, practitioners and researchers in sales and marketing.

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Information

Publisher
Routledge
Year
2008
ISBN
9781136404443
Edition
1

PART ONE


EXCHANGE BEHAVIOR IN SELLING
AND SALES MANAGEMENT (X-Be)

1


OVERVIEW OF THE (1 + 7)
ELEMENTS OF X-Be

Exchange behavior in Selling and Sales Management, or X-Be in short, is a comprehensive conceptual framework that deconstructs, systematizes and elucidates selling, sales management and the various actions that are related to them. Composed of (1 + 7) fundamental building blocks or elements (a model for the purchase process, plus 7 concepts), X-Be has its theoretical foundations in psychology and sociology. Its central precepts reflect extensive experience within the field and are based upon various kinds of selling and sales management practices that the authors have been exposed to. As will be demonstrated later in this book, the (1 + 7) building blocks of X-Be are logically integrated by a series of bonds that make use of relevant theoretical knowledge about buyers’ cognitions, psychographics, and behaviors. While X-Be and its building blocks are easy to comprehend and implement, the framework also allows the sales staff (salespeople and sales managers) to define a complete roadmap for selling and sales management that accounts for various complex issues related to the latter activities.
The goal of this chapter is to provide an overview of the (1 + 7) building blocks of X-Be, while the next eight chapters of the book will focus on presenting a detailed discussion of each building block.

THE PHASES OF THE PURCHASE PROCESS

The first building block of X-Be is a universal model that describes consumer and organizational buying decision-making processes. We shall refer to this model as the Phases of the Purchase Process, or PPP. The basic idea that underlies the PPP is that consumers and organizations are value-pursuing engines and that buying decisions are at the root of value formation and exchange. Above all, X-Be does not consider the buyers’ underlying motives to be a black-box that cannot be understood, described, or explained.
The PPP model has five phases which we will refer to as follows:
1. Need Emerging (NE)
2. Need Defining (ND)
3. Selective Qualifying (SQ)
4. SeLecting (SL)
5. Follow-up and Control (FC)
This model provides an effective tool to analyze the purchase decision-making processes of almost any organization. While the nature, content, and effectiveness of buying activities may vary by organization or products, the basic flow of the purchase decision-making processes remains consistent with the PPP model regardless of context. The following Figure 1.1 describes this flow in a graphical form.
As a purchasing organization goes through these five phases, not necessarily in a linear manner though, its structural focus, behavior, and rhetoric will change. When X-Be is implemented, it allows the seller to establish which one of the five stages the buyer currently occupies and thus devise an appropriate strategy of approach and communication to get involved most effectively in the process of value formation and exchange on the part of customer.
The PPP model not only applies to organizational purchases, but to consumer purchases as well. However, consumers tend not to follow quite so formal a process as organizations may be inclined to. Consider a simplified example: Imagine that you want to buy a house, here representing any product or service that is particularly significant. To carry out the purchase, you would normally go through the following phases:
image
FIGURE 1.1 The Five Phases of the Purchase Process (PPP).
• NE: Before buying a house (regardless of what or who caused you to think about it), you would ponder whether or not one was needed.
• ND: If you thought that a house was needed, you would then look at its criteria – for example, the location, the price, and the type of house. At the end of this stage, you would define your views on the relevant criteria, which you would use to carry out your search in the real-estate market.
• SQ: Based on your own views on criteria (VOC), you would select a specific set of real estate agencies and/or builders who could provide you with your dream home.
• SL: Once you have selected the agencies and builders, you might weigh-out the pros and cons of each house based on your VOC. At the end of this stage, you would select a house that best satisfies your VOC.
• FC: After living in a house for a year or so, you would probably be able to gauge your satisfaction with the house and its features. In the end, you would realize whether the choices you made corresponded to what you had originally thought of the house (before actually living in it). Through this process of post-purchase evaluation, you would enhance your existing knowledge about house purchasing and/or develop new knowledge that would contribute to your own internal knowledge base (KB). This KB would in turn influence future behaviors in situations that are similar to that of buying a house.
Although the above example is necessarily abstract and simplified, it provides an illustration of the PPP model and shows the processes by which value formation and exchange occur for customers when dealing with important purchases.
The question that arises now is that how does the PPP model account for consumer behaviors that underlie the purchase of more everyday items? For example, if a person feels thirsty while walking, she may visit a nearby shop and buy a drink. This kind of spontaneous purchasing behavior is very common and occurs in most economies. Because of its seemingly impulsive nature, it has led many researchers and academes to doubt whether it is possible to develop a model to account for it. Purchasers do not seem to take much time to go through all the PPP when dealing with less important products or services. Once they realize that something is needed, they go ahead and buy it. They seem to go from the phase of NE straight to the SL phase. But this behavioral shortcut does not mean that buyers have never gone through the five phases outlined in our model; it is an indication that buyers tend to rely on their prior knowledge to deal with these “inessential” purchases. Thus, they do not require a formal decision-making process in which they may have to repeat all the five steps of the above PPP model. It is similar in nature to the shortcut one usually uses to carry out the multiplication of a whole number by 100, for example. There is no need to apply a complex algorithm to reach the product; two zeroes appended to the initial number shall suffice. However, this algorithmic shortcut is not the result of impulsive thinking, but is rather a consequence of knowledge previously acquired through experimentation, examples, formal education, and/or learning in general.
Consumer behavioral shortcuts develop in a similar manner, but with one difference. Algorithmic shortcuts in computer science and mathematics can be accounted for in terms of logic, while consumer behavioral “shortcuts” are accounted for by means of the introduction of a new concept default-value behavior (DVB). The “default-values” in a person's behavioral makeup can be compared to defaults found in a computer's operating system. For a computer to begin working properly after it is powered up, its operating system needs to internalize (which is to say, commit to memory) those defaults in advance. These defaults are also required for the computer to respond adequately to the user's requests. Similarly, it is the internalized behavioral default values that guide a purchaser through less multifaceted purchasing contexts, especially those involving inessential purchases. For our purpose, we consider default values as the result of direct or indirect experiences of similar events and/or similar situations assimilated into one's system of actionable values.
In Figure 1.2, we have updated the PPP's Buying Map and added the concept of DVB to it.
The DVB and the corresponding behavioral “shortcuts” can be illustrated by various examples in everyday life. For instance, it is not very likely that a person will wander into a shoe store and ask for a plate of spaghetti. Cases like this are not considered in X-Be, because they are fundamentally irrational. Our discussions will focus on people who act with reason (no matter what this reason is) and are responsible for their own behaviors. PPP can provide a universal model that accounts for the purchasing behaviors of any rational person (“rational” refers here to a behavior that is agreeable to some set of reasons, no matter what these reasons are or how they have been defined by the individual under observation). “A shoe store is a place that sells shoes” – this is a default value engrained from youth, deep into the minds of anyone living in the context of a market economy (in Chapter 5, you will read the case of a nightclub owner who takes advantage of these default values in naming his establishment to attract a younger customers base). Education, experience, or learning in general endow us with many default values which precipitate and facilitate seemingly thoughtless and “natural” behaviors – these are referred to as DVBs. Children, for example, who have been taught that electrical sockets are dangerous to the touch will fear them, even if they have never touched one. Adept cyclists can ride on the road gracefully; the peculiar rhythms and precarious balance of bicycle riding is second nature to them.
image
FIGURE 1.2 The Five Phases of the Purchase Process (PPP) Including the Default-Value Behavior (DVB).
Default values shall be discussed at length in the next several chapters of this book. For now a prĂŠcis:
• Buyers may go through the entire cycle of the PPP model, even when facing routine purchasing situations in their daily lives. The distinction lies in the fact that the less essential and more frequent purchases would rely more heavily on the customer's DVB.
• DVBs exist even in corporate purchasing processes. The experience and belief systems of organizational buyers working within a company influence the company's buying decision-making processes.
• One can view the DVBs of the customers as a consequence of the deployment of their KB (as per Figure 1.2), the content of which has accumulated in the past in many different forms. Various activities such as advertisements and promotions, personal experience, “word of mouth,” and other sources all have something to do with the formation and development of our default values, which often influence our purchasing activities.

KEY PERSONS AND CORE OPINION LEADERS

The second building block of X-Be is concerned with people who play key roles in the purchasing decision-making process. We usually refer to those people as “customers,” “purchasers,” or “buyers”. In complex selling situations, however, this term is too general to provide an effective description of “who really does the buying.” For instance, when one sells goods or services to organizations, several or even more people – with widely varying interest in the purchase – can exert their influence over purchasing decisions. Thus, various labels are applied to these figures: decision makers, advisers, influencers, gatekeepers, coaches, mentors, anti-sponsors, sponsors, and users. These terms are rather inexact, though, and indiscriminate in responding to the question of “who really does the buying.” In X-Be, we adopt a simpler approach. In addition to those people who are often highly visible during the purchase process (e.g., buyers, purchasing managers, purchasing engineers, etc.), we also propose a straightforward model – the MAP (see Figure 1.3) which allows a seller to identify other people who may not be so visible at purchase, but can also play key roles in the purchasing decision-making process. All these people, visible or not, could each have an impact at different phases of this process; we shall refer all of them as key persons. Among them, there are those whose influence is most acute, who exert the strongest influence (be it positive or negative) upon the purchasing process and its result, and consequently upon the selling activities – these people are the core opinion leaders (COLs).
image
FIGURE 1.3 The Key Persons are Those Who have Authority Over Money Spending and Product Selection.
In some simple selling situations, sellers may deal with a purchasing process that involves one key person – the customer. In a hypothetical situation in which the customer is not influenced by anyone else, the key person may also necessarily be termed the COL [in the sense of “communication with self” – Mead (1934)]. In this case, the sales task of identifying key persons is easiest to parse and evaluate. But these sales situations – even in a retail setting – are fairly rare. Most of the time, the customer is under the influence of others who also function as key persons and even COLs in the various PPP. Although these people may be absent from the actual site at which the product is bought, they contribute to the synthesis of the customer's decision. These people could be the buyer's peers, acquaintances, relatives – or, they could be the seller's competitors, who may have succeeded in inculcating certain default values to the customer through previous interaction or communication. These variables present difficulty to the act of selling, particularly when a customer's or key person's default values run contrary to the seller's value proposition.
By nature, organizational sales tend to be this complex. For, in sales involving companies, or governmental departments or offices, the personnel concerned with and interested in the sale can be myriad, and differences of opinion are to be expected. Sales of OEM products, industrial products, or large quantities of wholesale products are examples. In these cases, the sales process will most likely involve several and even more key persons – perhaps even several COLs. Well-organized purchasing entities are likely to ensure that each key person or specialized group of key persons is concerned with a different aspect of the purchase in question. Each key person and COL involved in a purchase develops his or her own self-defined views on how the customer's needs can best be addressed.

VIEWS ON CRITERIA

Many companies currently rely upon the express “voice of customer” – populi – to describe the customers’ expectations from a sales transaction. But the term's definition is vague, and, worse yet, the “voice of customer” is inexact and can be unreliable in practice.
In X-Be, the customer is not simply taken at face value. Steps are enacted to meaningfully and usefully interpret a purchaser's behavior, in the context of his or her phase of the purchasing process. To do that, we propose rethinking this old concept in terms of views on criteria (VOC), which, applied to a customer's expressed and implied attitudes and beliefs, can be a reliable measure of this customer's values, wants, and expectations before, during, and after a transaction.
VOC are characterized by two elements: one is a key person's perception about the specific factors, aspects, or dimensions relevant to his purchase decision situation, termed selecting points. Each selecting point has the rationale behind it – the feeling, belief, or logic accounting for a key person's or COL's valuing the corresponding selecting point in terms of importance. This rationale, whether it is explicit or implicit, clear or not, felt or emotional, may be termed selecting rationale.
It should be noted that the VOC might not be directly related to any specific sales offer on table at all, although in many cases, the previously experienced sales offers often do contribute to its formation and contents.
In the real estate industry, there is an old motto that runs, “Location, Location, Location!” While l...

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