Consumer Shopping Overview

1. Retailing MKTG 3346 Consumer Shopping Overview Professor Edward Fox Cox School of Business/SMU

2. Factors Driving Consumer Shopping Behavior • Needs • Social group • Family size • Occupation • Price Sensitivity • Disposable income • Opportunity cost of time • Location and Retail Density

3. Shopping Behavior Depends on the Product High involvement, High price, High risk, Infrequent • High-Involvement, Detailed Process • Buying a Durable – Car, Computer, Home • High Risk, Uncertainty • Moderate Problem Solving • Some Prior Buying Experience • Relatively Infrequent Purchase • May Be Impulse Purchase • Habitual Decision Making • Frequent Shopping • Store, Brand Loyalty Drives Purchase Low involvement, Low price, Low risk, High frequency

4. Shopping Behavior ExamplesAPPAREL • Moderate Price • High involvement for some; low for others • Shopping Product • Consumers likely to shop around • Evaluate both quality and price • Image? • Experience Good – Touch it; try it on • Less likely to buy online or by catalog • Interaction with salesperson may affect • Browsers or goal (i.e., purchase) oriented shoppers? • Mall locations facilitate browsing and search

5. Shopping Behavior ExamplesMOVIE • Low Price • Low involvement? • Experience good • Prerelease advertising • Quality assessment • Actors • Reviews • Location • Multiplexes • Many screens • Different start times Are movies cross-shopped with other forms of entertainment?

6. Shopping Behavior ExamplesINSURANCE • High Price • High involvement? • Unsought Product • Consumers may avoid the subject • Don’t want to think about it, so don’t give it much attention • Credence Product • Inertia • Hard to get customers to switch • Primary interaction with provider may be billing • Triggered by events (bad stuff happened) • Regret

7. Shopping Behavior Depends on Retail Format Outlet % Shopping Number of Weekly Weekly Trips Spending Supermarkets 100 2.4 $ 72.82 General merchandise 68 1.3 32.53 discount stores Fast-food restaurants 65 1.9 16.32 Drug stores 39 1.2 18.70 Convenience stores 37 2.4 19.72 Wholesale clubs 27 1.7 75.12 Specialty food stores 9 1.0 23.70 Source: “Consumers Are Skeptical Again,” “63rd Annual Report of the Grocery Industry,” Progressive Grocer, April 1996, p.42.

8. Consumer Shopping Process

9. How Retailers Affect Need Recognition STIMULATING TRAFFIC AND SALES • Out-of-Store • Advertising • Direct mail • In-Store • Visual merchandising • Signage • Displays • Suggestions by sales associates In-store merchandising and selling can generate unplanned, or impulse, purchases Adapted from Levy and Weitz

10. Factors Affecting Information Search • Customer Characteristics • Experience with the product/category • Perceived risk • Time pressure • Product Characteristics • Complexity • Cost • Risk • Category Characteristics • Number of alternatives • Meaningful differences between products Adapted from Levy and Weitz

11. How Retailers Reduce Information Search KEEPING CUSTOMERS IN THE STORE • Product • Extensive merchandise assortment • Ease in locating alternatives (cross merchandising) • Useful information from sales associates • Price • Everyday low pricing; price matching • Loyalty incentives; volume discounts; card programs Adapted from Levy and Weitz

12. Evaluating Retailers Source: Levy and Weitz

13. Evaluating a Product for Purchase Information used in buying a men’s suit Source: Levy and Weitz

14. Between Purchase Intent and the Purchase • Purchase Intention • Desire to buy the most preferred brand/product In-store Merchandising Social Factors • Product Choice • Choice of the store/brand/product Intention to buy does not always result in purchase

15. Buyer’s Decision ProcessPOST-PURCHASE BEHAVIOR • Consumer’s Expectations of Value • Perceived Value Satisfied Customer! Dissatisfied Customer! Retailers must deliver on the promise of value, or lose repeat business – customer loyalty! Adapted from Prentice Hall

16. Example of Marketing to Customer Segments