RETAIL CUSTOMERS

POPULATION TRENDS
According to population variables, such as population growth trends, age
distributions, ethnic makeup, and geographic trends. This is useful for two
reasons. First such data is often linked to market place needs. Second, The data
is readily available and can be easily applied in analyzing markets.

POPULATION GROWTH
Retailers have long viewed an expanding population base as synonymous with
growth in retail market. Unfortunately, the nation’s overall growth rate has
declined during each of the past three decades as families have had fewer
children.
IMPLICATIONS FOR RETAILERS
Any increase in domestic population growth will mean an increased demand for
goods and services however, the growth will be nowhere near the 80-percent
increase if the retailer doesn’t understand its customers. It won’t be able to
accomplish the first two strategies.

MARKET SEGMENTATION
Is the method retailers use to segment, or break down, heterogeneous consumer
populations into smaller, more homogeneous groups based on certain
characteristics.
AGE DISTRIBUTION
The age distribution of the U.S population is changing in 1980, the median age
was 30, but by 2010 it had risen to just over 37. The most significant change
today is the bulge of early baby boomers moving into their sixties.

ETHNIC TRENDS
More than 160 years ago, Ralph Waldo Emerson wrote about America as the
utopian product of a culturally and racially mixed “melting pot”. Emerson
explicitly welcomed the racial intermixing of whitesand nonwhites, a highly
controversial view during his lifetime.
GEOGRAPHIC TRENDS
The location of consumers in relation to the retailer will often affect how they
buy. Retailer should be concerned, not only with the number of people, their
ages, and their ethnicity, but also with where they reside.

SHIFTING GEOGRAPHIC CENTERS

The U.S. population for the past 200 years has been moving toward the West and the
South. growth opportunities in retailing should be greatest in these areas. For example,
between 2000 and 2010 the eight gong states were all in the West and South (Nevada.
Arizona, Utah, Idaho, Texas, North Carolina, Georgia, and Florida, respectively).
URBAN CENTERS
Most of the U.S population resides in metropolitan areas with population
greater than 50,000 which the U.S Census Bureau calls metropolitan statistical
areas (MSAs) The proportion of the population residing in these citeies has
increased dramatically, from 64 percent in 1950 to 84 percent today.

MOBILITY
In many countries people are born, raised, married, widowed, and die in the
same city or immediate geographic vicinity. While this was once true in the
United States, it certainly not characteristic of contemporary America.
Typically, Americans change residence about a dozen times in a lifetime.
SOCIAL TRENDS
In this section, we continue our examination of demographic factors affecting
the modern retailer by looking at several social trends: the increasing level of
educational attainment, the state of marriage and divorce, the makeup of the
American household, and the changing nature of work.

EDUCATION
The education level of the average American is increasing. In 2010, 87 percent
of individuals aged 25 years and older had a high school degree, and 30 percent
had a bachelor’s or advanced educated generation ever.
STATE OF MARRIAGE
A relatively new social phenomenon has occurred during the last 40 years. In
1970, less than 10 percent of the U.S Male population between ages 30 and 34
had never married, and slightly more than 6 percent of the same female
population had never married.

DIVORCE
Since 1960, the U.S divorce rate has increased by 250 percent. While many have offered
potential explanations for this trend, few have given as compelling a justification as Professor
Gary Becker of the University of Chicago. Professor Becker was awarded the Nobel Prize for
theorizing that families, just like businesses, rationally make decisions that maximize benefits.
MAKEUP OF AMERICAN HOUSEHOLDS
Because households are the basic consumer unit for most products, household
growth and consumer demand go hand-in-hand. Yet, because of the differing
sizes and habits of various generation, the change in the makeup of household is
notoriously hard to predict.

CHANGING NATURE OF WORK

In the United States and other industrialized economies, work has become less
central to one’s life. In the past, work was often the way people identified
themselves and obtained meaning in their lives.
ECONOMIC TRENDS
In this section, we look at the affects of income growth, the declining rate of
personal savings, the increase in the number of working women, and the
widespread use of credit on the modern retailer.

INCOME GROWTH
In 2010, the median household income was slightly over $60,000, which is a 70
percent increase over the median household income in 1990 (as measured in
2010) However, not all consumer groups have equally shared in this income
increase.
PERSONAL SAVINGS
A major criticism of the U.S economic system is that it does not reward
personal saving. Expressed as a percentage of disposable income, saving had
dwindled from a post-World War II high of 8.8 percent in 1981 to 6.5 percent in
1990, to a dismal 1.4 percent in 2005; however, the trend appears to be
changing as Americans saved 5.9 percent in 2009 and 5.8 percent in 2010.

WOMEN IN THE LABOR FORCE

Over the past five decades, women have become a dominant factor in the labor
force. In 1970, 43 percent of all women over age 16 were in the labor force;
today it is just under 59 percent; however, that the number climbs to over 73
percent for women with college degrees.
WIDESPREAD USE OF CREDIT
Retailers, especially department stores and those selling big-ticket items, have
long offered their own credit cards to customers. However, today the trend is
always from the retailer’s store-branded cards and toward third-party cards
(Visa, MasterCard, Discover, American Express, etc.).

CONSUMER BEHAVIOR MODEL

Now that we have examined the population, social, and economic trends of
today, we can develop a model that describes and, to some degree, predicts how
these factors come together to affect consumer buying patterns. We call this the
consumer shopping and purchasing model.
 PROBLEM SOLVING

Active
Post
ProblemInformation Evaluate Evaluate
Stimulus Purchase Purchase
Recognition Gathering Alternatives Alternatives
Evaluation
(Search)

STIMULUS
A stimulus involves a cue (external to the individual) or drive ( internal to the
individual). A cue is any object or phenomenon in the environment that is
capable of eliciting a response. Common examples of retail marketing stimuli
are advertisements, point-of-purschase displays coupons, salespeople and free
samples.
PROBLEM RECOGNITION
Stimuli can often lead to problem recognition. Problem recognition occurs when
the consumer’s desired state of affairs departs sufficiently from the consumer’s
actual state of affairs.

PROBLEM SOLVING
The next tow stages in the consumer shopping and purchasing model active
information gathering (or search) and evaluation of alternatives will determine
the degree of problem solving that occurs.
HABITUAL PROBLEM SOLVING
With habitual problem solving, the consumer relies on past experience and
learning to convert the problem into a situation requiring less thought. Here the
consumer has a strong preference for the brand to buy and the retailer form
which to purchase it.

LIMITED PROBLEM SOLVING

Limited problem solving occurs when the consumer has a strong preference for
either the brand or the store but not both. The consumer may not have a store
choose in mind but may have a strong preference for the brand to purchase.
EXTENDED PROBLEM SOLVING
Occurs when the consumer recognizes that a problem exists yet does not have a
strong preference for either the brand or the store. For example, a woman in her
early 20s has recently received a promotion and a 25-percent raise from the
bank that employs her.

PROBLEM-SOLVING STAGES
Once consumers recognize that a problem exists and believe a potential product
solution exists within the marketplace, they will engage in problem solving.
PURCHASE
Based on information gathered and evaluated in the problem-solving stage, the
consumer decides whether to purchase and which product and retailer to choose.
However, it is not uncommon for many major purchases such as a new
automobile, sofa, or suit that the customer wants to test drive the car, sit on the
sofa.

POST-PURCHASE EVALUATION
The consumer shopping and purchase process does not end with the purchase.
Ultimately, consumers are buying solution to their perceived needs, and
successful retailers
 • Shoppers
Entering
100,00
Store

• Shoppers
Times
75% Converted to
Customers

Equals 75% • Total

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