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In Consumer Decision Process

Presented y:Abhinav AggarwalMBA GEN B)

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How the traditional retailing environment ischanging

Factors that affect retail outlet selection

Why consumer characteristics can also affectoutlet selection

In-store influences that can affect brandchoice

How marketers can capitalize on theseinfluences

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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

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Selecting a retail outlet involves the sameprocess as selecting a brand. That is, theconsumer 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

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1. Brand (or item) first, retail outlet second

2. Retail outlet first, brand second

3. Brand and retail outlet simultaneously

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Marketing strategy based on the consumer decision sequence

LEVEL IN THE CHANNEL

DECISIONSEQUENCE

RETAILER MANUFACTURER

Outlet First ,BrandSecond

Image Advertising,Margin Management on shelfspace, displaysLocation analysis

Distribution in key out letsPoint of purchase shelfspace, positionProgram to strengthenexisting outlets

Brand first , OutletSecond

Appropriate pricingMany brands and/ or key brandsCooperative advertisementsfeaturing brands

More exclusive distributionBrand availabilityAdvertising(Yellow pages)Brand image management

Simultaneous Price specials on brands, yellowpages listing under brandsMargin training for sales personnelMultiple brands/ key brandsHigh service/ low price structure

Programmes targeted atretail sales personnelDistribution in key outletsCooperative advertising

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Retail outlet selection involves a comparisonof the alternative outlets on consumersevaluative criteria: Outlet Image

Retailer Brands

Retail Advertising

Outlet Location and Size

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Outlet image

A consumers or a target markets perception of all

the attributes associated with a retail outlet

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Outlet Image Store image - perception of all the attributes associated with a retail

outlet

imension ComponentsMerchandiseService

ClientelePhysical facilities

ConveniencePromotionStore AtmosphereInstitutionalPost transaction

Quality, selection , Style and PriceLayaway plan, sales personnel , easy return,credit and deliveryCustomersCleanliness , store layout, shopping ease andattractiveness

Location and parkingAdvertisingCongeniality, fun , excitement, comfortStore reputationsatisfaction

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Retailer Brands Store brands are closely related to store

image, and at the extreme, the store or outletis the brand. Traditionally, retailers carried only manufacturers'

brands, and only a few, such as Kapsons,developed their own brands.

Increasingly retailers such as Kapsonsaredeveloping 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, toconsumers.

Tracking the purchases of an advertised itemunderstates the total impact of the ad.

Spillover sales are the sales of additional items tocustomers 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 impacton overall store sales and profit.

Studies show that price is frequently not the primaryreason for selecting a particular outlet.

Many retailers could benefit from emphasizing service,selection, or affective benefits.

Online retailers advertise in mass media to buildimage and attract consumers

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Retail AdvertisingPrice 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 priceinformation?

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Retail AdvertisingPrice 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 withthe current price.

An internal reference price is a price or price rangethat a consumer retrieves from memory to comparewith 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, customersprefer larger outlets over smaller outlets.

The retail attraction model, or the retail gravitation

model model, is used to calculate the level of storeattraction model based on store size and distance fromthe consumer.

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Retail Attraction modelMSi = (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 certainactivities or shopping motivations.

A recent study used projective techniques (inthis case, thinking about an animal) to

ascertain the ways college students approachshopping.

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Shopping Orientation:Chameleons Shopping style situation specific orconstantly changing Shopping approach is based onproduct type, shopping impetus, and

purchasetask Collectors/Gatherers Propensity to stockpile items and to

purchase large quantities to either savemoney or alleviate the need for shopping Attempt to get the best price and takeadvantage of retailer guarantees

Foragers Particular and motivated to purchaseonly the desired items Willing to search extensively and havelittle store loyalty;Prefer to shop alone

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Shopping OrientationHibernants II little store loyalty; Prefer to shop alone Indifferent toward shopping with opportunistic shoppingpatterns rather than need driven Will often postpone even required purchasesPredators Purposeful and speed oriented in shopping; plan before

shopping and like to shop alone Do not enjoy shopping and tend to shop outlets whereassured of getting needed items quickly

Scavengers Enjoy shopping both to make purchases and as an activity Like to go to sales and consider shopping to beentertainment Make numerous unplanned purchases

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Perceived Risk The purchase of products involves the risk that

they may not perform as expected; such failuremay 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 pastexperiences and lifestyles.

For this reason perceived risk is considered aconsumer characteristic as well as a product

characteristic

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Thank you

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