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The World of Retailing Introduction to Retailing
Chapter 4
Types of Retailers
Customer Buying Behavior
Multi-Chann MultiChannel el Retailing Customer Buying Behavior
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What Inf Influences luences Consumer Behavior?
Consumer Behavior
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The field of Consumer
Behavior :
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“studies how individuals, groups, and organizations organiz ations sel ect, buy, use, and dispose of goods, goods, ser vices, ideas, or exp experiences eriences to satisfy their needs and and desir desir es.”
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Cultural Factors Social Factors Personal Factors Psychologicall Fac Psychologica Factors tors
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Questions ■
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Illustration of Buying Process
How do custom ers decide which retailer to go to and what merchandise to buy ? What s ocial and personal f act ors affect customer purchase decisions? How can retailers get c ustom ers to visit their stores m ore f requently, and buy more merchandise during each v isit? Why and how do retailers group customers into market segments?
Eva Carlyn, a student at the University of Washing, i s beginning to interview for jobs. For the first interviews on campus, Eva planned to wear the blue suit her parents bought her three years ago. But after looking at her suit, she realizes that it’s not stylish, and it shows signs of wear. She wants to make a strong first impression during her interviews, so she decides to buy a new suit.
©Digi tal Vision
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Illustration (Continued)
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Illustration (Continued)
Eva surfs the Internet for tips on dressing for interviews (www.colleg egrad.com and www.jobsearch .ab out.c om) and looks through catalogs to see which styles are offered. However, she decides to go to retail store to try things on, and to have the suit in time for her first interview next week. She usually shops at Abercr ombie & Fitch and American Eagle Outfitter, but neither sells business suits. Before going to the mall, she goes to BrandHabit.com, a site that enables her to examine and compare the suits curr ently available at the mall. Armed with a list of possibilities, she goes directly to the stores that she reviewed on BrandHabit.c om.
She likes to shop with Britt, but Britt is in Paris f or the semes ter. Since she values Britt’s opinion, Ev a shares her shopping list with Britt on Kaboodle.com. ©Ingram Publishing/AGEFotosto ck
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Illustration (Continued) Evan wanders into Macy ’s, as a salesperson approaches her in the career women’s department. After asking her what type of suit she wants and her size, the salesperson shows her three suits . Ev a photographs them with her cell phone, and text messages them to Britt in Paris. Britt likes all three, so Eva tries them on again. However, after messaging Britt more photos, all three individuals decide the 2nd suit is the most appropriate for the interview.
Illustration (Continued) Eva is happy with the aesthetics of the suit: its color, fit, fabric, and length. Although, she is about the costs of dry cleaning, and she realizes she’s spending more money than she had planned. Then Eva decides to buy it after another customer in the store tells her she appears very professional in the suit. As the salesperson walks with Eva to the cash register, they pass a display of scarves. The salesperson stops, picks up a scarf, and demonstrates to her how well the scarf complements the suit. As a result, Eva also decides to buy the scarf.
©Bananastock/ Punchstock
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Stages in the Buyi ng Process
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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. ■
Hedoni c needs – satisfied
when purchases accomplish a need for entertainment, emotional, and recreational experience as in department stores or specialty stores. 4-11
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Hedoni c Needs that Retai le rs can Sati sfy ■
Stimulation
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Social experience
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Learn new trends and fashio ns
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Satisfy need for power and status
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Ex: Background music, visual displays, scents
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Ex: Mixed-use developments, lifestyle centers Ex: T he Body Shop – learn how can live an environmentally friendly lifest yle ■
Ex: Canyon Ranch – upscale health resorts
Self-rewards
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Conflictin g Needs
Ex: personalized makeovers
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Ex: Ev a’s hedonic needs (wearing a DKNY suit to enhance self -image) conflict with her budget, and her utilitarian need to get a job. Cust omers m ake trade-offs between their conf licting needs Cross s hopping
Adven tu re
Treasure hunting for bargains
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Stimu lating Need Recognition
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Information Se arch ■
Suggestions by Sales Associates Adv ertis ing and Direc t Mail
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Amount of Information Search Depends on the v alue fro m searching versus the cost o f searching Factors A ff ecting Amou nt of Infor mation Search
Visual Merchandise in st ore Special Ev ents in the Store
Signage Displays
Free f ood sample
Product Characteristics • Complexity • Cost Customer Characterist ic s • Past experience • Perceived risk • Time pressure Market Characteristics • Number of alternative brands
Stoc kby te/PunchstockImages
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How Can Retailers Lim it the Information Search?
Sources of Information Internal
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Past experiences
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Memory
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Digital Vision/GettyImages
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External
Inf ormation from sales associates Prov ide an ass ortment of s ervices Prov ide good assortm ents Ev ery day low pricing Credit
Consumer reports Adverti sin g Word of mouth ©Dyna micGraphics/PictureQuest
Royalty -Free/CORBIS
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Retail ers encourage customers to spend ti me ■
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Multiattribute att itude model:
Customers who spend 40 mins in a store are more than twice as likely to buy than someone who spends 10 mins. Also, they typically buy 2x as many items.
Stores use f ood and personal service
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Evaluati on of Alternatives
The more time cus tomers s pend shopping, the more they will buy .
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Talbots: attention of a sales associate, light snack City Furniture: Chocolate cookies Gymboree: television playing kids’ videos
Customers see a retailer, product, or servic e as a collection of attributes or characteristics Predict a customer’s evaluation of a retailer, product, or service based on • Its perform ance on relevant attributes • the importance of those attributes to the customer
Websites prov ide enjoyable experiences with technologies 4-19
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Information about Retailers Selli ng Groceries
Information Used i n Eval uating Retailers
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Information Needed to Use M ulti -Attribute Model
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Information Eva Used in Buying Suit
Alternat iv e Consumer Considering ■ Characteristic/Benefits Sought in Making Store and Merchandise Choices ■ Ratings of Alternative Performance on Criteria ■ Im portance of Criteria to Consumer ■
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Information Needed to Use Mul ti-Attribute Mod el
Getting i nto the Consideration Set Consideration set : the set of
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Alternat iv e retailers consumers can consider ■ Characteristic/Benefits Sought in Making Store and Merchandise Choices ■ Ratings of Alternative Performance on Criteria ■ Im portance weights t hat consumers attach to the merchandise
alternatives the customer evaluates when making a selection Retailers develop programs influencing top-of-mind
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awareness
Get exposure on search engines like Google Try t o be the t op of the page More stores in the same area (e.g., Starbucks)
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Methods f or increasing the chance of s tore visit af ter getting into the consideration set
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Purchasing Merchandise or Services Cust omers do not alway s purchase a brand with the highest ov erall ev aluation.
Increase Perf ormance Beliefs of Y our Store ■ Decrease Perf ormance Beliefs About Competitor ■ Increase Importance Weight of Attributes on which You Hav e an Adv antage ■ Add a New Benef it on which Y ou Excel ■
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The high-r ated item may not be available in the store. How can a retailer increase the chances that customers will convert their merchandise evaluations into purchases?
T h e M c G r a w -H i l C o m p a n i e s ,I n c / . J l i l B r a a t e ,n p h o t o g r a p h e r
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Converting M erchandi se or Services Evaluati ons in to Purchases ■
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Postpurchase Evaluation
Measure: the number of abandoning carts in stores and at websites Methods to reduce it:
Don’t st ock out of popular merchandise Reduce waiting times at checkout • Digital displays offering entertainment (Disney) • Apple stores – cell check-out Easy navigation and check-out at websites (amazon.com) Of fer liberal return policies, money back guarantees, and refunds if same merchandise is available at lower prices from another retailer
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Satisf action
T h e M c G r a w -H i l C o m p a n i e s ,I n c / . A n d r e w R e s e k , p h o t o g r a p h e r
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A post-consumption evaluation of how well a store or product meets or exceeds customer expectations
Becomes part of the customer’s internal inf ormation that affects f uture store and product decisions Builds s tore and brand loyalt y
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Type s of Purchase Decisions
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Extended Problem Sol ving Consumers devot e time and eff ort analyzing alternativ es
Extended Problem Solv ing -High f inancial or Social Risk
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Limited Problem Solv ing -Some Prior Buy ing Experience
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Habitual Decis ion Making
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-Store Brand, Loyalty
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Financial risk s – purchasing expensiv e products or serv ices Phys ical risks – purchases that will aff ect consumer’s health and saf ety Social risk s – cons umers will believ e product will af f ect how others view them
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What Retail ers Need to d o for Customers Engaged in
Lim ited Problem Solving
Extended Problem Sol ving
Purchase decisions process in v olv ing moderate amount of eff ort and time
Provid e a Lo t of Info rmation -Use Salespeopl e rather th an adv ertising to
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communicate with customers ■
Reduce the Risks
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-Off er Guarant ees
Customers engage in this when they have had prior experience with products or services Customers rely more upon personal knowledge Majority of customer decisions involve limited problem solving
(c) Brand X Pictures/PunchStock
-Return Privileges © Roya lty -Free/CORBIS
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What do Retailers Need to do for Customers Engaged in Limi ted Problem Solv ing? ■ ■
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, Change Behavior Offer More Convenient Locations, Better Service and Assortments
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Encouraging Im pulse Buyi ng
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Impulse buying: one common type of limited problem solving Influence by using prominent point-ofpurchase (POP) or point-of-sale ( POS)
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Have Salespeople Suggest Add-ons Have Complementar y Merchandise Displayed Near Product of Int erest Use Signage in Aisle or Special Displays Put Merchandise Where Customers Are Waiting
P h o t o L i n k / G e t y I m a g e s
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Habitual Problem Solving
Custome r Loyalty
Purchase decision process involving little or no conscious effort
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Brand Loyalty
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For purchases that aren’t important to the consumer For merchandise consumers have purchased in the past For consumers l oyal to brands or a store
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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
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What Retail ers Need to do for Custome rs to Engage i n Habitual Decision Making
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Social Factors Infl uenci ng the Buyi ng Decision Process
IT DEPENDS
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If the customer habitually comes to you, reinforce behavior Make sure merchandise in stock Provide good service Offer rewards to loyal customer
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If the customer goes to your competitor’s store, break the habit Offer special promotions
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Famil y Infl uences Buying Decisions
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Reference Groups A reference group is one or more people whom a person uses as a basis of comparison for beliefs, feelings and behaviors.
Purchases are f or entire f amily to use
Reference groups affect buying decisions by: ■ Offering information ■ Providing rewards for specific purchasing behaviors ■ Enhancing a consumer’s self-im age
Whole f amily participates in decision making process Retailers work to s atisfy needs of all f amily members
k c o t S h c n u P / 0 0 1 e g a m i ) c (
Kids in the U.S. spend over $200 billion on personal items. They directly influence the purchase of another $300 billion worth of items such as food and clothing. 4-41
Reference Groups
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Culture Culture is the meaning, beliefs, morals and values shared by most members of a society
Ev a…. looks to
Soccer player Mia Hamm and tennis player Maria Sharapova for the selection of athletic wear Jessica Simpson for casual fashion advice
Western culture: individualism Eastern culture: collectivism
Store adv ocates:
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Customers that like a store so much that they actively share their positive experiences with friends and family Victoria Secret Alpha Moms 4-43
Subcultures are distinctive gr oups of people within a culture
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Criteria for Evaluating Market Segm ents
Methods for Segmenting Retail Markets Geo-demographic
Act ionable ■ Identifiable ■ Substantial ■ Reachable ■
Geographic
Lifestyle
Segmenting Markets
Benefits
Demographic
Buying situations
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Geo-demographic Segmentation “Birds of a f eather Flock Together”
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Dist ribution of Gray Collar Aging Couples Near Suburbs
PRIZM (Potential Rating Index by Zip Market – Claritas (www. Claritas.com) ESRI Tapestry
Town and Gown
Latino A merica
College Town Singles
Hispanic Middle Class
Foreign Films (+)
Boxing (+)
Dogs (-)
Dance Music (+)
Sewing (-)
Barbequing (-)
Coca Cola (+)
Avocados (+)
Fast Food (+)
Cosmopolitan
Friends (+)
Touched By an Angel (+ )
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Sports Illustrated (+ ) 4-47
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VALS2 American Lifestyle Segm ents
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