The Buying Process

The Lenovo example illustrates the need to adapt value messages as customers move through the stages of their buying process. In some instances, such as for frequently purchased goods such as grocery items, the buying process is relatively short, and and the only opportunity to communicate value might be at the shelf front through label comparisons and point-of-sale displays. For purchases involving more complex, higher involvement goods such as computers, vacations, or automobiles, the buying process can be quite lengthy and involve extensive search and evaluation of information. In either case, the challenge is the same: how to adapt the value messages to influence customers' learning about goods as they move through the stages of the buying process. illustrates the four basic stages of the buying process: origination,information gathering, selection, and fulfillment and describes the customer's learning process at each stage. Origination is the stage at which the customer becomes aware of a need and begins the search for a suitable offering to satisfy it. Origination of the buying process can be initiated in a variety of ways. Consider the example of a new car purchase. A customer might initiate a buying process because:

• Her 10-year-old car has broken down for the second time in a month

• A neighbor has just purchased a new convertible, and it seems like a fun idea to buy something more exciting than the customer's current sedan

• The family is expecting their first child, and they need more space and are concerned about safety

• The owner just lost her job and can't afford to make payments on her current car

EXHIBIT 4-5 The Customer Buying Process

The Buying Process

The objective for value communications at the origination stage is to use value as a lever to encourage customers to consider a purchase within the category. Hyundai Motors did this admirably during the 2008 — 09 recession. At a time when North American new car sales had dropped by more than 50 percent, Hyundai developed a promotional campaign that boosted sales of its cars by 38 percent. The “Hyundai Assurance” campaign enabled a customer to purchase a new car and then return it with no penalty if he subsequently lost his job in the next year. It encouraged tens of thousands of customers to initiate a buying process for a new car because it was actually less risky than continuing payments on an existing car. In this case, Hyundai identified an emerging value driver (uncertainty about future income), developed a promotion to address the need, and then invested heavily in communicating the program to consumers.

The next stage of the buying process, information gathering, is a critically important stage for complex goods with a high cost of search. Historically, distribution channels were central to the search for information as customers turned to salespeople to explain their products and facilitate product comparisons. The prominent role of salespeople gave sellers considerable power to communicate value and influence the purchase decision. In recent years, however, the balance of power has shifted toward the customer because of the explosion of data available from websites and social networking channels. Instead of relying on potentially biased messages from the seller, customers can, with little effort, gather information from objective third parties and current users.

The ready access to information reduces the cost of search and places a greater burden on the seller to provide accurate and relevant information to the customer. The communication objective at this stage of the buying process is to increase the salience of the value drivers upon which your product has an advantage. Kodak has done an admirable job of highlighting critical value drivers in its advertising for computer printers. Most customers are well aware of the traditional pricing model for printers in which the printer is sold at a low price (often near cost) and the replacement ink cartridges are sold at a premium. By highlighting the high quality and low prices of its ink cartridges, Kodak encourages customers to consider the total cost of owership, including the price for ink. The greater the weight customers put on the cost of ink cartridges, the more they are likely to choose Kodak's printer over a competitor's.

Selection, the next stage in the buying process, involves winnowing the alternatives to a manageable number in order to conduct a more detailed product evaluation that ultimately leads to choice. The communication objective is to create awareness of your brand and its superiority in terms of the most salient value drivers. When it launched the Scion in 2008, Toyota did an excellent job of facilitating awareness of the car's advantages durng the selection stage. The Scion is a small, boxy vehicle targeted at 20-something firsttime car buyers. Toyota recognized that this segment valued individuality and designed the Scion so that it could be configured in tens of thousands of ways by changing bumpers, lights, and a host of other options. But Toyota did not stop at simply providing a product that met the needs of its customers; it communicated those benefits through a highly interactive website containing visualization and design tools that enabled potential customers to customize their own vehicle and see precisely how their new car would look. Because Toyota adopted a fixed-price policy for the Scion (a departure from its other models), customers could explore different car configurations to stay within their budget while getting a car made just for them.

EXHIBIT 4-6 Kodak Printer Ad

The Buying Process

The final stage of the buying process, fulfillment, involves the selection of a purchase channel and then actual purchase. The value communication goal at this stage is to justify the price by using value to create a favorable framing for the price. For goods in which monetary value drivers are most relevant, marketers can use quantified estimates of value to frame price as a discount from value received instead of a premium over a competitor's price. Framing price in this way focuses on what a customer gains by purchasing your product (the discount from value) instead of what they lose (additional price over competition) and can have a powerful psychological influence on the purchase decision.

For goods in which psychological value drivers are most relevant to the customer, the goal is to develop messages that clearly demonstrate high value relative to price. This can be done through a variety of means, such as benchmarking against other products with well-understood value propositions. shows such an approach for a nutritional supplement called Glucofast that helps to stablize blood sugar levels for diabetics. While the value of such a product could be quite high, the intangible nature of the value drivers makes comparison to price difficult. The company cleverly reframed the value by comparing it to the cost of a cup of coffee, implying that any reasonable person would naturally want better health for less than she spends for a hot drink.

EXHIBIT 4-7 Glucofast Ad

The Buying Process

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