2. Outlet selection and product purchase
A further step in the consumer decision making process
6-2
3. Chapter 6: Outlet selection and
product purchase
1. How the traditional retailing environment is
changing
2. Trend towards internet retailing
3. Factors that affect retail outlet selection
4. Why consumer characteristics can also
affect outlet selection
5. In-store influences that can affect brand
choice
6. How marketers can capitalize on these
influences
6-3
4. Consumer outlet selection
and product purchase
• Where will consumers shop?
• How do they choose a retail outlet?
– Consumer characteristics
– Store characteristics
• In-store decision alterations
• The purchase process
• Alternative to store selection
• Implications for strategy
6-4
5. Outlet Selection and Choice
Selecting a retail outlet involves the same process as
selecting a brand. That is, the consumer
recognizes a problem that requires outlet selection
engages in internal and possibly external search
evaluates the relevant alternatives, and
applies a decision rule to make a selection
6-5
6. Outlet choice vs product choice
(which one comes first?)
1. Brand (or item) first, retail outlet
second
2. Retail outlet first, brand second
3. Brand and retail outlet simultaneously
6-6
9. Use of advertising to create brand demand
and direct consumers to outlets
6-9
10. The Retail Scene
Retail outlet refers to any source of products or services for
consumers.
In-home shopping represents a relatively small but rapidly
growing percentage of total retail sales.
Increasingly consumers see or hear descriptions of products in
catalogs, direct-mail, print
television or radio
on the Internet
and then acquire them via
mail
telephone, or
computer orders
6-10
11. The Retail Scene
Internet Retailing
• Barriers to Internet Shopping
• Characteristics of Online Shoppers
Store-based Retailing
The Internet as Part of a Multi-Channel Strategy
6-11
12. Online shopping
• Increasing number of consumers preferring to
shop online - 5% in 1999 to 31% in 2004-5
• Females now using the internet
– Males 64%, females 62%
• Image of the outlet influenced by:
– Webpage design
– Convenience
– Security
– Pricing
6-12
15. The Retail Scene
Internet Retailing
Many industry experts
predicted the demise of
catalogs.
But catalogs and the
Internet appear to be
complementary.
Consumers often
purchase online after
receiving a catalog!
6-15
16. The Retail Scene
Barriers to Internet Shopping
Many barriers still exist to online purchasing, not the least of
which is the lack of Internet access. However, many who are
online still have never made a purchase.
A Forrester Research study found the following reasons among
those who are online who have never made a purchase:
6-16
17. The Retail Scene
Barriers to Internet Shopping
Online privacy concerns relate to consumer fears regarding
how personal information about them that is gathered online
might be used, including:
targeting children
being inundated with marketing messages, and
Identity theft
Online privacy concerns represent a major challenge to Internet
commerce, with estimated lost sales at some $24.5 billion!
6-17
18. The Retail Scene
Barriers to Internet Shopping
As a consequence, companies must build and sustain
highly trusted online images and relationships.
This involves such factors as
having adequate privacy policies in place
utilizing security verification systems (e.g., VeriSign), and
handling consumer information responsibly
Just as brand name can be a surrogate quality indicator, so
too can it be a surrogate for information safety and security
online.
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19. The Retail Scene
Barriers to Internet Shopping
Lack of touch or ability to physically try products prior to
purchase is also a concern.
It affects product categories such as apparel where it can
be difficult to simulate experience attributes such as fit.
Internet marketers are creating virtual product experiences
using such techniques as 3D simulations and rich media.
MVM (My Virtual Model) is an example of this technology.
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22. The Retail Scene
Characteristics of Online Shoppers
Internet shoppers tend to have higher income and
education levels than the general population, although
these differences are diminishing.
Online shoppers tend to be younger and more affluent than
the average Internet users.
While men and women are roughly equally split in terms of
internet use, women are emerging as the stronger Internet
buyer.
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23. The Retail Scene
Characteristics of Online Shoppers
Research is moving beyond simple demographics.
Trying to understand online shopping in terms of
online experience and attitudes and behaviors
regarding online shopping.
Example: Those who purchase online tend to have
more experience online. Those online 10 + years
spend 75% more than those online 2 years or less!
6-23
24. The Retail Scene
Characteristics of Online Shoppers
Shopping Lovers
The following are Adventurous Explorers
results of a study which Suspicious Learners
identifies the following
eight online shopper Business Users
segments: Fearful Browsers
Shopping Avoiders
Technology Muddlers
Fun Seekers
6-24
26. The Retail Scene
Store-based Retailing
Most sales take place in physical stores, and this will
remain true for the foreseeable future.
However traditional store-based retailing is certainly
vulnerable in ways that plays into the hands of in-home
retailers.
6-26
27. The Retail Scene
Store-based Retailing
The following are the results of a Roper survey asking
consumers why they don’t like shopping in stores:
6-27
28. The Retail Scene
Store-based Retailing
In-store shopping perceived as neither fun nor efficient by
many. Retailers fighting back with store-based activates
and technologies to improve the experience:
Brand stores add value by providing a fun
shopping environment 6-28
29. Applications in Consumer Behavior
Store-based Retailing
This Wal-Mart ad shows
one of the many ways
store-based retailers add
value for their customers
– namely providing a fun
shopping environment.
Courtesy Wal-Mart Stores, Inc.
6-29
30. The Retail Scene
The Internet as Part of a Multi-Channel Strategy
Many think of Internet
retailers as distinct from
store-based retailers and
catalogs.
However, pure play
Internet retailers such as
eBay and Amazon are
Priceline.com is an example of
only part of the pictures. an exclusive Internet retailer
6-30
31. The Retail Scene
The Internet as Part of a Multi-Channel Strategy
A multi-channel retail strategy approach is becoming
increasingly essential.
This approach can take on many forms and relates to
the shifts in consumer shopping patterns.
Over 70% of the top 100 online retailers in the U.S.
are multi-channel retailers.
Multi-channel shoppers are consumers who browse
and/or purchase in more than one channel.
6-31
32. The Retail Scene
The Internet as Part of a Multi-Channel Strategy
Consumers are utilizing multiple channel in complementary
ways since no retailing format is optimal on all dimensions.
So, the Internet can be used to
• overcome a lack of informed salespeople or the
inconvenience of researching products in-store, while
• in-store can provide “touch” and immediacy of
purchasing.
6-32
33. The Retail Scene
The Internet as Part of a Multi-Channel Strategy
6-33
34. Attributes Affecting Retail Outlet Selection
Retail outlet selection involves a comparison of the
alternative outlets on consumer’s evaluative criteria:
Outlet Image
Retailer Brands
Retail Advertising
Outlet Location and Size
6-34
35. Attributes affecting retail
outlet selection
• Outlet image
–A consumer’s or a target
market’s perception of all the
attributes associated with a
retail outlet
6-35
36. Attributes Affecting Retail Outlet Selection
Outlet Image
Store image - perception of all the attributes associated with a
retail outlet.
6-36
38. Attributes Affecting Retail Outlet Selection
Outlet Image
As these studies suggest, overall retailer image (both Internet
and store-based) relates to both functional and affective
dimensions.
6-38
39. Attributes Affecting Retail Outlet Selection
Retailer Brands
Store brands are closely related to store image, and at the
extreme, the store or outlet is the brand.
Traditionally, retailers carried only manufacturers' brands,
and only a few, such as Sears and Wards, developed their
own brands.
Increasingly retailers such as Wal-Mart and Target are
developing and promoting high-quality brands with either the
store’s name or an independent name.
The key to success of store brands--high quality at a
reasonable price.
price
6-39
40. Attributes Affecting Retail Outlet Selection
Retail Advertising
Retailers use advertising to communicate their attributes,
particularly sale prices, to consumers.
Tracking the purchases of an advertised item
understates the total impact of the ad.
Spillover sales are the sales of additional items to
customers who came to purchase an advertised item.
6-40
41. Attributes Affecting Retail Outlet Selection
Retail Advertising
Expenditure of Individuals Drawn to a Store by an Advertised Item
Source: The Double Dividend. (New York: Newspaper Advertising Bureau Inc., February 1977.
6-41
42. Attributes Affecting Retail Outlet Selection
Retail Advertising
Retailers evaluating the benefits of price or of the
promotions must consider the impact on overall store
sales and profit.
Studies show that price is frequently not the primary
reason for selecting a particular outlet.
Many retailers could benefit from emphasizing
service, selection, or affective benefits.
benefits
Online retailers advertise in mass media to build
image and attract consumers.
6-42
43. Attributes Affecting Retail Outlet Selection
Retail Advertising
Price Advertising Decisions
Retailers face three decisions when they consider using
price advertising:
1. How large a price discount should be used?
2. Should comparison or reference prices be used?
3. What verbal statement should accompany the price
information?
6-43
45. Attributes Affecting Retail Outlet Selection
Retail Advertising
Price Advertising Decisions
A reference price is a price with which other prices are
compared.
An external reference price is a price presented by a
marketer for the consumer to use to compare with the
current price.
An internal reference price is a price or price range
that a consumer retrieves from memory to compare
with a price in the market.
6-45
46. Attributes Affecting Retail Outlet Selection
Outlet Location and Size
Location and size play an important role in store choice.
All else equal, consumers generally select the closest
store.
Outlet size is also important. Generally, customers
prefer larger outlets over smaller outlets.
The retail attraction model, or the retail gravitation
model
model, is used to calculate the level of store attraction
model
based on store size and distance from the consumer.
6-46
47. Outlet location and size:
retail attraction model
Si / Tiλ
MSi =
n
Σ Si / Tiλ
=
i= 1
MSi = market share of store i
Si = size of store i (or mall)
Ti = travel time to i
λ = attraction factor for a particular product
category
6-47
48. Consumer characteristics and outlet
choice
• Shopping orientation
• Perceived risk
– Financial risk
– Social risk
6-48
49. Consumer Characteristics and Outlet
Choice
Shopping Orientation
A Shopping orientation is a shopping style that puts
particular emphasis on certain activities or shopping
motivations.
A recent study used projective techniques (in this case,
thinking about an animal) to ascertain the ways college
students approach shopping.
6-49
50. Consumer Characteristics and Outlet
Choice
Shopping Orientation: Part I
Chameleons • Shopping style situation specific or
constantly changing
• Shopping approach is based on product
type, shopping impetus, and purchase task
Collectors/Gatherers • Propensity to stockpile items and to
purchase large quantities to either save
money or alleviate the need for shopping
• Attempt to get the best price and take
advantage of retailer guarantees
Foragers • Particular and motivated to purchase only
the desired items
• Willing to search extensively and have
little store loyalty; Prefer to shop alone
6-50
51. Consumer Characteristics and Outlet
Choice
Shopping Orientation: Part II
little store loyalty; Prefer to shop alone
Hibernants • Indifferent toward shopping, with
opportunistic shopping patterns rather than
need driven
• Will often postpone even required
purchases
Predators • Purposeful and speed oriented in shopping;
plan before shopping and like to shop
alone
• Do not enjoy shopping and tend to shop
outlets where assured of getting needed
items quickly
Scavengers • Enjoy shopping both to make purchases
and as an activity
• Like to go to sales and consider shopping
to be entertainment
• Make numerous unplanned purchases
6-51
52. Consumer Characteristics and Outlet
Choice
Perceived Risk
The purchase of products involves the risk that they may not
perform as expected; such failure may result in a high
Social cost • e.g., a hairstyle that is not appreciated by one’s peers
Financial cost • e.g., an expensive pair of shoes that become too
uncomfortable to wear
Time cost • e.g., a television repair that required the set to be taken
to the shop, left, and then picked up later
Effort cost • e.g., a computer jump drive that is loaded with several
hours of work before it fails
Physical cost • e.g., a new medicine that produced a harmful side
effect
6-52
55. Consumer Characteristics and Outlet
Choice
Perceived Risk
The perception of these risks differs among consumers,
depending in part on their past experiences and
lifestyles.
For this reason perceived risk is considered a
consumer characteristic as well as a product
characteristic.
6-55
56. In-Store and Online Influences on Brand
Choices
Often we enter a retail outlet with the intention of
purchasing a particular brand but leave with a different
brand or additional items.
Influences operating within the retail outlet influence our
shopping patterns.
Unplanned purchases are purchases made in a retail
outlet that are different from those the consumer planned
to make prior to entering that retail outlet.
6-56
57. In-store influences that alter brand
choices
• The nature of unplanned purchases
– Reminder purchases
– Impulse purchases
6-57
58. In-store influences that alter brand
choices (cont.)
• The nature of unplanned purchases
– The specifically planned decision
– The generally planned decision
– The substitute decision
– The unplanned decision
– The in-store decisions
6-58
62. In-Store and Online Influences on Brand
Choices
In-Store Purchase Behavior
6-62
63. In-Store and Online Influences on Brand
Choices
Strategies used by manufacturers and retailers to influence
in-store and online decisions:
1. Point-Of-Purchase Materials
2. Price Reductions and Promotional Deals
3. Outlet Atmosphere
4. Stockouts
5. Web Site Functioning and Requirements
6. Sales Personnel
6-63
65. Point-of-purchase (POP) displays
• A device used by marketers and retailers at
the point of sale to inform consumers or
encourage them to buy; may comprise
posters, cards, shelf wobblers, etc.
6-65
67. In-Store and Online Influences on Brand
Choices
Point-Of-Purchase Materials
Shelf-Based Point-of-Purchase Materials
6-67
68. In-Store and Online Influences on Brand
Choices
Price Reductions and Promotional Deals
Price reductions and promotional deals
• coupons
• multiple-item discounts, and
• gifts
are generally accompanied by the use of some point-of-
purchase materials.
6-68
69. In-Store and Online Influences on Brand
Choices
Price Reductions and Promotional Deals
Sales increases in response to price reductions come from
four sources
1. Current brand users may buy ahead of their anticipated
needs (stockpiling).
2. Users of competing brand may switch to the reduced price
brand.
3. Nonproduct category buyers may buy the brand because it is
now a superior value to the substitute product.
4. Consumers who do not normally shop at the store may come
to the store to buy the brand.
6-69
70. In-Store and Online Influences on Brand
Choices
Outlet Atmosphere
Store atmosphere is influenced by such attributes as
• lighting
• layout
• presentation of merchandise
• fixtures
• floor coverings
• colors
• sounds
• odors
• dress and behavior of sales and service personnel
6-70
71. In-Store and Online Influences on Brand
Choices
Outlet Atmosphere
Atmospherics is the process managers use to manipulate the
physical retail or service environment to create specific mood
responses in shoppers.
Internet retailers also have online atmospheres that are
determined by
• graphics
• colors
• layout
• content
• entertainment features
• inactivity
• tone
6-71
75. In-Store and Online Influences on Brand
Choices
Web Site Functioning and Requirements
Consumers often research online then buy in traditional
stores. However, losses also occur during the online
shopping process.
A DoubleClick study found the following reasons for
shopping cart abandonment:
6-75
76. In-Store and Online Influences on Brand
Choices
Sales Personnel
The effectiveness of sales efforts is influenced by the
interaction of
• the salesperson’s knowledge, skill, and authority
• the nature of the customer’s buying task
• the customer-salesperson relationship
In the online context, marketers are testing so-called “pop-
up” sales clerks that interact with customers as they shop
on their web site.
6-76
78. Purchase
Once the consumer has selected the brand and retail
outlet, he/she must complete the transaction, referred
to as purchasing or renting the product.
In traditional retail environments, this was
straightforward with little delay, with the exception of a
major and complex purchase.
Many consumers starting to make an online purchase
quit without making one for a variety of reasons.
6-78
79. Purchase
Increasingly the percentage of potential purchasers
who actually purchase is a major challenge for most
online retailers.
Credit plays a major role in consumer purchases.
Businesses need to simplify the actual purchase
process as much as possible.
6-79
80. Summary of topics in this chapter:
We have discussed:
• How the traditional retailing environment is
changing
• The trend towards internet retailing
• Factors that affect retail outlet selection
• Why consumer characteristics can also
affect outlet selection
• In-store influences that can affect brand
choice
• How marketers can capitalize on these
influences
6-80
