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Chapter 4
Customer Buying Behavior
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The World of Retailing
Introduction to Retailing
Types of Retailers
Multi-Channel Retailing
Customer Buying Behavior
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1) What Influences Consumer Behavior 2/13
3 /2 8
Cons umer Behav i or
The f i el d of Consumer Behavi or :
st udi es how i ndi vi dual s, gr oups, and
or gani zat i ons sel ect , buy, use, and di spose
of goods, ser vi ces, i deas, or exper i ences t o
sat i sf y t hei r needs and desi r es.
4-4
1) What Influences Consumer Behavior 6/13
4 /2 8
What Infl uenc es Cons umer Behav i or ?
Cul t ur al Fact or s
Soci al Fact or s
Per sonal Fact or s
Psychol ogi cal Fact or s
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4-5
Questions
How do customers decide which retailer to go to
and what merchandise to buy ?
What social and personal f actors affect customer
purchase decisions?
How can retailers get customers to visit their
stores more f requently, and buy more
merchandise during each v isit?
Why and how do retailers group customers into
market segments?
4-6
Eva Carlyn, a student at the University
of Washing, is 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 its 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.
Il l ustrati on of Buyi ng Process
Di gi tal Vi si on
4-7
Il l ustrati on (Conti nued)
Eva surfs the Internet for tips on dressing for
interviews (www.colleg egrad.com and
www.jobsearch.about.com) 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 Abercrombie & 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 currently available at the mall.
Armed with a list of possibilities, she goes directly to
the stores that she reviewed on BrandHabit.com.
4-8
Il l ustrati on (Conti nued)
She likes to shop with Britt,
but Britt is in Paris f or the
semester. Since she values
Britts opinion, Ev a shares
her shopping list with Britt on
Kaboodle.com.
Ingram Publi shing/AGEFotostock
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Il l ustrati on (Conti nued)
Evan wanders i nto Macys, as a
sal esperson approaches her i n the
career womens department. After
asking her what type of suit she wants
and her size, the sal esperson shows
her three sui ts. Eva photographs them
with her cel l phone, and text
messages them to Britt in Paris. Britt
likes all three, so Eva tries them on
agai n. However, after messaging Britt
more photos, all three i ndividuals
decide the 2nd sui t i s the most
appropriate for the interview.
Bananastock/Punchstock
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Il l ustrati on (Conti nued)
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 shes 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.
4-11
Stages i n the Buyi ng Process
4-12
Types of Needs
Ut ilit arian Needs satisfied
when purchases accomplish a
specific task. Shopping needs
to be easy, and effortless like
Sams 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.
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Hedoni c Needs that Retai l ers can Sati sfy
Sti mul ati on
Ex: Background music, visual displays, scents
Soci al experi ence
Ex: Mixed-use developments, lifestyle centers
Learn new trends and fashi ons
Ex: The Body Shop learn how can live an environmentally friendly lifestyle
Sati sfy need for power and status
Ex: Canyon Ranch upscale health resorts
Sel f-rewards
Ex: personalized makeovers
Adventure
Treasure hunting for bargains
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Confl i cti ng Needs
Ex: Ev as hedonic needs (wearing a DKNY suit
to enhance self -image) conflict with her budget,
and her utilitarian need to get a job.
Customers make trade-offs between their
conf licting needs
Cross shopping
4-15
Sti mul ating Need Recognition
Suggestions by Sales Associates
Adv ertising and Direct Mail
Visual Merchandise in store
Special Ev ents in the Store
Signage
Display s
Free f ood sample
Stoc k by te/Punchstock Images
4-16
Informati on Search
Amount of Information Search Depends on t he value
f rom searching versus t he cost of searching
Fact ors Af f ect ing Amount of Inf ormat ion Search
Product Characteristics
Complexity
Cost
Customer Characteristic s
Past experience
Perceived risk
Time pressure
Market Characteristics
Number of alternative brands
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Sources of Informati on
Ext ernal
Consumer reports
Adverti si ng
Word of mouth
Int ernal
Past experi ences
Memory
Di gi tal Vi si on/ Getty Images
Dy nami c Graphic s/Pic ture Ques t
4-18
How Can Retai l ers Li mi t the Informati on
Search?
Inf ormation from sales associates
Prov ide an assortment of services
Prov ide good assortments
Ev ery day low pricing
Credit
Roy al ty -Free/CORBIS
4-19
Retai l ers encourage customers
to spend ti me
The more time customers spend shopping, the
more they will buy .
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
Talbots: attention of a sales associate, light snack
City Furniture: Chocolate cookies
Gymboree: television playing kids videos
Websites prov ide enjoyable experiences with
technologies
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Eval uati on of Al ternatives
Multiattribute attitude model:
Customers see a retailer, product, or service as a
collection of attributes or characteristics
Predict a customers evaluation of a retailer, product,
or service based on
Its performance on relevant attributes
the importance of those attributes to the customer
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Informati on about Retai lers Sel l i ng
Groceri es
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Informati on Used i n Eval uati ng Retai lers
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Informati on Needed to Use Mul ti -Attri bute
Model
Alternativ e Consumer Considering
Characteristic/Benefits Sought in Making Store
and Merchandise Choices
Ratings of Alternative Performance on Criteria
Importance of Criteria to Consumer
4-24
Information Eva Used in Buying Suit
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Informati on Needed to Use
Mul ti -Attri bute Model
Alternativ e 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
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Getti ng i nto the Consi derati on Set
Considerat ion set : the set of
alternatives the customer
evaluates when making a
selection
Retailers develop programs
influencing t op-of -mind
awareness
Get exposure on search engines
like Google
Try to be the top of the page
More stores in the same area
(e.g., Starbucks)
4-27
Methods f or increasing the chance of store visit
af ter getting into the consideration set
Increase Perf ormance Beliefs of Your 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 You Excel
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Purchasi ng Merchandi se or Servi ces
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 alway s purchase a brand with the
highest ov erall ev aluation.
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Converti ng Merchandi se or Servi ces
Eval uati ons i nto Purchases
Measure: the number of
abandoning carts in stores and at
websites
Methods to reduce it:
Dont stock 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)
Offer liberal return policies, money
back guarantees, and refunds if same
merchandise is available at lower
prices from another retailer
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Postpurchase Eval uati on
Satisf action
A post-consumption evaluation of how well a store or
product meets or exceeds customer expectations
Becomes part of the customers internal
inf ormation that affects future store and product
decisions
Builds store and brand loy alty
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Types of Purchase Deci si ons
Extended Problem Solv ing
-High f inancial or Social Risk
Limited Problem Solv ing
-Some Prior Buy ing Experience
Habitual Decision Making
-Store Brand, Loyalty
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Extended Probl em Sol ving
Financial risks
purchasing expensiv e
products or serv ices
Phy sical risks purchases
that will af f ect consumers
health and saf ety
Social risks consumers
will believ e product will
af f ect how others view
them
Consumers devot e t ime and ef f ort analyzing alt ernat ives
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What Retai l ers Need to do for Customers Engaged i n
Extended Probl em Sol ving
Pr ovi de a Lot of Informati on
-Use Salespeople rat her t han advertising t o
communicat e
wit h cust omers
Reduce the Ri sks
-Of f er Guarant ees
-Ret urn Privileges
Roy al ty -Free/CORBIS
4-34
Li mi ted Probl em Solvi ng
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 Pi ctures /Punc hStoc k
Purchase decisions process involving moderat e
amount of ef f ort and t ime
4-35
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 Competitors Store,
Change Behavior
Offer More Convenient Locations, Better Service
and Assortments
What do Retai l ers Need to do for Customers
Engaged i n Li mi ted Problem Solv i ng?
4-36
Encouragi ng Impulse Buyi ng
Impulse buying: one common type of
limited problem solving
Influence by using prominent point-of-
purchase (POP) or point-of-sale (POS)
Have Salespeopl e Suggest Add-ons
Have Complementary Merchandise
Displayed Near Product of Interest
Use Signage in Aisle or Special Displays
Put Merchandise Where Customers Are
Waiting
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Habi tual Probl em Sol ving
For purchases that arent 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
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Customer Loyal ty
Brand Loyalt y
Committed to a Specific
Brand
Reluctant to Switch to a
Different Brand
May Switch Retailers to Buy
Brand
St ore Loyalt y
Committed to a Specific
Retailer
Reluctant to Switch Retailers
4-39
What Retai l ers Need to do for Customers to
Engage i n Habi tual Deci si on Maki ng
IT DEPENDS
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 competitors store, break
the habit
Offer special promotions
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Soci al Factors
Infl uenci ng the Buyi ng Deci si on Process
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Fami l y Infl uences Buyi ng Deci si ons
Purchases are f or entire
f amily to use
Whole f amily participates in
decision making process
Retailers work to satisfy
needs of all f amily members
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.
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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.
Reference groups affect buying decisions by:
Offering information
Providing rewards for specific purchasing behaviors
Enhancing a consumers self-image
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Reference Groups
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
Store adv ocates:
Customers that like a store so much that they actively
share their positive experiences with friends and
family
Victoria Secret
Alpha Moms
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Cul ture
Culture is the meaning, beliefs, morals and values shared
by most members of a society
Western culture: i ndi vi dual i sm
Eastern culture: col l ecti vi sm
Subcultures are
distinctive groups
of people within a
culture
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Cri teri a for Eval uati ng Market Segments
Actionable
Identif iable
Substantial
Reachable
4-46
Methods for Segmenti ng Retai l Markets
Geographic
Demographic
Buying sit uat ions Lifest yle
Segmenting Markets
Geo-demographic
Benef it s
4-47
Geo-demographic Segmentation
Birds of a f eather Flock Together
Lat ino America
Hispanic Middle Class
Boxing (+)
Dance Music (+)
Barbequing (-)
Avocados (+)
Cosmopolitan (+)
Touched By an Angel (+)
Lat ino America
Hispanic Middle Class
Boxing (+)
Dance Music (+)
Barbequing (-)
Avocados (+)
Cosmopolitan (+)
Touched By an Angel (+)
Town and Gown
College Town Singles
Foreign Films (+)
Dogs (-)
Sewing (-)
Coca Cola (+)
Fast Food (+)
Friends (+)
Sports Illustrated (+)
Town and Gown
College Town Singles
Foreign Films (+)
Dogs (-)
Sewing (-)
Coca Cola (+)
Fast Food (+)
Friends (+)
Sports Illustrated (+)
PRIZM (Potential Rating Index by Zip Market Claritas (www. Claritas.com)
ESRI Tapestry
4-48
Distribution of Gray Collar Aging Couples Near
Suburbs
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VALS2 Ameri can Li festyl e Segments