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RETAIL MANAGEMENT
LECTURER: VALERIA VOLPONI Valeriaelisabetta volponi@gmail com Valeriaelisabetta.volponi@gmail.com

Aims of the lesson

Understand

behaviour

the basic model of consumer

Evaluate

the consumer decision making process and know the factors that influence it the theory of motivation the influence of personality on consumer choice behaviour the risk involved in choosing between alternatives

Understand Recognise

Understand

Consumer behaviour and retail marketing strategy development

Why

do we study this? Because in order to increase the probability of success, success retailers must understand consumer behaviour behaviour may be defined as th process that the th t underlies d li an i individual di id l decision of what, when, where, how and from whom to purchase good and services

Consumer

Consumer behaviour and retail marketing strategy development

Purchase

behaviour is a complex phenomenon with multiple phases and phenomenon, dimensions individual product or service evokes a specific and possibly unique response from it set its t of f customers t shopping opp g situation o is unique q e

Each

Each c

Basic influencing factors in the shopping process

THE CUSTOMER PERSONAL FACTORS Demographics Economic Situational

SHOPPING PROCESS SOCIAL FACTORS Family Group Class Culture

INFLUENCING FACTORS PSYCHOLOGICAL FACTORS Perception Motives Learning Attitudes Personality

The shopping behavioural process

The

question to answer is: How do customers make their shopping decisions? decisions? to economic theory, often the only significant variable to be considered is the price and the available promotions even in the apparently simple case of buying y g a tin of o baked e beans, e , a shopper oppe in a supermarket, faced by the large number of competitors, may have a number of factors in mind

According

But

Basic variables in shopping decision making

EXPERIENCE POINT OF SALE

LIFESTYLE

CONSUMER

The shopping behavioural process

Shopping

experience: the shoppers have probably already tried a number of brands, brands they may have had bad experiences with a particular brand or may have found one particularly good is a much i h undervalued d l d factor f t , particularly by those advertising agencies that believe creative creative marketing marketing is all it takes to sell the brand

It

The shopping behavioural process

Shoppers

lifestyle: Apart from the physical experience of the product, product the shoppers may also demand that it conforms to their lifestyle

The shopping behavioural process

The

point of sale: Here the shopper will be confronted with the brands on offer and the display at the point of sale display reflects the supermarkets own contribution, which is in turn influenced by th buying the b i patterns tt of f its it other th customers t

This

The shopping behavioural process

Retail

promotion: due to the economic crisis it has become a very strong crisis, marketing factor, affecting business and revenues risk: if I sell one appealing brand at h lf its half it price i to t attract tt t customers t for f one week, how do I get the same customers to pay the entire price the week after? How do customers perceive the real value of the product?

The

The shopping behavioural process

The

price of the item: is a major factor in own label marketing. own-label marketing Shoppers usually buy private labels because they are perceived as offering a better value for money

The shopping behavioural process

Which

of these factors, if any, will eventually swing the balance depends upon the individual shopper happens is usually not completely clear, least of all to the shoppers th themselves l a result, e , there e e are e se several e theoretical eo e c models of the shopping decision-making process

What

As

Model 1. 1 Basic

AWARENESS

TRIAL

REPEAT PURCHASE

Simple model of shopping behaviour

Products Three The

that are purchased frequently and used repeatedly (commodities) stages: awareness, trial, repeat purchase lesson for the retailer: you cant can t obtain repeat purchases, even from loyal shoppers, without o go going g through o g the e stages ge o of building awareness and then obtaining trial use, which has to be successful

Simple model of shopping behaviour

Kotler,

1997 an enriched version of this model RECOGNITION SEARCH OF ALTERNATIVES

Proposed PROBLEM

INFORMATION EVALUATION PURCHASE POST

DECISION

PURCHASE BEHAVIOUR

Simple model of shopping behaviour

Evaluation The

of alternatives process of choosing can be represented as the result lt of f a number b of f filtering processes, some of which are under the consumers consumer s control and some under the retailers

Simple model of shopping behaviour

Filtering

processes

Availability Awareness Suitability

Consumer decision making (CDM)

All

the influencing factors we have seen do not act in isolation isolation, they all interrelate most relevant of the models explaining how they interrelate is the Consumer Decision Model proposed by Howard

The

It

is made of six interrelated components or variables es

Consumer decision model

Consumer decision making (CDM)

On

these six, the three central components brand recognition (b), (b) attitude toward the brand (a) and confidence judging the brand (c) make up the buyer buyers s brand image can b be thought th ht as th the ABC ABCs of f consumer behaviour

They Th

Consumer decision making (CDM)

A

Attitude: is defined as the extent to which the shopper expects the brand to yield satisfaction of a particular need spurs the intention to buy the brand

It

Consumer decision making (CDM)

B

Brand recognition: is defined as the extent to which the buyer knows enough about b t th the criteria it i to t categorise t i the th b brand, d but not enough to evaluate and distinguish it from other brands in its product category helps consumers build an both an attitude toward the brand and confidence in their judgement of it

Recognition

It

tends to be physical: the colour, size, shape p and texture of the box (p (pack & design)

Consumer decision making (CDM)

C

Confidence: is defined as the shoppers degree of certainty that this evaluative l ti judgement j d t of f a brand b d is i correct t the j judgement g is correct, , it is very y likely y to increase the intention to buy

If

Consumer decision making (CDM)

Although

shown as 3 separate elements making up brand image, brand recognition, iti attitude ttit d towards t d a brand b d and a buyers confidence in the judgement of the brand are all intimately interrelated recognition forms a mental foundation in the memory, upon which th other the th t two components t of fb brand di image build

Brand

Strategy development and influencing factors

So

far we have seen factors relating to the features of the product/brand in taking their final decisions, and indeed throughout g the whole p process, , customers are influenced by a wide range of factors and lifestyle, situational influences, psychological factors and social factors

But

Age

Its It s coffee time

Age & Lifestyle

The

demands of individuals and families vary over time ( (1996) ) identified a number of stages in an adults life, each of which patterns of earning g has characteristics p and consumption

Mercer

Age & Lifestyle 1 1. Bachelor Stage

Young, single

home

people not living at

Recreation oriented, , they y are prospective customers for providers of entertainment

Age & Lifestyle 2. 2 Newly married couples

Young, no They

children

have high joint incomes and p them tend to spend this group are the so called yuppies i beloved b l d of f the th suppliers li of f the luxury goods

Among

Age & Lifestyle 3. 3 Full nest I

Youngest They

child under six

are the typical first time house y who, , at the same time, , buy y all buyers the other durable and household goods that become part g p of a home

Age & Lifestyle 4. 4 Full nest II

Youngest They They

child six or over

are often the target of the mass consumer advertisers represent the archetypal h housewife if with ith a f family il t to feed f d

Age & Lifestyle 5. 5 Full nest III

Older For

married couples with dependant children them, , the p pattern of buying y g may y have become more selected as income increases

Age & Lifestyle 6. 6 Empty nest I

Older More

married couples, not retired, no children living at home able to spend p on luxuries

Age & Lifestyle 7. 7 Empty nest II

Older More

married couples, retired, no children living at home able to spend p on luxuries, , although of different types

Age & Lifestyle 8. 8 Solitary Survivor I

In

labour force support requirements

Pose

Age & Lifestyle 9. 9 Solitary Survivor II

Retired Pose

support requirements

Situational factors
The

external circumstances or conditions that exist when a shopper is making a purchase decision to t the th worsening i of f the th economic i situation, a consumer may decide to reject the purchase entirely A conviction that the supply of a particular product is limited may impel a person to buy it while it is available

Due D

Psychological factors
Abraham Due

Maslow (1954), hierarchy of needs

to the worsening of the economic situation, a consumer may decide to reject th purchase the h entirely ti l A conviction that the supply pp y of a particular p product is limited may impel a person to buy it while it is available

Psychological factors

Social factors
The

forces that other exert on buying b h i behaviour are called ll d social i lf factors t factors may be grouped into major areas including: family, social classes culture classes, culture, subcultures and reference groups

These

Social classes
Within

all societies, people rank others th into i t higher hi h or lower l positions iti of respect ranking results in social classes: an open (?) group of individuals who have similar social rank

This

Social classes
Social

classes are still existing: in the W t Western Countries C t i they th are based b d on occupation, education, income, wealth, l h race, ethnic h i group and d possessions the former Soviet Union, wealth and income are less important than education and occupation

In

Subcultures and reference groups

Social

classes are still existing: in the W t Western Countries C t i they th are based b d on occupation, education, income, wealth, l h race, ethnic h i group and d possessions the former Soviet Union, wealth and income are less important than education and occupation

In

The customer franchise

Once

you have established a proper relation with your customer customer, through a series of retail marketing investments over the years years, you have to protect it
This

asset is often referred to as the customer c s o e franchise c se

The customer franchise

At

one extreme it may be derived from the individual relationship developed face to face by the retailer At the other other, it is the cumulative image held by the consumer resulting from long exposure p to a number of retail advertising g campaigns may regularly switch brands for variety, but they still retain a positive image of the brand

Consumers

The customer franchise

The The

keyword is: VALUES

franchise is based on an accumulation of impacts over time: every action must be carefully evaluated Every communication must appeal to the customers deep d values l

Few (good) examples

Few (good) examples

Few (good) examples

Walk like an Egyptian: the mechanics of shopping

The

first principle behind the science of shopping is the simplest one: there are certain physical and anatomical abilities, tendencies, limitations and needs common t all to ll people l the retail environment must be tailored to these characteristics Stores, banks, Stores banks restaurants and other such spaces must be friendly to the specifications of the human human animal animal

And

Walk like an Egyptian: the mechanics of shopping

There

are all the obvious differences in shoppers based on gender, age, income and tastes there are many more similarities Being aware of this means that where shoppers h go, what h they h see and dh how they h respond determine the very nature of their shopping experience

but but

Walk like an Egyptian: the mechanics of shopping

They y They

will either see merchandise and signs g clearly, or they wont will reach objects easily or with difficulty They will move through areas at a leisurely space or swiftly, or not at all

Walk like an Egyptian: the mechanics of shopping

All

of these p physiological y g and anatomical factors come into play simoultaneously, forming a complex matrix of behaviors must be understood if the retail environment is to adapt itself successfully to the animal that shops

which

A lesson to learn
Amenability y Take

and profitability p y are totally y and inextricably linked care of the former, former in all its guises guises, and the latter is assured and operate a retail environment that fits the highly particular needs of shoppers h and d youve created t da successful store

Build

The twilight zone

Imagine g

we are standing g in the middle of a parking lot is moving at a pretty brisk clip toward the store it because they are all so damned excited to be going there?

Everybody Is

The twilight zone

Maybe y But

maybe not: remember that a parking lot is not the place for a leisurely stroll: it its s speeding cars, exhaust fumes and asphalt, with the usual elements on top rain, rain wind, wind cold, heat

The twilight zone

Lets

join everybody rushing for the store

What Its

do you see ahead? Windows? And whats what s in them? Stuff? Or is it signs? hard to tell, because of how the sunlight glares l off ff the th glass, l or because b its it dark d k and d the lighting is too low retailers dont change the lighting depending on whether its day or nightmeaning that visibility must be pretty bad during at least one of those periods, i d if not t both b th

Most

The twilight zone

In

any case, whatever is in the windows, the scale is wrong are too many small thing there that we cant quite see from this distance in i mind i d that th t the th f faster t people l walk, lk the narrower their field of peripheral vision becomes by time we reach the windows, we dont have the time to stop. Weve got that good cariovascular parking lot stride going, and it b its bringing i i us right i ht i into t the th entrance t

There Bear B

But

The twilight zone

We

hit the doors and we are inside

Consumers

start making adjustments: they are slowing their pace, adjusting their eyes to the change in light and scale, craning their necks to begin g taking g in all there is to see ears and noses and nerve endings are sorting out the rest of the stimuli: analyzing the sounds and smells, judging whether the store is warm or cold

Meanwhile, Meanwhile their

The twilight zone

That

means that whatever is in this twilight zone they cross before movingis pretty much lost on them there is a display or merchandise, they are not g going g to take it in there is a sign, theyll probably be moving too fast to absorb what it says the sales staff hits them with a warm Can I help you? the answer is going to be No

If If

If

The twilight zone

Its

a law of nature: shoppers pp need a landing g strip p

The twilight zone

A A In

big store can afford to waste some space up front smaller one can cant t either case, store merchandisers can do t two sensible ibl things thi where h th the t transition iti zone is concerned: they can keep from trying accomplish anything important there they can take steps to keep that zone as small as possible

And

The twilight zone

So, what

zone?

can you do with the transition

Greet You Y

customers, remind them where they are, start the seduction can offer ff a basket, b k t a map, or a coupon think that being g firstis necessarily y the best (flowers)

Dont

How to read a sign

To

say whether a sign or any in-store media works or not, theres only one way to assess it in place most common mistake in the design and p placement of signs g and other message g media is the thought that theyre going into a store we are talking signs, its no longer a store..its store..it s a 3D tv commercial

The

When

How to read a sign

First, First you

attention

have to get your audience audiences s

Then, Th you

h have t to present t your message i in a clear, logical fashion the beginning, the middle the ending middle, have to deliver the information the way people absorb it: a bit at a time, a layer at a time, and in the proper sequence

You

How to read a sign

Why

is it so important?

Because

70% of the purchasing decisions today are being made on the premises of the store itself role l of f merchandising h di i h has never b been greater: products now live or die by what happens on the selling floor cant waste a chance to tell shoppers something you want them to know

The Th

You

How to read a sign

So

you cant just look around your store, see where there are empty spots on the walls and put the signs there store is a collection of zones and you have to map them out before you can place a single i l sign i y yourself What shoppers pp will be doing g here?

Every

Ask

How to read a sign

Over Over

there theyll be browsing around, so you can deliver a little more detail there by the registers they will be standing still for a minute and a half, a perfect window for a longer message then theyll be on their way out of the store, , but y you can use the exit p path to g give them a thought for the road

And

How to read a sign

Each

zone is right for one kind of message g and wrong g for all others

How we walk
The

most crucial aspect of shopping is the one that looks the simplest: how we walk tend to move pretty much as their bodies allow them to move, as is most natural and comfortable good store is by definition one that exposes p the g greatest portion p of its goods g to the greatest number of its shoppers for the longest period of time

People

How to read a sign

The

store that puts its merchandise in our p path and our field of vision in a way that invites consideration

How we walk
An

example: people slow down when they see reflective surfacesand surfaces and they speed up when they see banks Bank windows are boring and nobody much likes visiting a bank. Mirrors, on the th other th hand, h d are never d dull. ll open p a store next to a financial institution, for when pedestrians reach you theyll still be moving at a speedy clip too fast for window shopping

Why?

So, , never

How we walk
Another

fact about how people move: they invariably walk toward the right, right and they reach right when they are in front of a shelf can a retail environment respond? PLANOGRAMS: the map of which products are stocked where on a shelf

How

Using

How we walk

How we walk

Capture rate
How

much of what is on display p y in supermarkets is seen by shoppers one fifth of all shoppers actually see the average product on a supermarket shelf is a reliable zone in which shoppers will probably see merchandise: it goes from slightly li htl above b eye l level ld down t to about b tk knee level above that or below and they probably wont see it unless they happen to be looking at intently

About There

Much

Capture rate

This

means that a huge amount of retail selling g space p is, if not quite wasted, then seriously challenged

HOMEWORK
Think

about a fashion store single g branded boutique q Gucci, Prada- and tell me what would you position at the entrance of the store and at the back of the store, and why