Chapter 4

Customer Buying Behavior

McGraw-Hill/Irwin
Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Stages in the Buying Process
4-
2
Types of Needs 4-
3

• Utilitarian Needs –satisfied when purchases

accomplish a specific task. Shopping needs
to be easy and effortless like a grocery
store.

• Hedonic needs – satisfied when purchases

accomplish a need for entertainment,
emotional and recreational experience as
in department stores or specialty stores.
Hedonic Needs that Retailers can Satisfy
4-4

Stimulation-Ex: Background music,

visual displays, scents
Social experience
Learn new trends and fashions
Satisfy need for power and status
Self-rewards
Adventure
Conflicting Needs 4-
5

Ex: Jennifer’s’s hedonic needs (wearing a DKNY

suit to enhance self-image) conflict with her
budget, and her utilitarian need to get a job.
• Customers make trade-offs between their
conflicting needs
• Cross shopping
Stimulating Need Recognition 4- 6

Suggestions by Sales Associates

Advertising and Direct Mail
Visual Merchandise in store
Special Events in the Store
Signage
Displays
Stockbyte/Punchstock Images
Information Search 4- 7

Amount of Information search depends on the value from

searching versus the cost of searching
Factors Affecting Amount of 4-
8
Information Search
Nature/Characteristics of the Product
Complexity
Cost
Characteristics of Customer
Past experience
Perceived risk
Time pressure
Aspects of the Market
Number of alternative brands
Sources of Information 4- 9

Internal
Past experiences
Memory
Digital Vision / Getty Images

External
Consumer reports
Advertising
Word of mouth
The McGraw-Hill Companies, Inc./John Flournoy, photographer
 How Can Retailers Limit the
Information Search? 4- 10

Information from sales associates

Provide an assortment of services
Provide good assortments
Everyday low pricing
Credit

Royalty-Free/CORBIS
Internet, Information Search, 4-
11
and Price Competition

Profound impact on consumers’ ability to gather

external information
• Number of stores visited is no longer limited
by physical distance
• Information about the quality and
performance at a low search cost
• Retailers using an Internet channel can
differentiate their offerings by providing better
services and information
Evaluation of Alternatives 4-
12

• Multiattribute attitude model:

• Customers see a retailer, product, or service
as a collection of attributes or characteristics
• Predict a customer’s evaluation of a retailer,
product, or service based on
 Its performance on relevant attributes
 The importance of those attributes to the
customer
Providing Information on Internet 4-
13
Buying a Car On-line

(c) image100/PunchStock
Characteristics About Food Retailers 4-
14
Evaluation of Retailers 4-
15
Information Sanchez Used in 4-
16
Buying Suit
Information Needed to Use Multi- 4-
17
Attribute Model
• Alternative retailers consumers can consider
• Characteristic/Benefits Sought in Making Store and
Merchandise Choices
• Ratings of Alternative Performance on Criteria
• Importance weights that consumers attach to the
merchandise
Consideration Set 4-
18

The set of alternatives the customer evaluates when

making a selection
• Retailers develop programs influencing top-of-mind
awareness
• Get exposure on search engines like Google
• Try to be the top of the page
• More stores in the same area
(e.g., Starbucks)
Methods for increasing the chance of store
4-
visit after getting into the consideration set 19

• Increase Performance Beliefs of Your Store

• Decrease Performance Beliefs About
Competitor
• Increase Importance Weight of Attributes on
which You Have an Advantage
• Add a New Benefit on which You Excel
 Purchasing Merchandise or 4- 20
Services
Customers do not always purchase a brand with the
highest overall evaluation.
• The high-rated item may

The McGraw-Hill Companies, Inc./Jill Braaten, photographer

not be available in the
store.
• How can a retailer increase
the chances that customers
will convert their
merchandise evaluations
into purchases?
Converting Merchandise or Services 4- 21
Evaluations into Purchases

• Don’t stock out of popular

merchandise

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

• Offer liberal return policies, money
back guarantees, and refunds if same
merchandise is available at lower
prices from another retailer
• Offer credit
• Make purchases easy by having
convenient checkout
• Reduce waiting times at checkout
Types of Purchase Decisions 4-
22

Extended Problem Solving

Images
Adam Crowley/Getty
 Consumers devote
considerable time and effort

Janis Christie/Getty Images

to analyzing their alternatives.
 High financial, physical, or
social risks

Greg Kuchik/Getty Images

Extended Problem Solving 4- 23

Consumers devote time and effort analyzing

alternatives

• Financial risks – purchasing expensive products or services

• Physical risks – purchases that will affect consumer’s health
and safety
• Social risks – consumers will believe product will affect how
others view them
 4-
What Retailers Need to do for Customers Engaged in
Extended Problem Solving

24

Provide a Lot Information

-Use Salespeople rather than advertising to
communicate with customers

Reduce the Risks

-Offer Guarantees
-Return Privileges

© Royalty-Free/CORBIS
Types of Purchase Decisions 4-
25

Limited Problem Solving

Images
Adam Crowley/Getty
 Some Prior Buying Experience

Janis Christie/Getty Images

 Involve a moderate amount of
effort and time.
 Consumers have prior
experience

Greg Kuchik/Getty Images

 Moderate risks
What do Retailers Need to do for Customers Engaged in
Limited Problem Solving? 4-26

It depends…
• If the Customer Is Coming to You, Provide a Positive
Experience and Create Loyalty
• Make Sure Customer is Satisfied
• Provide Good Service, Assortments, value
• Offer Rewards to Convert to Loyal Customer
• If the Customer Goes to Your Competitor’s Store,
Change Behavior
• Offer More Convenient Locations, Better Service
and Assortments
Types of Purchase Decisions 4-
27

Habitual Decision Making

Images
Adam Crowley/Getty
 Store Brand, Loyalty
 Little or no conscious effort

Janis Christie/Getty Images

 Simplify their decision-making
process with time pressure
 Loyal to a brand or a store

Greg Kuchik/Getty Images

 Habitual Problem Solving 4- 28

Purchase decision process involving little or no conscious

effort
• For purchases that aren’t
important to the consumer
• For merchandise consumers have
purchased in the past
• For consumers loyal to brands or
a store
Royalty-Free/CORBIS
Postpurchase Evaluation 4-
29

Satisfaction
• A post-consumption evaluation of how well a
store or product meets or exceeds customer
expectations
• Becomes part of the customer’s internal
information that affects future store and
product decisions
• Builds store and brand loyalty
Encouraging Impulse Buying
4- 30

• Impulse buying: one common type

of limited problem solving
• Influenced by using prominent point-of-
purchase (POP) or point-of-sale (POS)
Have Salespeople Suggest Add-ons
Have Complementary Merchandise
Displayed Near Product of Interest

PhotoLink/Getty Images
Use Signage in Aisle or Special Displays
Put Merchandise Where Customers Are
Waiting
Customer Loyalty 4-
31

• Brand Loyalty
• Committed to a Specific Brand
• Reluctant to Switch to a Different Brand
• May Switch Retailers to Buy Brand
• Store Loyalty
• Committed to a Specific Retailer
• Reluctant to Switch Retailers
What Retailers Need to do for Customers to 4- 32

Engage in Habitual Decision Making

• If the customer habitually comes to you, reinforce

behavior
• Make sure merchandise in stock
• Provide good service
• Offer rewards to loyal customer
• If the customer goes to your competitor’s store, break
the habit
• Offer special promotions
Factors Influencing the Buying Decision
Process 4-
33
 Family Influences Buying 4- 34
Decisions
Purchases are for entire family to use

Whole family participates in decision

making process

Retailers work to satisfy needs of all

family members © Digital Vision
Reference Groups 4- 35

One or more people whom a person uses as a basis

of comparison for beliefs, feelings and behaviors.
Reference groups affect buying
decisions by:
Offering information
Providing rewards for specific purchasing behaviors
Enhancing a consumer’s self-image
 Culture 4-
36

Culture is the meaning, beliefs, morals and values shared

by most members of a society
Western culture: individualism
Eastern culture: collectivism

Subcultures are distinctive groups of

people within a culture

Mark Andersen/Getty Images

Market Segmentation 4-
37

A retail market segment

• A group of customers whose needs are
satisfied by the same retail mix because they
have similar needs
Criteria for Segmenting Markets 4-
38

 Actionability: clearly indicates what

retailers should do to satisfy its needs
 Identifiability: the ability to identify the
customers in a target segment
 Accessibility: the ability to deliver the
appropriate retail offering to the
customers in the segment
 Size
Methods for Segmenting Retail Markets4-
39
VALS2 American Lifestyle Segments 4-
40
What is Fashion? 4- 41

A type of product or way of behaving that is

temporarily adopted by a large number of
consumers because it is viewed as
s
The McGraw-Hill Companies, Inc./Lars A. Niki,

sociallyacceptable.

Digital Vision / Getty Images

photographer

(c) Digital Vision/PunchStock

Why Consumers Buy Fashions 4- 42

Communicate with Others

Manage Appearance
Express Self-Image
Enhance Ego
Impress Others
McGraw-Hill Companies, Inc./Gary He, photographer
Stages in the Fashion Life Cycle 4-
43
Theories of Fashion Diffusion 4-
44

Trickle Down Theory:

Fashion leaders are consumers with the highest social status –
wealthy, well-educated consumers.

After they adopt a fashion, the fashion trickles down to

consumers of lower classes
Theories of Fashion Diffusion 4-
45

Mass Market Theory: This theory suggests that fashions

spread across social classes and that each social class
has its own fashion leaders who play a key role in their
own social networks

© Digital Vision
Theories of Fashion Diffusion 4-
46

Subculture Theory: This theory is based on the

development of recent fashions. These fashions start
with people from lower-income groups and “trickled
up” to mainstream consumer classes.

© Digital Vision
Saturation to Decline 4- 47

When fashion reaches

saturation, it becomes less
appealing to consumers. It
no longer provides an
opportunity for people to
express their individuality.

Royalty-Free/CORBIS