Outlet Selection and Purchase 17 CHAPTER Outlet Selection and Purchase McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

PART IV: CONSUMER DECISION PROCESS 17-2

Learning Objectives L01 L02 L03 L04 L05 Describe how retailing is evolving Discuss the Internet and mobile as part of multi- and omni-channel shopping Explain the retail and consumer attributes that affect outlet selection Summarize the in-store and online influences on brand choice Understand how purchase plays a role in the shopping process 17-3

Consumer Behavior In The News… What Are the Top 5 Factors Driving Consumer Interest in an Apparel Retailer? Source: D. Warmath, “Get in the Game or Lose,” Advertising Age, August 25, 2008, p. 15. 17-4

Consumer Behavior In The News… Top 5 Factors in Apparel Retailing. 1. Latest Trends 2. High-Quality Products 3. Brand Names I want 4. Broad Selection 5. Full Range of Services NOTE: Factors vary by category. Number 1 factor in home products is broad selection. Source: D. Warmath, “Get in the Game or Lose,” Advertising Age, August 25, 2008, p. 15. 17-5

The Evolving Retail Scene Internet Retailing Characteristics of Online Shoppers Barriers to Internet Shopping Store-based Retailing The Internet as Part of a Multi-Channel Strategy Mobile as Part of an Omni-Channel Strategy 17-6

Video Application The following Video Clip demonstrates how M&Ms gets personal with its multichannel strategy! 17-7

17-8 17-8

The Evolving Retail Scene Internet Retailing Internet retailing continues to evolve and grow as a strong retail channel: 17-9

The Evolving Retail Scene Consumers shop online for reasons similar to those for shopping from catalogs: 17-10

The Evolving Retail Scene Characteristics of Online Shoppers Six shopping segments identified by Experian: 17-11

The Evolving Retail Scene Barriers to Internet Shopping A recent study found the following reasons among those who are online who have never made a purchase: 17-12

The Evolving Retail Scene Store-based Retailing The following are the results of a Roper survey asking consumers why they don’t like shopping in stores: 17-13

The Evolving Retail Scene Store-based Retailing In-store shopping is perceived as neither fun nor efficient by many. Retailers are trying to enhance the experiential component through layout, music, personal shoppers, etc. Brand stores add value by providing a fun shopping environment 17-14

Applications in Consumer Behavior Store-based Retailing This Walmart ad shows one of the many ways store-based retailers add value for their customers – namely providing a fun shopping environment. Courtesy Walmart Stores, Inc. 17-15

The Evolving Retail Scene The Internet as Part of a Multi-Channel Strategy Most retailers utilize multiple retail channels, such as physical stores, Internet, catalogs, etc. This approach can take many forms and can be successful for a number of reasons, such as a regional in-store retail utilizing online to become national/international in scope. Multi-channel shoppers are consumers who browse and/or purchase in more than one channel. 17-16

The Evolving Retail Scene Multi-Channel Shoppers Browse in One Channel and Purchase in Another 17-17

The Evolving Retail Scene Mobile as Part of an Omni-Channel Strategy Omni-channel shoppers are consumers who browse and/or purchase in more than one channel simultaneously. They are Digital savvy, with heavy reliance on mobile shopping apps. Younger Gen Yers, upscale and tech savvy Gen X and older Gen Y Spend 15%-30% more with a retailer than multi-channel shoppers! IDC Retail Insights discusses the importance of the emerging omni-channel shopper YouTube Spotlight 17-18

The Evolving Retail Scene Mobile as Part of an Omni-Channel Strategy 17-19

Attributes Affecting Retail Outlet Selection Retail outlet selection involves a comparison of the alternative outlets on consumer’s evaluative criteria: Outlet Image Retailer Brands Retail Advertising Outlet Location and Size 17-20

Attributes Affecting Retail Outlet Selection Outlet Image Bricks-and-Mortar Image 17-21

Attributes Affecting Retail Outlet Selection Outlet Image Online Image 17-22

Attributes Affecting Retail Outlet Selection Retailer Brands Store brands are closely related to store image, and at the extreme, the store or outlet is the brand. Traditionally, retailers carried only manufacturers' brands, and only a few, such as Sears and Wards, developed their own brands. Increasingly retailers such as Walmart and Target are developing and promoting high-quality brands with either the store’s name or an independent name. The key to success of store brands--high quality at a reasonable price. 17-23

Attributes Affecting Retail Outlet Selection Retail Advertising Expenditure of Individuals Drawn to a Store by an Advertised Item Source: The Double Dividend. (New York: Newspaper Advertising Bureau Inc., February 1977. 17-24

Attributes Affecting Retail Outlet Selection Outlet Location and Size Location and size play an important role in store choice. All else equal, consumers generally select the closest store. Outlet size is also important. Generally, customers prefer larger outlets over smaller outlets. The retail attraction model, or the retail gravitation model, is used to calculate the level of store attraction based on store size and distance from the consumer. 17-25

Consumer Characteristics and Outlet Choice Perceived Risk Shopping Orientation Two consumer characteristics that are particularly relevant to store choice: 17-26

Consumer Characteristics and Outlet Choice Shopping Orientation Segments Apathetic Shoppers 16% Enthusiastic Shoppers 22% Destination shoppers 21% Basic Shoppers 22% Bargain Seekers 20% 17-27

In-Store and Online Influences on Brand Choices Supermarket Decisions: Two-Thirds Are Made In-Store 17-28

In-Store and Online Influences on Brand Choices Point-Of-Purchase Materials Price Reductions and Promotional Deals Outlet Atmosphere Stockouts Website Functioning and Requirements Mobile Apps Sales Personnel Strategies used by manufacturers and retailers to influence in-store and online decisions: 17-29

In-Store and Online Influences on Brand Choices Point-Of-Purchase Materials Shelf-Based Point-of-Purchase Materials 17-30

In-Store and Online Influences on Brand Choices Price Reductions and Promotional Deals Price reductions and promotional deals coupons multiple-item discounts, and gifts are generally accompanied by the use of some point-of-purchase materials. 17-31

In-Store and Online Influences on Brand Choices Outlet Atmosphere 17-32

In-Store and Online Influences on Brand Choices Stockouts Stockouts affect a consumer’s purchase decision. Three types of perceived costs: Substitution costs Transaction costs Opportunity costs 17-33

In-Store and Online Influences on Brand Choices Web Site Functioning and Requirements Consumers often research online then buy in traditional stores. However, losses also occur during the online shopping process. A DoubleClick study found the following reasons for shopping cart abandonment: 17-34

In-Store and Online Influences on Brand Choices Mobile and Mobile Apps Mobile marketing is clearly seen as next horizon for marketers local mobile search is changing how consumers find stores and brands within stores mobile apps increasingly play role in how consumers shop, find the best deals, etc. 17-35

In-Store and Online Influences on Brand Choices Sales Personnel The effectiveness of sales efforts is influenced by the interaction of the salesperson’s knowledge, skill, and authority the nature of the customer’s buying task the customer-salesperson relationship In the online context, marketers are testing online sales clerks, called avatars, that interact with customers as they shop on their website. 17-36