CHAPTER 6:

IDENTIFYING &
UNDERSTANDING
CONSUMERS

Submitted By:
Alva, Madelyn Jane B.
Camba, Jichelle Anne S.
Pider, Ronarie Kaye
BSBA-MM 2A

Submitted To:
Mr. Donald P. Villamarzo
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.
● To look at retailer actions based on target market planning.
● To note some of the environmental factors that a ect consumer
shopping.
______________________________________________

IDENTIFYING AND UNDERSTANDING CONSUMERS

● Identifying and understanding consumers in retailing helps the retailers

to know who buys which product and when. This paves way for better
know-how of the buying behavior of the consumers.
● Studying consumer behavior is important because this can help
marketers understand what influences consumers’ buying decisions.
● Identifying and understanding the consumer of the retail industry is
essential for the survival and growth of the business.
● The success of a retail strategy depends on how well a firm identifies and
understands its customers and how well it forms a strategy mix to appeal
to them
● This entails identifying consumer characteristics, needs and attitudes;
recognising how people make decisions; and then devising the proper
target market plan

CONSUMER DEMOGRAPHICS

● Demographics: objective, quantifiable, easily identifiable, and

measurable population data
● Both groups of consumers and individual consumers can be identified by
such demographics such as:
- Market size: How many people are in the potential target market?
- Gender: more male or female, or equal?
- Age
- Population growth rate
- Life expectancy
 - Literacy
- Language spoken
- Household size
- Marital and family status
- Income: lower, middle, upper
- Mobility
- Place of residence
- Occupation: professionals or o ce workers? Etc
- Education: college educated?
- Racial background

CONSUMER LIFESTYLES

● Lifestyles: ways in which individual consumers and families

(households) live and spend time and money .
● Based on social and psychological factors and are influenced by
demographics

Social ● Culture ● What values,

- A distinctive heritage shared norms, and
by a group of people that customs are most
passes on a series of beliefs, important to the
norms and customs potential target
market?
● Social class ● Are potential
- Informal ranking of people consumers lower,
based on income, occupation, middle, or upper
education & other factors class? Are they
socially mobile?
● Reference group ● To whom do
- Aspirational –person doesn’t people look for
belong but wishes to purchasing
- Membership –person does advice?
belong
- Dissociative –person doesn’t
want to belong

● Family life cycle ● In what stages of

- How a traditional family the cycle are the
moves from bachelorhood to bulk of potential
children to solitary retirement customers?
 ● Time utilization ● How do people
- The activities in which a spend time? How
person is involved and the do they feel about
amount of time allocated to their shopping
them time?
- If busy – convenience
important

● Personality ● Do potential
Psychologic - Sum total of individual’s customers have
al traits, which make them identifiable
unique personality
- Innovativeness, traits?
self-confidence, sociability

● Class consciousness ● Are potential

- Extent to which a person consumer’s
desires and pursues social status conscious?
status

● Attitudes ● How does the

- Pos/neutral/neg feelings a potential target
person has about di erent market feel about
topics the retailer and
its o erings in
terms of specific
strategy
components?

● Perceived risk ● Do potential

- Level of risk consumers customers feel at
believes exist regarding the risk in connection
purchase of a specific with the retailer?
good/service
- Functional –will it perform
well?
-Physical – can it hurt me?
- Financial –can I a ord it?
- Social – what will my peers
think?
- Psychological –Am I doing
 the right thing?
- Time – how much shopping
e ort is needed?

● Importance of a purchase ● How important

- A ects the amount of time are the
spent on making a decision goods/services
- Also relates to risk o ered to
potential
customers?

RETAILING IMPLICATIONS OF CONSUMER DEMOGRAPHICS & PROFILES

● Gender roles
- Willingness to switch brands is a sentiment most aligned with female
consumers
- Store choice also a ected – Aus women shop around for the best price
– almost twice as much as men
- Huge amount of working women
- Tend to be more self confident, concerned with convenience,
individualistic
- More knowledgeable
- More interested in leisure activities
- Men now take more care of their children, shop for food, do laundry

● Generation di erences
- Gen Y: spending has remained much higher
- Baby boomers: fear the slowdown, investing heavily and taking a risk
aversion attitude
- Gen Z: thrifty, worry about money, have strong convictions about
paying bills on time, don’t like to owe money, put quality of life ahead of
materialistic goals

● Consumer sophistication and confidence

- Many shoppers now knowledgeable
- More aware of trends in tastes, styles, goods and services
● Poverty of time
- Increase in working women, desire for personal fulfillment, daily job
commute and need for people to have second jobs may result in
consumers feeling time pressured
- Firms can be open for longer hours, reduce checkout time, add on floor
sales personnel, websites - Ready meals Component lifestyles
- Shopping is less predictable and more individualistic
Other consumer trends
● Trading up – paying someone else to do it
● Do it for me - outsourcing
● Getting older
● Being younger
● Convenience –location, delivery of product (click and collect, drive thru)
● Nostalgia – old time values, feeling of extra service
● Sense of community
● Global village –consumers want to feel like they belong

CONSUMER NEEDS AND DESIRES

● Needs: a person’s basic shopping requirements consistent with their
present demographics and lifestyle
● Desires: discretionary shopping goals that have an impact on attitudes
and behaviors
● When a retail strategy aims to satisfy consumer needs and desires, it
appeals to consumer motives, the reasons for their behavior. Some
questions to resolve:
- How far will consumers travel to get to the retailer?
- How important is convenience?
- What level of customer service is preferred?
- How important is price?
- What retailer actions are necessary to reduce perceived risk?
- Do di erent market segments have special needs, if so, what are they?
● In home shopping
-Buying things not in a shop – e.g. through catalogs
-Shopping often discretionary, not necessary
-Convenience in ordering an item
-Active, a uent, well-educated
-Self-confident, younger, adventuresome
-Time scarcity isn’t a motivator
● Online shopping
-Shoppers are well educated and have above average incomes
-Use of web for decision making process as well as buying process
-Convenience important
-Time scarcity is a motivator
● Outshopping
-Out of hometown shopping
-Important for both local and surrounding retailers
-Former want to minimize this behavior
-Latter want to maximize it
 -Outshoppers often young, members of a large family, enjoy fine
foods, like to travel, are active
-Income and education varies.

Di erence between a Consumer and Customer

A consumer is the direct user of the product or the service while a customer is a
buyer of that product. A customer might not be a consumer as if a mother buys
some product for her child, she is the customer and her child is the consumer.
A number of companies divide a customer into 2 categories that include
customer and consumer. As a matter of fact, it is at times not easy to
understand the role of a decision-maker in this regard. The next important
thing is how to identify a customer.

Identifying a Customer
It is important to understand and identify the buying patterns of the consumer
because there are a number of factors that influence their buying behavior.
Consumers are of di erent gender, ages, educational backgrounds, religions,
nationality, etc. the next important thing is the buying behavior of the
customer.
Customer’s Buying Behavior Patterns vary for every consumer and companies
must identify this as a trend.

The consumer’s behavior is largely influenced by the following factors:

● Availability/Shortage of product
● Perishability of product
● Type of commodity
● Degree of necessity involved
● Lifestyle of customers
● Festivals and customs
● Requirement of product
● Storage requirements
● The purchasing power of the consumer
● Location of customer

The role of consumer behavior can be gauged with reference to the following
points.
The Latest Marketing Philosophy: The behavior of consumers can be
understood through modern marketing philosophy – identifying consumers’
needs and satisfying them more e ciently than competitors. It makes
marketing consumer-oriented.

Knowledge of Consumer is Important for Retailers: It is always important to

know more about consumers as it is not useful for the company only. The
knowledge of consumer behavior is equally useful for retailers to perform their
tasks e ectively in meeting consumers’ needs and wants. This improves the
performance of the entire distribution system.

The Growth Factor: The way to an organization’s life is to get more profits and
experience growth in marketing. It should develop the ability to satisfy
unfulfilled consumer needs better and sooner than the competitors.

Essentials of Marketing Programs: Numerous marketing courses based on the

product, price, promotion, and distribution decisions, can be prepared more
objectively. Such programs can become more pertinent if they highlight
consumer behavior as it is instrumental in realizing marketing goals.

Forecasting Market Trend: Consumer behavior can also help in projecting

future market trends. The retailers get suitable time to prepare for exploiting
the emerging opportunities, and/or facing challenges and threats.

Recognition of Customer’s Needs: Those are successful retailers who cater to

customer needs and know the way to cater to their needs. A company or retailer
finds it easy to sell its products as they constantly study consumer behavior
and make attempts to meet changing expectations of the buyers, and can
retain their consumers for a long period.

When Competition Happens: Through consumer behavior study, the

marketers face competition, too. Based on consumers’ expectations, more
competitive advantages can be given. It is useful in improving the viable
strengths of the company.