Consumer Shopping Behavior

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Retailing MKTG 6211
Consumer Shopping Behavior
Professor Edward Fox Cox School of Business/SMU
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All Those Decisions

• Trip
• Buying or browsing?
• Specific need, or inventory replenishment
• Retailer
• Where to shop (order matters)?
• Mall/retail center vs. nearby store
• In-Store
• What product categories?
• Within each category, which products to consider?
• What about impulse, or unplanned items?
• Buy or defer?

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Consumer Shopping Decisions
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TripPurpose(s) of the Trip

• Before determining where to shop, the consumer
  must determine the purpose(s) of the trip
• Transaction
• Information
• Entertainment
• Transaction
• Replenishment
• Which retailer do I prefer?
• Routine
• Specific item
• Where are desired items available?

For transaction-focused shopping, convenience,
price, and assortment are key criteria for store
choice
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TripPurpose(s) of the Trip

• Information
• Product search
• Assortment is the primary criterion
• Price search
• Expected prices are the key criterion
• Entertainment
• Retailer advertising
• Retailer reputation
• Mall operators often stage entertainment to
  create excitement and draw customer traffic

For information- and entertainment-focused
shopping, proximity of a store to other stores
(e.g., mall, restaurant row) is often a key
criterion
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TripPurpose(s) of the Trip

• Purpose Shopper Classification

Transaction
Buyer (Goal Directed)
Information
Browser
Entertainment
Consumers browse in apparel and department
stores not grocery and drug stores
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Trip and RetailerWhere to Shop and What to Buy
Store choice Where to shop
Category Selection What to buy
Needed items, or shopping lists, often affect the
choice of store
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Trip and RetailerWhere to Shop and What to Buy

• If the purpose is replenishment
• Neighborhood Store Low-Price Store

Shoppers buy less than half as much on a trip to
the neighborhood store, compared to a low-price
stores
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Trip and RetailerWhere to Shop and What to Buy

• If the purpose is replenishment
• Shoppers engage in two types of trips
• Stock up
• Spend more
• Mainly on the weekend
• Fill in
• Driven by specific item(s)
• Random occurrences

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RetailerStore Choice

• Consumers report that their choice of store is
  driven by
• Convenience
• Proximity to the shoppers home
• One-stop shopping convenience
• Proximity to other stores (e.g., on the mall)
• Price
• Variety and assortment
• Service

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RetailerShoppers Evaluation of Retailer Prices

• The general evaluation of a retailer prices is
  known as price image
• Consumers cant evaluate all the prices in a
  store, so price image depends on
• Prices of items that the consumer has considered
  buying
• Are prices usually lower than competitors?
• Consumers cant easily evaluate how much lower
• Better known brands are thought to have a greater
  effect on the retailers price image
• Prices of sale items
• Most salient to shoppers
• Often displayed, too

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RetailerShoppers Evaluation of Retailer
Assortment

• Retailer assortment can be difficult for
  consumers to evaluate
• It depends on the differences between products
  offered, as well as the number of products
  offered
• The shoppers general evaluation of a retailer
  product assortment is based on
• The number of SKUs offered
• Whether preferred or favorite brands are
  available
• Shelf or floor space devoted to the category

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RetailerMulti-Store Shopping

• Selecting a store may mean selecting more than
  one
• Price or value search order of store visits
  matters
• Consumers meet different needs at non-competing
  retailers on the same trip
• Cherry picking
• The store(s) visited previously may change the
  probability of visiting that store tomorrow
• Category-specific store preferences
• Consumers may tradeoff price and convenience
  differently from trip to trip

Multi-Store shopping is an important reason for
retailers to locate their stores near other stores
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RetailerMulti-Store Shopping

• Over time, consumers may shop at many stores that
  sell similar items

Correlations of Logarithm of Household Packaged
Goods Expenditures
Data Source IRI panel of 189 panelists from Oct
1995 - Oct 1997
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In-StoreWhat to Buy Shopping List

• Before shopping, customers often prepare a
  shopping list of items sought
• On paper
• US (1995) 55 of grocery shoppers prepare
  shopping lists
• Europe (1997/8) 70 of grocery shoppers prepare
  shopping lists
• Mental
• In apparel and other non-CPG shopping, fewer
  items are sought so shopping lists are primarily
  mental

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In-Store What to Buy Shopping List

• Shopping lists may be more or less specific
• Product category
• Brand Though most customers use shopping lists,
  only 25 of brands purchased are pre-selected
• Size

Shopping lists, particularly mental lists,
usually include only the product category (not
the brand)
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In-StoreWhat to Buy Factors Influencing
Purchase Decisions

• Most purchase decisions are made in-store
• US
• POPAI 65 in the 1980s 81 in the 1990s
• Europe
• Retail Marketing Services 75 in 1997/8
• 8 category selected for purchase, but not brand
• 4 pre-selected brand was substituted
• 64 unplanned purchases

P-O-P is significant as the last three feet of
a brands marketing campaign, and serves as the
closer for in-store purchasing decisions as
well as an influencer for impulse purchases
POPAI, 1995
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In-Store What to Buy Factors Influencing
Purchase Decisions
Source POPAI, 1995
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In-StoreWhat to Buy Unplanned Purchases

• Items for which purchase was not anticipated are
  considered unplanned purchases
• Impulse
• Non-impulse
• Reminder
• Suggestion
• Impulse purchases can be stimulated
• Merchandising around cash-wraps, entrances and
  other high-traffic areas
• Store atmospherics (e.g., colors and smells)
• Displays

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In-Store What to Buy Unplanned Purchases

• Purchases which suggested/reminded by retailer
  are influenced by
• Display
• Signage e.g., shelf tags
• Cross-merchandising
• From the retailers perspective, these are
  add-on sales
• The number of unplanned purchases increases with
  both variety and assortment offered by the
  retailer

The bigger the store, the more unplanned purchases
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In-Store What to Buy Unplanned Purchases

• Unplanned purchases may be limited by the
  shoppers budget constraints and time constraints
• Browsers make more unplanned purchases

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In-Store Brand/Product Choice Consideration
Sets

• To avoid spending all day in the store, shoppers
  limit their consideration to relatively few items
• What Consideration set is the subset of
  available products that is evaluated when making
  a choice
• Why limited cognitive resources
• How screen items unlikely to be of interest
  before evaluating them

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In-Store Brand/Product Choice Consideration
Sets
Need Recognition

• How/when is the consideration set formed

Information Search
Consideration Set
Evaluation of Alternatives
Intention to Purchase
Purchase Decision
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In-Store Brand/Product Choice Evaluation
Factors

• Price/value
• Compared with what is on the shelf (in-store)
• Compared with competitors (out of the store)
• Compared with recalled prices
• Quality
• Performance (e.g., fabric weave and weight, cut)
• Conformance (e.g., durability, workmanship)
• Image
• Familiarity / information Reduces uncertainty
  of evaluation

Brand can be a proxy for quality, if quality is
unknown and can be a primary factor in
determining the image associated with a product
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In-Store Brand/Product Choice Consumer
Evaluation

• Retailers can affect consumers product
  evaluations by
• Pricing
• Vs. competitors
• Between items on the shelf
• Assortment
• Number of items
• Quality of items
• Brand(s) of merchandise
• Retailers may try to up-sell, or influence
  shoppers to purchase a higher-margin product, but
  they are more likely to pursue customer loyalty
  or add-on sales

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In-Store Brand/Product Choice Consumer
Evaluation

• Brands are often a key component of the
  retailers positioning

Barneys New York
JCPenney

• Donna Karan
• Dolce Gabanna
• Giorgio Armani
• Jil Sander

• Arizona
• Lee
• L.E.I.
• Vanity Fair

http//www.barneys.com
http//www.jcpenney.com
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In-Store Brand/Product Choice Private Label

• Retailers may offer their own brands, known as
  private labels
• Offer consumers more choice alternatives
• Offer consumers lower-priced alternatives to the
  national brand
• May appeal to more price-sensitive shoppers
• Offer products that have higher margins than
  national brands
• Offer products that are exclusive to the retailer

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In-Store Brand/Product Choice Private Label

• In general, shoppers prefer national brands to
  store brands, though
• Some retailers offer exclusively private labels
• The Gap
• Lands End
• Private label penetration varies by category
• 64 of egg sales
• 58 of milk sales
• 30 of sour cream sales
• Private label has higher penetration in certain
  countries
• Britain

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In-Store Brand/Product Choice Private Label

• Private label examples

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In-Store Purchase Quantity

• Purchase quantity is driven primarily by
  promotional discounts
• The limited time availability leads customers to
  stockpile
• Specific promotions encourage larger quantity
  purchases
• Of individual items
• Buy one get one free
• 3 for the price of two
• Trial size with purchase
• Of goods in the store
• Volume discounts
• Frequent flyer-type programs