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Lecture 04

Outlet selection and product

purchase – Post-purchase

processes

The consumer decision process

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Source: Quester et al., (2014), Consumer Behaviour: implications for marketing strategy 7th ed, McGraw-Hill Education, page 20

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Learning objectives

• How the traditional retailing environment is changing

• Trend towards internet retailing

• Factors that affect retail outlet selection

• Why consumer characteristics can also affect outlet selection

• In-store influences that can affect brand choice

• How marketers can capitalise on these influences

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Consumer outlet selection

and product purchase

• Where will consumers shop?

• How do they choose a retail outlet?

– Consumer characteristics

– Store characteristics

• In-store decision alterations

• The purchase process

• Alternative to store selection

• Implications for strategy

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Outlet choice vs product choice

• Retail outlet first, brand second

• Brand (or item) first, retail outlet second

• Brand and retail outlet simultaneously

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Marketing strategy based on the

consumer decision sequence

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Retailers use quality brands to promote

the store

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The retail scene

• In retail stores

• Other outlets, non-store outlets

– Internet sales

– Markets, direct sales, etc.

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Online shopping

• Increasing number of consumers preferring to shop online – 5% in 1999 to 31% in 2004-5

• Females now using the internet – Males 64%, females 62%

• Image of the outlet influenced by: – Webpage design

– Convenience

– Security

– Pricing

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Online shopping by age groups

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Reasons for not purchasing on the

internet

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Attributes affecting retail

outlet selection

• Retail format

– Reflect different types of shopping behaviours

• Outlet image

– A consumer’s or a target market’s perception

of all the attributes associated with a retail

outlet

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Dimension

Merchandise

Service

Clientele

Physical features

Convenience

Promotion

Store atmosphere

Institutional

Post-transaction

Component(s)

Quality, selection, price, style

Sales assist., return, credit

Other customers

Clean, layout, etc.

Location, parking

Advertising

Fun, excitement, comfort

Store reputation

Satisfaction

Dimensions and components of store

image

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Attributes affecting retail outlet

selection

• Store brands

• Retail advertising

– Price advertising

• size of discount

• reference/comparison may be used

• words accompanying the price information

• Outlet location and size

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Expenditure of individuals drawn

to a store by an advertised item

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= MSi Si / Til

n S

i= 1 Si / Til

Outlet location and size

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• Retail attraction model:

MSi = market share of store i

Si = size of store i (or mall)

Ti = travel time to store i

l = attraction factor for a particular product category

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Consumer characteristics and outlet

choice

• Shopping orientation

• Perceived risk

– Financial risk

– Social risk

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Financial and social risks for

various types of products

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In-store influences that can affect

evaluation of alternatives and purchase

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In-store influences that alter brand

choices

• The nature of unplanned purchases

– Reminder purchases

– Impulse purchases

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In-store influences that alter brand

choices (cont.)

• The nature of unplanned purchases

– The specifically planned decision

– The generally planned decision

– The substitute decision

– The unplanned decision

– The in-store decisions

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Encouraging unplanned purchases -

‘gift-time’ and suggesting products

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In-store buying habits

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Point-of-purchase (POP) displays

• A device used by marketers and retailers at the

point of sale to inform consumers or encourage

them to buy; may comprise posters, cards, shelf

wobblers, etc.

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Point-of-purchase (POP) displays

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Shopper behaviour in response

to frequent stockouts

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Impact of stockout situation

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Store atmosphere and shopper behaviour

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Purchase

• Once the brand and store have been selected

• Complete transaction:

– Payment

– Online/security risk

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Learning objectives

• Be aware of the post-purchase activities

• Understand post-purchase dissonance

• Know why product use is important to marketers

• Know why product disposal is important to consumers

• Understand the concept of customer satisfaction

• Understand the concept of consumer loyalty

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Post-purchase consumer behaviour

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Source: Quester et al., (2014), Consumer Behaviour: implications for marketing strategy 7th ed, McGraw-Hill Education, page 184

704003 – Product purchase and

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Post-purchase processes

• Post-purchase dissonance

• Product use and non-use

• Disposal

• Purchase evaluation

• Customer satisfaction

– repeat purchase behaviour and

– consumer loyalty

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Post-purchase dissonance

• Some purchases are followed by post-

purchase dissonance

• Probability of post-purchase dissonance and

the magnitude of dissonance is a function of:

– degree of commitment and/or whether the

decision can be revoked

– importance of the decision to the consumer

– difficulty of choosing among the alternatives

– individual’s tendency to experience anxiety

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Product use and non-use

• Product use

– use innovativeness

– regional variations

– multiple vs single use

• Packaging

• Defective products

– product recalls

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Product disposal and

marketing strategy

• Recycling

– product

– package

• Trade-ins

– to motivate replacement

• Second-hand markets

– E.g. textbooks, clothes/ ‘Cash converters’

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Purchase evaluation

and customer satisfaction

• The evaluation process

– Demension of performance

• Dissatisfaction responses

• Marketing strategy and dissatisfied

consumer

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Purchase evaluation

and customer satisfaction

• Evaluation of a purchase is influenced by:

– Expectations

– Perceived performance

• Dimensions of performance:

– Instrumental: physical/functional

– Symbolic: image

– Affective: emotional

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Purchase evaluation

and customer satisfaction

• The evaluation process

– Dimensions of performance

• Customers switch ‘away’ from service providers

rather than ‘to’ providers:

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• Core service failure (44%)

• Service encounter failures (34%)

• Pricing (30%) • Inconvenience (21%)

• Response to service failures (17%)

• Attraction to competitors (10%)

• Ethical problems (7%) • Involuntary switching (6%)

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Measuring customer satisfaction

• Qualitative measurement techniques

• Focus groups

• Surveys

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Purchase evaluation

and customer satisfaction

• Dissatisfaction responses

– Possible outcomes of a negative purchase

evaluation:

• Taking no action

• Switching brands, products or stores

• Warning friends and colleagues

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Actions taken by consumers in response to

product dissatisfaction

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Source: Quester et al., (2014), Consumer Behaviour: implications for marketing strategy 7th ed, McGraw-Hill Education, page 195 704003 – Product purchase and

Postpurchase processes

Purchase evaluation

and customer satisfaction

• Marketing strategy and dissatisfied

consumer:

– Marketers need to satisfy consumer

expectations by:

• creating reasonable expectations through

promotional efforts

• maintaining consistent quality so that these

reasonable expectations are fulfilled

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Repeat purchase behaviour

• Repeat purchase behaviour

– Simply involves the frequent repurchase of

the brand

• Brand loyalty

– Implies a psychological commitment to the

brand

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Brand loyalty

• Biased

• A behavioural response

• Expressed over time

• A consumer selects a brand over alternative

brands

• A function of psychological processes

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Value of customer loyalty

• Increased purchases of the existing product

• Cross-purchases of your other products

• Price premium due to their appreciation of your

added-value services

• Reduced operating cost because of familiarity

with your service system

• Positive word-of-mouth that refers other

customers to your firm

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Repeat purchase behaviour

and marketing strategy

• Once objectives are defined for each

group it becomes possible to develop and

implement marketing strategies and

evaluate the results

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Relationship marketing

• Developing a core product/service on which to

build

• Customising the relationship to the individual

customer

• Augmenting the core product/service with extra

benefits

• Pricing in a manner that encourages loyalty

• Marketing to employees so that they perform

well for customers

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Summary

• The post-purchase process

• The post-purchase dissonance

• Why product use is important to marketers

• Why product disposal is important to

consumers

• Concept of customer satisfaction

• Concept of consumer loyalty

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Next lecture

• Lecture 05: Perception, Learning and

Memory

• Case study:

– Spotlight on Hong Kong: ‘Can-Do Hong Kong

Spirit’ (p. 256)

– Beware the rhino – Just don’t tell ‘em (p. 291)

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