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Questions

CHAPTER 2
4
1

• How do customers decide which retailer to go to and
what merchandise to buy?
• What social and...
Stages in the Buying Process

CHAPTER 2
4
1

4-2
Types of Needs

CHAPTER 2
4
1

• Utilitarian Needs –satisfied
when purchases accomplish a
specific task. Shopping needs
to...
Hedonic Needs that Retailers can
Satisfy

CHAPTER 2
4
1

• Stimulation
• Ex: Background music,
visual displays, scents

• ...
Information Search

CHAPTER 2
4
1

• Amount of Information Search Depends on the value from
searching versus the cost of s...
Sources of Information
• Internal
• Past experiences
• Memory
• External
• Consumer reports
• Advertising
• Word of mouth
...
How Can Retailers Limit
the Information Search?

CHAPTER 2
4
1

• Information from sales associates
• Provide an assortmen...
Evaluation of Alternatives

CHAPTER 2
4
1

• Multiattribute attitude model:
• Customers see a retailer, product, or servic...
Information Used
in Evaluating Retailers

CHAPTER 2
4
1

4-9
Getting into the Consideration Set

CHAPTER 2
4
1

• Consideration set: the set
of alternatives the
customer evaluates whe...
Methods for increasing the chance of store visit
after getting into the consideration set

CHAPTER 2
4
1

• Increase Perfo...
Purchasing Merchandise or Services

CHAPTER 2
4
1

Customers do not always purchase a brand with the
highest overall evalu...
Postpurchase Evaluation

CHAPTER 2
4
1

• Satisfaction
• A post-consumption evaluation of how well a store or
product meet...
Types of Buying Decisions

CHAPTER 2
4
1

• Extended Problem Solving
• High financial or Social Risk

• Limited Problem So...
Extended Problem Solving

CHAPTER 2
4
1

Consumers devote time and effort analyzing alternatives

• Financial risks – purc...
What do Retailers Need to do for Customers
Engaged in Extended Problem Solving

CHAPTER 2
4
1

• Provide a Lot of
Informat...
Limited Problem Solving

CHAPTER 2
4
1

Purchase decisions process involving moderate
amount of effort and time
• Customer...
What do Retailers Need to do for Customers

Engaged in Limited Problem Solving?

CHAPTER 2
4
1

• It depends…
• If the Cus...
Encouraging Impulse Buying

CHAPTER 2
4
1

• Impulse buying: one common type
of limited problem solving
• Influence by usi...
Habitual Problem Solving

CHAPTER 2
4
1

Purchase decision process involving little or no conscious effort

• For purchase...
What do Retailers Need to do for Customers

Engage in Habitual Decision Making

CHAPTER 2
4
1

• It depends…
• If the cust...
Customer Loyalty
• Brand Loyalty
• Committed to a Specific
Brand
• Reluctant to Switch to a
Different Brand
• May Switch R...
Social Factors
Influencing the Buying Decision Process

CHAPTER 2
4
1

4-23
Family Influences Buying Decisions

CHAPTER 2
4
1

• Purchases are for entire
family to use
• Whole family participates in...
Reference Groups

CHAPTER 2
4
1

• Reference groups affect buying
decisions by:
• Offering information
• Providing rewards...
Culture

CHAPTER 2
4
1

• Culture is the meaning,
beliefs, morals and values
shared by most members
of a society
• Western...
Approaches for Segmenting Markets

CHAPTER 2
4
1

• Geographic segmentation groups customers according
to where they live....
Approaches for Segmenting Markets

CHAPTER 2
4
1

• Geodemographic segmentation uses both geographic
and demographic chara...
Approaches for Segmenting Markets

CHAPTER 2
4
1

• Buying situations can influence customers with the
same demographics o...
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Retail buying behaviour

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Retail buying behaviour

  1. 1. Questions CHAPTER 2 4 1 • How do customers decide which retailer to go to and what merchandise to buy? • What social and personal factors affect customer purchase decisions? • How can retailers get customers to visit their stores more frequently, and buy more merchandise during each visit? • Why and how do retailers group customers into market segments? 4-1
  2. 2. Stages in the Buying Process CHAPTER 2 4 1 4-2
  3. 3. Types of Needs CHAPTER 2 4 1 • 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. 4-3
  4. 4. Hedonic Needs that Retailers can Satisfy CHAPTER 2 4 1 • Stimulation • Ex: Background music, visual displays, scents • Satisfy need for power and status • Ex: Canyon Ranch – upscale health resorts • Adventure • Treasure hunting for bargains 4-4
  5. 5. Information Search CHAPTER 2 4 1 • Amount of Information Search Depends on the value from searching versus the cost of searching • Factors Affecting Amount of Information Search • Product Characteristics • Complexity • Cost • Customer Characteristics • Past experience • Perceived risk • Time pressure • Market Characteristics • Number of alternative brands 4-5
  6. 6. Sources of Information • Internal • Past experiences • Memory • External • Consumer reports • Advertising • Word of mouth CHAPTER 2 4 1 Digital Vision / Getty Images © Dynamic Graphics/Picture Quest 4-6
  7. 7. How Can Retailers Limit the Information Search? CHAPTER 2 4 1 • Information from sales associates • Provide an assortment of services • Provide good assortments • Everyday low pricing • Credit Royalty-Free/CORBIS 4-7
  8. 8. Evaluation of Alternatives CHAPTER 2 4 1 • Multiattribute attitude model: • Customers see a retailer, product, or service as a collection of attributes or characteristics • Predict a customer’s evaluation of a retailer, product, or service based on • Its performance on relevant attributes • the importance of those attributes to the customer 4-8
  9. 9. Information Used in Evaluating Retailers CHAPTER 2 4 1 4-9
  10. 10. Getting into the Consideration Set CHAPTER 2 4 1 • Consideration set: the set of alternatives the customer evaluates when making a selection • Retailers develop programs influencing topof-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) 4-10
  11. 11. Methods for increasing the chance of store visit after getting into the consideration set CHAPTER 2 4 1 • 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 4-11
  12. 12. Purchasing Merchandise or Services CHAPTER 2 4 1 Customers do not always purchase a brand with the highest overall evaluation. The McGraw-Hill Companies, Inc./Jill Braaten, photographer • 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? 4-12
  13. 13. Postpurchase Evaluation CHAPTER 2 4 1 • Satisfaction • A post-consumption evaluation of how well a store or product meets or exceeds customer expectations • Becomes part of the customer’s internal information that affects future store and product decisions • Builds store and brand loyalty 4-13
  14. 14. Types of Buying Decisions CHAPTER 2 4 1 • Extended Problem Solving • High financial or Social Risk • Limited Problem Solving • Some Prior Buying Experience • Habitual Decision Making • Store Brand, Loyalty 4-14
  15. 15. Extended Problem Solving CHAPTER 2 4 1 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 4-15
  16. 16. What do Retailers Need to do for Customers Engaged in Extended Problem Solving CHAPTER 2 4 1 • Provide a Lot of Information • Use Salespeople rather than advertising to • Communicate with customers • Reduce the Risks • Offer Guarantees • Return Privileges © Royalty-Free/CORBIS 4-16
  17. 17. Limited Problem Solving CHAPTER 2 4 1 Purchase decisions process involving moderate amount of effort and time • 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 4-17
  18. 18. What do Retailers Need to do for Customers Engaged in Limited Problem Solving? CHAPTER 2 4 1 • 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 4-18
  19. 19. Encouraging Impulse Buying CHAPTER 2 4 1 • Impulse buying: one common type of limited problem solving • Influence by using prominent pointof- purchase (POP) or point-of-sale (POS) PhotoLink/Getty Images • Have Salespeople Suggest Add-ons • Have Complementary Merchandise Displayed Near Product of Interest • Use Signage in Aisle or Special Displays • Put Merchandise Where Customers Are Waiting 4-19
  20. 20. Habitual Problem Solving CHAPTER 2 4 1 Purchase decision process involving little or no conscious effort • 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 4-20
  21. 21. What do Retailers Need to do for Customers Engage in Habitual Decision Making CHAPTER 2 4 1 • 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 competitor’s store, break the habit • Offer special promotions 4-21
  22. 22. 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 CHAPTER 2 4 1 4-22
  23. 23. Social Factors Influencing the Buying Decision Process CHAPTER 2 4 1 4-23
  24. 24. Family Influences Buying Decisions CHAPTER 2 4 1 • Purchases are for entire family to use • Whole family participates in decision making process • Retailers work to satisfy needs of all family 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. 4-24
  25. 25. Reference Groups CHAPTER 2 4 1 • Reference groups affect buying decisions by: • Offering information • Providing rewards for specific purchasing behaviors • Enhancing a consumer’s self-image (c) image100/PunchStock • A reference group is one or more people whom a person uses as a basis of comparison for beliefs, feelings and behaviors. 4-25
  26. 26. Culture CHAPTER 2 4 1 • Culture is the meaning, beliefs, morals and values shared by most members of a society • Western culture: individualism • Eastern culture: collectivism • Subcultures are distinctive groups of people within a culture 4-26
  27. 27. Approaches for Segmenting Markets CHAPTER 2 4 1 • Geographic segmentation groups customers according to where they live. • Demographic segmentation groups consumers on the basis of easily measured, objective characteristics such as age, gender, income, and education. 4-27
  28. 28. Approaches for Segmenting Markets CHAPTER 2 4 1 • Geodemographic segmentation uses both geographic and demographic characteristics to classify consumers. • Lifestyle, or psychographics , refers to how people live, how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world in which they live. 4-28
  29. 29. Approaches for Segmenting Markets CHAPTER 2 4 1 • Buying situations can influence customers with the same demographics or lifestyle. • Benefit segmentation groups customers seeking similar benefits. 4-29

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