7 Chapter 7 Identifying and Understanding Consumers

Chapter Objectives  To discuss why it is important for a retailer to properly identify, understand, and appeal to its customers  To enumerate and describe a number of consumer demographics, lifestyle factors, and needs and desires – and to explain how these concepts can be applied to retailing  To examine consumer attitudes toward shopping and consumer shopping behavior, including the consumer decision process and its stages

Figure 7-1: What Makes Retail Shoppers Tick

Demographics and Lifestyles  Demographics –consumer data that is objective, quantifiable, easily identifiable, measurable  Lifestyles –ways in which consumers and families live and spend time and spend money  Typical household has an annual income of $45,000  Top 1/5 of households earn $85,000 or more  Lowest 1/5 of households earn under $18,000  High incomes lead to high discretionary income  There are 5 million more females than males  Three-fifths of females age 20 and older are in the labor force  Most U.S. employment is in services  More than 25% of all U.S. adults age 25 and older have at least graduated from a four-year college

Understanding Consumer Lifestyles: Social Factors Lifestyle Culture Reference Groups Social Class Family Life Cycle Time Utilization Household Life Cycle

Understanding Consumer Lifestyles: Psychological Factors Lifestyle PersonalityAttitudes Perceived Risk Purchase Importance Class Consciousness

Illustrations  Gender Roles  Consumer Sophistication and Confidence  Poverty of Time  Component Lifestyles Gender Differences? consumer-knowledge.com Curated Consumption iBood e.g., Woot

Three Special Market Segments Shopping is discretionary, not necessary Convenience is important Active, affluent, well- educated Self-confident, younger, adventuresome Time scarcity is not a motivator In-Home Shoppers Use of Web for decision- making process as well as buying process Convenience is important Above average incomes, well-educated Time scarcity is a motivator Online Shoppers Out-of-hometown shopping Young, members of a large family, and new to the community Income and education vary They like to travel, enjoy fine food, are active, and read out-of-town newspapers Outshoppers

Environmental Factors and Consumers  State of the Economy  Rate of Inflation  Infrastructure for Shopping  Price Wars  Emergence of New Retail Formats  People Working at Home  Regulations on Shopping  Changing Social Values and Norms

Figure 7-6: Key Factors in the Purchase Act

Figure 7-5: The Consumer Decision Process

Problem Awareness Problem Recognition A. Definition B. Cues 1. Internal 2. External C. Types* 1. Merchandise 2. Social a. Social Experiences Outside the Home b. Communication with others having the same interests c. Peer group attraction d. Status and Authority e. Pleasure of Bargaining 3. Personal a. Role Playing b. Diversion c. Self-Gratification d. Learning About New Trends e. Physical Activity f. Sensory Stimulation

Information Search II. Shopping Alternatives A. Internal Search B. External Search Influenced by: -Perceived Risk -Shopping Orientations -Attitudes towards Shopping -Situational Factors, etc. Shopping Orientations: 1. Economic Shopper 2. Personalized Shopper 3. Ethical Shopper 4. Apathetic Shopper Figure 7-2: Perceived Risk and Consumers Department Store Shopping Motives Shopper Typologies Metastudy Hedonic Shopping Motivations (Arnold and Reynolds, 2003): -Adventure Shopping -Social Shopping -Gratificaiton Shopping -Idea Shopping -Role Shopping -Value Shopping Attitudes Towards Shopping  Shopping enjoyment  Shopping time  Shifting feelings about retailing  Why people buy or not on a shopping trip  Attitudes by market segment  Attitudes toward private brands

Evaluation of Alternatives Screening Alternatives A. Attitude Formation Purchase IV. Decision A. Choice Rules B. Other Factors Post-Purchase Evaluation V. Outcome A. Satisfaction/Dissatisfaction B. Dissonance Reduction

Top Reasons for Leaving an Apparel Store Without Buying  Cannot find an appealing style  Cannot find the right size  Nothing fits  No sales help is available  Cannot get in and out of the store easily  Prices are too high  In-store experience is stressful  Cannot find a good value

Table 7-3: Where America Shops Type of Retailer % Shopping At Supermarkets 72 Discount department stores/supercenters 66 Drugstores 61 Convenience stores 59 Apparel stores 36 Home improvement centers 31 Membership clubs 29 Book/music stores 22 Consumer electronics stores 21 Chapter Seven Discussion Questions: 4, 8