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MKT 3210 Ch. 4 Customer Buying Behavior

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Customer Buying Behavior

MKT 3210 Retailing Management

Stages in Buying Process

1) Need recognition

2) Information search about channels, stores, merchandise, and services

3) Evaluation of alternatives for channels, stores, merchandise, and services

4) Purchase of the merchandise or service

5) Postpurchase

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MKT 3210 Ch. 4 Customer Buying Behavior

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Evaluation of Alternatives

• Multiattibute attitude model (Fishbein model) – Can be used to evaluate products, retail stores, and

channels

– Predicts consumers’ evaluation of alternatives and choice based on (1) performance on relevant attributes and (2) importance of those attributes

– Invented by Fishbein (psychology researcher) in 1963

– First used in marketing by Bass and Talarzyk in 1972

Implications of Fishbein Model

• Information needed to use the model – Alternative retailers that the consumer considers – Characteristics or benefits sought in evaluating and choosing a

retailer – Ratings on each retailer’s performance on the characteristics – Importance of the characteristics to the consumer

• 1st task: Getting into the consideration set and then the choice set

• 2nd task: Influencing retailer choice – Increase consumers’ belief about the retailer’s performance. – Increase importance weights of attributes on which the retailer has

an advantage. – Add a new benefit.

MKT 3210 Ch. 4 Customer Buying Behavior

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Types of Buying Decisions

• Extended problem solving

• Limited problem solving

• Habitual decision making

Extended Problem Solving

• Purchase decision process in which consumers devote considerable time and effort before purchase

• Buying situations – High risk (financial, physical, social) and uncertainty – Satisfying an important need or having little knowledge about the

product

• More reliance on external information source than internal • How retailers can influence consumers

– Provide necessary information that is readily available and easily understood (e.g., salespeople)

– Offer money-back guarantees to encourage purchases

MKT 3210 Ch. 4 Customer Buying Behavior

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Limited Problem Solving

• Purchase decision process involving a moderate amount of time and effort

• Buying situations – Some prior experience with the product – Moderate risk

• More reliance on internal information source than external

• Majority of consumer decision making • One common type: impulse buying (or

unplanned purchasing)

Impulse Buying

• Buying products or brands that the consumer had not planned on buying before entering a store

• Types – Completely unplanned

• No intention of making a purchase in a product category

– Partially unplanned • Clear idea about a category, but not for a brand or model

– Unplanned substitution • Intention to buy a specific brand, but change mind about the brand in

the store

• How retailers can influence consumers – Store: Use prominent displays, e.g., display around checkout

counters, end-aisle display, discount tags – Online: Special merchandise on home pages, complementary

merchandise just before checkout

MKT 3210 Ch. 4 Customer Buying Behavior

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Habitual Decision Making

• Purchase decision process involving little or no time and effort

• Buying situations – Not very important products – Familiar merchandise – Under time pressure

• Examples – Brand loyalty – Retailer loyalty

Brand and Retailer Loyalty

• Brand loyalty – Consistent purchase of a specific brand – Reluctant to switch to other brands – Upside: increased store traffic – Downside: Retailers must carry the brand.

• Retailer loyalty – Habitual visits to the same retailer – Reluctant to patronize competing retailers – How to build retailer loyalty

• Clear and precise positioning strategy • Great customer service • Well-designed loyalty programs

MKT 3210 Ch. 4 Customer Buying Behavior

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Market Segmentation

• Criteria for evaluating market segments – Differentiable

• Segments that are conceptually distinguishable and respond differently to different retail mix decisions

– Actionable • Effective programs can be designed for the segment.

– Identifiable (= measurable) • Size, purchasing power, and profile of the segment can be

determined and measurable.

– Substantial (in size) • Whether the segment is large enough to support a unique

retail mix

– Reachable • Ability to deliver the designed retail mix to the segment

Approaches for Segmenting Markets • Geographic segmentation • Demographic segmentation • Geodemographic segmentation

– Widely used tool: Tapestry Segmentation System

• Psychographic segmentation – Self-values, self-image, lifestyles – Widely used tool: VALS (values of lifestyle survey)

• Buying situation segmentation – Example: fill-in vs. major shopping trips

• Benefit segmentation • Composite segmentation

– Using multiple variables, e.g., benefits sought, lifestyle, demographics