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CHAPTER 7: IDENTIFYING AND UNDERSTANDINGCONSUMERS
©2013 Pearson Education 7-2
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, needs and desires – and to explain how these concepts can be applied to retailing
©2013 Pearson Education 7-3
Chapter Objectives (cont.)
• 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
Figure 7-1: What Makes Retail Shoppers Tick
7-4
©2013 Pearson Education 7-5
Demographics and Lifestyles
• Demographics consumer data that
is objective, quantifiable, easily identifiable, and measurable
• Lifestyles• ways in which
consumers and families live and spend time/money
©2013 Pearson Education 7-6
Helpful Facts for Understanding U.S. Demographics
• Typical household has an annual income of $50,000
• Top 1/5 of households earn $100,000 or more• Lowest 1/5 of households earn $20,000 or less• High incomes lead to high discretionary
income
©2013 Pearson Education 7-7
Helpful Facts for Understanding U.S. Demographics (cont.)
• There are 5 million more females than males
• Three-fifths of adult females are in the labor force
• Most U.S. employment is in services• 30 % of all U.S. adults have at least
a four-year college degree
©2013 Pearson Education 7-8
Current Economic Issues
• Real 17 percent unemployment rate (10 percent unemployment and 7 percent underemployed, stopped linking, accepted early retirement offer)
• Low levels of consumer confidence• High foreclosure rate (particularly Nevada, Texas,
California, Florida) plus high underwater loans (nationwide)
• Many fixes are temporary—”cash for clunkers” auto rebates, first time homebuyer incentives, mortgage renegotiations
©2013 Pearson Education 7-9
Lifestyle
CultureReference
Groups
Social Class
FamilyLife Cycle
Time Utilization
HouseholdLife Cycle
©2013 Pearson Education 7-10
Lifestyle
Personality Attitudes
PerceivedRisk
PurchaseImportance
ClassConsciousness
©2013 Pearson Education 7-11
Figure 7-2: Perceived Risk and Consumers
©2013 Pearson Education 7-12
Retailer Strategies to Reduce Perceived Risk by Shoppers
• Functional– product usage testing by retailer; especially private labels. Double check returned “B” goods. Simulate wear for new goods.
• Physical- safety testing, reduce salt and fat in food products
• Financial- money back guarantee and exchange privileges
©2013 Pearson Education 7-13
Retailer Strategies to Reduce Perceived Risk by Shoppers (cont)
• Social— co-branding of private label products with major high-quality national brands (Kirkland by Starbucks)
• Psychological– showing empathy for consumer
• Time- double money back guarantee; Saturn dealers picking and returning recalled cars
©2013 Pearson Education 7-14
Illustrations of Life Styles
• Gender Roles• Consumer Sophistication and Confidence• Poverty of Time• Component Lifestyles
©2013 Pearson Education 7-15
Figure 7-4: Blurring Gender Roles
©2013 Pearson Education 7-16
Three Special Market Segments
• In-Home Shoppers• Online Shoppers• Outshoppers
©2013 Pearson Education 7-17
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
©2013 Pearson Education 7-18
Attitudes Towards Shopping• Level of shopping enjoyment• Shopping time• Shifting feelings about retailing• Why people buy or not on a
shopping trip• Attitudes by market segment• Attitudes toward private brands
©2013 Pearson Education 7-19
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
©2013 Pearson Education 7-20
Table 7-3 Global Shopping Attitudes and Behavior
Why Consumers in 51 Countries Shop at a Specific Retailer (% saying highly influential):
Good value for the money 61Lowest prices 58Convenient location 57Great sales and promotions 55Desired products in stock 54Organized store layout (ease of shopping) 42Friendly, knowledgeable employees 40Fast checkout 38Customer loyalty program 28
©2013 Pearson Education 7-21
Cross-Shopping
• Shopping for a product category at more than one retail format during the year
• Visiting multiple retailers on one shopping trip
21
©2013 Pearson Education 7-22
Figure 7-5: The Consumer Decision Process
©2013 Pearson Education 7-23
Figure 7-6: Key Factors in the Purchase Act
©2013 Pearson Education 7-24
High
RISK & TIME
Low
Extended
Limited
Routine
Types of Consumer Decisions
©2013 Pearson Education 7-25
Types of Impulse Shopping
• Completely unplanned• Partially unplanned• Unplanned substitution
©2013 Pearson Education 7-26
Figure 7-8: Impulse Shopping
©2013 Pearson Education 7-27
Figure 7-10: Devising a Target Marketing Strategy
©2013 Pearson Education 7-28
Possible Retailer Approaches
• Mass Marketing Kohl’s Department Stores
• Concentrated Marketing Foot Locker
• Differentiated Marketing Family Dollar
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any
form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher. Printed in
the United States of America.