When customers go shopping to accomplish a specific task, they are seeking to satisfy

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Retail Shopper Behaviour, process of consumer buying in retail, Need recognition, stimulating need recognition, information search, types of buying decision

Retail Shopper Behaviour, process of consumer buying in retail, Need recognition, stimulating need recognition, information search, types of buying decision

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1. 1. Retail Shopping Behaviour Dr. Parveen Nagpal
2. 2. Retail Shopping Behaviour • The buying process, comprising the steps consumers go through when buying a product or service, begins when customers recognize an unsatisfied need. • Then they seek information about how to satisfy the need - what retailers, channels, and products or services might satisfy the need. • Customers evaluate the alternatives and choose a store or Internet site to visit or a catalogue to review. • Their encounter with a retailer provides more information and may alert customers to additional needs. • After evaluating the retailer’s offering, customers may make a purchase or go to another retailer to collect more information. • Eventually, customers purchase a product, use the product, and then decide whether the retailer, channel, and product satisfy their needs during the post-purchase evaluation stage of the customer buying process.
3. 3. The buying process—the stages consumers go through to select a retailer and channel and to buy a specific item. The buying process is linear, first the channel is selected, then the retailer, and finally the specific items. For each of these decisions, customers go through five stages, beginning with need recognition and ending with loyalty. However customers might not go through all the stages.
4. 4. Stages in the Buying Process 1. Need Recognition • The buying process is triggered when consumers recognize they have an unsatisfied need. • An unsatisfied need arises when customers’ desired level of satisfaction differs from their present level of satisfaction • Needs can be:  When consumers go shopping to accomplish a specific task, such as a person buying a suit for job interviews, they are seeking to satisfy utilitarian needs.  When consumers go shopping for pleasure, they are seeking to satisfy their hedonic needs - their needs for entertaining, emotional, and recreational experiences. Thus, from the consumer’s perspective, utilitarian needs are associated with work, whereas hedonic needs are associated with fun
5. 5. Stages in the Buying Process • Consumers motivated by utilitarian needs typically shop in a more deliberate and efficient manner. Thus, retailers need to provide adequate information and an effortless shopping experience for utilitarian shoppers. • On the other hand, shoppers with hedonic needs desire excitement, stimulation, status and power, and adventure Conflicting Needs: Most customers have multiple needs. Moreover, these needs often conflict. The pattern of buying both premium and low-priced merchandise or patronizing both expensive, status-oriented retailers and price-oriented retailers is called cross-shopping. Although all cross-shoppers seek value, their perception of value may vary across product categories.
6. 6. Stages in the Buying Process 2. Information Search • Once customers identify a need, they seek information about retailers, channels, or products to help them satisfy that need. • A customer’s search may start on the Internet and then narrow to the three suits shown to him by the salesperson at a retail store. • Sources of Information Internal sources: Information in a customer’s memory, such as names, images, and past shopping experiences with different stores. External sources: information provided by ads and other people. When customers feel that their internal information is inadequate, they turn to external information sources.
7. 7. Stages in the Buying Process Amount of Information Searched • In general, the amount of information search undertaken depends on the value customers feel they can gain from searching versus the cost of searching. • The value of search arise from the degree to which the additional information improves the customer’s purchase decision. • Will the search help the customer find a lower-priced product or one that will give superior performance? • The costs of the search include the customer’s time and money. Traveling from store to store can cost money for fuel and parking, but the major cost incurred is the customer’s time. • However, technology has dramatically reduced the cost of information search. For example, vast information about merchandise sold across the world is just a mouse click away.
8. 8. Stages in the Buying Process Reducing Information Search • The retailer’s objective for customers in the information search stage is to limit the customer’s search to its store or Web site. • One measure of a retailer’s performance on this objective is the conversion rate - the percentage of customers who enter a store or access a Web site and then buy a product at the store or Web site. Internet, Information Search, and Price Competition • The Internet has had a profound impact on consumers’ ability to gather external information. In addition to placing their own information on their Web sites, retailers encourage their customers to post information such as product reviews, ratings etc. • Consumer reviews are emerging as a prime information source for shoppers as they collect information during the buying process
9. 9. Stages in the Buying Process 3. Evaluation of Alternatives: The Multiattribute Model • The Multiattribute attitude model provides a useful way to summarize how customers use the information they have collected to evaluate and select retailers, channels, and products. • The Multiattribute attitude model is based on the notion that customers see a retailer, a product, or a channel as a collection of attributes or characteristics. • The model is designed to predict a customer’s evaluation of a product, retailer, or channel on the basis of: (i) its performance on relevant attributes and (ii) the importance of those attributes to the customer.
10. 10. Stages in the Buying Process 4. Purchasing the Merchandise or Service • Customers do not always patronize a store or purchase a brand or item of merchandise with the highest overall evaluation. • The product or service offering the greatest benefits (having the highest evaluation) may not be available from the retailer, or the customer may feel that its risks outweigh the potential benefits. • One measure of retailers’ success at converting positive evaluations to purchases is the number of real or virtual abandoned carts in the retailer’s store or Web site. • Retailers use various tactics to increase the chances that customers will convert their positive evaluations into purchases.
11. 11. Stages in the Buying Process • Retailers can reduce the number of abandoned carts by making it easier to purchase merchandise. • They can reduce the actual wait time for buying merchandise by having more checkout lanes open and placing them conveniently in the store. To reduce perceived wait times, they can install digital displays to entertain customers waiting in line
12. 12. Stages in the Buying Process 5. Post purchase Evaluation • The buying process does not end when a customer purchases a product. After making a purchase, the customer uses the product and then evaluates the experience to determine whether it was satisfactory or unsatisfactory. • Satisfaction is a post-consumption evaluation of how well a store or product meets or exceeds customer expectations. • This post purchase evaluation then becomes part of the customer’s internal information and affects store and product evaluations and purchase decisions. • Unsatisfactory experiences can motivate customers to complain to the retailer, patronize other stores, and select different brands in the future. • Consistently high levels of satisfaction build store and brand loyalty that are important sources of competitive advantage for retailers.
13. 13. Types of Buying Decisions 1. Extended Problem Solving - Purchase decision process in which customers devote considerable time and effort to analyzing their alternatives. Customers engage in extended problem solving when a purchase decision involves a lot of risk and uncertainty. Financial risks arise when customers purchase an expensive product or service. Physical risks are important when customers feel that a product or service may affect their health or safety. Social risks arise when customers believe a product will affect how others view them. Lasik eye surgery, for instance, involves all three types of risks: It can be expensive, potentially damage the eyes, and change a person’s appearance.
14. 14. 2. Limited Problem Solving: Purchase decision process involving a moderate amount of effort and time. • Customers engage in this type of buying process when they have had some prior experience with the product or service and their risk is moderate. • Customers tend to rely more on personal knowledge than on external information. They usually choose a retailer they have shopped at before and select merchandise they have bought in the past • One common type of limited problem solving is impulse buying, or unplanned purchasing, which is a buying decision made by customers on the spot after seeing the merchandise. • Retailers encourage impulse-buying behavior by using prominent point-of- purchase (POP) or point-of-sale (POS) displays to attract customers’ attention.
15. 15. • POP stands for “point-of-purchase” and refers to anything that customers interact with in-store when they are deciding whether or not to purchase a product. • POS stands for “point-of-sale” and refers to the actual transaction that occurs when the customer buys the product. 3. Habitual Decision Making: Purchase decision process involving little or no conscious effort. • It occurs when decisions are not very important to customers and involve familiar merchandise they have bought in the past. • When customers are loyal to a brand or a store, they engage in habitual decision making • Brand loyalty - customers like and consistently buy a specific brand in a product category and are reluctant to switch to other brands if their favorite brand is not available. For example, loyal Coca-Cola drinkers won’t buy Pepsi, no matter what.
16. 16. Social Factors Influencing Buying Process 1. Family: considers needs of all members 2. Reference Groups: includes one or more people whom a person uses as a basis of comparison for beliefs, feelings, and behaviors Store advocates - customers who like a store so much that they actively share their positive experiences with friends and family 3. Culture: meaning, beliefs, morals, and values shared by most members of a society. Subcultures - distinctive groups of people within a culture. Members of a subculture share some customs and norms with the overall society but also have some unique perspectives. Subcultures can be based on geography, age, ethnicity, lifestyle or a college
17. 17. Market Segmentation • In order to be cost-effective, retailers identify groups of customers (market segments) and target their offerings to meet the needs of customers in a segment rather than the needs of a specific customer. • A retail market segment is a group of customers whose needs are satisfied by the same retail mix because they have similar needs. • For example, families travelling on vacations have different motives and needs than executives travelling for business tours.
18. 18. Approaches for Segmenting Markets 1. Geographic Segmentation: Here the customers are grouped according to the place where they live. A retail market can be segmented by cities or countries. Because customers shop at stores convenient to where they live and work, individual retail outlets usually focus on the customer segment reasonably close to the outlet. Segments based on geography can be identifiable, substantial and reachable.
19. 19. Approaches for Segmenting Markets 2. Demographic Segmentation: Here the customers are grouped according to the characteristics such as age, gender, income and education. Demographic variables are the most common means of defining segments, because consumers in these segments can be easily identified, their size can be determined, and the degree to which they can be reached by and are responsive to media can be easily assessed. 3. Geodemographic Segmentation: This type of segmentation uses both geographic and demographic characteristics to classify consumers. It is based on the assumption that consumers in the same neighborhoods tend to buy the same types of cars, appliances and apparel and shop at the same type of retailers.
20. 20. Approaches for Segmenting Markets 4. Lifestyle Segmentation: Lifestyle or psychographics refers to how people live, how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world in which they live. Lifestyle segments can be identified through consumer surveys that ask respondents questions such as: “I would love to stay in an expensive lodge” “I would want to own Harley Davidson bike rather than a normal bike” Retailers today are placing more emphasis on lifestyles than on demographics to define a target segment.
21. 21. Approaches for Segmenting Markets 5. Buying Situation Segmentation: The buying behavior of customers with the same demographics or lifestyle can differ depending on their buying situation. Thus, retailers may use buying situations, such as fill – in versus weekly shopping, to segment a market. 6. Benefit Segmentation: Here the customers who seek similar benefits are grouped In the multiattribute attitude model, customers in the same benefit segment would have similar set of important weights for the attributes of a store or product. For example, customers who place high importance on fashion and style and low importance on price might form a fashion segment, whereas customers who place more importance on price would form a price segment. This type of segmentation helps retailers to design their offerings to appeal to their customers.
22. 22. Approaches for Segmenting Markets Composite Segmentation Approaches No segmentation approach meets all the criteria. For example, segmenting by demographics and geography may be ideal for identifying and accessing customers, but these characteristics often are unrelated to customers needs. These approaches may thus not indicate the actions necessary to attract customers in this segment. Composite segmentation uses multiple variables to identify customers in the target segment according to their benefits sought, lifestyles and demographics.
23. 23. References 1. Michael Levy & Barton A Weitz, “Retailing Management”, 8th Edition, Tata Mc Graw Hill. 2. Swapna Pradhan, “Retailing Management – Text and Cases”, 5th Edition, Tata Mc Graw Hill. 3. Nagpal, Sharma “Retail Management”, TYBMS, Sheth Publishers 4. Nagpal, Sharma “Retail Management”, M. Com, Vipul Prakashan.

What need is a shopper trying to satisfy by going shopping to accomplish a specific task?

What means that customers like and habitually visit the same store to purchase a type of merchandise?

How is shopping going to be in the future?

Which type of segmentation strategy is based on the principle that birds of a feather flock together?