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> Purchase Logic: The Foundation of Marketing Strategy
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> Using Research to Identify Purchase Logic

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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.

This paper is a discussion of Purchase Logic and how to use it.

> We will begin by defining the term.

> Then we will explain the importance of Purchase Logic to you, the marketer and seller.

> In closing, we will offer some examples of how to turn an understanding of your market's Purchase Logic into positive, profit generating action.

Part 1. What is Purchase Logic?

Term Definition

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.

What Determines Purchase Logic

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

Examples: How Purchase Logic Becomes Complex

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 spouse and another couple, 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 four people's tastes 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.

COMPONENTS OF PURCHASE LOGIC

A systematic approach to examining Purchase Logic will look at each of its four components: Benefits, Barriers, Trade-offs and Price.

PURCHASE LOGIC IS A PROCESS

How Will Someone React to What Is Offered?

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

What Motivates a Purchase

We all buy benefits. Even if we have a specific idea of what features will deliver them, benefits are what we seek. 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 may appear irrational. Buyers are often reluctant to share their wants with a seller; frequently they are not even conscious of some of them. Nevertheless, wants are usually most influential in a buying decision.

Think about purchasing a watch. The desire for prestige or some other very emotional need or want justifies the choice of a Rolex over some much lower priced alternative. Both do an equally good job of satisfying the basic need to tell time reliably.

BARRIERS

What Prevents a Purchase

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. They can be at least as important as the desired benefits. Overcoming barriers can become the most important benefit.

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. However, barriers must be dealt with. The seller needs to know what they are in order to address 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 choice.

TRADE-OFFS

What Is the Relative Value?

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

What Am I Willing to Pay?

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.

Cost does not determine price unless you are selling a commodity. However, 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:

1. What is the relative value of the options I am still considering?

2. Is the value of one choice enough to justify a higher price?

3. Since nothing is perfect, which minuses am I willing to live with?

Part 2. Why Should You Care About Purchase Logic?

Real Benefits to the Seller

There are four specific areas in which a seller can apply an understanding of a Purchase Logic to enhance the likelihood of success: Analyzing the Market, Communicating, Identifying Qualified Prospects and Altering Offerings for Stronger Appeal.

ANALYZING THE MARKET

Who Wants What

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. This gives you power to change your offering or approach, and thereby strengthen or defend your position.

COMMUNICATING

What Should Advertising Say?

No matter what communication vehicle is used, knowing your prospect's Purchase Logic will help you talk about the right topic at the right time. You will know what benefits to stress in order to motivate purchase. Also, you will know how to "position your product" for greater appeal versus others in its market.

IDENTIFYING QUALIFIED PROSPECTS

How to Find Customers

From Purchase Logic you can pull out some salient questions or characteristics that will help you identify good prospects. In some cases you may even be able to construct selling messages that will prompt buyers to self select and identify themselves to you.

ALTERING OFFERINGS FOR STRONGER APPEAL

How to Improve Your Product or Service

As we have already suggested, Purchase Logic can also help you revise or improve your products and services to give them stronger appeal. Clear understanding of your market's needs and wants and their relative importance will give you the guidance you require to make effective changes.

Part 3. How Is Purchase Logic Turned Into Positive Action?

Purchase Logic Leads to 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.

We close with two brief examples of how an understanding of Purchase Logic can make a difference. The first focuses on how Purchase Logic may be used to redefine product offerings. The second illustrates how understanding Purchase Logic can increase the power of your communications.

PRODUCT REDEFINITION

Example #1

This example is a case history. A vehicle fleet leasing company was experiencing disappointing growth and competitive price pressure. It expected to increase margins and gain new points of difference against competition with several add-on options to its base service.

We were asked to determine which of the add-on services were most valuable. We conducted qualitative research to learn about the Purchase Logic of fleet buyers. From this work, we discovered two important findings:

1. First, the add-on options did not offer significant benefits to fleet buyers. Some buyers were neutral about them; most were negative. Although these extra services would be attractive to fleet car drivers, they would create many potential problems for the fleet buyer. Fleet buyers felt that these add-on options would make their job harder.

2. Second, by learning about the Purchase Logic, we came to understand the personal risk that fleet buyers face regarding residual values at the end of a lease. We identified a large opportunity to gain market share by assuming that risk for them.

With this understanding of fleet buyer Purchase Logic, our client abandoned the planned add-on services. Instead it developed residual value insurance that eliminated personal risk for the fleet buyer. As a result, the business grew significantly.

ADVERTISING MESSAGE

Example #2

You are all familiar with small package overnight air-delivery services and at least some of their advertising. Think about your own Purchase Logic for these services. Which of the following two messages speaks to you? Which company would you choose?

"When it absolutely, positively, has to be there."

"If it doesn't get there on time, you get your money back."

Federal Express understands the Purchase Logic of the business customer and has reflected this understanding in its communications. The company knows that $25 is virtually no compensation for the aggravation and humiliation of standing up in front of an audience (your boss, your potential customer) without slides to present. It also knows that no refund will make up for a contract that was disqualified because it arrived late.

Federal Express is talking to business customers. The other company is not. Both services may be equally reliable. However, Federal Express has demonstrated how a seller can build a strong perceived point of difference by making its message fit the Purchase Logic of its customers.

All material copyright © 1995-2008 by Urban Wallace Associates.