7 Chapter 7 Identifying and Understanding Consumers Dr. Pointer Notes.
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Transcript of 7 Chapter 7 Identifying and Understanding Consumers Dr. Pointer Notes.
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Chapter 77Identifying and Understanding Consumers
Dr. Pointer NotesDr. Pointer Notes
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Chapter Objectives
To discuss why it is important for a retailer to properly identify, understand, and appeal to its customers
To list and describe a number of consumer demographics, lifestyle factors, and needs and desires – and to explain how these concepts can be applied to retailing
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Chapter Objectives _2
To examine consumer attitudes toward shopping and consumer shopping behavior, including the consumer decision process and its stages
To look at retailer actions based on target market planning
To note some of the environmental factors that affect consumer shopping
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Overview
• The success of retailer’s strategy depends on how well the firm develops a retail strategy to appeal to target market
• Need to identify appropriate consumers• Understand different consumer characteristics,
their needs, attitudes• Recognize how decisions are made by target
market• The following factors are key to identifying and
understanding target market
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Figure 7.1 What Makes Retail Shoppers Tick
Retail Shoppers
Life-Styles
Demographics
Environmental Factors
Retailer Actions
Shopping Attitudes and Behavior
Needs and Desires
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Demographics and Lifestyles
Demographics– consumer data
that is objective, quantifiable, easily identifiable, measurable
Lifestyles– ways in which
consumers and families live and spend time and spend money
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Helpful Facts for Understanding U.S. Demographics
Typical household has an annual income of $45,000
Top 1/4 of households earn $75,000 or more
Lowest 1/6 of households earn under $15,000
High incomes lead to high discretionary income
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Helpful Facts_2
There are 5 million more females than males
Three-fifths of females age 16 and older are in the labor force
Most U.S. employment is in services25% of all U.S. adults age 25 and older
have at least graduated from a four-year college
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Helpful Facts_3
One –sixth of people move each, yet 60% stay in same county
There are many ethnic groups. Blacks, Hispanics, and Asian represent 30% of U.S. population
Each group represents a large target market
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Consumer Life-Styles
• Consumer life-styles are based on social and psychological factors and are affected by demographics.
• Culture – distinctive heritage shared by a group of people that passes on a series of beliefs, norms, and customs
• Major subcultures are within the broader culture• Social class ranking of people based on education,
income, occupation and other factors
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Understanding Consumer Lifestyles: Social Factors
Lifestyle
CultureReference
Groups
Social Class
FamilyLife Cycle
Time Utilization
HouseholdLife Cycle
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Consumer Life-Styles
• Reference groups- any group or individuals a persons looks to for direction in behaving. They influence thoughts, behavior;
• Family life cycle – how a traditional family moves form bachelorhood to children to solitary retirement
• Time utilization – activities in which a person is involved and the amount of time allocated to them (work, transportation, eating, recreation, entertainment, parenting, sleeping, etc
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Understanding Consumer Lifestyles: Psychological Factors
Lifestyle
Personality Attitudes
PerceivedRisk
PurchaseImportance
ClassConsciousness
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Psychological Factor
• Personality- sum total of a person’s traits that make the unique. Consistent response to environmental stimuli.
• Class consciousness – extent to which a person desires and pursues social status.
• Attitudes – feels that a person holds toward an object
• Perceived risk – level of risk that person holds regarding the purchase of a product from a retailer
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Figure 7.2 The Impact of Perceived Risk on Consumers
Consumers
Types of riskFunctionalPhysicalFinancial
SocialPsychological
Time
Factors affecting Perceived Risk
NewnessBudget
ExperienceNumber of alternatives
Social visibility
OutcomesPurchase new
productStick with old brand
Talk to friendsSeek more info
nonpurchase
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Retail Implications of consumer demographics
Because of changing life-styles, more husband and wives shop together. More men are doing non traditional work around the house
Component life-styles – consumers are less predictable
Such as cleaning, shopping, babysitting
Consumer sophistication and confidence – more knowledgeable shoppers who are more cosmopolitan (more aware of trends)
Poverty of time – people are time-pressed because of work, commuting, family responsibilities and etc
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Consumer Profiles
• Need to have a profiles of your retail customers. As and Example:
• Typical outlet shopper is married, career women who’s 43 yr, HH income of $53K, shops 4 times a yr at outlets and spends more than 100 per visit
• Heavy shoppers drive sales and represent 33% of all shoppers
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Consumer Needs and Desires
• What are the key consumer needs that they are trying to fill
• Needs a person’s basic shopping requirements which are consistent with demographics and life-style
• Desires are discretionary shopping goals that affect attitudes and behavior
• Consumer motives, reasons for their shopping behavior ( pg 169)
• Three major shopping market segments –in-home,online and outshoppers
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In-Home Shoppers
• Shopping is discretionary, not necessary
• Convenience is important• Active, affluent, well-
educated• Self-confident, younger,
adventuresome• Time scarcity is not a
motivator
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Online Shoppers
• Use of Web for decision- making process as well as buying process
• Convenience is important• Above average incomes,
well-educated• Time scarcity is a
motivator
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Out- Shoppers
• Out-of-hometown shopping
• Male, young, members of a large family, and new to the community
• Income and education vary
• They like to travel, enjoy fine food, are active, and read out-of-town newspapers
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Attitudes Towards Shopping
Shopping EnjoymentAttitudes toward Shopping TimeShifting Feelings About RetailingWhy People Buy or Not on a Shopping
TripAttitudes by Market SegmentAttitudes toward Private Brands
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Top Reasons for Leaving an Apparel Store Without Buying
Cannot find an appealing styleCannot find the right sizeNothing fitsNo sales help is availableCannot get in and out of the store easilyPrices are too highIn-store experience is stressfulCannot find a good value
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Table 7.3 Where America Shops: Household Purchases
0102030405060708090
Discount MailOrder
Self-ServiceShoes
ApparelStores in
Malls
OutletStores
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Table 7.3 Where America Shops: Weekly Purchases
0
10
20
30
40
50
60
SupermarketsConvenienceFull-Line DiscountDrugstoresMembership Clubs
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Cross-Shopping
Shopping for a product category at more than one retail format during the year
Visiting multiple retailers on one shopping trip
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The Consumer Decision Process
• After understanding how to describe consumers using demographic factors, retailers should know some thing about how they make purchase decisions
• Consumer decision process consist of the activities consumers do in making the decision to obtain, consume and dispose of goods and services
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The Consumer Decision Process
Need/Problem Awareness
Information Search
Eval of Alternatives
Purchase
Post Purchase Eval
Demographics
Lifestyle
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Key Factors in the Purchase Act
Retailer’s place of Purchase
Retailer’s purchase terms
Retailer’s goods
and service availability
Consumer’spurchase or nonpurchase
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Purchasing Act
• Place of purchase – Store, home, mall,office,online
• Purchasing Terms – price, cash, credit• Good and services – instock, delivery time• Post Purchase behavior• Cognitive dissonance• Satisfaction is based on?
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Types of Consumer Decisions
High
RISK & TIME
Low
Extended
Limited
Routine
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Types of Decision making
• Extended- consumer makes full use of all steps in consumer decision model
• Limited- consumers use each step but don’t spend a long time at each step
• Routine decision – consumer buys out of habit and skips many of the steps in the model
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Types of Impulse Shopping
Completely unplannedPartially unplannedUnplanned substitution
Impulse purchase is defined as a sudden urgent to buy without consideration of consequences of actions
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Devise a Marketing Strategy
After choosing the target market method, the target market is selected.
The target market is evaluated for needs, psychological factors and social, situational factors.
Next the retailing mix is then shaped
The major retail strategies focuses on being a retailer with a mass merchandise strategy, retailer with concentrated marketing strategy or one with a differentiated strategy
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Possible Retailer Approaches
Mass MarketingKohl’s Department Stores
Concentrated MarketingZutopia
Differentiated MarketingFoot Locker
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Retail Strategies
• Mass marketing strategy – goes after a broad array of customers with good quality merchandise (between discounter and Traditional dept store)
• Concentrated marketing strategy –focuses retailing effort at only one segment
• Differentiated strategy – appealing to different target markets with different retailing mixes
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Environmental Factors and Consumers
State of the EconomyRate of InflationInfrastructure for ShoppingPrice WarsEmergence of New Retail FormatsPeople Working at HomeRegulations on ShoppingChanging Social Values and Norms
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Questions