consumer buying behavior, search, and factors affecting external search effort
TRANSCRIPT
Overview
• Consumer decision process with a focus on consumer search.
• Reaction from retailers—do retailers like to be “shopped” or “searched?”
• Market structure that results from search.
• Search costs, demographics, and segmentation.
Problem Recognition
Search
Alternative Evaluation
PurchasePurchase
EvaluationPurchase Act
Interpersonal Determinants
•Cultural Influences•Social Influences•Family Influences
Personal Determinants•Needs and Motives•Perception•Attitudes•Learning•Self-Concept
Fee
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An Integrated Model of the Consumer Decision Process
Customer Buying Behavior
• Extended problem solving: used to buy products which represent risk (financial, physical, social). Consumers spend time and effort in making the purchase.
• Limited problem solving: consumers are experienced with the product and risk is perceived to be limited.
Comparison of Extended and Limited Problem Solving
• Extended• Seek information
through literature, sales people.
• Seek opinions of family, friends.
• Want warrantees, guarantees.
• Limited • Minimal effort.• Use personal
knowledge instead of seeking external information.
• Subject to impulse buying.
Customer Buying Behavior
• Habitual decision making: low-risk routine purchasing decisions.
• Determined by:
--Brand loyalty.
--Store loyalty.
Retail Market Segmentation
• A group of customers whose needs are satisfied by the same retail mix because they have similar needs and go through similar buying processes.
External Search Effort
• “The degree of attention, perception, and effort directed toward obtaining environmental data or information related to the specific purchase under consideration.”
Search continues up to the point where the anticipated gains from search are exceeded by the costs:
Stores visited and Alternatives products sought
George Stigler, 1961
Gains of Search: Shopping can be worthwhile!
A consumer gains come from:– Finding new merchandise
• New brands,• Sizes• Flavors
– Learning about new products– Learning the distribution of prices.
Shopping is not free.
• Costs of search are:• Travel costs• Time• Energy, physical and psychological
• Search for the lowest price—then go back any buy.
Market Environment:Factors increasing search
• Increasing number of alternatives• Number of brands in the market• Number of retail firms in competition
• Wide distribution of prices• Geographic concentration of stores
• Regional malls• Downtown shopping districts
Marketers can increase search by increasing the amount of information in the market
• Advertising• Point-of-purchase• Sales personnel• Packaging• Experienced consumers• Independent information sources
Product: Factors increasing search
Relatively high prices– Automobiles– negotiated prices– allowance for trade-in
Highly differentiated products– Furniture, brands unimportant
"Positive" products– Products which are enjoyable to shop for,
rewards, boats, for example.
Potential Payoff/Product Importance
• Price
• Perceived Risk
• Social Visibility
• Status of Decision Making Activity
• Style and Appearance Importance
• Length of Commitment Necessary
Consumer Characteristics
Learning and experience (decreases search), process can become routinized.
Shopping orientation– Purposeful– Recreational
Age, gender, household life cycle -- What are the costs of time at different demographic stages?
Individual differences
• Ability to judge (+)
• Tolerance for ambiguity (+)
• Enjoyment and perceived search benefits (+)
• Education (+)
Situational Factors
Time availability, more time -- shopping can occupy that available time.
Purchase for self (versus gift) decreases the search.
Pleasant surrounding increases time spent shopping.
What about convenience goods?
• With respect to price, weekly expenditures on grocery items, health and beauty aids, and prescription drugs are significant components of the household budget.
• How does external search effort or process evolve within a changing household?
“Buying a new car”
• What is the purpose of a salesman?
• Do car dealerships appreciate customers who leave the negotiation phase to visit another dealer?
• Why is Saturn a different car buying experience?
Distribution intensity
Shopping goodHigh search Convenience good
Limited search
Number of stores carrying
Sales
Comparison of price and quality Very little Considerable Very little
Importance of convenient location Critical Important Unimportant
Purchase frequency Frequent Less frequent Infrequent
Planning time involved in purchase Very little Considerable Extensive
CONSUMER FACTORS
FactorConvenience
ProductsShopping Products
Specialty Products
Marketing Impact of the Consumer Products Classification System
Importance of store image
Number of retail outlets
Distribution channel length
Promotion
Price
Unimportant Very important Important
Many FewVery few; often one per market
area
Long Relatively short Very short
Advertising and promotion by
producer
Low
Personal selling and advertising
by both producer and retailer
Relatively high
Personal selling and advertising by producer and
retailer
High
MARKETING MIX FACTORS
FactorConvenience
ProductsShopping Products
Specialty Products
Marketing Impact of the Consumer Products Classification System
Retailer Reaction to “Search”• Retailers prefer to “reward” consumer
search for variety—finding different products.
• Retailers prefer to “defeat” consumer search on price—matching competitors on identical items.
• Opportunities for suppliers who can maintain differentiated assortments for retailers.