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Retailing
MKTG 6211
Consumer Shopping
Behavior
Professor Edward Fox
Cox School of Business/SMU
All Those Decisions…
Trip
Buying or browsing?
Specific need, or inventory replenishment
Retailer
Where to shop (order matters)?
Mall/retail center vs. nearby store
In-Store
What product categories?
Within each category, which products to consider?
What about “impulse,” or unplanned items?
Buy or defer?
Consumer Shopping Decisions
Store
Choice
Category
Selection
Brand
Choice
Purchase
Quantity
Trip
Purpose(s) of the Trip
Before determining where to shop, the consumer must
determine the purpose(s) of the trip
Transaction
Information
Entertainment
Transaction…
Replenishment
Which retailer do I prefer?
Routine
Specific item
Where are desired items available?
For transaction-focused shopping, convenience,
price, and assortment are key criteria for store choice
Trip
Purpose(s) of the Trip
Information…
Product search
Assortment is the primary criterion
Price search
Expected prices are the key criterion
Entertainment…
Retailer advertising
Retailer reputation
Mall operators often stage entertainment to create
excitement and draw customer traffic
For information- and entertainment-focused
shopping, proximity of a store to other stores (e.g.,
mall, “restaurant row”) is often a key criterion
Trip
Purpose(s) of the Trip
Purpose
Shopper Classification
Transaction
Buyer
(Goal Directed)
Information
Browser
Entertainment
Consumers browse in apparel and department
stores; not grocery and drug stores
Trip and Retailer
Where to Shop and What to Buy
Store choice
Category Selection
“Where to shop”
“What to buy”
Needed items, or shopping lists, often affect the
choice of store
Trip and Retailer
Where to Shop and What to Buy
If the purpose is replenishment …
Neighborhood Store
Low-Price Store
24.3%
48.5%
27.2%
Common Replenishment
Extra Replenishment
Stockpiling
Shoppers buy less than half as much on a trip to the
neighborhood store, compared to a low-price stores
Trip and Retailer
Where to Shop and What to Buy
If the purpose is replenishment …
Shoppers engage in two types of trips:
“Stock up”
Spend more
Mainly on the weekend
“Fill in”
Driven by specific item(s)
Random occurrences
Retailer
Store Choice
Consumers report that their choice of store is driven by:
Convenience
Proximity to the shopper’s home
One-stop shopping convenience
Proximity to other stores (e.g., on the mall)
Price
Variety and assortment
Service
Retailer
Shopper’s Evaluation of Retailer Prices
The general evaluation of a retailer prices is known as price image
Consumers can’t evaluate all the prices in a store, so price
image depends on:
Prices of items that the consumer has considered buying
Are prices usually lower than competitors?
Consumers can’t easily evaluate how much lower
Better known brands are thought to have a greater effect on the
retailer’s price image
Prices of sale items
Most salient to shoppers
Often displayed, too
Retailer
Shopper’s Evaluation of Retailer Assortment
Retailer assortment can be difficult for consumers to
evaluate
It depends on the differences between products offered,
as well as the number of products offered
The shopper’s general evaluation of a retailer product
assortment is based on:
The number of SKUs offered
Whether preferred or “favorite” brands are available
Shelf or floor space devoted to the category
Retailer
Multi-Store Shopping
Selecting a store may mean selecting more than one
Price or value search – order of store visits matters
Consumers meet different needs at non-competing
retailers on the same trip
“Cherry picking”
The store(s) visited previously may change the
probability of visiting that store tomorrow
Category-specific store preferences
Consumers may tradeoff price and convenience differently
from trip to trip
Multi-Store shopping is an important reason for
retailers to locate their stores near other stores
Retailer
Multi-Store Shopping
Over time, consumers may shop at many stores that sell
similar items
Correlations of Logarithm of Household Packaged Goods Expenditures
HiLo
Grocery
HiLo Grocery
EDLP Grocery
Mass Merchandiser
Drug Store
Warehouse Club
1
0.114
0.852
0.791
0.075
EDLP
Grocery
1
0.215
0.154
0.142
Mass
Merchandiser
1
0.713
0.221
Drug Store
1
0.000
Warehouse
Club
1
Data Source: IRI panel of 189 panelists from Oct 1995 - Oct 1997
In-Store
What to Buy – Shopping List
Before shopping, customers often prepare a shopping
list of items sought
On paper
US (1995) – 55% of grocery shoppers prepare shopping lists
Europe (1997/8) – 70% of grocery shoppers prepare
shopping lists
Mental
In apparel and other non-CPG shopping, fewer items
are sought so shopping lists are primarily mental
In-Store
What to Buy – Shopping List
Shopping lists may be more or less specific
Product category
Brand – Though most customers use shopping lists, only
25% of brands purchased are pre-selected
Size
Shopping lists, particularly mental lists, usually
include only the product category (not the brand)
In-Store
What to Buy – Factors Influencing Purchase Decisions
Most purchase decisions are made in-store
US
POPAI – 65% in the 1980s; 81% in the 1990s
Europe
Retail Marketing Services – 75% in 1997/8
8% category selected for purchase, but not brand
4% pre-selected brand was substituted
64% unplanned purchases
“P-O-P is significant as the ‘last three feet’ of a
brand’s marketing campaign, and serves as the
‘closer’ for in-store purchasing decisions as well as
an influencer for impulse purchases” POPAI, 1995
In-Store
What to Buy – Factors Influencing Purchase Decisions
% Reporting
Promotional Influence
86%
In-Store Ads / Displays
53%
Billboards / Posters
45%
Radio
32%
Television Advertising
30%
Newspaper Advertising
28%
Direct Marketing / Couponing
5%
Magazine Advertising
Source: POPAI, 1995
In-Store
What to Buy – Unplanned Purchases
Items for which purchase was not anticipated are
considered “unplanned purchases”
Impulse
Non-impulse
Reminder
Suggestion
Impulse purchases can be stimulated
Merchandising around cash-wraps, entrances and other hightraffic areas
Store atmospherics (e.g., colors and smells)
Displays
In-Store
What to Buy – Unplanned Purchases
Purchases which suggested/reminded by retailer are
influenced by:
Display
Signage – e.g., shelf tags
Cross-merchandising
From the retailer’s perspective, these are “add-on” sales
The number of unplanned purchases increases with
both variety and assortment offered by the retailer
The bigger the store, the more unplanned purchases
In-Store
What to Buy – Unplanned Purchases
Unplanned purchases may be limited by the shoppers’
budget constraints and time constraints
Browsers make more unplanned purchases
In-Store
Brand/Product Choice – Consideration Sets
To avoid spending all day in the store, shoppers limit
their consideration to relatively few items
What – Consideration set is the subset of available
products that is evaluated when making a choice
Why – limited cognitive resources
How – screen items unlikely to be of interest before
evaluating them
In-Store
Brand/Product Choice – Consideration Sets
How/when is the consideration set formed
Need Recognition
Information Search
Consideration Set
Evaluation of Alternatives
Intention to Purchase
Purchase Decision
In-Store
Brand/Product Choice – Evaluation Factors
Price/value
Compared with what is on the shelf (in-store)
Compared with competitors (out of the store)
Compared with recalled prices
Quality
Performance (e.g., fabric weave and weight, cut)
Conformance (e.g., durability, workmanship)
Image
Familiarity / information – Reduces uncertainty of
evaluation
Brand can be a proxy for quality, if quality is unknown
and can be a primary factor in determining the image
associated with a product
In-Store
Brand/Product Choice – Consumer Evaluation
Retailers can affect consumers’ product evaluations by
Pricing
Vs. competitors
Between items on the shelf
Assortment
Number of items
Quality of items
Brand(s) of merchandise
Retailers may try to “up-sell,” or influence shoppers to
purchase a higher-margin product, but they are more
likely to pursue customer loyalty or “add-on” sales
In-Store
Brand/Product Choice – Consumer Evaluation
Brands are often a key component of the retailer’s
positioning
Barney’s
New York
JCPenney
•Donna Karan
•Arizona
•Dolce & Gabanna
•Lee
•Giorgio Armani
•L.E.I.
•Jil Sander
•Vanity Fair
http://www.barneys.com
http://www.jcpenney.com
In-Store
Brand/Product Choice – Private Label
Retailers may offer their own brands, known as “private
labels”
Offer consumers more choice alternatives
Offer consumers lower-priced alternatives to the
national brand
May appeal to more price-sensitive shoppers
Offer products that have higher margins than national
brands
Offer products that are exclusive to the retailer
In-Store
Brand/Product Choice – Private Label
In general, shoppers prefer national brands to store
brands, though:
Some retailers offer exclusively private labels
The Gap
Land’s End
Private label penetration varies by category
64% of egg sales
58% of milk sales
30% of sour cream sales
Private label has higher penetration in certain countries
Britain
In-Store
Brand/Product Choice – Private Label
Private label examples
In-Store
Purchase Quantity
Purchase quantity is driven primarily by promotional
discounts
The limited time availability leads customers to stockpile
Specific promotions encourage larger quantity purchases:
Of individual items
Buy one; get one free
3 for the price of two
Trial size with purchase
Of goods in the store
Volume discounts
Frequent flyer-type programs