1 CHAPTER 7: IDENTIFYING AND UNDERSTANDING CONSUMERS.

1

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


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


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


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


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


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


Lifestyle

CultureReference

Groups

Social Class

FamilyLife Cycle

Time Utilization

HouseholdLife Cycle


Lifestyle

Personality Attitudes

PerceivedRisk

PurchaseImportance

ClassConsciousness


Figure 7-2: Perceived Risk and Consumers


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


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


Illustrations of Life Styles

• Gender Roles• Consumer Sophistication and Confidence• Poverty of Time• Component Lifestyles


Figure 7-4: Blurring Gender Roles


Three Special Market Segments

• In-Home Shoppers• Online Shoppers• Outshoppers


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


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


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


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


Cross-Shopping

• Shopping for a product category at more than one retail format during the year

• Visiting multiple retailers on one shopping trip

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Figure 7-5: The Consumer Decision Process


Figure 7-6: Key Factors in the Purchase Act


High

RISK & TIME

Low

Extended

Limited

Routine

Types of Consumer Decisions


Types of Impulse Shopping

• Completely unplanned• Partially unplanned• Unplanned substitution


Figure 7-8: Impulse Shopping


Figure 7-10: Devising a Target Marketing Strategy


Possible Retailer Approaches

• Mass Marketing Kohl’s Department Stores

• Concentrated Marketing Foot Locker

• Differentiated Marketing Family Dollar

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1 CHAPTER 7: IDENTIFYING AND UNDERSTANDING CONSUMERS.

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