Consumer Buying Behavior

Stages in the Buying Process ßNeed recognition ßInformation search ßEvaluation ßChoice ßVisit ßLoyalty

Stages in the Buying Process

ßUtilitarian Needs – ßHedonic needs – Types of Needs

Hedonic Needs that Retailers can Satisfy ßStimulation ßNeed for power and status ßAdventure

Information Search

ßAmount of Information Search depends on the value from searching versus the cost of searching ßFactors Affecting Amount of Information Search ßProduct Characteristics ßComplexity ßCost ßCustomer Characteristics ßPast experience ßPerceived risk ßTime pressure ßMarket Characteristics ßNumber of alternative brands

ßInternal ßPast experiences ßMemory ßExternal ßConsumer reports ßAdvertising ßWord of mouth Sources of Information Digital Vision / Getty Images © Dynamic Graphics/Picture Quest

How Can Retailers Limit the Information Search? ßInformation from sales associates ßProvide an assortment of services ßProvide good assortments ßEveryday low pricingEveryday low pricing ßCredit ßConversion rate-the percentage of customers who enter a store or access a website and then buy a product from that same store or website. Royalty-Free/CORBIS

Internet, Information Search, and Price Competition ßProfound impact on consumers’ ability to gather external information ßNumber of stores visited is no longer limited by physical distance ßInformation about the quality and performance at a low search cost ßRetailers using an Internet channel can differentiate their offerings by providing better services and information

Evaluation of Alternatives ßMultiattribute attitude model: ßCustomers see a retailer, product, or service as a collection of attributes or characteristics ßPredict a customer’s evaluation of a retailer, product, or service based on ßIts performance on relevant attributes ßthe importance of those attributes to the customer

Information Needed to Use Multi-Attribute Model ßAlternative Consumer Considering ßCharacteristic/Benefits Sought in Making Store and Merchandise Choices ßRatings of Alternative Performance on Criteria ßImportance of Criteria to Consumer

Information about Retailers Selling Groceries

Evaluation of Retailers

Getting into the Consideration Set ßConsideration set: the set of alternatives the customer evaluates when making a selection ßRetailers develop programs influencing top-of-mind awareness ßGet exposure on search engines like Google ßTry to be the top of the page ßMore stores in the same area (e.g., Starbucks)

Methods for increasing the chance of store visit after getting into the consideration set ßIncrease Performance Beliefs of Your Store ßDecrease Performance Beliefs About Competitor ßIncrease Importance Weight of Attributes on which You Have an Advantage ßAdd a New Benefit on which You Excel

Purchasing Merchandise ßThe high-rated item may not be available in the store. ßHow can a retailer increase the chances that customers will convert their merchandise evaluations into purchases? Customers do not always purchase a brand with the highest overall evaluation. The McGraw-Hill Companies, Inc./Jill Braaten, photographer

Postpurchase Evaluation ßSatisfaction ßA post-consumption evaluation of how well a store or product meets or exceeds customer expectations ßBecomes part of the customer’s internal information that affects future store and product decisions ßBuilds store and brand loyalty

Types of Buying Decisions ßExtended Problem Solving ßLimited Problem Solving ßHabitual Decision Making

Encouraging Impulse Buying ßImpulse buying: one common type of limited problem solvingImpulse buying ßInfluence by using prominent point-of- purchase (POP) or point-of-sale (POS) ßHave Salespeople Suggest Add- ons ßHave Complementary Merchandise Displayed Near Product of Interest ßUse Signage in Aisle or Special Displays ßPut Merchandise Where Customers Are Waiting PhotoLink/Getty Images

Customer Loyalty ßBrand Loyalty ßStore Loyalty

Social Factors Influencing the Buying Decision Process

Market Segmentation ß Retail Market Segment- a group of customers who are attracted to the same retail mix because they have similar needs.

Criteria for Evaluating Market Segments ßActionable ßIdentifiable ßSubstantial ßReachable