Customer Buying Behavior

1. Customer Buying Behavior • 3 types of customer decision-making processes • Extended Problem solving • Limited Problem Solving • Habitual Decision Making Buying Process :- begins when customers recognize an unsatisfied need .

2. Extended Problem Solving Is a purchase decision process in which customers devote considerable time & effort to analyzing alternatives. Mainly when purchase decision involves a lot of risk & uncertainty . Types of risks • Financial risks • Physical risks • Social risks

3. Limited Problem Solving Purchase decision process involving a moderate amount of effort & time.Mainly when purchase decision involves some prior experience with the product or service & risk is moderate. Type • Impulse buying :- decision made on the spot after seeing the merchandise . Ex:- “BEST BUY”

4. Habitual Decision Making Purchase decision process involving little or no conscious effort . Examples :- • Brand Loyalty :- therefore retailers need to keep high loyalty brands . • Store Loyalty approaches for increasing store loyalty - convenient location - Offering complete assortments - Rewarding for frequent purchases - Providing good customer service - Reducing no. of stock outs

5. The Buying Process Retailers attempt to influence consumers as they go through the buying process to encourage them to buy the retailers merchandise & service SELECTING MERCHANDISE SELECTING A RETAILER STAGES Need Recognition Need Recognition Need recognition Search for Information About merchandise Search for Information About retailers Information Search Evaluate Retailers Evaluate Merchandise Evaluation Select a Retailer Select a Merchandise Choice Purchase Merchandise Visit Store or Internet site Or look through catalog Visit Post purchase evaluation Repeat Store Patronage Loyalty

6. Need Recognition Types of Needs • Psychological needs :- emotional needs • Conflicting Needs :- multiple needs • Stimulating Need Recognition :- advertisement , store ambience , visual merchandise , direct mail, publicity , special prices ,

7. Psychological needs :- emotional needs • Functional needs – rational • Stimulation • Social Experience • Learning new trends • Status & Power • Self-reward Conflicting Needs :- Multiple needs . Pattern of buying :- both premium & low-priced is called CROSS –SHOPPING Example :- An executive may own an Mercedes-Benz & buy petrol from a discount service station . Note :- Because need often cannot be satisfied in one store or by one product Consumers may appear to be inconsistent in their shopping behavior .

8. Information Search Seek information about retailers or products to help them satisfy the need. AMOUNT OF INFORMATION SEARCHED :- Depends upon gains vs cost of searching. Internet reduces cost of searching FACTORS INFLUENCING AMOUNT OF INF SEACRH :- • Nature & Use of Product being purchased • Characteristic of individual customer • Aspects of market & buying situation • Marketplace & situational factors - no. of competing brands & retail outlets - Time pressure under which purchase has to be made

9. Sources of information • Internal Sources - information in customers memory - names, images , past experiences • External Sources - Information provided by ads & other people. Reducing the Information Search – Retailers Objective • Provide good selection of merchandise • Broad assortment – colors,brands,sizes • Services - availability of credit - delivery for durables like furniture,appliance etc - Information - Everyday Low Prices - Money back guarantee etc

10. Evaluation of Alternatives • Multiattribute Attitude Model Is based on the notion that customers see a retailer or a product as a collection of attributes or characteristics . Customer's evaluation of a product or retailer on:- • Its performance on relevant attributes • Importance of those attributes to customers Multiattribute Model offers a framework for developing a retailing strategy to evaluate merchandise & vendors

11. Implications for Retailers Encourage customers to shop at its store more frequently Market research to collect the following information :- • Alternative stores that customers consider • Characteristics or benefits that customers consider when evaluating & choosing a retailer. • Customer’s ratings of each store’s performance on the characteristics • The importance weights that customers attach to the characteristics (out of 10)

12. Getting into the Consideration Set Consideration Set:- is the set of alternatives the customer evaluates when making a selection . The retailers must make sure that it is included in the customer’s consideration set. 4 methods • Increase the belief about the store’s performance • Decrease the performance belief for competing stores in the consideration set. • Increase customer’s importance weights • Add a new benefit .

13. Purchasing the Merchandise Steps that retailers take to increase the chances that customers can easily convert their positive merchandise evaluations into purchase are :- • Don’t stock out of popular merchandise.Have a complete assortment of sizes & colors for customer to buy . • Offering liberal return policies & refunds • Offer Credit • Having convenient checkout terminals • Reduce the actual & perceived waiting time in lines at checkout terminals .

14. Postpurchase Evaluation Post purchase evaluation becomes a part of the customers internal information that affects future store & product decisions . Satisfaction :- Is a post consumption evaluation of how well a store or product meets or exceeds customer expectations .