Customer Buying Behavior Chapter 4 Customer Buying Behavior

Illustration of Buying Process 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. Andrew Ward/Life File/Getty Images

Illustration (Continued) Jennifer surfs the Internet for tips on dressing for interviews (www.collegegrad.com and www.jobsearch.about.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 interested in fashion.

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. John A. Rizzo/Getty Images

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.

Stages in the Buying Process

Types of Needs Utilitarian Needs –satisfied when purchases accomplish a specific task. Shopping needs to be easy and effortless like Sam’s or a grocery store. Hedonic needs – satisfied when purchases accomplish a need for entertainment, emotional and recreational experience as in department stores or specialty stores.

Satisfied Hedonic Needs Stimulation Social experience Learn new trends and fashions Satisfy need for power and status Self-rewards Adventure (c) image100/PunchStock

Stimulating Need Recognition Suggestions by Sales Associates Advertising and Direct Mail Visual Merchandise in store Special Events in the Store Signage Displays Stockbyte/Punchstock Images

Factors Affecting Amount of Information Search Nature of the Product Complexity Cost Characteristics of Customer Past experience Perceived risk Time pressure Aspects of the Market Number of alternative brands

Sources of Information Internal Past experiences Memory Digital Vision / Getty Images External Consumer reports Advertising Word of mouth The McGraw-Hill Companies, Inc./John Flournoy, photographer

How Can Retailers Limit the Information Search? Information from sales associates Provide an assortment of services Provide good assortments Everyday low pricing Credit Royalty-Free/CORBIS

Providing Information on Internet Buying a Car On-line (c) image100/PunchStock

Characteristics About Food Retailers

Evaluation of Retailers

Info Sanchez Used in Buying Suit

Information Needed to Use Multi-Attribute Model Alternative retailers consumers can consider Characteristic/Benefits Sought in Making Store and Merchandise Choices Ratings of Alternative Performance on Criteria Importance weights that consumers attach to the merchandise

Getting into the Consideration Set 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

Purchasing Merchandise or Services Customers do not always purchase a brand with the highest overall evaluation. The high-rated item may not be available in the store. How can a retailer increase the chances that customers will convert their merchandise evaluations into purchases? The McGraw-Hill Companies, Inc./Jill Braaten, photographer

Converting Merchandise or Services Evaluations into Purchases Don’t stock out of popular merchandise Offer liberal return policies, money back guarantees, and refunds if same merchandise is available at lower prices from another retailer Offer credit Make purchases easy by having convenient checkout Reduce waiting times at checkout The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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 Adam Crowley/Getty Images Janis Christie/Getty Images Greg Kuchik/Getty Images

Extended Problem Solving Consumers devote time and effort analyzing alternatives Financial risks – purchasing expensive products or services Physical risks – purchases that will affect consumer’s health and safety Social risks – consumers will believe product will affect how others view them

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 © Royalty-Free/CORBIS

Limited Problem Solving Purchase decisions process involving moderate amount of effort and time Customers engage in this when they have had prior experience with products or services Customers rely more on personal knowledge Majority of customer decisions involve limited problem solving (c) Brand X Pictures/PunchStock

What do Retailers Need to do for Customers Engaged in Limited Problem Solving? It 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 PhotoLink/Getty Images

Habitual Problem Solving Purchase decision process involving little or no conscious effort For purchases that aren’t important to the consumer For merchandise consumers have purchased in the past For consumers loyal to brands or a store Royalty-Free/CORBIS

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

Factors Influencing the Buying Decision Process

Family Influences Buying Decisions Purchases are for entire family to use Whole family participates in decision making process Retailers work to satisfy needs of all family members © Digital Vision

Culture Culture is the meaning, beliefs, morals and values shared by most members of a society Western culture: individualism Eastern culture: collectivism Subcultures are distinctive groups of people within a culture Mark Andersen/Getty Images

Reference Groups A reference group is one or more people whom a person uses as a basis of comparison for beliefs, feelings and behaviors. Reference groups affect buying decisions by: Offering information Providing rewards for specific purchasing behaviors Enhancing a consumer’s self-image (c) image100/PunchStock

Criteria for Evaluating Segmentation Schemes Actionability Identifiability Accessibility Stability Size

Methods for Segmenting Retail Markets

VALS2 American Lifestyle Segments

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. The McGraw-Hill Companies, Inc./Lars A. Niki, photographer Digital Vision / Getty Images (c) Digital Vision/PunchStock

Why Consumers Buy Fashions Communicate with Others Manage Appearance Express Self-Image Enhance Ego Impress Others McGraw-Hill Companies, Inc./Gary He, photographer

Stages in the Fashion Life Cycle

Theories of Fashion Diffusion Trickle Down Theory: Fashion leaders are consumers with the highest social status – wealthy, well-educated consumers. After they adopt a fashion, the fashion trickles down to consumers of lower classes

Theories of Fashion Diffusion Mass Market Theory: This theory suggests that fashions spread across social classes and that each social class has its own fashion leaders who play a key role in their own social networks © Digital Vision

Theories of Fashion Diffusion Subculture Theory: This theory is based on the development of recent fashions. These fashions start with people from lower-income groups and “trickled up” to mainstream consumer classes. © Digital Vision

Saturation to Decline When fashion reaches saturation, it becomes less appealing to consumers. It no longer provides an opportunity for people to express their individuality. Royalty-Free/CORBIS