Lecture Retailing management (6/e): Chapter 4 - Levy Weitz

Lecture Retailing management (6/e) - Chapter 4: Customer buying behavior. This chapter discusses factors consumers consider when choosing stores and buying merchandise and explores trends in consumer demographic segments.

Retailing Management, 6/e Copyright © 2007 by The McGraw­Hill Companies, Inc. All rights reserved.

Customer Buying Behavior

Jennifer Sanchez, at San Francisco

State University, is beginning to

interview for jobs For the first

interviews on campus, Jennifer had

planned to wear the blue suit her

parents bought her three years ago

But looking at her suit, she realizes

that it’s not very stylish and that the

jacket is beginning to show signs of

wear Wanting to make a good first

impression during her interview, she

decides to buy a new suit

Illustration of Buying Process

Andrew Ward/Life File/Getty Images

Illustration (Continued)

Jennifer surfs the Internet for tips on dressing for

interviews (www.collegegrad.com and

www.jobsearch.about.com) and looks through some

catalogs to see the styles being offered But she decides

to go to retail store so she can try it on and have it for her first interview next week She likes to shop at

Abercrombie and Fitch and American Eagle Outfitter, but neither sells business suits She remembers an ad in the

San Francisco Chronicle for women’s suits at Macy’s

She decides to go to Macy’s in the mall close to her

apartment and asks her friend Brenda to come along

Jennifer values Brenda’s opinion, because Brenda is

interested in fashion.

Illustration (Continued)

Walking through the store,

they see some DKNY suits

Jennifer looks at them briefly

and decides they’re too

expensive for her budget

and too stylish She wants to

interview with banks and

thinks she needs a more

conservative suit

John A Rizzo/Getty Images

Illustration (Continued)

Jennifer and Brenda are approached by a

salesperson in the career women’s department

After asking Jennifer what type of suit she wants

and her size, the salesperson shows her three

suits Jennifer asks Brenda what she thinks about the suits and then selects one to try on When

Jennifer comes out of the dressing room, she

feels that the shoulder pads in the suit make her

look too heavy, but Brenda and the salesperson

think the suit is attractive Jennifer decides to buy the suit after another customer in the store tells

her she looks very professional in the suit

Illustration (Continued)

Jennifer doesn’t have a Macy’s charge card, so

she asks if she can pay with a personal check

The salesperson says yes, but the store also

takes VISA and MasterCard Jennifer decides

to pay with her VISA card

As the salesperson walks with Jennifer and

Brenda to the cash register, they pass a display

of scarves The salesperson stops, picks up a

scarf, and shows Jennifer how well the scarf

complements the suit Jennifer decides to buy

the scarf also

Stages in the Buying Process

Types of Needs

• Utilitarian Needs –satisfied when purchases

accomplish a specific task Shopping needs to

be easy and effortless like Sam’s or a grocery

store

• Hedonic needs – satisfied when purchases

accomplish a need for entertainment, emotional and recreational experience as in department

stores or specialty stores

Social experience

Learn new trends and fashions

Satisfy need for power and status

Self-rewards

Adventure

Satisfied Hedonic Needs

(c) image100/PunchStock

Stimulating Need Recognition

Suggestions by Sales Associates

Advertising and Direct Mail

Visual Merchandise in store

Special Events in the Store

Signage

Displays

Stockbyte/Punchstock Images

Factors Affecting Amount of Information Search

Nature of the Product

Complexity Cost

Characteristics of Customer

Past experience Perceived risk Time pressure

Aspects of the Market

Number of alternative brands

Sources of Information

External

Consumer reports Advertising

Word of mouth

Internal

Memory

Digital Vision / Getty Images

The McGraw-Hill Companies, Inc./John Flournoy, photographer

How Can Retailers Limit the Information Search?

Information from sales associates

Provide an assortment of services

Provide good assortments

Everyday low pricing

Credit

Royalty-Free/CORBIS

(c) image100/PunchStock

Providing Information on Internet

Buying a Car On-line

Characteristics About Food Retailers

Evaluation of Retailers

Info Sanchez Used in Buying Suit

Information Needed to Use

Multi-Attribute Model

• Alternative retailers consumers can

consider

• Characteristic/Benefits Sought in Making

Store and Merchandise Choices

• Ratings of Alternative Performance on

Criteria

• Importance weights that consumers

attach to the merchandise

Getting into the Consideration Set

• Increase Performance Beliefs of Your

Store

• Decrease Performance Beliefs About

Competitor

• Increase Importance Weight of Attributes

on which You Have an Advantage

• Add a New Benefit on which You Excel

Purchasing Merchandise or Services

• The high-rated item may

not be available in the

store

• How can a retailer increase

the chances that customers

will convert their

merchandise evaluations

into purchases?

Customers do not always purchase a brand with the

highest overall evaluation

Evaluations into Purchases

• Don’t stock out of popular

merchandise

• Offer liberal return policies, money

back guarantees, and refunds if

same merchandise is available at

lower prices from another retailer

Types of Purchase Decisions

Extended Problem Solving

-High financial or Social Risk

Limited Problem Solving

-Some Prior Buying Experience

Habitual Decision Making

-Store Brand, Loyalty

Extended Problem Solving

Consumers devote time and effort analyzing alternatives

• Financial risks – purchasing expensive products or services

• Physical risks – purchases that will affect consumer’s health and safety

• Social risks – consumers will believe product will affect how

others view them

Extended Problem Solving

Provide a Lot Information

-Use Salespeople rather than advertising to

Limited Problem Solving

• Customers engage in this

when they have had prior

experience with products or

services

• Customers rely more on

personal knowledge

• Majority of customer

decisions involve limited

Purchase decisions process involving moderate amount of effort and time

• It depends…

• If the Customer Is Coming to You, Provide a

Positive Experience and Create Loyalty

– Make Sure Customer is Satisfied

– Provide Good Service, Assortments, value

– Offer Rewards to Convert to Loyal Customer

• If the Customer Goes to Your Competitor’s Store,

Encouraging Impulse Buying

• Have Salespeople Suggest

• Put Merchandise Where

Customers Are Waiting

Habitual Problem Solving

• For purchases that aren’t

important to the consumer

• For merchandise consumers

have purchased in the past

• For consumers loyal to brands

or a store

Purchase decision process involving little or no conscious effort

Royalty-Free/CORBIS

Customer Loyalty

• Brand Loyalty

– Committed to a Specific Brand

– Reluctant to Switch to a Different Brand

– May Switch Retailers to Buy Brand

• Store Loyalty

– Committed to a Specific Retailer

– Reluctant to Switch Retailers

Engage in Habitual Decision Making

• If the customer habitually comes to you, reinforce

behavior

– Make sure merchandise in stock

– Provide good service

– Offer rewards to loyal customer

• If the customer goes to your competitor’s store,

break the habit

– Offer special promotions

Factors Influencing the Buying Decision

Process

Family Influences Buying Decisions

Purchases are for entire

family to use

Whole family participates in

decision making process

Retailers work to satisfy

needs of all family members © Digital Vision

Culture is the meaning, beliefs, morals and

values shared by most members of a society

Western culture: individualism

Eastern culture: collectivism

Mark Andersen/Getty Images

Subcultures

are distinctive groups of

people within a culture

Reference Groups

A reference group is one or more people whom a person uses

as a basis of comparison for beliefs, feelings and behaviors.

Reference groups affect buying decisions by:

• Offering information

• Providing rewards for specific purchasing behaviors

• Enhancing a consumer’s self-image

VALS2 American Lifestyle Segments

What is Fashion?

A type of product or way of behaving that is

temporarily adopted by a large number of consumers because it is viewed as socially acceptable

Why Consumers Buy Fashions

Communicate with Others

Stages in the Fashion Life Cycle

Theories of Fashion Diffusion

Fashion leaders are consumers with the

highest social status – wealthy, well-educated consumers

After they adopt a fashion, the fashion trickles down to consumers of lower classes

Theories of Fashion Diffusion

suggests that fashions spread across

social classes and that each social class has its own fashion leaders who play a

key role in their own social networks

Subculture Theory : This theory is based

on the development of recent fashions

These fashions start with people from

lower-income groups and “trickled up” to

mainstream consumer classes.

Theories of Fashion Diffusion