Buyer Group Decision Making?

Fireyscorp has put forth some good research into the subject, but I’m still curious about the way the buyer group decision making works.

For simplicity’s sake let’s imagine only price and brand rating are a factor in a group’s choices. Say this group prefers 30% brand rating and 70% price as their weighted buying incentives. Does that mean that a company that has a 30% lower brand rating than their competitor would have to sell at a price 70% lower than that competitor’s in order to compete for the same sale? For example:

Company A has 100% brand rating and Company B has 70% brand rating (30% less). If Company A is selling for 100,000 per unit does that mean Company B would have to sell at 30,000 per unit (70% less) to appeal to that same buyer group?

Or are the buyer group weighted decisions more of an all-or-nothing effect, meaning that since 70% of their incentive is on price, could Company B simply sell for $1 less than Company A and still get the sale even though their brand is significantly lower?

Thanks for any insight!

Aegis …

It is definitely not all-or-nothing as per your example.

It is also not as simple as the 70% lower example you noted.

All of the preference factors are considered together, which makes the buying decision quite complicated, but also quite realistic. Price is also complicated because some consumers will pay more for a product that best fits their needs, but how much more also depends on how close competing products are and how price sensitive the consumers are and how much of a price difference there is … and that prices are not overly inflated … very complex.

This level of detail is not something we can really share publicly. Sorry!

1 Like