Chapter 7

Identifying and Understanding

Consumers

Dr. Pointer Notes

 Chapter Objectives
To discuss why it is important for a
retailer to properly identify, understand,
and appeal to its customers
To list and describe a number of
consumer demographics, lifestyle
factors, and needs and desires and to
explain how these concepts can be
applied to retailing

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 Chapter Objectives _2
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

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 Overview
The success of retailers strategy depends on how
well the firm develops a retail strategy to appeal to
target market
Need to identify appropriate consumers
Understand different consumer characteristics,
their needs, attitudes
Recognize how decisions are made by target
market
The following factors are key to identifying and
understanding target market

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 Figure 7.1 What Makes Retail
Shoppers Tick

Life-Styles Needs and

Desires

Retail Shopping Attitudes

Demographics Shoppers and Behavior

Retailer Actions
Environmental
Factors

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 Demographics and Lifestyles
Demographics Lifestyles
consumer data ways in which
that is objective, consumers and
quantifiable, easily families live and
identifiable, spend time and
measurable spend money

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 Helpful Facts for Understanding
U.S. Demographics
Typical household has an annual
income of $45,000
Top 1/4 of households earn $75,000 or
more
Lowest 1/6 of households earn under
$15,000
High incomes lead to high discretionary
income

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 Helpful Facts_2
There are 5 million more females than
males
Three-fifths of females age 16 and older
are in the labor force
Most U.S. employment is in services
25% of all U.S. adults age 25 and older
have at least graduated from a four-year
college

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 Helpful Facts_3
One sixth of people move each, yet
60% stay in same county
There are many ethnic groups. Blacks,
Hispanics, and Asian represent 30% of
U.S. population
Each group represents a large target
market

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 Consumer Life-Styles
Consumer life-styles are based on social and
psychological factors and are affected by
demographics.
Culture distinctive heritage shared by a group of
people that passes on a series of beliefs, norms,
and customs
Major subcultures are within the broader culture
Social class ranking of people based on education,
income, occupation and other factors

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 Understanding Consumer
Lifestyles: Social Factors
Reference
Culture
Groups

Social Lifestyle Time

Class Utilization

Household Family
Life Life
Cycle Cycle

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 Consumer Life-Styles
Reference groups- any group or individuals a
persons looks to for direction in behaving. They
influence thoughts, behavior;
Family life cycle how a traditional family moves
form bachelorhood to children to solitary retirement
Time utilization activities in which a person is
involved and the amount of time allocated to them
(work, transportation, eating, recreation,
entertainment, parenting, sleeping, etc

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 Understanding Consumer
Lifestyles: Psychological Factors
Personality Attitudes

Perceived Lifestyle Class

Risk Consciousness

Purchase
Importance

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 Psychological Factor
Personality- sum total of a persons traits that make
the unique. Consistent response to environmental
stimuli.
Class consciousness extent to which a person
desires and pursues social status.
Attitudes feels that a person holds toward an
object
Perceived risk level of risk that person holds
regarding the purchase of a product from a retailer

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 Figure 7.2 The Impact of Perceived
Risk on Consumers
Types of risk
Functional
Physical Outcomes
Financial Purchase new
Social product
Psychological Stick with old brand
Time Consumers
Talk to friends
Seek more info
nonpurchase
Factors affecting
Perceived Risk
Newness
Budget
Experience
Number of alternatives
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 Retail Implications of consumer
demographics
Because of changing life-styles, more husband and wives shop
together. More men are doing non traditional work around the
house
Component life-styles consumers are less predictable
Such as cleaning, shopping, babysitting
Consumer sophistication and confidence more
knowledgeable shoppers who are more cosmopolitan (more
aware of trends)
Poverty of time people are time-pressed because of work,
commuting, family responsibilities and etc
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 Consumer Profiles
Need to have a profiles of your retail
customers. As and Example:
Typical outlet shopper is married, career
women whos 43 yr, HH income of $53K,
shops 4 times a yr at outlets and spends
more than 100 per visit
Heavy shoppers drive sales and represent
33% of all shoppers

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 Consumer Needs and Desires
What are the key consumer needs that they are
trying to fill
Needs a persons basic shopping requirements
which are consistent with demographics and life-
style
Desires are discretionary shopping goals that affect
attitudes and behavior
Consumer motives, reasons for their shopping
behavior ( pg 169)
Three major shopping market segments in-
home,online and outshoppers

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 In-Home Shoppers
Shopping is discretionary,
not necessary
Convenience is important
Active, affluent, well-
educated
Self-confident, younger,
adventuresome
Time scarcity is not a
motivator

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 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

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 Out- Shoppers
Out-of-hometown
shopping
Male, young, members of
a large family, and new to
the community
Income and education
vary
They like to travel, enjoy
fine food, are active, and
read out-of-town
newspapers

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 Attitudes Towards Shopping
Shopping Enjoyment
Attitudes toward Shopping Time
Shifting Feelings About Retailing
Why People Buy or Not on a Shopping
Trip
Attitudes by Market Segment
Attitudes toward Private Brands

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 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
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 Table 7.3 Where America Shops:
Household Purchases
90
80
70
60
50
40
30
20
10
0
Discount Mail Self- Apparel Outlet
Order Service Stores in Stores
Shoes Malls

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 Table 7.3 Where America Shops:
Weekly Purchases

60

50

Supermarkets
40
Convenience
30
Full-Line Discount
Drugstores
20
Membership Clubs
10

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 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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 The Consumer Decision Process

After understanding how to describe

consumers using demographic factors,
retailers should know some thing about how
they make purchase decisions
Consumer decision process consist of the
activities consumers do in making the
decision to obtain, consume and dispose of
goods and services

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 The Consumer Decision Process

Need/Problem Awareness

Information Search Demographics

Eval of Alternatives
Lifestyle
Purchase

Post Purchase Eval

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 Key Factors in the Purchase Act

Retailers
Retailers Retailers goods
place of Purchase purchase terms and service
availability

Consumers
purchase or
nonpurchase

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 Purchasing Act
Place of purchase Store, home,
mall,office,online
Purchasing Terms price, cash, credit
Good and services instock, delivery time
Post Purchase behavior
Cognitive dissonance
Satisfaction is based on?

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 Types of Consumer Decisions

Extended High

Limited RISK & TIME

Routine Low

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 Types of Decision making
Extended- consumer makes full use of all
steps in consumer decision model
Limited- consumers use each step but dont
spend a long time at each step
Routine decision consumer buys out of
habit and skips many of the steps in the
model

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 Types of Impulse Shopping

Completely unplanned
Partially unplanned
Unplanned substitution

Impulse purchase is defined as a sudden urgent

to buy without consideration of consequences of
actions

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 Devise a Marketing Strategy
After choosing the target market method, the target market is
selected.
The target market is evaluated for needs, psychological factors
and social, situational factors.
Next the retailing mix is then shaped
The major retail strategies focuses on being a retailer with a
mass merchandise strategy, retailer with concentrated marketing
strategy or one with a differentiated strategy

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 Possible Retailer Approaches

Mass Marketing
Kohls Department Stores
Concentrated Marketing
Zutopia
Differentiated Marketing
Foot Locker

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 Retail Strategies
Mass marketing strategy goes after a
broad array of customers with good quality
merchandise (between discounter and
Traditional dept store)
Concentrated marketing strategy focuses
retailing effort at only one segment
Differentiated strategy appealing to
different target markets with different
retailing mixes
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 Environmental Factors and
Consumers
State of the Economy
Rate of Inflation
Infrastructure for Shopping
Price Wars
Emergence of New Retail Formats
People Working at Home
Regulations on Shopping
Changing Social Values and Norms
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 Questions

7-38