Consumer Behavior & Shopping

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Consumer Behavior Shopping
2
The Buying Process

• Retail Selection Decision
• Need Recognition
• Search for information
• Evaluate retailers
• Select a retailer
• Visit store, browse internet or catalog, respond
  to TV advertisement

• Merchandise/Service Selection Decision
• Search for information
• Evaluate merchandise/service
• Select merchandise/service
• Purchase
• Postpurchase evaluation

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Factors Affecting Buying Process

• Buyer/Household Characteristics
• Internal Variables
• Needs
• Personality
• Lifestyle
• Attitudes
• External Variables
• Family and family life cycle
• Reference Groups
• Social Class
• Culture and sub-culture

4
Factors continued

• Shopping/Search Strategies
• Functional
• Experiential/Hedonic
• Situational Influences
• Physical surroundings
• Social surroundings
• Temporal (time)
• Task Definition
• Antecedent states (e.g. mood, discretionary
  income, etc.)
• Trip composition (single/multi-purpose)

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Current Trends Affect the Way the Consumer Behaves
Exhibit 3.1
Population Trends
Societal Trends
Consumer Shopping/ Purchasing Model
Economic Trends
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Population Trends
LO1

• 1. Population Growth
• 2. Age Distribution
• 3. Geographic Trends

7
Number of Births by Year
LO1 Exhibit 3.2
8
LO1
Where did the term Melting Pot originate?
The Melting Pot is the name of a play about
immigrants written by Israel Zangwell. In
the play, which opened in Washington D.C. in
1908, one of the characters declared
America isthe great melting pot where
all the races of Europe are melting and
reforming Germans and Frenchman, Irishmen and
Englishmen, Jews and Russians into the crucible
he will be the fusion of all races, the coming
superman.
9
Age Distribution
LO1
dELiAs Corporation consists of two core
businesses targeting consumers
between the ages of 13 and 24. The
dELiAs-branded business markets
apparel, accessories and home
furnishings via the dELiAs catalog,
www.dELiAs.com and dELiAs
retail stores.
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Social Trends
LO2

• 1. Education
• 2. State of Marriage and Divorce
• 3. Makeup of the American Household
• 4. Changing Nature of Work

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U.S. Education Levels
LO2 Exhibit 3.5
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Makeup of American Households
LO2
100 80 60 40 20 0
Other Living Alone Single Parents Other
Married Married with Children
Percent
1990 2000
2010
Year
SOURCE U.S. Bureau of the Census, Statistical
Abstract of the United States 1996 (116th
edition) Washington, D.C., 1996.
Based on data contained in Tables 60, 61, 66,
67,68.
13
Economic Trends
LO3

• 1. Income Growth
• 2. Personal Savings
• 3. Women in the Labor Force
• 4. Widespread Use of Credit

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Changing Purchasing Habits of American Households
LO3
25
Medical
20
15
Food
Percent
10
Recreation
5
Clothing
0
1970 1980 1990
2004
Year
SOURCE Vision for the New Millennium . .
.(Atlanta Kurt Salmon Associates, 1997). Used
with permission
15
Spenders and Savers as a Percentage of Total
Population 1965 to 2025
LO3
40
35
Spenders ( Age 20 to 44)
30
Percent
25
Savers ( Age 45 to 64)
20
15
1965 1970 1975 1980 1985
1990 1995 2000 2005 2010
2015 2020 2025

Year
SOURCE Based on data from U.S. Bureau of the
Census, Population Paper Listings PPL. 41,
Current Population Reports P25-1130, U.S. Census
of Population (1970), volume 1, Part B, Census of
Population (1980) volume 1, part B.
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LO3
The of Women Age 16 and Over in the Work Force
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Dual Wage Earners and Their Effect on Hours Spent
Shopping
LO3 Exhibit 3.7
Dual incomes rose ...
200
12
8
Families with Dual Incomes (1965 - 100)
Shopping Hours per
Month
and shopping hours dropped
4
100
0
1965 1980
1995 Year
SOURCE Vision for the New Millennium . .
.(Atlanta Kurt Salmon Associates, 1997). Used
with permission
18
Growth in Consumer Credit
LO3 Exhibit 3.8
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Square Feet of Retail Space Per Capita
LO3
20
16
12
Amount of space needed to support Market Demand
13.1
8
4
72 74 76 78 80 82 84
86 88 90 92 96 98
00
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Consumer Decision Model
LO4 Exhibit 3.9
Problem Solving
Active Information Gathering (Search)
Problem Recognition
Post-Purchase Evaluation
Evaluate Alternatives
Stimulus
Purchase
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Consumer Behavior Model
LO4
Stimulus a cue that is external to the individual
or a drive that is internal to the individual
that is capable of eliciting a response.
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Consumer Behavior Model
LO4
Problem recognition occurs when the consumers
desired state of affairs departs sufficiently
from the actual state of affairs, placing the
consumer in a state of unrest.
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Buying Process Stages

• Problem recognition
• Occurs when a consumers ideal state differs from
  actual state resulting in unmet needs
• Triggered by
• lack of satisfaction
• change in income
• advertising/store displays
• need to replenish items
• Needs may be both transactional and/or
  experiential

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Consumer Behavior Model
LO4 Exhibit 3.10
Retailer Preference
Strong
None or Weak
Brand Preference
Habitual Problem Solving
Limited Problem Solving
Strong
Limited Problem Solving
Extended Problem Solving
None or Weak
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Consumer Behavior ModelProblem Solving
LO4
Habitual problem solving occurs when the consumer
relies on past experiences and learning to
convert the problem into a situation in which
less thought is required. The consumer has a
strong preference for the brand to buy and the
retailer from which to purchase it.
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Consumer Behavior ModelProblem Solving
LO4
Limited problem solving occurs when the consumer
has a strong preference for either the brand or
the store, but not both.
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Consumer Behavior ModelProblem Solving
LO4
Extended problem solving occurs when the consumer
recognizes a problem but has decided on neither
the brand nor the store.
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Consumer Behavior Model
LO4
Active information gathering occurs when
consumers proactively gather information.
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Buying Process Stages continued

• Information Search
• Types
• Internal
• External
• Benefits contingent on
• Level and quality of existing information
• Ability to recall information
• Perceived risk
• Confidence in decision making ability

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Buying Process Stages continued

• Costs of search dependent upon
• delay in decision to collect information
• expenditure of time money
• information overload
• psychological costs (tension, frustration,
  anger)
• Outcome of search
• Definition of choice sets and alternative
  information (awareness set)
• Identification of consideration set

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Consumer Behavior Model
LO4
Evaluate alternatives occurs when consumers make
judgements regarding the individual product
attributes of a retailer and/or product.
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Buying Process Stages continued

• Generation Evaluation of Alternatives
• Choice Models
• Compensatory
• Non-compensatory
• Choice
• In-store (internet, catalog) information
  processing
• point-of-purchase information
• staff
• merchandise
• atmospherics
• Function of favorable evaluation of store,
  product product availability

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Consumer Behavior Model
LO4
Purchase The purchase stage may include final
negotiation, application for credit if necessary,
and the determination of the terms of purchase.
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Consumer Behavior Model
LO4
Post-purchase evaluation Consumer perceptions
toward the retailer and/or product purchased
after use and evaluation.
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Post-Purchase Satisfaction
LO4
This ad demonstrates how a retailer of a service,
such as Northwest Airline, utilizes the concept
of post-purchase satisfaction.
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Buying Process Stages continued

• Post-purchase Evaluation
• Satisfaction/Dissatisfaction
• Store personnel
• Environment/Atmosphere
• Merchandise
• Service
• Clientele
• Value/Price relationship

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Market Segmentation

• Retail Market Segment Group of customers whose
  needs are satisfied by the same retail mix
  because they have similar needs and go through
  similar buying processes
• Segmentation Criteria
• Actionability
• Identifiability
• Accessibility
• Stability

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Types of Segmentation

• Geographic
• Demographic
• Lifestyle
• Buying Situation
• Benefit Segmentation
• Composite Approach