Monthly Archives: February 2012

The purchase decision process

In formulating your marketing plan it is important to understand what triggers the consumers buying response. Why would or should they buy from you? Earlier we discussed how it is basically a case of recognising their needs and wants, but let’s now investigate further. The following table describes the process consumers go through when deciding to make a purchase. In this post I will address the first stage or problem recognition.

Problem recognition – At this stage the customer identifies a need or want which requires a solution. As an example the ‘need’ could be hunger and the ‘want’ relates to how the customer chooses to meet that need. To satisfy the hunger a customer has a huge range of foods to choose from and it is the job of marketing to build demand for particular wants and influence choices. There are three categories of purchases used to satisfy a need or want.

● Routine – Everyday items such as bread milk and fuel.

● Impulse – Items purchased which are not really needed. Have you ever gone shopping and came home with something totally unexpected? I once went grocery shopping with my wife and came home with a 65 inch LCD TV. I’m still wondering what happened!

● Specific – Purchases required immediately to resolve a problem. As an example you may have lost power supply to your house and you would immediately call an electrician before the food spoiled in your refrigerator.

Question – What problem does your product or service solve for consumers?

Question – How are you letting your customers know you can help them?

Question – What purchase category is your product or service?

It is important to reflect on the answers you have provided to the above questions. Often small business owners start a business based around their hobbies or interest with the mistaken belief that their products or services will appeal to everyone. Just because you like what you sell doesn’t mean everyone else will. You must be sure that your offering provides a solution to a large enough section of consumers to ensure a sustainable business. Equally important is to correctly identify what purchase category your products or services fall under. Doing so will assist you to fine tune and correctly target your marketing campaign.

Let’s take impulse purchases as an example. Your marketing plan must be far more concentrated and creative than that required for routine purchases. Why? – because you are trying to convince someone to buy something they don’t really need. With impulse purchases in particular, you need to understand the psychological, environmental and social-cultural factors which drive the buying decision. Think about the reasons someone would want to purchase a BMW, Italian shoes or a Rolex watch. What message does this send to the purchaser’s family, friends and peers? What feelings are being aroused in the buyer? You can argue that these products are a ‘want’ but I would argue that they can also meet a need. That need may be to appear or feel affluent, powerful and successful. This is where your marketing must be targeted.

Routine purchases are easier to market because you are addressing basic physiological needs such as hunger, thirst, shelter, security etc. Consumers will always routinely buy bread but should they choose white, brown or multigrain? In this scenario competition is high and marketers fight to create demand for their products. With specific purchases the consumer often does not have the time or flexibility of decision provided by the other purchase categories. Imagine you are out in the middle of nowhere and your car battery goes flat. The kids are whining, the air conditioning is not working and your wife’s giving you the evil eye. Are you going to shop around for the best price and carry out extensive research? Of course not! The point I’m making is that before you can develop an effective marketing plan you must know what problem your products or services solve and your customers purchase decision process.

Tony Grima

Psychometric Testing

Recruiting the wrong people can seriously damage a business in many ways, particularly if they are managers and in a position to make important decisions. When organisations do get their recruiting wrong it is often not discovered or acted on immediately and the negative impact on operations, employee morale and company reputation can go on for some time. Poor performance from an employee may not be their fault; it may be that they just were not suitable for the role they fill but were able to convince an interviewer (and themselves) otherwise. A company is then faced with mounting cost from recruiting, re-training, loss of intellectual capital and relationship damage with customers.

To reduce this risk human resource professionals and recruiters are increasingly turning to psychometric testing as a way of finding ‘quality’ candidates in a cost-effective way. Psychometric testing in essence is a tool to measure the mind. The word ‘psycho’ means mind and ‘metric’ means measure. Employers will normally use a combination of the two types of psychometric test; aptitude test and personality questionnaires. These ability test are designed to measure performance in a number of areas. The results will provide a useful profile of an individual’s personality and characteristics. The test can be customised to pinpoint qualities required for a particular job. As an example, a sales role may require someone who is extroverted or a manager role may require someone who is logical and decisive.

Passing the test

It is normal to feel anxious or nervous prior to taking these test. People feel that they are revealing some deep held traits and feelings which should remain private. There is something raw about exposing the workings of our minds. If you are overly anxious it will likely affect your performance so try to remain calm. Fortunately you can prepare for the test as there are numerous books available and practice test on-line. It is important to know that some test will have timed constraints and others will not. Ensure you understand the directions before you start and do not be afraid to ask the administrator questions if you require further clarification. Most test will allow you a few practice questions before starting. Keep in mind that you also improve your score by answering more questions, so try to move through the test quickly but carefully. Most test allow you to go back to unanswered questions so if you get stuck keep moving forward and return to the unanswered questions if time allows. An example of the types of test you will encounter are as follows.

  • Verbal aptitude: Test for the level of understanding of words and the ability to use them effectively. Many view the command of vocabulary as a true measure of intelligence.
  • Numerical aptitude: Test for your ability to reason and perform arithmetic functions.
  • Perceptual aptitude: These test involve a series of diagrams or shapes from which you are required to pick the odd one out or next in sequence. The test identifies how well you are able to identify patterns and meaning in complex information. It is argued that these test are a ‘fair’ method of determining intelligence because they are not based on verbal or numerical ability. Doing well in these test will establish intelligence not revealed in conventional ways.
  • Spatial aptitude: Test for the ability to hold an image in your mind and rotate it to view other sides or angles. We do this naturally without really being aware of it and it is a vital life skill.
  • Personality testing: Measures personality traits such as how you relate to emotions (emotional intelligence) and how you relate to other people or handle pressure. Whilst high scores in the aptitude test will be viewed favourably by employers it does not necessarily mean that the candidate will be suited for the role despite having the qualifications and intelligence. These test are usually not timed and there is no pass or fail.

Criticism of psychometric testing

Psychometric testing is being increasingly utilised everyday by employers looking for a quick cost-effective way of selecting employees. However the method is not without its critics. The test are not regulated and often conducted by unqualified administrators.  There is doubt around the appropriate analysis and application of the results. If the test are not evaluated by a specialist it is difficult to know if candidates are being seen in a true light. Do the test truly capture the various strengths and weaknesses of an individual and their suitability for a particular function? It is known that many people being tested try to provide the answers that the employer expects. For example, someone being tested for a senior manager role may provide answers which portray them as logical, decisive and strong when in reality they may be the opposite. When this occurs there is no validity to the test. In addition, it is argued that the test favour particular ethic groups and younger people over older people. Psychologist claim that the test are eurocentrically biased in favour of Caucasians and Asians over other groups.

Regardless of the faults, many agree that psychometric testing is a useful tool in the hiring process as long as it is not the sole selection factor. I would like to hear about your experiences with psychometric testing either as an applicant or test administrator. Feel free to share you thoughts and leave a comment.

Tony Grima

The Problem with Opinions

Everyone has an opinion and there is nothing wrong with that, but that is all they are – opinions! In a business environment opinions just won’t cut it and must be supported with a reasoned argument. Can you imagine as a manager being asked to provide a high-level report to your superior and all you present is a document full of opinions. You may well have a very short career. In this post I will explain a suggested structure to assist you in putting together a business case based on reasoned argument.

Step 1: What is the issue or problem?  – It is important right from the start to get a common understanding of what the issue or problem is.  What are the key factors and what frames of reference should be used. It must be understood that there may be different perceptions on what the problem is and it is crucial that a reader can understand your reasoning although they may not necessarily agree with it.

Step 2: What are your assumptions? – It will be unlikely that you will have at your disposal all of the information required to put together a report. Important data may be spread over a number of stakeholders who for various reasons may not be as forthcoming or cooperative. With this in mind you must clearly state your assumptions when developing your argument. Furthermore, it is critical that you also point out how crucial your assumptions are to your argument. As an example, your report may state that your findings are based on the assumption that your organisation will win a contract or revenue is expected to grow by 15% etc.

Step 3: What are the facts? – The tools for analysis may vary depending on the problem or issue. There is a wide range of frameworks available to help you conduct a thorough investigation of the available facts such as key ratios for financial problems or the congruence model to look at factors such as culture or organisational structure. The two key questions are what is the ’cause and effect’ and what are the ‘implications’.

Step 4: Conclusion – After analysing the available facts and taking account of any assumptions, you now must form a reasoned argument leading to a conclusion. The conclusion must not be based on opinion but linked and built around your investigations and analysis.

Step 5: The Recommendation – What you are saying here is that you have analysed the facts, articulated your assumptions before arriving at a conclusion, and this recommendation is based on the said conclusion. It is also a good idea to provide a number of recommendations to resolve the problem or issue and also outline any risk and how those risk will be mitigated.

I hope the above helps to provide you some structure to assist in gathering your thoughts and to provide a professional and persuasive argument based on reason and not opinion.

Tony Grima

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