Retailing

MKTG 3346

Consumer
Consumer Shopping
Shopping
Behavior
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
Information

Buyer
(Goal Directed)
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

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 shoppers home

One-stop shopping convenience
Proximity to other stores (e.g., on the mall)

Price
Variety and assortment
Service

Retailer
Shoppers Evaluation of Retailer Prices
The general evaluation of a retailer prices is known as price image
Consumers cant 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 cant easily evaluate how much lower
Better known brands are thought to have a greater effect on the
retailers price image

Prices of sale items

Most salient to shoppers
Often displayed, too

Retailer
Shoppers 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 shoppers 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

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

brands 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 retailers 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
Need Recognition
Recognition
Information
Information Search
Search
Evaluation
Evaluation of
of Alternatives
Alternatives
Intention
Intention to
to Purchase
Purchase
Purchase
Purchase Decision
Decision

Consideration
Consideration Set
Set

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 retailers
positioning

Barneys
New York

JCPenney

Donna Karan

Arizona

Dolce & Gabanna

Lee

Giorgio Armani

L.E.I.

http://www.barneys.com
Jil
Sander

Vanity Fair

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
Lands 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