LECTURE 03:

CONSUMER BEHAVIOUR
IN RETAIL
 Lecture 03 Objectives
• To discuss why it is important for a retailer to
properly identify, understand, and appeal to its
customers
• To enumerate and describe a number of
consumer demographics, lifestyle factors,
needs and desires – and how these concepts
can be applied to retailing
• To examine consumer attitudes toward
shopping and consumer shopping behaviour,
including the consumer decision process and
its stages

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Figure 7-1: What Makes Retail Shoppers Tick

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7-3
 Demographics and Lifestyles

• Demographics • Lifestyles
 consumer data • ways in which
that is objective, consumers and
quantifiable, families live and
easily spend
identifiable, and time/money
measurable

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 Helpful Facts for Understanding
Malaysian Demographics
Current Population Estimates, 2014 - 2016
• In 2016, total population estimated at 31.7
million persons with 1.5 per cent population
growth rate

Vital Statistics, Malaysia, 2014

• live births recorded in 2014 was 511,865, with
an increase of 1.6 per cent compared to 2013
(503,914). The crude birth rate unchanged at
16.7 per 1,000 population

Source: Department of Statistics, Malaysia DQ01

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 Helpful Facts for Understanding
Malaysian Demographics

Abridged Life Tables, Malaysia, 2012 - 2015

• Life expectancy: In 2015, a new born is
expected to live to 74.8 years, as compared
to 74.1 years in 2010.

Characteristics of Household 2010

• Total number of households: 6.35 million
(2010) compared to 4.80 million (2000).

Source: Department of Statistics, Malaysia DQ01

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 Current Economic Policies

Source: Malaysia Industrial Development Authority (MIDA)

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 Understanding Consumer Lifestyles:
Social Factors

Reference
Culture
Groups

Social Time
Class
Lifestyle Utilization

Household Family
Life Life
Cycle Cycle
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 Understanding Consumer Lifestyles:
Psychological Factors

Personality Attitudes

Perceived Class
Risk
Lifestyle Consciousness

Purchase
Importance
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 Figure 7-3: Perceived Risk and Consumers

DQ02 10
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 Retailer Strategies to Reduce
Perceived Risk by Shoppers
• Functional– product usage testing by
retailer; especially private labels.
Double check returned “B” goods.
Simulate wear for new goods.
• Physical- safety testing, reduce salt
and fat in food products
• Financial- money back guarantee and
exchange privileges

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 Retailer Strategies to Reduce
Perceived Risk by Shoppers (cont)
• Social— co-branding of private
label products with major high-
quality national brands (Kirkland
by Starbucks)
• Psychological– showing
empathy for consumer
• Time- double money back
guarantee; Saturn dealers picking
and returning recalled cars

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 Illustrations of Life Styles

• Gender Roles
• Consumer Sophistication and
Confidence
• Poverty of Time
• Component Lifestyles

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 Three Special Market Segments
• In-Home Shoppers
• Online Shoppers
• Outshoppers

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 In-Home Shoppers
• The in-home shopper is not always a captive audience, as
shopping is often discretionary
• Convenience in ordering an item is important.
• Often active store shoppers, affluent and well educated.
• Many are self-confident, younger, and venturesome. .
• For some catalogue shoppers, time is not important, may
be unable to comparison shop; may not be able to touch,
feel, handle, or examine products first hand; Concerned
about service (such as returns); and may not have a
salesperson to ask questions

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 Online Shoppers
• Use of Web for decision- making
process as well as buying process
- can research items, check out
prices, and place orders
• Convenience is important
• Above average incomes, well-
educated
• Time scarcity is a motivator

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 OutShoppers
• Out-of-hometown shopping is important for both local
(minimize this behaviour), and surrounding retailers
(maximize it )
• Often young, members of a large family, and new to the
community. Income and education vary by situation.
• Enjoy fine foods, like to travel, are active, stores, and
read out-of-town newspapers.
• Some basic reasons for out-of-town shopping: easy
access, liberal credit, store diversity, product
assortments, prices, the presence of large chains,
entertainment facilities, customer services, and product
quality.

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 Attitudes Towards Shopping
• Level of shopping enjoyment
• Shopping time
• Shifting feelings about retailing
• Why people buy or not on a
shopping trip
• Attitudes by market segment
• Attitudes toward private brands

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 Table 7-3 Global Shopping Attitudes and Behavior

Why Consumers in 51 Countries

Shop at a Specific Retailer (% saying highly influential):

Good value for the money 61

Lowest prices 58
Convenient location 57
Great sales and promotions 55
Desired products in stock 54
Organized store layout (ease of shopping) 42
Friendly, knowledgeable employees 40
Fast checkout 38
Customer loyalty program 28

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 Attitudes Towards Shopping
• Shopping Enjoyment: an assessment of
accessibility, atmosphere, environment,
and personnel.

• Attitudes Towards Shopping Time:

Retail shopping often viewed as a chore.
Retailers should not lose sight of the
importance of time-related factors in
catering to customers..

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 Attitudes Towards Shopping
• Shifting Feelings About Retailing: a major
change in attitudes toward spending, value,
and shopping with established retailers e.g.
specialty chains and department stores, has
led to price wars

• Why People Do Not Buy on a Shopping

Trip: It is critical for retailers to determine why
shoppers leave without making a purchase.
Prices? Rude salesperson? Not accepting the
consumer's credit card?

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 Attitudes Towards Shopping
• Attitudes by Market Segment: shoppers may
be classified based on their outlook to
shopping. For example, according to one
classification, shoppers can be of four types:

 "Thrifties" are most interested in price & convenience.

 "Allures" want a fun, social shopping experience
 “Speedsters" want to shop quickly.
 "Elites" want quality merchandise, an unhurried
shopping experience

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 Attitudes Towards Shopping
• Attitudes Toward Private Brands: Many
consumers believe private (retailer)
brands are as good as or better than
manufacturer brands.
• According to a recent study: Some 44
percent of grocery shoppers believe store
brands are of better quality today than
they were five years ago and 39 percent
would recommend a store brand.

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 Attitudes Towards Shopping
Where People Shop
• Consumer patronage differs sharply
by type of retailer.
• vital for firms to recognize the
venues where consumers are most
likely to shop and plan accordingly

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 Cross-Shopping

• Shopping for a product

category at more than one
retail format during the year
• Visiting multiple retailers on
one shopping trip

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 Figure 7-5: The Consumer
Decision Process

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 Figure 7-6: Key Factors in the Purchase Act

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 Types of Consumer Decisions
Process is affected by consumer characteristics:.
• Examples: Older people. Well-educated
consumers. Upper-income consumers a family
with children, Class conscious shoppers,
People under time pressure

The use of the decision process differs by

situation or product:
• Examples: A new home. A fast-food meal,

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 Types of Consumer Decisions

Extended High

Limited RISK & TIME

Routine Low

DQ06
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 Types of Consumer Decisions
• Extended decision making occurs when a
consumer makes full use of the decision process. A
lot of time is spent before a purchase.
• Potential for cognitive dissonance is great.
• e.g. expensive, complex items with which the person
has had little or no experience.

Perceived risk of all kinds is high.

• Items requiring extended decision making include a
house, a first car, and life insurance..
• Consumer traits (such as age, education, income,
and class consciousness) have the most impact with
extended decision making.

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 Types of Consumer Decisions
• Limited decision making: not a great deal of
time on each step because has some experience
e.g. items bought before but not regularly.

• Risk is moderate as the consumer spends some

time shopping and priority placed known
alternatives e.g. a second car, clothing, a
vacation, and gifts.
• relevant to such retailers as department stores,
specialty stores, and non-store retailers
• The shopping environment and assortment are
very important..

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 Types of Consumer Decisions
• Routine decision making - buys out of habit and
skips steps in the purchase process., spend little or
no time shopping, and the same brands are usually
repurchased (often from the same retailers). e.g.
items that are bought regularly.

• Little risk because of consumer experience and

repurchase is often automatic e.g. groceries,
newspapers, and haircuts.
• most relevant to such retailers as supermarkets, dry
cleaners, and fast-food outlets.
• strategic elements : a good location, long hours,
clear product displays, and, product availability.

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 Types of Impulse Shopping
• Impulse purchases and customer loyalty
merit our special attention.
• Impulse purchases arise when
consumers buy products and/or brands
they had not planned on buying, before
coming into contact with a retailer

• At least part of consumer decision making

is influenced by the retailer.

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 Types of Impulse Shopping

• Completely unplanned purchases

• Partially unplanned purchases
• Unplanned substitution purchases

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 Types of Impulse Shopping
• Completely unplanned: a consumer has no
intention of making a purchase in a goods or
service category.
• Partially unplanned: a consumer has
decided to make a purchase in a goods or
service category but has not chosen a brand
or model.
• Unplanned substitution. A consumer intends
to buy a specific brand of a good or service
but changes his or her mind about the brand
after coming into contact with a retailer.
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 Types of Impulse Shopping
• Completely unplanned shopping is
often related to routine decision
making or limited decision making;
there is little or no time spent on
shopping

• Impulse purchases are more

influenced by retail displays and in-
store interactions than are pre-
planned purchases

DQ04
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 Types of Customer Loyalty
• Customer loyalty can be placed into four
categories (from worst to best):
•
1. Inertia Loyalty —because inconvenient to
switch retailers or brands e.g.loyalty programs
offered by airlines, banks, and grocery retailers.

2. Mercenary Loyalty — retailers can

pay customers for their loyalty e.g. points and
discount-based loyalty programs

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 Types of Customer Loyalty
• Customer loyalty can be placed into four
categories (from worst to best):
•
3. True Loyalty — customers feel compelling
reasons to resist offers from competitive offers.
because the relationship is based on a deeper
connection of trust and shared value.
•
4. Cult Loyalty — commitment becomes a
virtual lock. Cult loyalty can be cultivated,
particularly through an effective social-media
program.

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 Types of Customer Loyalty
• Some retailers use typically monetary
rewards to stimulate repeat visits
• Product discounts won't change buying
behaviour in the long run in shoppers who
value personalized service, convenience, or
shopping pleasure more
• A more effective way: offer them
individualized rewards, based on what they
value e.g. providing access to a speedy
check in when flying
DQ03
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 Possible Retailer Approaches

• Mass Marketing
 Supermarkets

• Concentrated Marketing
 Cosmetics/perfumes

• Differentiated Marketing
 Departmental store

DQ05
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 Possible Retailer Approaches

• Mass Marketing –
• a retailer sells to a broad spectrum of
consumers;
• it does not really focus efforts on any
one kind of customer e.g.
supermarkets

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 Possible Retailer Approaches

• Concentrated Marketing –
• a retailer tailors its strategy to the needs
of one distinct consumer group,
• it does not attempt to satisfy people
outside that segment e.g. cosmetics firms
selling young working women;

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 Possible Retailer Approaches
• Differentiated Marketing –
• retailer aims at two or more distinct
consumer groups, such as men and boys,
with a different strategy mix for each;
• operating more than one kind of outlet
(such as separate men's and boys'
clothing stores) or by having distinct
departments grouped by market segment
in a single store (e.g. a department store).

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 Possible Retailer Approaches
• In deciding on a target market
approach, a retailer considers:
 its goods/service category and goals,
 competitors' actions,
 the size of various segments,
 the efficiency of each target market
alternative for the particular firm,
 and other factors such as resources
required

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 Lecture 03 Objectives
• To discuss why it is important for a retailer to
properly identify, understand, and appeal to
its customers
• To enumerate and describe a number of
consumer demographics, lifestyle factors,
needs and desires – and how these concepts
can be applied to retailing
• To examine consumer attitudes toward
shopping and consumer shopping behaviour,
including the consumer decision process and
its stages

next week: The Selling Environment

©2013 Pearson Education