Consumer & The Shop

1. Consumer & The Shop Week 6 Consumer Behaviourand Food Marketing

2. Sources • East (chapter 9) • Marshall (chapter 5) • Lam (2001). The Effects of Store Environment on Shopping Behaviors: A Critical Review. Advances in Consumer Research, 28: 190-197 • Taylor and Nelson web site http://www.tnsofres.com/superpanel

3. Retail changes (T & N)

5. Consequences of the retailing growth • Saturation • Price competition • Out-of-town versus town centre • Supermarket concentration

6. Gravity models for shopper choice • Trade is directly proportional to population and inversely related to distance • Geographical vs. time distance • Geographical vs. economic distance • Central place theory (economic distance) • Accounting for demographic differences

7. Huff’s Retail Gravitation Model Attraction of a shopping centre Selling area Travel time Probability of using a shopping centre:

8. Some empirical results with Huff’s model • λ  2 • Adj. R2  0.25 • Does the consumer consider ALL shopping centres? • What are the effects of ignoring all other details on the shopping area?

9. Store preferences • Store image: beliefs, attitudes and feelings about a store • What attribute does make the shop attractive to consumer? • Image is retained for long periods (difficult to change)

10. Main reason for choosing a store in Britain (1994) Source: Adapted from East (1997), original source CRU-Kingston Business School

11. Supermarket vs local shop (1991) Source: East et al. (1991b, 1997)

12. Determinants of choice • Salient attributes! • One/two factors • Store location is the most relevant attribute in UK (several studies) • In 1994 price was more important than store location in the US.

13. 1992 vs 1994(and US vs UK)

14. Shopping trips • “Main trip” customers • “Secondary quick trips” customers • Average consumer: • One weekly trip (main) • Supplements of secondary trips

15. Types of customers • Principal component analysis (1992) on Britain and US supermarket surveys Heavy buyer: large income and household, aged under 45, prefers large out-of-town stores, shop later in the day and usually on a regular day Congestion dislikers: dislike shopping, claim to avoid busy times and to be busy themselves (“reluctant shopper”) Local shoppers: use small local stores, shop frequently, spend little, often old and from small households

16. Compulsive shoppers • Buying something not needed • Buying something that will not be used • Mood repair out of the process of buying

25. The in-store environment • It is a tool for market differentiation • Store layout • Atmospherics • The store environment affects: • Cognition • Emotions • Behaviours

26. Shun Yin Lam (2001), The effects of store environment on shopping behaviour: a critical review, Advances in Consumer Research, 28: 190-197

27. Environment and actions • Actions occur when the environment presents: • Opportunities • Stimuli • Rewards • Example: try to find the exit in IKEA

28. Congruence • If store environmental elements/factors are congruent with each other, their effects on emotions, cognitions and shopping behaviour will be magnified • Match in cultural dimension

29. Store layout • Optimising spending opportunities • Delicatessen at the back • Presenting purchase cues • Making the store an easy and pleasant place • Place products to increase probability to buy • End aisle and displays • Optimisation of space and location devoted to a “Stock keeping unit” • Optimal layout to maximise profits (e.g. move profitable products to the eye-level)

30. Atmospherics MusicColourTemperatureLayoutsOdours ENVIRONMENT MOODS Pleasure-displeasureArousal-non-arousal BEHAVIOURS Time spentExplorationCommunicationSpending East (1997)

31. Some examples • Smell in the Body Shop • Handwritten prices in Oddbins • … • Case study (essay by Clara Ikemeh and Ravinun Bovornsantisuth, 2003)

32. “The Treat Store”  Ambient Factors Mixture of soft/strong lighting tones Floral Fragrance  Design Factors Very Modern Pictorial Representations Use of Subtle colours (Green/Silver) Numerous strategic positioning tills Extremely wide aisles Simply and very orderly layout  Social Factors Affluent, more upmarket shopper Specialist shopper (e.g. organic) Crowd haters Strong customer service emphasis Formal staff uniform

33. “The Hypermarket”  Ambient Factors Use of contemporary music Bright/intense lighting Food Aroma Design factor Significant use of subtle colours display (Green/Yellow) Wider aisle Pictorial representation Use of stimuli (e.g. sound bites-“cock a doo” in egg section) Social Factors Heavy shopper Younger shopper Casual staff uniform High level floating staff

34. “The Local Store” Ambient Factors Use of Music Moderate/poor lighting Design Factor Old Fashioned/Outdated Use of Bright Colours (Red & Yellow) Simple Layout Social Factor Older Demographic profile Cost saving shopper Low level of staff flow Limited Range products

35. Direct Stimulus-Response effects: some examples • Red is more arousing, lead to quick decisions • Rhythm of music influences speed of customers through the store • Classical music leads to buy more expensive wine • Lighting level in a cellar • Affects amount of handled wine • Does not influence time spent or amount bought

36. Time of store use • Food is perishable • Different environment at different times • Different level of consumption over the year (seasonality)

37. Weekly timing East (1997)

38. Day timing East (1997)

39. Segments by time of use • Full time employed mainly shop on Friday and Saturday and in the evenings (62% after 2pm) • Not full-time employed on average shop earlier in the week and in the day (70% before 2pm) East (1997)

40. Reasons for shopping on different days / times • Days • Near weekend (28%) • Day not working (16%) • Store less busy (13%) • Needed specific food (13%) • Time of day • Fitted in with other shopping (25%) • Store less busy (25%) • Left work then (13%) • Car / lift / help available (13%)

41. Food retailing methods • Concentration of retailing in western countries • Small shop disappearing • Economies of scale • Labour costs • Economies of “scope” for the consumer • Price, services and range differentiation/segmentation • Specialisation • Kwik save • Iceland

42. Non-price competition • Multi-buy • Link-save • Shopper loyalty schemes • Retail format • Differentiation • Specialisation • Diversification

43. Retail marketing strategies High price Marshall (1995) Delicatessen Specialist Food Department store food hall Convenience store Conventional Supermarket Narrow range Wide and deep range Warehouse club Food superstore “Hard” discount store Discount superstore Low price

44. Retail own brands • Expansion of retail own brands (labels, sub-brands) • First/second generation RB • Substitutes of well-known brands at a discount price • Third generation RB • Low price, but close to leader quality • Fourth generation RB • Added value product, differentiation from competitors, not significant price discount, competing with premium brands, customer loyalty • Lower advertising costs • Quality control – link between product and retailer name

45. Own brands and price perception • Consumer search and shopping costs are too high to search for different own brands • Consumer usually select a single store / retail brand • Price comparison is made on price of main item retail brand • Price of main item retail brand becomes the surrogate of the perceived price level of the whole store

46. Use of information • Scan data: item data at the point of sale • Efficient shelf and store layouts • Matching of checkout labour to shopper flows • Effectiveness in buying by the retailer (cost reduction) • Capability to have link-save, consumer loyalty programmes (panel data) • Improved stock management