Transcript Retail Customers

Chapter 3
Retail Customers
Learning Objectives
• Explain the importance of population trends on
retail planning
• List the social trends that retail managers should
regularly monitor and describe their impact on
retailing
• Describe the changing economic trends and their
effect on retailing
• Discuss the consumer shopping/purchasing
model, including the key stages in the
shopping/purchasing process
Retailing Headlines
• Pizza Hut new concept stores (Pizza by the
slice)
• Chipotle starts a Pizza store
• Starbucks opens tea Bar
• Starbucks on a Train
Introduction
• Customer satisfaction: Occurs when the total
shopping experience of the customer has
been met or exceeded
• Customer services: Activities performed by
the retailer that influence:
• The Ease with which a potential customer can
shop or learn about the store’s offering
• The ease with which a transaction can be
completed
• The customer’s satisfaction with the transaction
LO 1
Exhibit 3.1 - Personal Consumer Expenditures
and Lagged Satisfaction (ACSI)
LO 1
Introduction
• Market segmentation: Dividing of a
heterogeneous consumer population into
smaller, more homogeneous groups based on
their characteristics
• Demographic
• Psychographic
• Behavior
• Geography
LO 1
Wal-mart Customer
• Brand Aspirationals
• Price-sensitive affluents
• Value-price customers
Things I should have learned in
Marketing Jeopardy edition
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The fast growing minority in the US
Who are Hispanics?
Make up 60% of all Hispanics in the US
Who are Mexicans?
Has more Hispanics than the Country of Costa
Rica
• What is the greater Los Angeles area?
More Jeopardy
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This ethnic minority is the most afluent
Who are Asians?
Japanese, Indians, Koreans, Chinese and Phillipinos
What are the 5 largest ethnic Asian Minorities
Median age in the US is now 37
What is the graying of America
On average 9 years younger than general
population
• Who are Hispanics?
More Jeopardy
• 1 out of every 50 women and 1 out of every
200 men will do this
• What is live to be 100?
• Born 1946 to 1964
• Who are the baby boomers?
• Roughly 80 million strong
• Who are the millenials, echo boomers, gen Y
2010 Census Information
• White non-Hispanic population is predicted to increase by 7%
(195.7M to 210.3M) by 2050; however, this group will only
comprise 50.1% of the total population in 2050 compared to
69.4% in 2000.
• Hispanic population is predicted to increase by 188% (35.6M to
102.6M) and comprise approximately 24.4% of the total
population by 2050.
• Asian population is predicted to increase by 213% (10.7M to
33.4M and comprise approximately 8.0% of the total population
by 2050.
• African-American population is predicted to increase by 71%
(35.8M to 61.4M) and comprise approximately 14.6% of the total
population by 2050.
Exhibit 3.2 - How Current Trends Affect
the way the Consumer Behaves
LO 1
Population Trends
• Population variables: Includes population
growth trends, age distributions, and
geographic trends
• It is useful for two reasons:
• Data is often linked to marketplace needs
• Data is readily available and can be easily applied
in analyzing markets
LO 1
Population Growth
• Any increase in domestic population growth
will mean an increased demand for goods and
services
• Even minimal growth in the total population
will mean opportunities for retailers
LO 1
What we learned from the 2010
Census
6 Disruptive Trends
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The south has risen—Again
The “browning” of America
Marrying Out is “In”
The Silver Tsunami is about to Hit
The end of Men?
Cooling Water from Grandma’s Well—and
Grandpa’s Too?
The south has risen—Again
Shares of Net Population Growth by Region 2000-2009
Region
Absolute Population
Change
United States
Percent of Total
24,834,593
100%
North East
1,616,173
6.5%
Midwest
2,342,955
9.4%
South
12,757,940
51.4%
West
8,117,525
32.7%
What are the implications?
The “browning” of America
U.S. population change by race & ethnicity, 2000-2009
Total
307,806,550
24,834,539
8.8%
Non-Hispanic
258,587,226
12,057,648
4.9%
White
199,851,240
4,088,448
2.1%
Black
37,681,554
3,276,661
9.5%
2,360,807
256,564
12.2%
13,686,083
3,233417
30.9%
448,510
79,260
21.5%
4,559,042
1,123,298
32.7%
48,419,324
12,776,945
35.8%
American Indian &
Alaska Native
Asian
Native Hawaiian &
Other Pacific Islander
Two or More Races
Hispanic
The Future…
Relative Distribution of U.S. Population by Race/Ethnicity
Race/Ethnicity
White
Black
Hispanic
Asian
2005
2050
67%
47%
12.8%
13%
14%
29%
5%
9%
Marrying Out is “In”
Percent of Newlyweds
Married to someone of a
different Race/Ethnicity
White
8.9%
Black
15.5%
Hispanic
25.7%
Asian
30.8%
2010
2000
1990
Series1
1980
1970
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Intermarriage Trends 19802008
Newly Currently
Married Married
1980
6.7% 3.2%
1990
8.6% 4.5%
2000 12.1% 6.8%
2010 14.6% 8.0%
16.0%
14.0%
12.0%
Intermarriage
Trends 1980-2008
Newly Married
10.0%
8.0%
Intermarriage
Trends 1980-2008
Currently Married
6.0%
4.0%
2.0%
0.0%
1980
1990
2000
2010
Hispanic/White 41%
Asian/White
Other
Both nonwhite
15%
17%
Black/White
16%
11%
Hispanic/White
Asian/White
Other
Both non-white
Black/White
The Silver Tsunami is about to Hit
U.S. Population Change by Age, 2000-2009
Age
<25
2009
Absolute Change
% Change
104,960,250
5,258,492
5.3%
25-44
84,096,278
-1,898,345
-2.2%
45-64
79,379,439
16,977,567
27.2%
65+
39,570,590
4,496,886
12.8%
Total
307,006,550
24,834,593
8.8%
Every day over the next 5 years
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12,300 people will turn age 50
11,500 people will turn age 55
9,200 people will turn age 62
8000 people will turn age 65
The end of Men?
Jobs lost/gained by gender during the 2007 – 2009 Recession
Industry
Women
Men
Construction
-106,000
-1,300,000
Manufacturing
-106,000
-1,900,000
Healthcare
+451,800
+118,100
Government
+176,000
+12,000
-1,700,000
-4,700,000
Total
College Class of 2010
Degree
Male
Female
Difference
Associate’s
293,000
486,000
193,000
Bachelor's
702,000
946,000
244,000
Master’s
257,000
391,000
134,000
Professional
46,800
46,400
-400
Doctoral
31,500
32,900
1,400
1,330,300
1,902,300
572,000
Total
Female Workforce Representation
2010
2000
1970
36.8%
1980
42.2%
1990
1990
47.4%
1980
2000
48.0%
1970
2010
49.8%
1967
2007
% of Bread winner
mothers
11.7%
39.3%
% of Co-breadwinner
mothers
Total
16.0%
27.7%
24.0%
63.3%
0.0%
Series1
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Cooling Water from Grandma’s Well—
and Grandpa’s Too?
Children living in non-grandparent and grandparent households
Householder Type
2010 #
2010%
2001#
2001%
Change #
Change %
All
74,718
100%
72,006
100%
2,712
3.8%
No Grandparents
67,209
90%
66,292
92%
917
1.4%
Both Grandparents
2,610
3.5%
1,839
2.6%
771
41.9%
Grandmother only
1,922
2.6%
1,758
2.4%
164
9.3%
318
0.4%
247
0.3%
71
28.7%
Grandfather Only
• http://www.kenanflagler.unc.edu/~/media/files/kenaninstitute/
UNC_KenanInstitute_2010Census
Population Growth
• As population growth slows, successful
retailers must:
• Focus on taking market share away from
competitors
• Managing gross margin by controlling selling price
and cost price
• Increasing the productivity of existing stores
• Another growth opportunity for retailers is
international expansion
LO 1
Exhibit 3.3 - Boomers, Xers, and Yers
LO 1
8000 boomers turn 60 every day
Forth & Towne
Chicos
J Jill
Generation P (for plastic)
Tweens (8-14) $40 billion (influence $450)
Under 20 tweens
The unretired
Age Distribution
• Seniors are categorized in terms of their
health:
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Good health-adequate wealth
Good health-inadequate wealth
Poor health-adequate wealth
Poor health-inadequate wealth
LO 1
Age Distribution
• A retailer must:
• Understand the various needs of each age
segment and know what motivates consumers to
spend money
• Be able to speak the older consumers’ language,
avoid talking down to or patronizing them
• Understand that older consumers need easy-tonavigate store layouts and clearly labeled
merchandise
LO 1
Age Distribution
• Retailers will also need to shift the types of
services provided if they are to gain the
consumers’ dollar
• They must use the Internet to reach out to
young consumers since most of them are
technology savvy
LO 1
Ethnic Trends
• In the last half-century, the United States has
moved from a predominantly white
population to a society rich in racial and
ethnic diversity
• The U.S. Census Bureau has projected that by
2042 non-Hispanic whites will no longer make
up the majority of the population
• By 2050, the Hispanic population is expected
to rise from 15 percent today to 30 percent
LO 1
Ethnic Trends
• Implications for retailers
• Retailers must understand Hispanic shoppers and
their $1.5 trillion of purchasing power
• When targeting Hispanics, retailers should not
assume that:
• Their population in the United States is homogeneous
• They exhibit similar behavior patterns in the
marketplace
LO 1
Ethnic Trends
• Asian teens have become frequent purchasers of
fashionable apparel compared to their white
counterparts
• Chinese entrepreneurs have made enormous
fortunes over the last two decades
• This group of jet setters, in 2010, spent $55 billion on
international travel
LO 1
Geographic Trends
• The location of consumers in relation to the
retailer will often affect how they buy
• Retailers should be concerned about where
their consumers reside
• All consumers want convenience and will
therefore tend to patronize local retail outlets
• Considering mobility, the farther one moves
from a prior residence, the more one needs to
establish new retail shopping patterns
LO 1
Geographic Trends
• Implications for retailers
• Northeastern and Midwestern retailers are
experiencing slower growth, and national retailers
are adding stores and warehouses in the South
and West
• Retailers should not assume that all consumers in
a certain geographic area have the same
purchasing habits
• Micromarketing: Tailoring of merchandise in each
store to the preferences of its neighborhood
LO 1
Geographic Trends
• Every shift in consumer population patterns has
major implications for retailers
• Metropolitan statistical areas: Freestanding
urban areas with populations in excess of 50,000
• As MSAs have begun to stabilize, secondary markets
have become more attractive
• With the recent trend toward higher education,
which results in more job variations, retailers can
expect consumer mobility to increase
LO 1
More Jeopardy
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More women than men
What is are pursuing higher education?
About 6% of US population
What are mingles (unmarried US couples)
20 and 21 years old respectively
What is the average age for women and men to
get married in 1970
• 51%
• What is the % of women living without a spouse
Social Trends
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Education
State of marriage
Divorce
Makeup of American households
Changing nature of work
LO 2
Education
• The education level of the average American is
increasing
• Most reliable indicator of a person’s income
potential, attitudes, and spending habits
• Retailers can expect consumers to become
increasingly sophisticated, discriminating, and
independent in their search for consumer
products
LO 2
State of Marriage
• Single-person households present many
opportunities for the retailer because of the
increased need for a larger number of smaller
houses
• With more men living alone, supermarkets will
have to direct promotions toward their needs
and habits
LO 2
Divorce
• Divorce may impact the way people shop once
they are settled into their new homes
• Retailers must make specific adjustments for
divorced, working women with children by:
• Adjusting store hours
• Providing more consumer information
• Changing the product assortment
LO 2
Makeup of American Households
• Boomerang effect: The recent trend of
children returning to live with their parents
after having already moved out
• Sandwich generational family/trigenerational
family: When three generations (parents,
grandparents, and children) live together in
the same house
• Retailers should recognize the differences in
the changing structure in the makeup of
households within the market
LO 2
Changing Nature of Work
• Retailers need to find ways to enrich job
experiences and lower turnover
• One opportunity for retailers is employing homebased and disabled workers
• Since many individuals are holding multiple
jobs, retailers can tap into this pool of
individuals for part-time workers
LO 2
Economic Trends
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Income growth
Personal savings
Women in the labor force
Widespread use of credit
LO 3
Income Growth
• Disposable income: Personal income less
personal taxes.
• Discretionary income: Disposable income
minus the money needed for necessities to
sustain life
LO 3
Income Growth
• Implications for retailers
• The imbalance in income growth across
households has created an increased demand for
value-oriented retailers such as discounters and
manufacturers’ outlets
• Many Americans now use the Internet as a source
to sell unwanted or unneeded merchandise and
increase their income
LO 3
Personal Savings
• Government’s numbers regarding the savings
rates fail to address the treatment of capital
gains or losses
• Wealth effect - Claims that for every $100 of
additional wealth generated in an individual’s
stock market holdings, that individual will
spend $4
LO 3
Personal Savings
• Implications for retailers
• Retailers have benefited from the spending rather
than the saving mindset of the consumer
• They must be prepared when baby boomers and
Gen Xers plan for retirement while simultaneously
reducing their spending and increasing their
savings
• As the marketplace becomes saturated with
available workers, overall wages fall, which could
negatively impact future retail sales
LO 3
Women in Labor Force
• Over the past five decades, women have
become a dominant factor in the labor force
• Rise in the number of working women has
protected many households from inflation and
recession
• It has resulted in a huge increase in household
income
LO 3
Women in Labor Force
• Implications for retailers
• As the number of dual wage-earner families
increases, many of these families have less time
for shopping
• More prone to looking for convenience and additional
services from retailers
• Bricks-and-mortar retailers must extend store
hours and offer conveniences
LO 3
Widespread use of Credit
• Credit card usage has increased as a result of
active promotional campaigns and low
interest rates
• Customers spend more when they use a credit
card than when they must pay in cash
LO 3
Consumer Behavior Model
• Describes and predicts how population, social,
and economic factors come together to affect
consumer buying patterns
LO 4
Exhibit 3.7 - Consumer Shopping and
Purchasing Model
LO 4
Stimulus
• Cue that is external to the individual or a drive
that is internal to the individual
• Cue: Any object or phenomenon in the
environment that is capable of eliciting a response
• Drive: Motivating force that directs behavior
• Passive information gathering: Receiving and
processing information regarding any factor
that a consumer might consider in making a
decision of where to shop and what to
purchase
LO 4
Problem Recognition
• Occurs when the consumer’s desired state
departs sufficiently from the actual state
• The level of one’s desire to resolve a particular
problem depends on two factors:
• Magnitude of the gap between the consumer’s
desired and actual states
• Importance of the problem
LO 4
Exhibit 3.8 - Degrees of Consumer
Problem Solving in Shopping and Purchasing
LO 4
Problem-Solving Stages
• Active information gathering: Consumers
proactively gather information
• Evaluation of alternatives:
• Consumers develop a set of attributes on which
the purchase decision will be based
• Consumers narrow their consideration set to a
more manageable number of attributes
• Consumers directly compare the key attributes of
the alternatives remaining on their short list
LO 4
Purchase
• The purchase stage may include final
negotiation, application for credit if necessary,
and the determination of the terms of
purchase
• This stage is seen by retailers as an
opportunity to use suggestion selling to sell
add-on or related purchases
LO 4
Post-Purchase Evaluation
• Immediately after the transaction, consumers
form lasting impressions regarding the
soundness of their purchase decision
• Post-purchase resentment: Arises after the
purchase when the consumer becomes
dissatisfied with the product, service, or
retailer and begins to regret that the purchase
was made
LO 4
Post-Purchase Evaluation
• If post-purchase resentment is not identified
and rectified quickly by the retailer, it can have
a long-term negative effect on the retailer’s
bottom line
• If the retailer is proactive in the customersatisfaction program and responds quickly to
budding resentment, it can be overcome
• Many retailers have started customer follow-up
programs
LO 4