changing retail customers deanna dewitt caitlin zimbrick lauren stewart
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Changing Retail Customers
Deanna DewittCaitlin ZimbrickLauren Stewart
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The faces of Change“Changes in consumer attitudes and behavior are reshaping consumer
shopping and spending patterns making today’s consumers more fragmented and harder to predict than ever before…”
• Fast-growing ethnic, age and income segments
• Expected growth of four major demographic groups
1. Hispanic consumers2. High-income consumers3. Low-income consumers4. Aging Baby Boomers
• Tailor the product mix
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Market segmentationMethod retailers use to examine ways to
segment, or break down, heterogeneous consumer populations
into smaller, homogeneous groups based on their characteristics.
– Who their customers are– How they think– What they do– Desires, needs, perceptions, and shopping behaviors
Micromarketing: tailoring merchandise in each store to neighborhood preferences,
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Ethnic market segmentation“…today’s consumers are multicultural and bilingual…”
• The "Hispanic ethnicity" category on the Census includes:
– Mexicans (7.3 % of the total U.S. population in 2000)
– Puerto Ricans (1.2 percent)– Cubans (0.4 percent) – other Latin and South American
ethnicities.
• 14% of U.S population in 2006 is Hispanic
• Buying power of $652 billion in 2006 and growing by 9% per year.
• Spend more on consumer goods than the general population-mainly due to their greater household size
• Fastest growing demographic group in the U.S
• Hispanic students represent 15% of the total versus 11% in 1990
• Expected to triple in size by 2025 and represent 29% of the U.S. population
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“The Hispanic consumer”“It costs the average retailer five times as much money to get a new customer into its store as it does to retain a current customer who may be unhappy.” –Dunne & Lusch
• Shop in groups with their family rather than as a single shopper.
• Price-conscious• Look for three things when
choosing where to shop:1. Good prices (but not the lowest)2. Proximity to their home3. Whether the store sells ethnic
foods
• Shopping patterns reflect needs of young and large families
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How to reach the Hispanic consumer
• Look in specific categories to figure out where they are really spending their money
• Hispanics spend the most in the following categories:– Children/infant clothing– Athletic shoes and clothing– Telephone services– groceries
• Don’t ignore regional differences; the various countries of origin affect the consumer behavior and media usage
• Tailor product mix – EX: Bilingual packaging with emphasis on Spanish– EX: Stronger and different scents– EX: Value pricing
Examples of such products include• Procter & Gamble's Gain and Ariel detergents• Colgate-Palmolive's Suavitel fabric softener, and Clorox's Lavanda
(lavender-scented) surface cleaners launched under a number of different brands.
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Success 7-Eleven Gets store specific
• Tailor the product mix at each store to that store’s customers
• Selling Enchilosa products (spicy “picante” noodles for the Hispanic market) in areas with large Hispanic population
• Tailor products, food, magazines, and services to need of those customers.
• Item-by-item management
• Customer needs drive product assortment and merchandising
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Consumer Retailing for:
Low-income consumers High Income consumers
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Low-income consumers
• Consumers who earn $25,000 or less annually
• Nearly a third of Americans live on household incomes of less than $25,000
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Low-income consumers spending patterns:
• spend a high share of their money on food and rent
• Spend a large share on consumable goods: nonperishable food, toilet paper, cleaning supplies and shampoo
• necessity rather than impulse that dictates their purchase behavior.
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Who Targets low-income consumers?
• Convenience discounters like Family Dollar, Dollar General and the Dollar Tree serve the low-income consumers.
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Meeting low-consumer needs
• low-income consumer do not buy because they want to but it is when they absolutely HAVE to.
• In order for low-income retailers to be successful they must be responsive to their consumers needs.– Basic consumable goods
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Store Characteristics
• These stores are generally smaller and older than stores serving moderate-income consumers and also offer fewer time-saving services.
• Lack sophisticated inventory control and worker training
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High-income consumers
• Households with incomes of more than $75,000
• Allocate larger amounts of money to food away from home, housing operations, supplies and furnishings, entertainment, and apparel and services.
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High-income consumers: Eating out
• Households with incomes of $75,000 or more allocated just over 11% of their total expenditures on food and 51% of that food was away from home
• Increased visits to food categories that have higher priced items.
• Less likely to take advantage of deals
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Recreational Shopping for high-income consumers
• more shoppers today view it as recreation and entertainment.
• Shopping is now an experience people with high incomes pursue for fun, recreation, adventure and as well as a way to buy more stuff.
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Shopping a unique and fun experience
• Niketown is a three-story shoe store that presents shoes and clothing in a highly entertaining way
– Basketball courts– Pictures of sports heroes
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High-income consumers: high quality products
• Demand high quality products and personalized services.
• Products tend to have more attributes and can be differentiated from other products.
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Home-based shopping
• Catalogues
• Online-shopping– Peapod: shop for groceries online,
groceries delivered to home within 2 hours
• No driving and more time saved
• Less impulse buying
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Consumer Retailing for:
Baby Boomers
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Baby Boomers
• Born between 1946 and 1964
• Children of WWII veterans
• 1st wave of boomers turned 60 last year, entering the “gray market”
• Newly disposable income due to children leaving home, retirement
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As consumers…
• They have a fine taste for good quality and reasonably priced products
• They look for products that will make their daily lives easier
• They research products before deciding which are best to buy
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Marketing
• The 18-49 demographic gets the most attention in advertising
• Commercials:30% more per ad minute
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BUT…
• Consumers ages 50+ already spend more than $1.7 trillion per year
• 78 million baby boomers are richer than any group in history
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Sunbeam
• Aims products toward “time-stressed individuals” who have no time for gourmet cooking
• Markets on TV, radio, and the web
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KitchenAid
• Many housewares marketers are partnering with charitable causes
• Raises awareness, aids in sale
• 2001: Partnered with the Komen Breast Cancer Foundation
• Partnership has become one of the greatest sources of revenue for Komen
• 2006: Survivor’s Week
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Bibliography
"Aging Hipsters Change Housewares Market." Response March 2007 41-45. 6 April 2007 <http://www.responsemagazine.com.
Crain, Rance. "Boomer Boon: 'Crazy Aunts and Uncles' Spend $1.7 Trillion." Advertising Age. 02 April 2007. 6 Apr 2007 <www.adage.com.
Gibson, Rowan. "Mapping The Future Marketplace." Winning in the Innovation Economy. 5 Apr 2007 <http://www.rethinkinggroup.com
Howell, Debbie. "The Leader In The Realm of Deep Discount." DSN Retailing Today 8 May 2000 6 April 2007 <http://www.findarticles.com/p/articles.
Longo, Don. "The Faces of Change." Convenience Store News. 3 March 2007. Buisness Source Premier. 5 Apr 2007 <http://search.ebscohost.com/login.aspx>.