2-Consumer Decision Making Process

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Understanding the Retail Consumer:

Factors influencing the Retail Shoppers,

The Customer Decision Making Process.


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Introduction

Peter Drucker quoted Business Exists to satisfy

Customers.

The existence o the customer is integral to the existence ofthe Retailer.

The Integral Part of understanding customers is identifying

the customer for the product or service, i.e. The targetsegment, and the demographics of this segment, their needand buying behavior


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Consumer understanding or an understanding of theconsumer buying behavior is the starting point of strategycreation.

It is not important to understand consumers know about aproduct, but also what they do not know.

Shopping is an activity that everybody perform with high levelof regularity ad involvement.

It has been found that shoppers behave differently dependingon the type of shopping situation. They tend to change theirinformation search process depending on the type of storeand product


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Need for studying consumer behavior

The accurate understanding of consumer helps the retailercreate a product that is likely to be successful in the market.

Retailers need to know the various influences that lead up to apurchase and they consider the external and internalinfluences.

Some important and external and internal influences are as:


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1. Understanding how the need for a product/service wasdetermined.

2. Understanding how information was sought by the

customer.

3. The process of evaluation of various products and store.

4. The payment process.

5. The post purchase behavior.


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The retailer also needs to understand its competitors and howthe customers perceive them.

The retailer need to understand why customer choose thecompetition over its products. This analysis may reveal somestartling facts and provide a direction for futuredifferentiation.

as quoted some various aspects like signages , shelf position,

display space and fixtures, all influences the shopper in hisbuying decision


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Factors Influencing the retail Shoppers

Shopping is the act of identifying the store and purchasing theproduct.

Shopping is a function of the nature of the product, thedegree of perceived risk inherent in the product class, and thelevel of knowledge or amount of information aboutalternatives.

In India retailers and retail formats are still evolving. Localbania and other option available in the ,market.

Therefore understanding the reasons behind consumerschoosing or selected a store is important for retailer


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Range of merchandise

Factors influencingcustomers decision

making


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1. Range of Merchandise:

The range of merchandise is one of the Most importantreason for customers to patronize a particular outlet.

Initial curiosity about the store draw a consumer to retailstore

But convert the customer into buyer and retain them over aperiod of time is dependent on the quality and the range ofmerchandise offered by the store.

Range of merchandise includes categories like Books &Music, apparel and other lifestyles products


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2. Convenience of shopping at a particular outlet.

This element is fast gaining prominence in the world oforganized retail.

Example patient prefer medicine shops , fresh juice andfruits shops near clinic or hospitals.

3. Time of Travel: Time requires to reach a particular location is again become

critical.

big cities where traveling takes too much time like Delhi,

Mumbai because of this we can see many local areasdeveloping in terms of shopping to facilitate buying


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4. Socio economic background and culture:

Background of the consume largely determines his /herlifestyles. And this influences the kind of store that he may becomfortable shopping in.

Consumer buying behavior varies largely market to marketinfluence by culture and environment.

5. The stage of the family life cycles.

The stage of the family life cycle the customer belongs to alsoinfluences their needs.

Example Need for young bachelors differ from therequirements of the old age or senior citizen.


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The customer Decision Making Process At this stage Retailers need to understand the manner in

which a customer makes a decision. And this requires anunderstanding of consumer behavior.

The need for product or a service starts at the time when theneed for that particular product or services recognized.

A need can be Psychological or Functional.

The process that a customer goes through while makingpurchase decision is as follows


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The customer Decision Making process

Need

recogniz

ed

Search

for

Informati

on

Store

visits

Purchase

decision

Evaluation

of options


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Stage 1Identification of a need for the Product or service. thisarises when the consumer becomes aware of his need for aparticular product or services.

Stage 2 Search For Information: the second steps whereconsumer seeks information from the various sourcesavailable.

Stage 3 Evaluating Alternatives: these evaluating criteria are usedby consumers use to consider different options. This would

vary from person to person and may be influenced by thesituation.

Stage 4The Purchase Decision: at this stage is made about first ,whether to buy or not.


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Need recognition

Individual differences- Consumer resources

- Motivation- Knowledge- Attitudes

- Personality, valuesand lifestyle

Environmental

Influences- Culture

- Social class- Personal influence

- Family- Situation

MEMOR

Y

Needrecognition


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SearchInternal

search

MEM

ORY

Individualdifferences

Environ-mental

influences

Need recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Consumer decision process model


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Pre-purchaseevaluation of

alternatives

SearchInternalsearch

MEMO

RY

Individualdifferences

Environ-mental

influences

Need recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Purchase

Consumption

Post-consumptionevaluation

External

search SatisfactionDissatisfaction

Consumer decision process model


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Search for information

Internal search: retrieving knowledge from

memory or genetic tendencies

External search: collecting information frompeers, family, and the marketplace

Search may be passive as consumers becomemore receptive to information around them, or

active if they engage in search behaviourSearch refers to a receptivity of information that

solves problems or needs rather than a search forspecific products


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Search: Sources of information

Marketer dominated

- Advertising- Salespeople

- Infomercials

- Websites

- Point-of-sales materials

Non-marketer dominated stimuli

- Friends- Family

- Opinion leaders

- Media


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Variables shaping the decisionprocess

Individual differences:

Demographics, psychographics, values, and personality Consumer resources

Motivation

Knowledge

Attitudes

Culture

Social class Family

Personal influence Situation behaviours

Environmental differences:


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Shoppers Behavior

Observations of shoppers behavior in the store show thatevery purchase involves part or the whole of a process thatfollows a consistent patterns of See- Touch- Sense- Select.

Different shopping behavior have been classified into threecategories

1. Blinkered Mode: in this Mode, shopping is very automatic.

It is characterized by shoppers confidently and efficientlyzooming in on familiar brands with no time or interested inlogical label reading or studying product attributes


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2. Magpie Mode: In the magpie mode, the shoppers allowshimself/herself to be distracted and attracted by differentbrands on display.

3. Browser Mode:The browser mode finds the shopper

behaving more rationally , reading the back of pack copy andinvariably comparing prices, ingredients and seeking moreinformation about product attributes, making price valuecomparisons across various brands


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Psychographic profile of Indian Shoppers

Segments of Men: profile of Indian men has shown fourbroad groups.

1. The traditional Menis conservative, driven by values, cherishes

by family and avoids ostentation.2. The Pleasure seekeris a self oriented person driven by statusand status symbols. He is risk taker and pleasure seeker.

3. The social chameleonis a hypocrite of sorts who wants to

project the right image. Tech savvy and individualistic.4. The intrinsic progressive manis futuristic person. He believes in

family values and equality of sexes.


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Segments of Women: Indian women in followingmanner.

1. The contentedconservativeis a housewife who is happy with herstate of her life /society.

2. The anxious rebelis a working women who is happy with theexisting state of affairs.

3. The troubled homebodyis housewife who is not sure that she isdoing the right thing by sitting at home.

4. The tight-fisted traditionalistis traditional women who believesin saving for tomorrow


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5. The affluent sophisticateis an affluent women who iscomfortable with the finer things in life

6. The contemporary housewifeis a housewife who plays active rolein the household and sees herself as equal to her husband.

7. The Gracious hedonistis a working women who believes inlooking after herself well


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Youth segments:

1. Homebodies:they are largely traditional , have low individualityand very few aspirations for self and keep duty and moralityat the core of their value .

2. Two faced youths: they are inwardly traditional and outwardlymodern.

3. Wannabes:this is large cluster. They are materialistic showoffs they are extremely competitive. they are desperately tobe a part a crowd , and trend followers, aggressive seek outlifestyles.


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4. Rebels:this is the largest cluster. They may be first generationeducated professionals , experiencing winds of change in theform of education as the means to a career, wealth ,change inlifestyles and independence.

5. Cool guys:they are the influences . Others want to be likethem. They fall in the work hard play harder. They are

confident and have a strong sense of individuality.


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The changing Indian consumer

The media explosion.

Increase in disposable income.

The rise of the great Indian middle class

Increase in the number of earning young people

Change in expenditure patterns

Increase in the number of working women


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How consumers Develop Loyalty Towards a Store

The experience during and after the purchase leads to satisfactionor dissatisfaction with that particular store.

The consumer incorporates the experience that he/she had while

shopping and his/her post purchase satisfaction ordissatisfaction.

The consumer also influences by the opinions and the experience

that friends and family have had with the store.

Retailers need to understand this process and tap into the buyingprocess, so that they can develop loyalty over a period of time.


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How consumers Develop Loyalty Towards a Store

Recognize desire

to shop

Evaluate options &

select store5

Previous

shopping

experience

Beliefs and

attitudes

Information on product, store,

location from different sources

Store

visit(s)Decision Outcome


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Research prior to setting up a retail store

Demographic Data.

Population

GDP

Customer Data.


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Research after setting up a retail store

Merchandise and service offered.

New product development.

Acceptability of products.

Acceptability of pricing.

Understanding consumer profiles.

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2-Consumer Decision Making Process

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