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

2. Factors Driving Consumer Shopping Behavior lNeeds tSocial group tFamily size tOccupation lPrice Sensitivity tDisposable income tOpportunity cost of time lLocation and Retail Density

3. Shopping Behavior Depends on the Product lHigh-Involvement, Detailed Process tBuying a Durable – Car, Computer, Home tHigh Risk, Uncertainty lModerate Problem Solving tSome Prior Buying Experience tRelatively Infrequent Purchase tMay Be Impulse Purchase lHabitual Decision Making tFrequent Shopping tStore, Brand Loyalty Drives Purchase Low involvement, Low price, Low risk, High frequency High involvement, High price, High risk, Infrequent

4. Shopping Behavior Examples APPAREL lModerate Price tHigh involvement for some; low for others lShopping Product tConsumers likely to shop around tEvaluate both quality and price tImage? lExperience Good – Touch it; try it on tLess likely to buy online or by catalog tInteraction with salesperson may affect lBrowsers or goal (i.e., purchase) oriented shoppers? tMall locations facilitate browsing and search

5. Shopping Behavior Examples MOVIE lLow Price tLow involvement? lExperience good tPrerelease advertising tQuality assessment Actors Reviews lLocation tMultiplexes Many screens Different start times Are movies cross-shopped with other forms of entertainment?

6. Shopping Behavior Examples INSURANCE lHigh Price tHigh involvement? lUnsought Product tConsumers may avoid the subject tDon’t want to think about it, so don’t give it much attention lCredence Product tInertia tHard to get customers to switch tPrimary interaction with provider may be billing lTriggered by events (bad stuff happened) tRegret

7. Outlet% ShoppingNumber of Weekly Weekly TripsSpending Supermarkets1002.4 $ 72.82 General merchandise 681.3 32.53 discount stores Fast-food restaurants 651.9 16.32 Drug stores 391.2 18.70 Convenience stores 372.4 19.72 Wholesale clubs 271.7 75.12 Specialty food stores 91.0 23.70 Source: “Consumers Are Skeptical Again,” “63rd Annual Report of the Grocery Industry,” Progressive Grocer, April 1996, p.42. Shopping Behavior Depends on Retail Format

8. Consumer Shopping Process

9. How Retailers Affect Need Recognition STIMULATING TRAFFIC AND SALES lOut-of-Store tAdvertising tDirect mail lIn-Store tVisual merchandising Signage Displays tSuggestions by sales associates In-store merchandising and selling can generate unplanned, or impulse, purchases Adapted from Levy and Weitz

10. Factors Affecting Information Search lCustomer Characteristics tExperience with the product/category tPerceived risk tTime pressure lProduct Characteristics tComplexity tCost tRisk lCategory Characteristics tNumber of alternatives tMeaningful differences between products Adapted from Levy and Weitz

11. How Retailers Reduce Information Search KEEPING CUSTOMERS IN THE STORE lProduct tExtensive merchandise assortment tEase in locating alternatives (cross merchandising) tUseful information from sales associates lPrice tEveryday low pricing; price matching tLoyalty 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 Purchase Intention Desire to buy the most preferred brand/product Product Choice Choice of the store/brand/product Product Choice Choice of the store/brand/product In-store Merchandising Social Factors Intention to buy does not always result in purchase

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

16. Example of Marketing to Customer Segments