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Customer Buying Behavior

Consumer behavior is defined as the behavior that consumers


display in searching for , purchasing , using , evaluating and
disposing of products and services that they expect will satisfy their
needs .

Consumer behavior focuses on how individuals make decisions to


spend their available resources ( time , money , effort ) on
consumption related items .

That includes
what they buy ,
why they buy ,
when they buy it ,
where they buy it ,
how often they buy it ,
how often they use it ,
how they evaluate it after purchase
and the impact of such evaluations on future purchases
and how they dispose of it .

What consumer behavior study aims at ?

It attempts to understand the buyer decision making process, both


individually and in groups.
It studies characteristics of individual consumers such as
demographics and behavioral variables in an attempt to understand
people's wants.
It also tries to assess influences on the consumer from groups such
as family, friends, reference groups, and society in general.
Customer behavior study is based on consumer buying behavior,
with the customer playing the three distinct roles of user, payer and
buyer.

Origin of discipline of consumer behavior

The field of consumer behavior is rooted in a marketing strategy that


evolved in the late 1950s, when some marketers began to realize
that they could sell more goods more easily if they produced only
those goods that they had already determined that consumers
would buy . Instead of trying to persuade customers to buy what the
firm had already produced , marketing oriented firms found that it
was lot easier to produce only products that they first confirmed
through research that consumers wanted . Consumers needs and
wants became the firms primary focus . The consumer oriented
marketing philosophy came to be known as the marketing concept .

An effective retail strategy satisfies customer needs better than do


competitors strategies.
Thus , understanding customer needs and buying behavior is critical
for effective retail decision making.

The buying process

The buying process begins when customers recognize an


unsatisfied need and then seek information on how to satisfy the
need. What products might be useful and how they can be bought.

Buying process illustrated

Jennifer Sanchez , a student at San Francisco University , is


beginning to interview for jobs . For the first interviews on campus ,
Jennifer had planned to wear the blue suit her parents bought her
three years ago. But looking at her suit , she realizes that its not
very stylish and that the jacket is beginning to show signs of wear .
Wanting to make a good first impression during her interviews, she
decides to buy a new suit .

Jennifer surfs the internet for tips on dressing for


interviews and looks through some catalogs to see the styles being
offered . But she decides to go to a retail store so she can try on the
suit and have it for her first interview next week . She likes to shop
at Abercrombie and Fitch and American eagle outfitters , but neither
sells business suits . She remembers an ad in the newspaper for
women's suits at Macys .She decides to go to Macys in the mall
close to her apartment and asks her friend Brenda to come along .
Jennifer values Brenda's opinion because Brenda is interested in
fashion and has a good taste .

Walking through the store , they see some DKNY suits . Jennifer
looks at them briefly and decides theyre too expensive for her
budget and too trendy . She wants to interview in the banking
industry and thinks she needs a more conservative suit .
Jennifer and Brenda are approached by a sales person in the career
womens department. After asking Jennifer what type of suit she
wants and her size , the salesperson shows her three suits .
Jennifer asks Brenda what she thinks about the suits and then tries
on all three.

When Jennifer comes out of the dressing room , she is unsure


which suit to select , but Brenda and the salesperson thinks the
second suit is the most attractive and appropriate for interviewing .
Jennifer is happy with the color , fir , fabric and length of the suit but
is concerned that it will require dry cleaning and that she is spending
more than she had planned . Jennifer decides to buy the suit after
another customer in the store tells her she looks very professional in
the suit.

Jennifer doesnt not a Macys charge card , so she asks if she can
pay with a personal check . The salesperson says yes , but the
store also takes visa and master card .Jennifer decides to pay with
her visa card . As the salespersons walks with Jennifer and Brenda
to cash register , they pass a display of scarves. The sales person
stops , picks up a scarf , and shows Jennifer how well the scarf
compliments the suit . Jennifer decides to buy the scarf also .

When Jennifer comes out of the dressing room , she is unsure


which suit to select , but Brenda and the salesperson thinks the
second suit is the most attractive and appropriate for interviewing .
Jennifer is happy with the color , fir , fabric and length of the suit but
is concerned that it will require dry cleaning and that she is spending
more than she had planned . Jennifer decides to buy the suit after
another customer in the store tells her she looks very professional in
the suit.

Jennifer doesnt not a Macys charge card , so she asks if she can
pay with a personal check . The salesperson says yes , but the
store also takes visa and master card .Jennifer decides to pay with
her visa card . As the salespersons walks with Jennifer and Brenda
to cash register , they pass a display of scarves. The sales person
stops , picks up a scarf , and shows Jennifer how well the scarf
compliments the suit . Jennifer decides to buy the scarf also .

Model of Consumer Behavior

Marketing and
other stimuli
Product
Price
Place
Promotion

Buyers black box


Economic
Technological
Political
Cultural
Buyer
Characteristics

Buying
decision
process

Buyers responses

Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount

The buying process

The buying process begins when customers recognize an


unsatisfied need and then they seek information on how to satisfy
need. What products might be useful and how they can be bought.
Consumers evaluate the alternative retailers and channels available
for purchasing the merchandise, such as stores , catalogs and the
Internet , and then choose a store or Internet site to visit or a catalog
to review. This encounter with a retailer provides more information
and may alert customers to additional needs.
Retailers attempt to influence consumers as they go through the
buying process to encourage them to buy the retailers merchandise
and services.

Consumer buying decision process

Consumer Decision-Making
Process
Need
Need Recognition
Recognition

Cultural,
Cultural, Social,
Social,
Individual
Individual and
and
Psychological
Psychological
Factors
Factors
affect
affect
all
all steps
steps

Information
Information Search
Search
Evaluation
Evaluation
of
of Alternatives
Alternatives
Purchase
Purchase
Postpurchase
Postpurchase
Behavior
Behavior

Buying process
There are various stages in buying process such as :
Need Recognition
Information search
Evaluation
Choice
Visit
Loyalty

Buyer Decision Process


Step 1. Need Recognition
Need
Need Recognition
Recognition

Difference
Differencebetween
betweenan
anactual
actualstate
stateand
andaadesired
desiredstate
state

State Where the


Buyers Needs are
Fulfilled and the
Buyer is Satisfied.

Buyer
Recognizes a
Problem or a
Need.

Needs Arising From:


Internal Stimuli
Hunger
External StimuliFriends

The
The Buyer
Buyer Decision
Decision Process
Process
Step
Step 1.
1. Need
Need Recognition
Recognition

Need
Need Recognition
Recognition

Difference
Differencebetween
betweenan
anactual
actualstate
stateand
andaadesired
desiredstate
state
Internal
InternalStimuli
Stimuli

External
ExternalStimuli
Stimuli

Hunger
Hunger

TV
TVadvertising
advertising

Thirst
Thirst

Magazine
Magazinead
ad

AApersons
personsnormal
normal
needs
needs

Radio
Radioslogan
slogan
Stimuli
Stimuliin
inthe
the
environment
environment

Need Recognition
The buying process is triggered when people recognize they have an
unsatisfied need. An unsatisfied need arises when a customers
desired level of satisfaction differs from his present level of
satisfaction.
Visiting stores , surfing the internet , and purchasing products are
approaches to satisfying different types of needs .

Two types of needs are there:

Functional / utilitarian needs - needs directly related to


performance of the product like hair dryer for styling the hair . The
purchase is based on the expectation that hair dryer will assist the
customer in styling hair.
Psychological / hedonic needs - are associated with the personal
gratification customers get from shopping or from purchasing a
product. for eg Tommy Hilfiger shirt may not be better than a knit
shirt from K-Mart but Hilfigers shirt may help to satisfy the
customers need to be perceived as a fashionable dresser. In
satisfying psychological needs, the products functional
characteristics are less important.

Many products satisfy both functional and psychological needs.


Functional needs are often referred to as rational while
psychological needs are called emotional.
Successful retailers attempt to satisfy both the functional and
psychological needs of their customers.
Retailers need to make the shopping experience easy and effortless
for shoppers by providing the desired merchandise so that it can be
easily located and purchased. Some needs that retailers can satisfy
include stimulation , social experience , learning new trends , status
and power , self reward and adventure.

Stimulation - through background music , visual displays, scents


and demos in stores and malls to create a carnival like stimulating
experience for their customers. They also attempt to stimulate
customers with exciting graphics and photography on their websites
and catalogs.
Social Experience - Malls try to satisfy this need by creating food
courts , Book stores have cafes where customers can discuss
novels while sipping coffee. Online retailers provide similar social
experiences through chat rooms.

Learning new trends - By visiting retailers people learn about new


trends and ideas. For e.g. record stores use displays to show
shoppers what new trends and artists are emerging., teens might
go to the Apple store to learn abut new computer technologies .
Status and Power - For some people , a store or a service
provider is one of the few places where they get attention and
respect. Stores provide aristocratic gentility and good life . For
example : Spa clubs make customers the centre of attention with
spa services , medical and nutritional consultations and workshops ,
spiritual pursuits and healthy cuisine.

Self Reward - Customers frequently purchase merchandise to


reward themselves when they have accomplished something or
want to dispel depression. Perfume and cosmetics are common self
gifts. Retailers satisfy these needs by treating customers to
personalized makeovers while they are in store.
Adventure Often consumers go shopping because they enjoy
finding bargains , looking for sales and finding discounts or low
prices. They treat shopping as a game to be won. Off-price
retailers cater to this need by putting merchandise haphazardly in
bins so that customers have an opportunity to go hunting for a
bargain.

Conflicting Needs Most customers have multiple needs . These


needs often conflict. For Eg: Jennifer would like to wear a DKNY suit
, which would enhance her self image , earn her the admiration of
her college friends , and be appropriate for her upcoming job
interviews . But this need conflicts with her budget and her utilitarian
need to get a job. Employer might feel that shes not responsible if
she wears an expensive suit to an interview for an entry level
position .
Typically customers make trade offs between their conflicting needs.

Bcause needs often cannot be satisfied in one store or by one


product , consumers may appear inconsistent in their shopping
behavior . For eg : an executive might own an expensive BMW , but
buy gas from a discount service station . A grocery shopper might
buy an inexpensive store brand of paper towels and a premium
national brand of orange juice.
The pattern of buying both premium and low priced merchandise or
patronizing both expensive , status oriented retailers and price
oriented retailers is called cross shopping .

Although all cross shoppers seek value , their perception of value


varies across product classes .

Stimulating need recognition Customers must recognize

unsatisfied needs before they are motivated to visit a store or go


online to buy merchandise. Sometimes these needs are stimulated
by an event in a persons life.
Retailers use a variety of approaches to stimulate problem
recognition and motivate customers to visit their stores and buy
merchandise .Advertising , direct mail , publicity and special events
communicate the availability of merchandise or special prices.

The Buyer Decision Process


Step 2. Information Search

Personal
PersonalSources
Sources

Commercial
CommercialSources
Sources

Public
PublicSources
Sources

Experiential
ExperientialSources
Sources

Family, friends, neighbors


Most effective source of
information
Advertising, salespeople
Receives most information from
these sources
Mass Media
Consumer-rating groups
Handling the product
Examining the product
Using the product

Information search

Once customers identify a need , they may seek information about


retailers or products to help them satisfy that need . Jennifers
search was limited to the three suits shown to her by the
salesperson at Macys . She was satisfied with this level of
information search because she and her Brenda had confidence in
Macys merchandise and pricing , and she was pleased with the
selection of suits presented to her .
More extended buying process may involve seeking more info about
product and retailers like collecting a lot of info. ,visiting several
retailers and deliberating long time before making a purchase.

Amount of Information search Depends on the value customers


feel theyll gain from searching versus the cost of searching .
The value of search stems from how it improves the customers
purchase decision .Will the search help customer find a lower priced
product or one that will give a superior performance?
The cost of search includes both time and money .

Factors influencing the amount of information search


The nature and use of the product being purchased
Characteristics of the individual customer
Aspects of the market and buying situation in which the purchase is
made
Market place and situational factors affecting information search
include
The number of competing brands and retail outlets ,
The tile pressure under which the purchase must be made .

Sources of information Customers have two sources of


information : Internal and external .
Internal sources information in a customers memory such as
names , images and past experiences with different stores. For eg:
jennefier relied on the an interna; source ( her memory of an ad )
when choosing to visit Macys . Major source of customer
information is the customers past experience .

External Sources are information provided by ads and other


people . Customers see hundreds of ads in print and electronic
media ; they notice signs for many retail outlets each day. In addition
, customers get information about products and retailers from
friends and family members.
When customer feels internal information is not sufficient , they turn
to external information sources .

Reducing the information search The retailers role at the


information search of the buying process is to limit the customers
search to its store or web site. Each element of the retailing mix can
be used to achieve this objective .
Primarily , the retailer must provide a good selection of merchandise
.Services provided by the retailers can also limit the search to the
retailers location.
Everyday low pricing is another way retailers increase the chance
that customers will buy in their store and not search for a better
price elsewhere.

The Buyer Decision Process


Step 3. Evaluation of Alternatives
Consumer May Use Careful
Calculations & Logical Thinking
Consumers May Buy on Impulse and
Rely on Intuition
Consumers May Make Buying Decisions
on Their Own.
Consumers May Make Buying Decisions
Only After Consulting Others.

Marketers Must Study Buyers to Find Out How


They Evaluate Brand Alternatives

The Buyer Decision Process


Step 3. Evaluation of Alternatives
Product
ProductAttributes
Attributes

Evaluation
Evaluationof
ofQuality,
Quality,Price,
Price,&&Features
Features

Degree
Degreeof
ofImportance
Importance

Which
Whichattributes
attributesmatter
mattermost
mostto
tome?
me?

Brand
BrandBeliefs
Beliefs

What
Whatdo
doIIbelieve
believeabout
abouteach
eachavailable
availablebrand?
brand?

Total
TotalProduct
ProductSatisfaction
Satisfaction

Based
Basedon
onwhat
whatIm
Imlooking
lookingfor,
for,how
howsatisfied
satisfied
would
wouldIIbe
bewith
witheach
eachproduct?
product?

Evaluation
EvaluationProcedures
Procedures

Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
or
ormore
moreattributes.
attributes.

Evaluation of alternatives : The multi


attribute model

The multi attribute model provides a useful way to summarise how


customers use the information they have about alternative
products , evaluate the alternatives , and select the one that best
satisfies their needs . It offers a framework for developing a retailing
strategy .

The multi attribute model is based on the notion that customers see
a retailer , a product or a service as a collection of attributes or
characteristics . The model is designed to predict a customers
evaluation of the product , service or retailer based on :
Its performance on relevant attributes
The importance of those attributes to the customer .

Beliefs about performance consider the store choice decision


confronting a young , single professional , woman who needs
groceries . She considers three alternatives : a super center in the
next suburb , her local supermarket or an internet grocery retailer .
The customer mentally processes objective information about
each grocery retailer and forms an impression of the benefits it
provides .
The degree to which each retailer provides the benefit is
represented on a 10 point scale . 10 means the retailer performs wel
in providing the benefit , 1 means it has poorly performed .

Importance weights The customer forms an overall evaluation of


each alternative based on the importance she places on each
benefit the stores provide. The importance customer places can
also be represented on a 10 point rating scale . With 10 indicating
the benefit is very important and 1 indicating that its very
unimportant .
The importance of a retailers benefit differs for each customer and
may also differ for each shopping trip.

Evaluating stores Research has shown that a customers overall


evaluation of an alternative is closely related to the sum of the
performance beliefs multiplied by the importance weights.
When the customers are about to select a retailer , they dont
actually go through the process of listing store characteristics ,
evaluating retailers performance on these characteristics,
determining each characteristic importance , calculating each stores
overall score, and then patronizing the retailer with the highest score
. The multi attribute attitude model doesnt reflect customer's actual
decision process , but it does predict their evaluation of alternatives
and their choice .

Implications for retailers the model indicates what information


customers use to decide which retailer to patronize and which
channel to use . Second , it suggests tactics that retailers can take
to influence customer store choice and merchandise selection.

The Buyer Decision Process


Step 4. Purchase Decision
Purchase Intention

Desire to buy the most preferred brand


Attitudes
of Others

Unexpected
Situational
Factors

Purchase Decision

Purchasing the merchandise or service

Customer dont always purchase a brand a brand or item of


merchandise with the highest overall evaluation . The item or
service offering the greatest benefits may not be available in store ,
or the customer may feel that its risks outweigh the potential
benefits .
Some of the steps that retailers take to increase the chances that
customer can easily convert their positive merchandise or service
evaluations into purchases are :

1. Dont stock out of popular merchandise . Have a complete


assortment of sizes and colors for customers to buy .For services
retailers , have service providers available when customers are
ready to place orders .
2. Reduce the risk of purchasing merchandise or services by offering
liberal return policies , money back guarantees and refunds if the
same merchandise is available at a lower price for another retailer .
3. Offer credit
4. Make it easy to purchase merchandise by having convenient
checkout terminals .
5. Reduce the actual and perceived waiting time in lines at check put
terminals .

Satisfied Customer!

Consumers
Expectations of Products Performance.
Products Perceived
Performance.

Cognitive Dissonance

The Buyer Decision Process


Step 5. Postpurchase Behavior

Dissatisfied Customer
50

Post-purchase Evaluation

After making a purchase , the customer uses the product and then
evaluates the experience to determine whether it was satisfactory or
unsatisfactory.
Satisfaction is a post consumption evaluation of how well a store or
product meets or exceeds customer expectations . This post
purchase evaluation then becomes part of the customers internal
information that affects future store and product decisions.
Unsatisfactory experiences can motivate customers to complain to
the retailer , patronize other stores and select different brands in the
future . Consistently high levels of satisfaction build store and brand
loyalty , important sources of competitive advantages .

Types of Buying Decision


Behavior
High
Involvement

Low
Involvement

Significant
differences
between
brands

Complex
Buying
Behavior

VarietySeeking
Behavior

Few
differences
between
brands

DissonanceReducing Buying
Behavior

Habitual
Buying
Behavior

52

Types of Buying Decisions


1.Extended problem solving - here customers devote a considerable
time and effort to analyzing their alternatives.
Customers engage in extended problem solving when the purchase
decisions involve lot of risk and uncertainty.
Financial risk arise when customers purchase an expensive product or
service.
Physical risks are important when customer feel that a product or
service may affect their heath or safety .
Social risks arise when customer believe the product will affect how
others view them .

Consumers engage in extended problem solving when they are


making a buying decision to satisfy an important need or when they
have little knowledge about the product or service.

Retailers can assist consumers in


Extended Problem solving by:

Providing a lot of information


Having helpful and informative salespeople
Having informational in-store displays
Having salespeople demonstrate features and answer questions

Retailers can also reduce risks by:

Offering a money back guarantee


Offering easy return of merchandise

2.Limited Problem solving- This involves moderate amount of effort


and time. In this type of buying process the consumers have some
prior experience with the product or service and their risk is
moderate. Majority of customers buying involves limited problem
solving.
One common type of limited problem solving is impulse buying,
which is a buying decision made by customers on the spot after
seeing the merchandise . Jennifer's decision to buy scarf was an
impulse purchase .
Retailers encourage impulse buying by using prominent point of
purchase or point of sale( POP or POS ) displays to attract
customers attention.

Retailers can assist consumers in


Limited Problem Solving by:
Providing a positive experience

Make sure customer is satisfied


Provide good service
Have a large selection of quality items
Offer rewards for loyal customers
Have convenient locations

3. Habitual decision making- is a purchase decision process


involving little or no conscious efforts. This process is used when
decisions are not very important to customers and involve familiar
merchandise they have used in the past. Brand loyalty and store
loyalty are examples of habitual decision making.
Brand loyalty means that customers like and consistently buy a specific
brand in a product category .They are reluctant to switch to other
brands if their favorite brand isnt available .

Brand loyalty creates both opportunities and problems for retailers.


Customers are attracted to stores carrying popular brands. Since
retailers must carry the high loyalty brands, they may not be able to
negotiate favorable terms with the supplier of the popular national
brands.
Store loyalty means that customers like and habitually visit the same
store to purchase a type of merchandise. Store loyalty can be
increased by selecting a convenient location, offering complete
assortments and reducing the number of stock-outs., rewarding
customer for frequent purchases and providing good customer
service.

Habitual Decision Making usually involves customer loyalty


to a Store or Brand.

Brand Loyalty

Customer is committed to a specific brand


Will shop at a different retailer to get specific brand
Reluctant to try a different brand

Store Loyalty
Customer habitually visits the same store
Reluctant to try a different store

Factors Influencing Consumer Behavior


Cultural
Social
Culture
Culture

Reference
groups

SubSubculture
culture

Family

Social
Social
class
class

Roles
and
status

Personal
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept

Psychological
Motivation
Perception
Learning
Beliefs and
attitudes

Buyer

61

Social Factors Influencing the Buying


Process

Factors Affecting Consumer


Behavior: Social
Groups
Groups
Membership
Membership
Reference
Reference
Family
Family (most
(most important)
important)
Husband,
Husband, wife,
wife, kids
kids
Influencer,
Influencer,buyer,
buyer,user
user

Social
Social Factors
Factors
Family Buying Influence

Roles
Roles and
and Status
Status

Children can exert a


strong influence on
family buying decisions.
Johnson & Johnson reminds
customers of its commitment
to the American Family.

What other companies use


children to influence
family buying decisions?

63
Click or pre ss spa cebar to return

Factors Influencing Consumer Behavior

Culture

Subculture

Social class

Reference groups

Family

How Family Influences the


Buying Decision

Purchases are for the entire family


All family members have opinions about products
Retailers try to satisfy needs of all family members
Example: playrooms at IKEA, books and games provided at Hyatt
Hotels, Seating areas with TV's in malls

Nordstrom provides sitting areas in its store and pubs where men
can have a beer and watch a football game while their wives shop .
By accommodating the needs of men and children who might not be
interested in shopping , the retailer keeps the family in stores longer
and thereby encourages them to buy more merchandise .

Reference Groups
A reference group is one or more people whom a person uses as a
basis of comparison for beliefs, feelings, and behaviors
A reference group can affect the buying process by:
Offering information (directly and indirectly)
Providing rewards for specific purchasing behavior
Reference groups provide information to consumers directly through
conversation or indirectly through observation .
Enhancing a consumers self-image
Retailers often try to reach store advocates that are part of reference groups to
encourage consumers to frequent their store.

Factors Affecting Consumer Behavior:


Culture
Culture is the Most Basic Cause of a Person's Wants and Behavior.

Subculture
Group of people with shared
value systems based on
common life experiences.

67

Factors Affecting Consumer Behavior:


Culture
Culture is the Set of Values, Perceptions, Wants & Behavior Learned by a
Member of Society from Family.

Social Class
Societys relatively permanent
& ordered divisions whose
members share similar values,
interests, and behaviors.
Measured by: Occupation,
Income, Education, Wealth and
Other Variables.
68

Major Social Classes

Upper Upper
Lower Upper
Upper Middles
Middle Class
Working Class
Upper Lowers
Lower Lowers

Characteristics of a social class

Those within the class tend to behave more alike than persons from
two different social class.
Persons are perceived as occupying superior or inferior position
according to social class.
Social class is indicated by a cluster of variables rather than any
single variable.
Individual can move up and down the social class ladder during their
lifetime.

Social factors

Reference group-all the groups that have direct or indirect influence


on the persons attitude or behavior.
Group having a direct influence on the person is called membership
group.
People also belong to secondary group, such as religion, profession
trade union.
Aspiration groups are those a person hopes to join.
Dissociative groups are those whose values or behavior an
individual rejects.

Group with high resources

Actualizers-Successful sophisticated, active, take Charge people,


purchases often reflect upscale niche product.

Fulfilleds- Mature , satisfied, comfortable reflective favor durability


functionality and value in products.

Achievers-Successful, career and work oriented favor established


and prestige product.

Experiencer-Young, Vital, Enthusiastic, impulsive, and rebellious.


Spend a comparatively high proportion of income on clothing, fast
food, music, movies etc

The Major tendencies of the groups with


lower resources

Believer- Conservative, conventional, and traditional. Favor familiar


product and established brands
Strivers- Uncertain, insecure, approval-seeking, resource
constrained. Favor stylish product that emulate the purchases of
those with greater material wealth.
Makers- Practical, self-sufficient, traditional, family oriented. Favor
only product with practical and functional purpose.
Strugglers- Elderly, resigned, passive, concerned, resource
constrained. Cautious consumers who are loyal to favorite brand

Perception
It is the process by which an individual
selects, organizes, and interprets
information inputs to create a meaningful
picture of the world
Three perceptual processes
Selective Attention

Selective Distortion

Selective Retention

Learning-it involves changes in an individual behavior arising from


experience.
Beliefs- it is a the descriptive thought that a person hold about
something.
Attitude-A persons consistently favorable or unfavorable
evaluations, feelings, and tendencies towards an object or idea.

Factors Affecting Consumer Behavior: Personal


Personal Influences
Personal
Influences

Age
Ageand
andLife
Life
Cycle
CycleStage
Stage

Occupation
Occupation

Economic
Economic
Situation
Situation

Personality
Personality &&
Self-Concept
Self-Concept

Lifestyle Identification
Identification
Lifestyle

Activities
Activities

Interests
Interests

Opinions
Opinions
76

Factors Affecting Consumer


Behavior: Psychological
Motivation

Beliefs and
Attitudes

Psychological
Factors
Affecting
Buyers
Choices

Learning

Perception

77

Market Segmentation

To be cost effective, retailers identify target costumers (market


segments) and target their offerings to meet the needs of typical
customers in that segment rather than the needs of a specific
customer.
A retail market segment is a group of customers whose needs are
satisfied by the same retail mix because they have similar needs.
For example : Families travelling on a vacation have different needs
than executives on business trips . Thus , hotels provide different
retail mixes for each of these segments .The internet enables
retailers to target individual customers efficiently and market
products to them on a one on one basis.

Criteria for evaluating market segments Customers are

grouped into segments in many different ways. Four criteria useful


for evaluating whether a retail segment is a viable target market are
actionability , identifiability , accessibility and size.
Actionability the fundamental criteria for evaluating a retail
market segment are as follows:
Customers in the segment must have similar needs , seek similar
benefits and be satisfied by a similar retail offering .

Those customers needs must be different from the needs of the


customers in other segments . Actionability means that the definition
of a segment clearly indicates what the retailer should do to satisfy
its needs.
Identifiability Retailers must be able to identify the customers in
the target segment .Identifiability permits the retailer to determine
The segments size
With whom the retailer should communicate when promoting its
retail offering.

Accessibility refers to the ability of the retailer to target its


communication to customers in a segment .
Size A target market must be large enough to support a unique
retailing mix .

Market Segmentation
Requirements for Effective Segmentation
Measurable
Measurable
Accessible
Accessible

Size, purchasing power, profiles


of segments can be measured.
Segments must be effectively
reached and served.

Substantial
Substantial

Segments must be large or


profitable enough to serve.

Differential
Differential

Segments must respond


differently to different marketing mix
elements & actions.

Actionable
Actionable

Must be able to attract and serve


the segments.

Market Segmentation
Bases for Segmenting Consumer Markets
Geographic
Nations, states,
regions or cities

Demographic
Age, gender, family size
and life cycle, or income

Psychographic
Social class, lifestyle, or
personality

Behavioral
Occasions, benefits,
uses, or responses

Geographic segmentation - groups customers according to where


they live. A retail market may be segmented by countries or by areas
within the country .
Because customers typically shop at stores convenient to where
they live and work , individual retail outlets usually focus on the
customer segment reasonably close to the outlet .

Demographic segmentation groups consumers on the basis of


easily measured , objective characteristics such as age , gender ,
income and education .
Demographic variables are the most common means to define
segments bcause consumers in these segments can be easily
identified and accessed .

Geodemographic segmentation uses both


geographic and demographic characteristics to classify
consumers . The consumers in the same neighborhoods
tend to buy the same types of cars , appliances and
apparel and shop at same type of retailers.

Lifestyle segmentation or psychographics refers to how


people live , how they spend their money and money ,
what activities they pursue and their attitudes and
opinions about the world in which they live.

Buying situation segmentation The buying behavior


of customers with the same demographics or lifestlye
can differ depending on their buying situation. Thus ,
retailers may use buying situations , such as fill-in versus
weekly shopping , to segment a market.

Benefit segmentation In the multi attribute attitude


model, customers in the same benefit segment would
have a similar set of importance weights for the attribute
of a store or product.
For eg: customers who place high importance on fashion
and style and low importance on price might form a
fashion segment whereas customers who place more
importance on price would form price segment.

Composite segmentation approaches


No one approach meets all the criteria for useful customer
segmentation .
Therfore , composite segmentation approach is used by
retailer , which uses multiple variables to identify
customers in the target segment .