5th Edition

Customer Buying Behavior Chapter 4 Customer Buying Behavior McGraw-Hill/Irwin Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

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

Provide a Lot Information 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 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

Customer Loyalty Brand Loyalty Store 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

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 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

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

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 Internal Past experiences Memory External Consumer reports Advertising Word of mouth

How Can Retailers Reduce Information Search? Extensive merchandise assortment Assistance in locating alternatives Everyday low pricing Credit Information 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 Considering Characteristic/Benefits Sought in Making Store and Merchandise Choices Ratings of Alternative Performance on Criteria Importance of Criteria to Consumer

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

Factors Influencing the Buying Decision Process

Social Factors Influencing Buying Decisions Family Culture Reference Group

Methods for Segmenting Retail Markets Geographic Demographic Segmenting Markets Lifestyle Feelings and Behaviors

Geodemographic Segmentation “Birds of a feather Flock Together” Town and Gown College Town Singles Foreign Films (+) Dogs (-) Sewing (-) Coca Cola (+) Fast Food (+) Friends (+) Sports Illustrated (+) Latino America Hispanic Middle Class Boxing (+) Dance Music (+) Barbequing (-) Avocados (+) Cosmopolitan (+) Touched By an Angel (+)

Distribution of Grey Collar Aging Couples Near Suburbs

VALS2 American Lifestyles

Lifestyle Segmentation VALS 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