FASHION RETAIL INDUSTRY Retailing Management 8th Edition Levy Weitz Chapter 4 Customer Buying Behavior effective retail strategy satisfies consumers needs better than competitors understanding consumer buying behavior CRITICAL to formulating implementing retail strategy BUYING PROCESS steps consumers go through when buying products services Information Search 1 Need Recognition 2 3 Evaluation 4 Choice 5 Visit 6 Loyalty 2 types of needs retailers seek to satisfy UTILITARIAN NEEDS when consumers shop to accomplish certain tasks associated with work HEDONIC NEEDS when consumers shop for pleasure associated with fun all needs cannot be satisfied by one store channel or product results in inconsistent shopping behavior unmet needs stimulated by advertising emails direct mail publicity and special events activities communicated by retailers CROSS SHOPPING pattern of buying both premium and low priced merchandise OR patronizing both status and price oriented retailers 2 sources of information INTERNAL information in customer s memory such as names images and past experiences with stores EXTERNAL information provided by ads and marketing of retailer and other people technology has dramatically reduced cost of information search profound impact on ability to gather info price info available on internet INCREASES PRICE COMPETITION Amount of information search depends on 1 Characteristics of the individual customer 2 Aspects of the market and buying situation in which purchase is made OBJECTIVE of retailers is to try to limit information search to their store website or offering CONVERSION RATE of customers who enter a store access a website and actually make a purchase MULTIATTRIBUTE ATTITUDE MODEL based on the notion that customers see retailers products channels as collections of attributes characteristics predicts a customer s evaluation of product retailer channel on basis of 1 Performance and relevant attributes Importance of attributes to customer 2 customer s overall evaluation of an alternative is related to the sum of the performance beliefs and multiplied by importance weights To attract customers retailers must research and collect info on 1 Alternative retailers customers could consider 2 Characteristics benefits customers consider when evaluating choosing a retailer 3 Customer ratings of each retailers performance on characteristics Importance weight that customers attach to characteristics 4 CONSIDERATION SET set of alternatives the customer evaluates when making the choice of a retailer to patronize retailers need to be included in the consideration set in order to increase the chance customer will choose them through Increasing beliefs about store benefits 1 2 Decreasing beliefs about competitors benefits 3 Increasing customer importance weights 4 Adding a new benefit SATISFACTION post consumption evaluation of how well a store product meets or exceeds customers expectations TYPES OF BUYING DECISIONS 1 EXTENDED PROBLEM SOLVING purchase decision process in which customers devote considerable amount of time and effort to analyzing alternatives typically occurs when purchase decision involves HIGH RISK UNCERTAINTY and effort typically when customers have had some PRIOR EXPERIENCE and the decision involves MODERATE RISK purchase decision process involving moderate amounts of time 2 LIMITED PROBLEM SOLVING IMPULSE UNPLANNED BUYING type of limited problem solving buying decisions made on the spot after seeing merchandise 3 HABITUAL DECISION MAKING because of brand retailer loyalty purchase decision process little or no conscious effort usually BRAND LOYALTY customers like and consistently buy a specific brand in a product category RETAILER LOYALTY customers likes and habitually visit the same retailer for merchandise Retailers want to INCREASE loyalty by Choosing convenient location Offering complete assortments of national private label brands Reducing number of stock outs Rewarding customers for frequent purchases Providing good customer service SOCIAL FACTORS that influence buying process 1 Family one or more people whom a person uses as a basis as comparison of 2 REFERENCE GROUPS beliefs feelings behaviors offer info rewards for specific purchase behaviors enhance self image 3 CULTURE meanings beliefs morals values learned and shared by most people in a society SUBCULTURE distinctive groups within a culture that share some of the same cultural customs and norms but also have unique perspectives MARKET SEGMENTATION RETAIL MARKET SEGMENT group of customers whose needs are satisfied by same retail mix because they have similar needs Criteria for evaluating market segments Are they 1 Actionable retailers should know what to do to satisfy needs of customers in the segment 2 3 Substantial retailer must determine if segment is large enough with significant buying power to Identifiable retailer is able to determine which customers are in the segment 4 Reachable retailer can target promotions and other retail mix elements to customers in the generate sufficient profits segment MARKET SEGMENTATION BY 1 Geographic Location groups customers according to where they live 2 Demographic most common groups customers on basis on easily measured objective characteristics such as age gender income education 3 Geodemographics use both geographic and demographic characteristics to classify customers 4 Lifestyles psychographics groups customers based on how people live spend their time money activities opinions attitudes etc not as easily measured 5 Benefits groups customers seeking similar benefits 6 Composite segmentation uses multiple variables to identify customers according to benefits sought lifestyles and demographics