PPT 4-1

5th Edition

PPT 4-2McGraw-Hill/IrwinLevy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Customer Customer Buying BehaviorBuying Behavior

Chapter 4Chapter 4

PPT 4-3

© Copyright 2006, Ignacio J. Vázquez All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the author.

© Copyright 2006

PPT 4-4

Types of Purchase Decisions

Extended Problem Solving-High financial or Social Risk

Limited Problem Solving-Some Prior Buying Experience

Habitual Decision Making-Store Brand, Loyalty

PPT 4-5

What Retailers Need to do for Customers Engaged in Extended Problem Solving

Provide a Lot Information -Use Salespeople rather than advertising to communication with customers

Reduce the Risks -Offer Guarantees

-Return Privileges

PPT 4-6

What Retailers Need to do for Customers to Engage in Habitual Decision Making

It DependsIf the Customer Habitually Comes to You, Reinforce

Behavior-Make Sure Merchandise is 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

PPT 4-7

Customer Loyalty

Brand Loyalty Committed to a Specific Brand

Reluctant to Switch to a Different Brand

May Switch Retailers to Buy Brand

Store LoyaltyCommitted to a Specific Retailer

Reluctant to Switch Retailers

PPT 4-8

What Do Retailers Need To Do for Customers Engaged in

Limited Problem Solving

It Also Depends…If the Customer Is Coming to You, Provide a Positive

Experience and Create LoyaltyMake 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 BehaviorOffer More Convenient Locations, Better Service and

Assortments

PPT 4-9

Encouraging Impulse Buying

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

PPT 4-10

Stages in the Buying Process

PPT 4-11

Why People Go Shopping

Purchase merchandise or services

Take a break from daily routine

Social experience

Learn new trends and fashions

Satisfy need for power and status

Self-rewards

PPT 4-12

Stimulating Need Recognition

Advertising and Direct Mail

Visual Merchandise in Store

Signage

Displays

Suggestions by Sales Associates

PPT 4-13

Factors Affecting Amount of Information Search

• Characteristics of the Product

Complexity

Cost

• Characteristics of Customer

Past experience

Perceived risk

Time pressure

• Market Characteristics

Number of alternative brands

PPT 4-14

Sources of Information

ExternalConsumer reports

Advertising

Word of mouth

Internal Past experiences

Memory

PPT 4-15

How Can Retailers Reduce Information Search?

Extensive merchandise assortment

Assistance in locating alternatives

Everyday low pricing

Credit

Information from sales associates

PPT 4-16

Providing Information on Internet

PPT 4-17

Information about Retailers Selling Groceries

PPT 4-18

Belief About Retailers’ Performance Benefits

PPT 4-19

Information Used in Evaluating Retailers

PPT 4-20

Information Used in Purchasing a Suit

PPT 4-21

Information Needed to Use Multi-Attribute Model

• Alternative Consumer Considering

• Characteristic/Benefits Sought in Making Store and Merchandise Choices

• Ratings of Alternative Performance on Criteria

• Importance of Criteria to Consumer

PPT 4-22

Methods for Increasing Consumer Evaluation

• 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

PPT 4-23

Factors Influencing the Buying Decision Process

PPT 4-24

Social Factors Influencing Buying Decisions

Family

Reference Group

Culture

PPT 4-25

Methods for Segmenting Retail Markets

GeographicDemographic

Feelings and BehaviorsLifestyle

Segmenting Markets

PPT 4-26

Geodemographic Segmentation“Birds of a feather Flock Together”

Latino 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 (+)

PPT 4-27

Distribution of Grey Collar Aging Couples Near Suburbs

PPT 4-28

VALS2 American Lifestyles

PPT 4-29

Lifestyle SegmentationVALS

Action Oriented

High Resources

Follow Fashions and Fads

Spend a lot on socializing, entertainment

Impulse buyers

Influenced by advertising

Believers

Lower resources

Buy American

Look for bargains

Watch TV a lot

Read home and garden magazines

PPT 4-30

Lifestyle SegmentationVALS

• http://www.sric-bi.com/vals/presurvey.shtml

This online version of the VALS™ questionnaire has been optimized for Netscape Navigator 4.x and Internet Explorer 5.01 or higher. You need to have Java, Javascript, and cookies active to take the questionnaire. Please check your browser preferences to ensure that Java, Javascript, and cookies are active. Company and personal firewalls may also interfere with the surve

PPT 4-31

Criteria for Evaluating Segmentation Schemes

Actionability

Identifiability

Accessibility

Stability

Size

PPT 4-32

Example of a Composite Segmentation Scheme

PPT 4-33

Example of a Composite Segmentation Scheme

PPT 4-34

What is Fashion?

A type of product or way of behaving that is temporarily adopted by a large number of consumers because it is viewed as socially acceptable.

PPT 4-35

Why Consumers Buy Fashions

Communicate with Others

Manage Appearance

Express Self-Image

Enhance Ego

Impress Others

PPT 4-36

What Creates Fashion?

Economic Factors

Sociological Factors

PPT 4-37

Factors Affecting Fashion

Economic Development

Social Environment

Class structure

Role of men and women

Structure of the family

Personal Issues

PPT 4-38

Stages in the Fashion Life Cycle

PPT 4-39

What Affects the Rate Fashion Spreads?

Advantage

Compatibility

Complexity

Trialability

Observability

PPT 4-40

Theories of Fashion Diffusion

Trickle-Down Theory

Mass Market Theory

Subculture Theory