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External Influences

  1. Social Factors — These are the influencing pressures of our friends, business associates, families, social environment, and culture. A sales person could be a factor here as well. Examples for toothpaste might include the social pressure to have fresh breath and white teeth, and the pressure from dentists to maintain a good oral hygiene program.

What social forces might affect the buying decisions of your ideal customers?

  1. Informational Factors — Information comes from a wide variety of sources including friends, magazines and the Internet. As a result, your customers may already know something about your products and/or your industry. Going back to our toothpaste example, your customers may already be aware of the benefits of fluoride. They may also be familiar with several of your major competitors.

The quantity and quality of information your customers have about your products or services has an impact on their buying behaviour. If they believe that baking soda helps whiten their teeth, for example, they may look for a product that contains baking soda. Whether baking soda actually helps whiten their teeth or not is inconsequential. If customers believe it does, then they will act accordingly.

Your customers' perceptions are their reality.

Two friends were talking about buying a new big screen TV. One friend said he was going to buy brand X and the other said he was thinking about buying brand Y. “I’m buying brand ‘X’ because when it breaks down, I know the manufacturer will fix it with no hassles.” The other said, “But if you buy brand ‘Y’, it won’t break down.” The first man replied “Yes, but it might, and I don’t want to have to worry about it.”

What information or beliefs does your Target Market have about your business or your industry that might affect their buying decisions?

What additional information would help your Target Market decide if they could use your products or services?

  1. Situational Factors — These are the circumstantial or environmental factors that influence our buying behaviour. They demonstrate how the situations your customers find themselves in affect their consumption patterns.

For example, Greg and Rita want to purchase a new home. Their children love the idea and Greg and Rita are highly motivated to make the purchase. Their income is sufficient but, unfortunately, most of their money is invested in their business so they don't have enough cash available for a down payment. In this example, the “situational factor” for buying the house is “having enough cash available for a down payment.”

Situational factors can expose potential opportunities. In Greg and Rita's situation, the need for cash might lead to a creative financing process that eliminates or defers the down payment.

To identify the situational factors that might affect your customers' buying decisions, consider the following:

When do your customers buy? - i.e. They service their cars every 15,000 km. They buy roses on Valentine’s Day.

Where do your customers buy? - i.e. They shop for clothes in a mall. They eat popcorn at the movies.

How do your customers buy? - i.e. They use cash, VISA, or MasterCard. They make down payments on expensive items. They purchase, lease, or rent.


What situational factors might affect the buying decisions of your customers?

When do they buy?

Where do they buy?

How do they buy?

Internal Influences

Your customers are continuously bombarded by external influences over which they have little control. How they interpret and react to those influences, however, is up to them. They may be influenced to make a particular purchase, but the final buying decision is always theirs. So the important question is: “How do your customers make those decisions?” In the end, what makes them decide to buy from you?

Your customers make buying decisions that are consistent with their personality. Highly organized, detail-oriented people, for example, make decisions by studying data. They are attracted to more serious environments that supply them with the information to make their own decisions. More creative people prefer to have the details consolidated for them. They are often visual learners who would rather get a feel for the whole, before examining the parts (if they do so at all).

To get a fix on the personality of your customers, have a look at three basic components: their attitudes, interests and opinions.

  1. Attitudes — What do your customers believe about themselves? What is their “self-image?” Do they see themselves as homebodies, trendsetters, leaders, spendthrifts, extroverts or introverts? If you sell sporting goods, for example, your customers might see themselves as both competitive and health conscious.

What are some attitudes that might reflect the purchase patterns of your customers? i.e.: fashionable vs. practical.

  1. Interests — What captures the attention and imagination of your customers? What are their aspirations and goals? Do they enjoy spectator sports or would they rather play themselves? Do they enjoy their work or is it simply a way to pay for the rest of their life? Do they enjoy dining out or do they prefer to eat in? If you sell real estate, for example, you might associate different interests with different property types. Younger people who enjoy an active lifestyle might purchase small condominiums or low maintenance townhomes in a busy part of the city.

What are some interests that might reflect the purchase patterns of your customers?

  1. Opinions and Values — What do your customers believe about their world? Do they think people are basically honest? Do they believe in traditional family values? Do they think taxes are too low, too high or just about right? What do they think is the greatest sport and why? What do they think about today's youth? And, most importantly, what do they think about your industry and why do they think that? If you sell used cars and your customers have a negative opinion about your industry, for example, you will want to contradict that opinion at every opportunity. Perhaps you’ll offer money-back guarantees and comprehensive warranties with your vehicles.

What are some opinions that might reflect the purchase patterns of your customers?

Business to Business

There are two schools of thought when it comes to “business to business” psychographics. One school suggests that business purchases are logical transactions; that business purchases are business decisions and are made for the purpose of improving the organization's position.

The second school suggests that business purchases are made by individuals, and are personally and emotionally influenced by a whole series of internal and external factors.

The reality is probably someplace in the middle. Individuals (with all their baggage) make business purchases, but business purchases are also made with the business in mind. If a purchase has the potential to support both the purchaser's individual goals as well as the organization's goals, its chances for success are greatly improved.

If you sell to other businesses, then the exercise above has given you some direction concerning the individuals to whom you sell. Now identify the psychographic factors that impact the actual businesses.

  1. Corporate Culture — This is the general personality of the companies you do business with. Are they formal, stoic institutions, such as banks and legal firms, or are they casual, yet fast-paced organizations, such as Internet companies and marketing firms? Often times, a company’s website will give you a good indication of their corporate culture.

  1. Purchase Motives — Business purchases are typically less emotional than consumer purchases. While emotions still have their impact, businesses tend to focus on quality, price, service and supply more consistently than consumers. What motivates your business clients to purchase from you?

  1. Loyalty — Do your customers tend to be loyal to their suppliers once they find one they like, or do they constantly shop for the best deal?