1. Identifying and Understanding Consumers
Chapter 7
Identifying and Understanding Consumers
Dr. Pointer Notes

2. Chapter Objectives
To discuss why it is important for a retailer to properly identify, understand, and appeal to its customers
To list and describe a number of consumer demographics, lifestyle factors, and needs and desires – and to explain how these concepts can be applied to retailing

3. Chapter Objectives _2
To examine consumer attitudes toward shopping and consumer shopping behavior, including the consumer decision process and its stages
To look at retailer actions based on target market planning
To note some of the environmental factors that affect consumer shopping

4. Overview
The success of retailer’s strategy depends on how well the firm develops a retail strategy to appeal to target market
Need to identify appropriate consumers
Understand different consumer characteristics, their needs, attitudes
Recognize how decisions are made by target market
The following factors are key to identifying and understanding target market

5. Figure 7.1 What Makes Retail Shoppers Tick
Life-Styles
Needs and
Desires
Retail
Shoppers
Demographics
Shopping Attitudes
and Behavior
Retailer Actions
Environmental
Factors

6. Demographics and Lifestyles
consumer data that is objective, quantifiable, easily identifiable, measurable
Lifestyles
ways in which consumers and families live and spend time and spend money

7. Helpful Facts for Understanding U.S. Demographics
Typical household has an annual income of $45,000
Top 1/4 of households earn $75,000 or more
Lowest 1/6 of households earn under $15,000
High incomes lead to high discretionary income

8. Helpful Facts_2 There are 5 million more females than males
Three-fifths of females age 16 and older are in the labor force
Most U.S. employment is in services
25% of all U.S. adults age 25 and older have at least graduated from a four-year college

9. Helpful Facts_3
One –sixth of people move each, yet 60% stay in same county
There are many ethnic groups. Blacks, Hispanics, and Asian represent 30% of U.S. population
Each group represents a large target market

10. Consumer Life-Styles
Consumer life-styles are based on social and psychological factors and are affected by demographics.
Culture – distinctive heritage shared by a group of people that passes on a series of beliefs, norms, and customs
Major subcultures are within the broader culture
Social class ranking of people based on education, income, occupation and other factors

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

12. Consumer Life-Styles
Reference groups- any group or individuals a persons looks to for direction in behaving. They influence thoughts, behavior;
Family life cycle – how a traditional family moves form bachelorhood to children to solitary retirement
Time utilization – activities in which a person is involved and the amount of time allocated to them (work, transportation, eating, recreation, entertainment, parenting, sleeping, etc

13. Understanding Consumer Lifestyles: Psychological Factors
Personality
Attitudes
Lifestyle
Class
Consciousness
Perceived
Risk
Purchase
Importance

14. Psychological Factor
Personality- sum total of a person’s traits that make the unique. Consistent response to environmental stimuli.
Class consciousness – extent to which a person desires and pursues social status.
Attitudes – feels that a person holds toward an object
Perceived risk – level of risk that person holds regarding the purchase of a product from a retailer

15. Figure 7.2 The Impact of Perceived Risk on Consumers
Types of risk
Functional
Physical
Financial
Social
Psychological
Time
Outcomes
Purchase new
product
Stick with old brand
Talk to friends
Seek more info
nonpurchase
Consumers
Factors affecting
Perceived Risk
Newness
Budget
Experience
Number of alternatives
Social visibility

16. Retail Implications of consumer demographics
Because of changing life-styles, more husband and wives shop together. More men are doing non traditional work around the house
Component life-styles – consumers are less predictable
Such as cleaning, shopping, babysitting
Consumer sophistication and confidence – more knowledgeable shoppers who are more cosmopolitan (more aware of trends)
Poverty of time – people are time-pressed because of work, commuting, family responsibilities and etc

17. Consumer Profiles
Need to have a profiles of your retail customers. As and Example:
Typical outlet shopper is married, career women who’s 43 yr, HH income of $53K, shops 4 times a yr at outlets and spends more than 100 per visit
Heavy shoppers drive sales and represent 33% of all shoppers

18. Consumer Needs and Desires
What are the key consumer needs that they are trying to fill
Needs a person’s basic shopping requirements which are consistent with demographics and life-style
Desires are discretionary shopping goals that affect attitudes and behavior
Consumer motives, reasons for their shopping behavior ( pg 169)
Three major shopping market segments –in-home,online and outshoppers

19. In-Home Shoppers Shopping is discretionary, not necessary
Convenience is important
Active, affluent, well-educated
Self-confident, younger, adventuresome
Time scarcity is not a motivator

20. Online 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

21. Out- Shoppers Out-of-hometown shopping
Male, 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

22. Attitudes Towards Shopping
Shopping Enjoyment
Attitudes toward Shopping Time
Shifting Feelings About Retailing
Why People Buy or Not on a Shopping Trip
Attitudes by Market Segment
Attitudes toward Private Brands

23. 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

24. Table 7.3 Where America Shops: Household Purchases

25. Table 7.3 Where America Shops: Weekly Purchases

26. Cross-Shopping
Shopping for a product category at more than one retail format during the year
Visiting multiple retailers on one shopping trip

27. The Consumer Decision Process
After understanding how to describe consumers using demographic factors, retailers should know some thing about how they make purchase decisions
Consumer decision process consist of the activities consumers do in making the decision to obtain, consume and dispose of goods and services

28. The Consumer Decision Process
Need/Problem Awareness
Demographics
Information Search
Eval of Alternatives
Lifestyle
Purchase
Post Purchase Eval

29. Key Factors in the Purchase Act
Retailer’s
place of Purchase
Retailer’s
goods
and service
availability
Retailer’s
purchase terms
Consumer’s
purchase or
nonpurchase

30. Purchasing Act Place of purchase – Store, home, mall,office,online
Purchasing Terms – price, cash, credit
Good and services – instock, delivery time
Post Purchase behavior
Cognitive dissonance
Satisfaction is based on?

31. Types of Consumer Decisions
Extended
Limited
Routine
High
RISK & TIME
Low

32. Types of Decision making
Extended- consumer makes full use of all steps in consumer decision model
Limited- consumers use each step but don’t spend a long time at each step
Routine decision – consumer buys out of habit and skips many of the steps in the model

33. Types of Impulse Shopping
Completely unplanned
Partially unplanned
Unplanned substitution
Impulse purchase is defined as a sudden urgent to buy without consideration of consequences of actions

34. Devise a Marketing Strategy
After choosing the target market method, the target market is selected.
The target market is evaluated for needs, psychological factors and social, situational factors.
Next the retailing mix is then shaped
The major retail strategies focuses on being a retailer with a mass merchandise strategy, retailer with concentrated marketing strategy or one with a differentiated strategy

35. Possible Retailer Approaches
Mass Marketing
Kohl’s Department Stores
Concentrated Marketing
Zutopia
Differentiated Marketing
Foot Locker

36. Retail Strategies
Mass marketing strategy – goes after a broad array of customers with good quality merchandise (between discounter and Traditional dept store)
Concentrated marketing strategy –focuses retailing effort at only one segment
Differentiated strategy – appealing to different target markets with different retailing mixes

37. 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

38. Questions