In Consumer Decision Process

Presented By:

Abhinav Aggarwal MBA GEN(B)

How the traditional retailing environment is changing Factors that affect retail outlet selection Why consumer characteristics can also affect outlet selection In-store influences that can affect brand choice How marketers can capitalize on these influences

University Business School ,Panjab University ,Chandigarh

Where will consumers shop? How do they choose a retail outlet? Consumer characteristics Store characteristics In-store decision alterations The purchase process Alternative to store selection Implications for strategy

University Business School ,Panjab University ,Chandigarh

Selecting a retail outlet involves the same process as selecting a brand. That is, the consumer
recognizes a problem that requires outlet selection engages in internal and possibly external search evaluates the relevant alternatives, and applies a decision rule to make a selection

University Business School ,Panjab University ,Chandigarh

1. Brand (or item) first, retail outlet second 2. Retail outlet first, brand second 3. Brand and retail outlet simultaneously

University Business School ,Panjab University ,Chandigarh

Marketing strategy based on the consumer decision sequence

LEVEL IN THE CHANNEL

DECISION SEQUENCE
Outlet First ,Brand Second

RETAILER
Image Advertising, Margin Management on shelf space, displays Location analysis Appropriate pricing Many brands and/ or key brands Cooperative advertisements featuring brands Price specials on brands, yellow pages listing under brands Margin training for sales personnel Multiple brands/ key brands High service/ low price structure

MANUFACTURER
Distribution in key out lets Point of purchase shelf space, position Program to strengthen existing outlets More exclusive distribution Brand availability Advertising(Yellow pages) Brand image management Programmes targeted at retail sales personnel Distribution in key outlets Cooperative advertising
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Brand first , Outlet Second

Simultaneous

University Business School ,Panjab University ,Chandigarh

Retail outlet selection involves a comparison of the alternative outlets on consumers evaluative criteria:
Outlet Image Retailer Brands Retail Advertising Outlet Location and Size

University Business School ,Panjab University ,Chandigarh

Outlet image

A consumers or a target markets perception of all the attributes associated with a retail outlet

University Business School ,Panjab University ,Chandigarh

Outlet Image

Store image - perception of all the attributes associated with a retail outlet Components Quality, selection , Style and Price Layaway plan, sales personnel , easy return, credit and delivery Customers Cleanliness , store layout, shopping ease and attractiveness Location and parking Advertising Congeniality, fun , excitement, comfort Store reputation satisfaction
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Dimension Merchandise Service Clientele Physical facilities Convenience Promotion Store Atmosphere Institutional Post transaction

Retailer Brands Store brands are closely related to store image, and at the extreme, the store or outlet is the brand.

Traditionally, retailers carried only manufacturers' brands, and only a few, such as Kapsons, developed their own brands. Increasingly retailers such as Kapsons are developing and promoting high-quality brands with either the stores name or an independent name. The key to success of store brands--high quality at a reasonable price.
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Retail Advertising Retailers use advertising to communicate their attributes, particularly sale prices, to consumers.
Tracking the purchases of an advertised item understates the total impact of the ad. Spillover sales are the sales of additional items to customers who came to purchase an advertised item.

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Retail Advertising Retailers evaluating the benefits of price or of the promotions must consider the impact on overall store sales and profit.
Studies show that price is frequently not the primary reason for selecting a particular outlet. Many retailers could benefit from emphasizing service, selection, or affective benefits. Online retailers advertise in mass media to build image and attract consumers

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Retail Advertising Price Advertising Decisions Retailers face three decisions when they consider using price advertising:
1. How large a price discount should be used? 2. Should comparison or reference prices be used? 3. What verbal statement should accompany the price information?

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Retail Advertising Price Advertising Decisions A reference price is a price with which other prices are compared.
An external reference price is a price presented by a marketer for the consumer to use to compare with the current price. An internal reference price is a price or price range that a consumer retrieves from memory to compare with a price in the market.

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Outlet Location and Size Location and size play an important role in store choice.
All else equal, consumers generally select the closest store. Outlet size is also important. Generally, customers prefer larger outlets over smaller outlets. The retail attraction model, or the retail gravitation model model, is used to calculate the level of store attraction model based on store size and distance from the consumer.

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Retail Attraction model MSi = (Si / Ti( times) )/( (Si / Ti( times)) )
MSi = market share of store i Si = size of store i (or mall) Ti = travel time to i = attraction factor for a particular product category

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 Shopping

orientation Perceived risk Financial risk Social risk

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Shopping Orientation A Shopping orientation is a shopping style that puts particular emphasis on certain activities or shopping motivations. A recent study used projective techniques (in this case, thinking about an animal) to ascertain the ways college students approach shopping.

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Shopping Orientation:
Shopping style situation specific or constantly changing Shopping approach is based on product type, shopping impetus, and purchase Propensity to stockpile items and to purchase large quantities to either save money or alleviate the need for shopping Attempt to get the best price and take advantage of retailer guarantees Particular and motivated to purchase only the desired items Willing to search extensively and have little store loyalty; Prefer to shop alone
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Chameleons

task Collectors/Gatherers

Foragers

Shopping Orientation
Hibernants II little store loyalty; Prefer to shop alone Indifferent toward shopping, with opportunistic shopping patterns rather than need driven Will often postpone even required purchases Purposeful and speed oriented in shopping; plan before shopping and like to shop alone Do not enjoy shopping and tend to shop outlets where assured of getting needed items quickly Enjoy shopping both to make purchases and as an activity Like to go to sales and consider shopping to be entertainment Make numerous unplanned purchases
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Predators

Scavengers

Perceived Risk The purchase of products involves the risk that they may not perform as expected; such failure may result in a high

Social cost - e.g., a hairstyle that is not appreciated by ones peers Financial cost - e.g., an expensive pair of shoes that become too uncomfortable to wear Time cost - e.g., a television repair that required the set to be taken to the shop, left, and then picked up later Effort cost - e.g., a computer jump drive that is loaded with several hours of work before it fails Physical cost - e.g., a new medicine that produced a harmful side effect

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Perceived Risk The perception of these risks differs among consumers, depending in part on their past experiences and lifestyles. For this reason perceived risk is considered a consumer characteristic as well as a product characteristic

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Thank you

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