5th Edition5th Edition

McGraw-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

Illustration

Jennifer Sanchez, at San Francisco State University, is beginning to interview for jobs. For the first interviews on campus, Jennifer had planned to wear the blue suit her parents bought her three years ago. But looking at her suit, she realizes that it’s not very stylish and that the jacket is beginning to show signs of wear. Wanting to make a good first impression during her interview, she decides to buy a new suit.

Illustration (Continued)

Jennifer surfs the Internet for tips on dressing for interviews (www.collegegrad.com and www.careercity.com) and looks through some catalogs to see the styles being offered. But she decides to go to retail store so she can try it on and have it for her first interview next week. She likes to shop at Abercrombie and Fitch and American Eagle Outfitter, but neither sells business suits. She remembers an ad in the San Francisco Chronicle for women’s suits at Macy’s. She decides to go to Macy’s in the mall close to her apartment and asks her friend Brenda to come along. Jennifer values Brenda’s opinion, because Brenda is a clothes horse and has good taste.

Illustration (Continued)

Walking through the store, they see some DKNY suits. Jennifer looks at them briefly and decides they’re too expensive for her budget and too stylish. She wants to interview with banks and thinks she needs a more conservative suit.

Illustration (Continued)

Jennifer and Brenda are approached by a salesperson in the career women’s department. After asking Jennifer what type of suit she wants and her size, the salesperson shows her three suits. Jennifer asks Brenda what she thinks about the suits and then selects one to try on. When Jennifer comes out of the dressing room, she feels that the shoulder pads in the suit make her look too heavy, but Brenda and the salesperson think the suit is attractive. Jennifer decides to buy the suit after another customer in the store tells her she looks very professional in the suit.

Illustration (Continued)

Jennifer doesn’t have a Macy’s charge card, so she asks if she can pay with a personal check. The salesperson says yes, but the store also takes VISA and MasterCard. Jennifer decides to pay with her VISA card.

As the salesperson walks with Jennifer and Brenda to the cash register, they pass a display of scarves. The salesperson stops, picks up a scarf, and shows Jennifer how well the scarf complements the suit. Jennifer decides to buy the scarf also.

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

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

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 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

Customer Loyalty

Brand Loyalty Committed to a Specific BrandReluctant to Switch to a Different BrandMay Switch Retailers to Buy Brand

Store LoyaltyCommitted to a Specific RetailerReluctant to Switch Retailers

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 SatisfiedProvide Good Service, Assortments, valueOffer Rewards to Convert to Loyal Customer

If the Customer Goes to Your Competitor’s Store, Change BehaviorOffer More Convenient Locations, Better Service and

Assortments

Encouraging Impulse Buying

Have Salespeople Suggest Add-onsHave Complementary Merchandise

Displayed Near Product of InterestUse Signage in Aisle or Special DisplaysPut Merchandise Where Customers Are

Waiting

Stages in the Buying Process

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

Stimulating Need Recognition

Advertising and Direct Mail

Visual Merchandise in Store

Signage

Displays

Suggestions by Sales Associates

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

Sources of Information

ExternalConsumer reportsAdvertisingWord of mouth

Internal

Past experiences

Memory

How Can Retailers Reduce Information Search?

Extensive merchandise assortmentAssistance in locating alternativesEveryday low pricingCreditInformation from sales associates

Providing Information on Internet

Information about Retailers Selling Groceries

Belief About Retailers’ Performance Benefits

Information Used in Evaluating Retailers

Information Used in Purchasing a Suit

Information Needed to Use Multi-Attribute Model

Alternative Consumer ConsideringCharacteristic/Benefits Sought in Making

Store and Merchandise ChoicesRatings of Alternative Performance on

CriteriaImportance of Criteria to Consumer

Methods for Increasing Consumer Evaluation

Increase Performance Beliefs of Your StoreDecrease Performance Beliefs About

Competitor

Increase Importance Weight of Attributes

on which You Have an AdvantageAdd a New Benefit on which You Excel

Factors Influencing the Buying Decision Process

Social Factors Influencing Buying Decisions

Family

Reference Group

Culture

Methods for Segmenting Retail Markets

GeographicDemographic

Feelings and BehaviorsLifestyle

Segmenting Markets

Geodemographic Segmentation“Birds of a feather Flock Together”

Latino AmericaHispanic Middle ClassBoxing (+)Dance Music (+)Barbequing (-)Avocados (+)Cosmopolitan (+)Touched By an Angel (+)

Latino AmericaHispanic Middle ClassBoxing (+)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 (+)

Distribution of Grey Collar Aging Couples Near Suburbs

VALS2 American Lifestyles

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

Criteria for Evaluating Segmentation Schemes

Actionability

Identifiability

Accessibility

Stability

Size

Example of a Composite Segmentation Scheme

Example of a Composite Segmentation Scheme

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.

Why Consumers Buy Fashions

Communicate with Others

Manage Appearance

Express Self-Image

Enhance Ego

Impress Others

What Creates Fashion?

Economic Factors

Sociological Factors

Factors Affecting Fashion

Economic Development

Social Environment

Class structure

Role of men and women

Structure of the family

Personal Issues

Stages in the Fashion Life Cycle

What Affects the Rate Fashion Spreads?

Advantage

Compatibility

Complexity

Trialability

Observability

Theories of Fashion Diffusion

Trickle-Down Theory

Mass Market Theory

Subculture Theory