consumer behavior ch.5

CHAPTER 5

PURCHASE

CHAPTER OUTLINE

I. To Buy or Not to Buy

A. In the purchase decision process, consumers decide:

1.          Whether to buy.

2.          When to buy.

3.          What to buy.

4.          Where to buy.

5.          How to pay.

B. The decision to buy can lead to either of these:

1.          Fully planned purchase- both product and brand are chosen before the store visit.

2.          Partially planned purchase – there is an intention to buy the product but brand choice is deferred until shopping.

3.          Unplanned purchase – both the items and brand are chosen in the store. This is often referred to as an impulse purchase.

C. The purchase decision can be affected by:

1.          Timing

2.          Effort by the consumer – refunds, rebates, etc.

3.          Alternative methods of payment – cash, check, credit card

D. Marketers prefer payment by credit cards in order to build databases for databased marketing or data mining.

II. Retailing and the Purchase decision

A. Why people shop:

1.          To acquire something

2.          To alleviate loneliness and boredom with escape and fantasy fulfillment

3.          It relieves depression

4.          It is a sport, or the modern “hunt”

5.          About 20% of the population do not like to shop

B. The purchase decision process shows where consumers decide to buy products by considering:

1.          Which type of retail concept select – internet, catalog, direct mail, or location – based retailer?

2.          Which specific retailer to patronize – Wal-Mart or K-Mart?

3.          The effects of past shopping experiences stored in long-term memory (automatic cognitive processing).

C. Retail image, as perceived by the shopper, determines where they will shop Store image consists of:

1.          They way the store is defined in the shopper’s mind

2.          The level of growing within a store.

D. The determinants of retailers success or failure are:

1.          Location

2.          Nature and quality of assortment

3.          Price

4.          Advertising and promotion

5.          Sales personnel

6.          Services offered

7.          Physical store attributes

8.          Nature of store clientele

9.          Store atmosphere

10.      Post-transaction service and satisfaction

E. Location is perceived by most consumers in terms of:

1.          Time

2.          Hassle

3.          Actual distance

F. Depth, breadth, and quality of assortment are determinants of store choice.

1.          Specialty stores with narrow and deep assortment appeal to specific consumer niches (Gap, The Limited)

2.          “Category Killers,” specializing in one dominant category, can be critical to the success of some mass merchandisers. (Toys’R US, Lenscrafters)

G. Price is an important determinant of store choice but it values by type of product offered.

1.          Price as a strategic tool to build patronage is questioned.

2.          Detailed scanner data can show the effect of price changes on sales and identify which price works best.

3.          Marketers need to learn more about how consumers respond to short-term price and promotion changes.

H. Advertising and promotion for retail brand positioning are important tools to create a retail brand.

1.          Image advertising uses visual components and words to create an expectation about the experience and satisfaction consumer will have with a specific store.

2.          Information advertising provides details about:

a. products

b. prices

c. hours of store operation

d. location

e. other attributes of influence

I. Sales personnel

1.    Sales success is determined by two factors:

a. The relationship during that transaction

b. The persuasion strategies used

2.  The ability to win a buyers confidence and complete a negotiation are affected by:

a. Perceived knowledge and expertise

b. Perceived trustworthiness

c. Customer knowledge

d. Adaptability

3.  Stores must a ways find ways to recruit, train, and motivate high quality sales personnel

J. Store image is affected by such considerations as:

1.          Convenient self-service facilities

2.          Ease of returning merchandise

3.          Delivery

4.          Credit

5.          Overall good service

K. The physical properties of a store environment are designed to create an effect on consumer purchases are called store atmospherics and include:

1.          Elevators

2.          Lighting

3.          Air conditioning

4.          Convenient and visible washrooms

5.          Layout

6.          Aisle placement and width

7.          Parking facilities

8.          Carpeting

9.          Architecture

10.      Special displays

11.      Music

12.      Color schemes

L. Store clientele, or the type of person who shops in a store affects consumer purchase intention because of the tendency to match one’s self-image to that of the store.

1.          Some people will identify with a store and shop there.

2.          Some people will avoid certain stores.

M. Point-of-Purchase materials (POP) can impact up to 70% of in-store purchase decisions, POP displays and campaigns:

1.          Are inexpensive compared to other forms of promotion

2.          Reach people where they buy

3.          Add atmosphere to the retail store

N. Customer logistic is the speed and ease with which consumers move through the retail and shopping process. It consists of six primary stages:

1.          Preparation to shop

2.          Arriving at and entering the store

3.          Movement through the store

4.          Checkout

5.          Travel home and home-warehousing

6.          Inventory stockouts

III. The retail landscape is changing because consumers want to purchase goods and services from a variety of retailing formats. Because of this marketers are turning to multi-channel retailing, which includes:

A.        Location-based retailing

B.         Value-oriented retailers

C.         The shopping mall

D.        Direct marketing, which consists of six methods:

1.          Direct selling

2.          Direct mail ads

3.          Direct mail catalogs

4.          Telemarketing

5.          Direct response ads

6.          Interactive electronic media

IV. E-Commerce is the glamour child of direct marketing today.

A.        Winners in “click and order” retailing will be those who service their customers better than their competitors

B.         The challenge will be to understand this form of retailing.

C.         Many e-traders fail to make a profit and the reasons are not known.

V. Consumer Resources: What People Spend When They Purchase

A. Time style determines how people allocate time:

1.          Paid time (work)

2.          Obligated time (other commitments)

3.          Discretion time (leisure time)

4.          Non-discretionary time (sleeping, commuting, personal care)

B. Purchased goods and services fall into two time-related categories:

1.          Time-using goods

2.          Time-saving goods

C. Time use is either:

1.          Polychanging – The simultaneous combining of activities like eating and watching TV.

2.          Monochronic – Performing only one activity at a time.

D. Time price is the amount of time required to use a product.

1.          “It only takes tow hours to install.”

E. Cognitive resources represent the mental capacity available for undertaking various information processing activities.

1.          Capacity are the resources available for information processing at any given time

2.          Attention is the allocation of capacity

3.          Intensity is the amount of capacity focused in a particular direction

4.          Shallow attention is a limited investment of cognitive resources to a stimulus

5.          Information overload can create the danger of exceeding the consumer’s cognitive capacity and can cause confusion resulting in poor choices

VI. Communicating with consumers with integrated marketing communications (IMC) differs from traditional communications in several ways:

A.        IMC programs are comprehensive

B.         IMC programs are unified

C.         IMC programs are targeted

D.        IMC programs have coordinated execution of all the communications components of the organization

E.         IMC programs emphasize productivity in reaching the designated targets