Chapter 5 Purchase The Purchase Process Whether to buy When to buy What to buy (product type/brand) Where to buy How to pay Fully Planned Purchase Partially Planned Purchase Unplanned Purchase 2 1
Why People Shop Personal Motives Role Playing Diversion Self-gratification Learning about trends Physical Activity Sensory Stimulation Social Motives Social experience outside of home Communication with others with similar interests Peer group attraction Status and authority Fun of bargaining 3 The Purchase Decision Process Individual Characteristics Purchase Characteristics Evaluative Criteria Evaluating Type of Retailer Evaluating Retail Competitors Store Choice Purchase Outcome 4 2
Individual Characteristics Lifestyles Economic Variables Views of Shopping Situations Purchase Characteristics Types of Product Timing Variables Price/Quality Situation 5 The Purchase Decision Process Individual Characteristics Purchase Characteristics Evaluative Criteria Evaluating Type of Retailer Evaluating Retail Competitors Store Choice Purchase Outcome 6 3
Evaluative Criteria Location Nature of Quality and Assortment Price Advertising and Promotion Sales Personnel Services Offered Physical Store Attributes Store Clientele Point-of-Purchase Displays Consumer Logistics 7 The Purchase Decision Process Individual Characteristics Purchase Characteristics Evaluative Criteria Evaluating Type of Retailer Evaluating Retail Competitors Store Choice Purchase Outcome 8 4
Evaluating Type of Retailer Evaluating Retail Competitors Determining the type of retail concept from which to purchase Determining the type of competitive store from which to purchase Direct mail Location-based retailer Catalog Internet Mass retailer Department store Specialty store Hypermarket 9 Store Choice Purchase Choosing the specific retailer from which to purchase (Name and Location) Gap or Express Nordstrom or Bloomingdale s Wal*Mart or Kmart 10 The process of securing the product Outcome The result of the purchase process: Satisfaction (may lead to repeat purchase and loyalty) Dissatisfaction (may influence future evaluations) 5
Determinants of Retail Success or Failure Examining how retailers perform on specific criteria in they eyes of consumers Retailers focus on adapting these variables according to changing consumer needs and trends Retailers strive to perform better than competitors on evaluative criteria 11 Location Physical location of store Distance from home, office, or other point of origin Perceived in terms of time and hassle as well Cognitive versus actual distance 12 6
Nature and Quality of Assortment Assortment breadth: how vast or wide the variety of products sold (mass retailers) Assortment depth: how deep the categories of product sold (specialty store) Category killers focus on one particular category and provide a deep assortment of products (Home Depot, Toys R Us) 13 Price The importance of price depends on nature of the consumer Consumers perception of price versus actual price Everyday Low Prices (EDLP) emphasizes low prices rather than one-time promotional prices Lowest price versus price in acceptable or expected range Effects of price promotions on: Brand image Retailer image Short term buying behavior Long term buying behavior 14 7
Advertising and Promotion Information Advertising Information advertising provides details about products, prices, hours of store operation, locations and other attributes that might influence purchase decisions 15 Advertising and Promotion Image advertising uses visual components and worlds that help consumers form an expectation about experience in the store Increased emphasis on image advertising Shift toward marketing and what happens outside of the store 16 8
Sales Personnel Sales personnel still play an important role in selecting a retailer Sales success depends on: -Relationship during the transaction -Persuasion strategies 17 Sales Personnel How successful or persuasive a sales person is depends on: Perceived knowledge and expertise Perceived trustworthiness Customer knowledge Adaptability Recruiting and training effective sales associates benefits retailers 18 9
Services Offered: Kinko s Copying and binding Delivery Shipping Computing Video conferencing 24 hour operation 19 Physical Store Attributes Store atmospherics: physical properties of the retail environment designed to create an effect on consumer purchases Lighting Signage Merchandise Displays Air conditioning Floor treatments Music Colors 20 10
Store Clientele Who shops at a store affects a person s decision to shop there Consumers tend match their self-image with that of the store Do consumers feel comfortable with other shoppers in the store? What effect does clientele have on store image? 21 Point-of-Purchase Materials POP displays help gain attention inside the store Advantages of POP displays: o Less expensive form of promotion o Can compensate for fewer sales persons on the floor o Provide valuable information 22 11
Consumer Logistics Consumer Logistics: focuses on the speed and ease with which consumers move through the retail and entire shopping process Examines how factors such as signage, lighting, aisle width, and parking affect the purchase process 23 Consumer Logistics Stages of Consumer Logistics Preparation Arriving at the store Entering the store Moving through the store Checkout Going home and storage Inventory replenishment What factors affect each stage? 24 12
The Changing Retail Landscape Location-based Retailing Retailers that have a physical store and location for consumers to visit Can be housed in shopping malls and strip centers or can be free-standing Some location-based retailers also have catalogs or Internet outlets available 25 The Changing Retail Landscape Location-based Retailing Value-oriented retailers -efficiency in supply chain lowers cost for retailer -economies of scale and volume buying allow retailers to pass cost savings to customers -quality products and image advertising have changed perception of mass retailers 26 13
The Changing Retail Landscape Location-based Retailing The Shopping Mall -People spending less time in shopping malls -Malls are emphasizing the entertainment value of shopping -Shift toward making malls become places people want to be, not just where they want to shop 27 The Changing Retail Landscape Direct Marketing Retail sales that occur someplace other than in the store More consumer shopping and buying activities are occurring outside the store Convenient for people not able to get to stores during store hours 28 14
The Changing Retail Landscape Direct Marketing Direct selling: any form of face-to-face contact between a salesperson and a customer away from a fixed retail location -door-to-door selling -in-home parties Direct mail ads Direct mail catalogs 29 The Changing Retail Landscape Direct Marketing Telemarketing -outbound telemarketing -inbound telemarketing (1-800 numbers) Direct response ads: ads that require a direct response from consumers 30 15
The Changing Retail Landscape E-Commerce Technology of electronic retailing determines what can be offered to consumers, but only consumers determine which technologies (or buying methods) will succeed Today, more people use the Internet for search and prepurchase evaluation than purchase 31 Consumer Resources: What People Spend When They Purchase Money Attention Time 32 16
Time and Money Budgets People have unlimited money budgets: have potential to earn as much money as they want People have limited time budgets: maximum of 24 hours per day Money (unlimited) Time (24 hours) 33 Time and Money Budgets As people work and make more money, leisure time decreases--leading to increased value of time Timestyles: determines how consumers allocate their time 34 17
Time and Money Budgets Time-using Goods Goods that require time to use, such as television or sporting equipment or events As consumer have less leisure time, they are often willing to spend more money to make the most of the leisure time they do have (travel or extreme sports) 35 Time and Money Budgets Time-saving Goods Goods that decrease nondiscretionary time expenditures (such as chores) Housecleaning services or dish washers free up time to spend on leisure or other activities Some firms position products with timesaving benefits 36 18
Time and Money Budgets Time Prices Products have economic prices as well as time prices How much time it takes to shop for, install, or use a product Firms sometimes use time prices in their ads (only takes 1 hour to install or deodorant takes 10 seconds to dry) 37 Polychronic Time Use Polychronic time involves combining activities simultaneously Trend has given rise to products: cellular phones (talk and walk or drive) fastfood (eat and drive) dentist beepers (wait for appointment and shop) prepared meals (shop for groceries and buy completed dinner at same store) 38 19
Cognitive Resources Cognitive resources: mental capacity available for undertaking information-processing activities Capacity: cognitive resources that an individual has available at any given time for processing information How much of this resource do consumers spend when shopping or making a purchase? 39 Cognitive Resources In addition to paying money and time for purchases, consumers also pay attention Attention: allocation of cognitive resources Direction: focus of attention Intensity: the amount of capacity focused in a particular direction Role in advertising, POP displays, and care and use instructions 40 20
Cognitive Resources Information overload may occur if too much information is provided, and it exceeds capacity What happens if too much information is included on package? Do consumers make poor decisions or stop processing? How much attention do consumers give to various products and purchases? 41 Communicating with Consumers: Integrated Marketing Communications (IMC) Coordinated marketing activities that often promote a brand and ultimately purchase activity Internet strategies can be integrated into the IMC program by having a similar look, feel, and message as other promotion elements 42 21
Integrated Marketing Communications (IMC) IMC programs are comprehensive IMC programs are unified IMC programs are targeted IMC programs have coordinated execution of all the communications components of the organization IMC programs emphasize productivity in reaching targets when selecting communication channels and allocating resources Review Question List the steps of the purchase process and explain why people shop. 43 22