Chapter 4

Customer Buying Behavior

McGraw-Hill/Irwin
Retailing Management, 7/e Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Questions

■ How do customers decide which retailer to go to

and what merchandise to buy?
■ What social and personal factors affect customer
purchase decisions?
■ How can retailers get customers to visit their
stores more frequently, and buy more
merchandise during each visit?
■ Why and how do retailers group customers into
market segments?

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Interesting video

■ https://www.youtube.com/watch?v=7JItU05mjCk

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PART I: GET TO KNOW CUSTOMER’S
BUYING PROCESS IN RETAIL

PART II: I

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Stages in the Buying Process

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Types of Needs

CUSTOMER PERSPECTIVES:
■ Utilitarian Needs –satisfied when
purchases accomplish a specific
task. Shopping needs to be easy,
and effortless like Sam’s or a
grocery store.

■ Hedonic needs – are needs for

entertaining, emotional, and
recreational experience as in
department stores or specialty
stores.

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Types of Needs

■ RETAILER’S PERSPECTIVE: satisfy both types of

needs of their customer

HOW?

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Satisfy Utilitarian Needs

■ Provide adequate information, easy and

effortless shopping experience
n Example: provide brochures, shop assistants, clear
instructions…

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Satisfy Hedonic Needs

■ Stimulation
n Ex: Background music, visual displays, scents
■ Social experience
n Ex: Mixed-use developments, lifestyle centers
■ Learn new trends and fashions
n Ex: The Body Shop – learn how can live an environmentally friendly lifestyle
■ Satisfy need for power and status
n Ex: Canyon Ranch – upscale health resorts
■ Self-rewards: buy merchandise to reward themselves
n Ex: personalized makeovers
■ Adventure
n Treasure hunting for bargains

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Conflicting Needs

■ Customers make trade-offs between their

conflicting needs
■ Cross shopping: The pattern of buying premium
and low-priced merchandise, patronizing
experience, status-oriented and price-oriented
retailers

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PART II: INFLUENCE CUSTOMER’S
BUYNG PROCESS

PART II: I

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1. Stimulating Need Recognition

Suggestions by Sales Associates

Advertising and Direct Mail
Visual Merchandise in store
Special Events in the Store
Signage
Displays
Free food sample
Forum, blog website sharing stories Stockbyte/Punchstock Images
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2. Information Search

Sources of Information
Internal are information in a customer’s memory
Past experiences
Memory
Digital Vision / Getty Images

External are information provided by ads

and other people
Consumer reports
Advertising
Word of mouth © Dynamic Graphics/Picture Quest

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2. Information Search

How Can Retailers Limit the Information

Search?
■ Information from sales associates
■ Provide an assortment of services
■ Provide a good selection of merchandise
■ Everyday low pricing
■ Credit

Royalty-Free/CORBIS

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 2. Information Search

Encourage customers to spend time with retailers

■ The more time customers spend shopping, the more
they will buy.

■ Stores use food and personal service

n Talbots: attention of a sales associate
n City Furniture: Chocolate cookies
n Gymboree: television playing kids’ videos

■ Websites provide enjoyable experiences with

technologies

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3. Evaluation of Alternatives

■ Multiattribute attitude model:

n Customers see a retailer, product, or service as a
collection of attributes or characteristics
§ Performance on relevant attribute
§ Importance of those attribute to the customer

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Information about Retailers Selling
Groceries

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Information Used in Evaluating Retailers
nếu nhóm khách hàng có điểm thấp nhất thì cần cải tiến cái
mà khách hàng đó quan trọng nhất

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 3. Evaluation of Alternatives

Getting into the Customer’s

Consideration Set
■ Consideration set: the set of
alternatives the customer
evaluates when making a
selection
■ Retailers develop programs
influencing top-of-mind
awareness
n Get exposure on search engines like
Google
n Try to be the top of the page
n More stores in the same area (e.g.,
Starbucks)
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3. Evaluation of Alternatives

Increasing the chance of store visit

after getting into the consideration set
■ 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

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4. Purchasing Merchandise or Services

How to increase the chances that

customers will convert their
evaluations into purchases?
■ Measure: the number of abandoning

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

carts in stores and at websites

■ Methods to reduce it:

n Don’t stock out of popular merchandise
n Reduce waiting times at checkout
• Digital displays offering entertainment
(Disney)
• Apple stores – cell check-out
n Easy navigation and check-out at websites
(amazon.com)
n Offer liberal return policies, money back
guarantees, and refunds if same
merchandise is available at lower prices
from another retailer 4-21
5. Postpurchase Evaluation

■ Satisfaction
n 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

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PART III: PURCHASE DECISIONS

PART III:

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1. Types of Purchase Decisions

a) Extended Problem Solving

b) Limited Problem Solving

c) Habitual Decision Making

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A) Extended Problem Solving

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
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What Retailers Need to do for Customers Engaged
in Extended Problem Solving

Provide necessary information available and

easy to understood
• Use Salespeople rather than advertising to
communicate with customers

Reduce the Risks

• Offer money-back guarantees

© Royalty-Free/CORBIS

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B) Limited Problem Solving

Purchase decisions process involving moderate

amount of effort and time

■ Customers engage in this when

they have had prior experience
with products or services
■ Customers rely more upon
personal knowledge
■ Majority of customer decisions (c) Brand X Pictures/PunchStock

involve limited problem solving

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Encouraging Buying
n Have salespeople suggest add-ons
n Have complementary merchandise
displayed near product of interest
n Use signage in aisle or special displays
n Put merchandise where customers are
waiting

PhotoLink/Getty Images
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C) Habitual Problem Solving

Purchase decision process involving little or no conscious effort

■ For merchandise consumers have

purchased in the past
■ For consumers loyal to brands or a
store
■ For purchases that aren’t important to
the consumer

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Customer Loyalty

■ Brand Loyalty
n Committed to a Specific
Brand
n Reluctant to Switch to a
Different Brand
n May Switch Retailers to Buy
Brand
■ Store Loyalty
n Committed to a Specific
Retailer
n Reluctant to Switch Retailers

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What Retailers Need to do for Customers to
Engage in Habitual Decision Making

IT DEPENDS

■ If the customer habitually comes to you, reinforce

behavior
n Make sure merchandise in stock

n Provide good service

n Offer rewards to loyal customer

■ If the customer goes to your competitor’s store, break

the habit
n Offer special promotions

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2. Social factors influencing the buying
decision process

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Family Influences Buying Decisions

■ Purchases are for entire

family to use

■ Whole family participates in

decision making process

■ Retailers work to satisfy

needs of all family members

Kids in the U.S. spend over $200 billion on personal items. They directly
influence the purchase of another $300 billion worth of items such as food
and clothing.
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Reference Groups

A reference group is 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

(c) image100/PunchStock

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Reference Groups

■ Celebrities
n Soccer player Mia Hamm and tennis player Maria
Sharapova: the selection of athletic wear
n Jessica Simpson: casual fashion advice
■ Store advocates:
n Customers that like a store so much that they actively
share their positive experiences with friends and
family
n Victoria Secret
n The faceshop

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Culture

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

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3. Methods for Segmenting Retail Markets

Geo-demographic

Geographic Segmenting Markets Demographic

Lifestyle Benefits Buying situations

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Geo-demographic Segmentation
“Birds of a feather Flock Together”
PRIZM (Potential Rating Index by Zip Market – Claritas (www. Claritas.com)
ESRI Tapestry

Town and Gown Latino America

College Town Singles Hispanic Middle Class
Foreign Films (+) Boxing (+)
Dogs (-) Dance Music (+)
Sewing (-) Barbequing (-)
Coca Cola (+) Avocados (+)
Fast Food (+) Cosmopolitan (+)
Friends (+) Touched By an Angel (+)
Sports Illustrated (+)
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Distribution of Gray Collar Aging Couples Near
Suburbs

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Other information

■ Best Retail Website:

http://www.webaward.org/winners_detail.asp?yr
=all&award_level=best&category=Retail#.V-
slLiF97IU

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