Purchase Logic: The Foundation of Marketing Strategy
The foundation of a successful marketing strategy is an understanding of what product/service should be offered, how it should be presented, and to whom. Determining these three things is the essence of the marketing function. Purchase Logic is marketing's primary tool for coming up with the answers.
Part 1. What is Purchase Logic?
Purchase Logic is the description of how and why someone buys a particular product or service. Purchase Logic is an understanding of customer motivation that goes far beyond industry or demographic classifications. Purchase Logic defines what an individual customer wants and how he or she sorts among different alternatives.
The more factors involved in a purchase decision, the more complicated Purchase Logic becomes. Small, routine purchases have simple Purchase Logics.
The complexity of Purchase Logic increases as any of the following variables increase:
- the number of needs and wants to be satisfied
- length of commitment to or longevity of the product/service
- number of people involved in the decision
- number of alternatives
- price
Two examples illustrate how Purchase Logic becomes complex. First, think about buying a meal for lunch at work. You are hungry, have half an hour to spend and have no plans to meet anyone. The decision is simple. You run downstairs to the cafeteria and pick up a sandwich for four dollars. This choice was easy because you had few options and a very simple need to satisfy your hunger and perhaps also take a little break. The price was also insignificant.
Now think about buying a meal on Saturday night. Because you are going out with your friends, you sort through many more factors to arrive at a decision about where to go. Hunger is only one need to satisfy. You also seek some kind of entertainment or atmosphere. You have several people's tastes and food preferences to blend and will spend a significant amount of money. Further, you have many more options. Even if you are not aware of it, you use a fairly complicated Purchase Logic in selecting the restaurant.
This latter scenario is still quite straightforward compared with most purchase decisions. Thus, in order to succeed in selling a product or service, it is important to take a systematic and formal approach to looking at Purchase Logic.
“Understanding precisely what your customers want and why they want it is a powerful tool for managing the marketing of your product or service.”
Part 2. Purchase Logic Is a Process
Every purchase decision involves a number of steps. These steps may not be clearly discrete or particularly conscious, but they do exist. They represent the order in which alternatives are sorted and decisions are made. The more factors involved in a purchase decision, the more complicated Purchase Logic becomes.
Sellers need to understand each step of Purchase Logic in order to make sure they are talking about the right thing at the right time. Clearly, a seller will benefit by understanding what is on the buyer's mind and how he or she is approaching the purchase decision. Purchase Logic reveals how a prospect will react to what is offered.
Purchase Logic also defines the sequence in which issues must be confronted. Benefits must be addressed first. After the benefits have been established, it is time to address barriers to purchase. Next come trade-offs and price. After an individual weighs all these factors, a purchase decision is made.
Benefits
We all buy benefits. Benefits fulfill needs and wants. Purchase Logic defines all relevant needs and wants. Purchase Logic allows us to understand how important each benefit is to an individual buyer and why it is so important.
Wants can be particularly tricky to identify. Often they are emotional and sometimes they appear irrational. Buyers are often reluctant to share their wants; frequently they are not even conscious of some of them.
“The fear of criticism causes buyers to select the safest choice—usually, the Brand leader. In order to win, the seller must also provide evidence that the buyer can use to defend his or her choice.”
Barriers
Barriers to purchase are those factors that may prevent a customer from purchasing. We need to design our products or services so that they overcome these barriers. Barriers can be at least as important as the desired benefits.
Barriers to purchase can be hard to discover. Because people want to avoid conflict, they usually do not offer objections and criticism freely. Sometimes barriers may seem irrational or unfair; thus, the buyer will not mention them.
One highly motivating barrier in business-to-business situations is the fear of criticism. This fear causes buyers to select the safest choice, the "one that can not be criticized." Usually that is the Brand leader. In this situation, demonstrating product superiority is not enough. In order to win, the seller must also provide evidence that the buyer can use to defend his or her choice.
Trade-offs
Trade-off analysis is the process of assessing the relative value of different offerings. Customers do not buy individual features, functions or benefits. They choose among services or products that offer bundles of benefits. The trade-off is a comparison of these different bundles. What a customer concludes from the trade-off evaluation directly determines how that customer will react to different prices.
Price
Price is the mechanism by which sellers capture some of the economic value of the product or service being offered. Price is a function of the benefits provided. The value of those benefits to a specific customer determines the maximum price that a customer will pay.
What a customer will pay is very much influenced by the relative value of alternative products or services. Cheaper acceptable alternatives put limits on how high a price a customer will pay.
Purchase Decision
As the customer completes the Purchase Logic process, the answers to three questions determine the final purchase decision:
- What is the relative value of the options I am still considering?
- Is the value of one choice enough to justify a higher price?
- Since nothing is perfect, which minuses am I willing to live with?
Part 3. Why Should You Care About Purchase Logic?
Understand Your Market
You will gain a clearer picture of the kinds of people who are likely to be interested in what you have to offer. In addition, you will have a deeper understanding of what your current customers seek and what that is important to them.
Advertising & Packaging
No matter what vehicle is used, knowing your prospect’s Purchase Logic will help you communicate the right topic at the right time. You will know the benefits to stress in order to motivate purchase. Also, you will know how to “position your product” for greater appeal versus others in its category.
Identifying Qualified Prospects
From Purchase Logic you can pull out salient questions or characteristics that will help you identify good prospects. In some cases you might be able to construct selling messages that will prompt buyers to self-select and identify themselves for you.
Improve Offering for Stronger Appeal
Purchase Logic can also help you revise or improve your product or services to give them stronger appeal. Clear understanding of your Market’s needs and wants, along with knowledge of their relative importance, will give you the guidance you require to make effective changes.
Part 4. How Is Purchase Logic Turned Into Positive Action?
Understanding precisely what your customers want and why they want it is a powerful tool for managing the marketing of your product or service. Specifically, your understanding of Purchase Logic enables you to choose the most compelling features, marketing programs and sales message. These choices become clear because Purchase Logic defines what products and services to offer and how to talk about these offerings. Once you have identified the Purchase Logic(s) in your marketplace, the direction in which you need to move will be evident.