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COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Purchase
CHAPTER 5
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Process
To Buy or Not to Buy?
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase ProcessConsumers decide:
Whether to buy
When to buy
What to buy (product type/brand)
Where to buy
How to pay
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Process
Fully Planned Purchase
Partially Planned Purchase
Unplanned Purchase
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Process
Fully Planned Purchase: both the product and brand are chosen in advance
Purchase planning is more likely to occur when product involvement is high with purchase affected by in-store factors and marketing efforts
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Process
Partially Planned Purchase: intent to buy the product exists, but brand choice is deferred until shopping
When involvement is low, consumers resort to buying a brand they know and like but may also be influenced by price reductions or special displays
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Process
Unplanned Purchase: both the product and brand are chosen at point of sale
In-store influences can guide product and brand choices made by consumers reminding them of a need and triggering a purchase
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Factor
When and if purchase occurs is affected by timing factors such as seasonality
Timing also affects the price and the likelihood of a purchase
When making a purchase, consumer must also decide how to pay—cash, checks, or plastic
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Why People Shop
While consumers may shop “to acquire something,” there are many other personal and social reasons
Consumers who dislike shopping embrace the Internet and other forms of direct marketing to make shopping quicker, easier, and less personally involving
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Why People Shop
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Why People Shop
While consumers may shop “to acquire something,” there are many other personal and social reasons
Consumers who dislike shopping embrace the Internet and other forms of direct marketing to make shopping quicker, easier, and less personally involving
Marketers should consider how their core customers think of shopping—is it fun or is it a chore for them?
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Purchase Decision Process
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Deciding where and how to purchase
- Retail choice is an interactive process where the type of store and specific retailer affect each other
- Consumer characteristics are matched to store characteristics and purchase characteristics
- Past experience and store image also influence specific store choice
The Purchase Decision Process
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Retail Image
Consumers rely on their overall perception of a store (store image)
Involves both functional and emotional attributes
The perceived level of crowding within the store may also affect shopping behavior, reducing shopping for some consumers while appealing to other segments
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Retail Image
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Retail Image
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Retail Image
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Determinants of Retailer Success- Location
- Nature and quality of assortment
- Price
- Advertising and promotion
- Sales personnel
- Service offered
- Physical store attributes
- Nature of store clientele
- Point-of-purchase-displays
- Consumer logistics
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Location
Perceived in terms of time and hassle in addition to actual distance
Cognitive maps or consumer perceptions of store locations and shopping areas are more important than actual location
Consumers generally overestimate both actual distance and time
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Nature and Quality of Assortment
Depth, breadth, and quality of assortment
- Specialty stores
- Mass merchandisers
- Department stores
- Value merchants
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Nature and Quality of Assortment
Assortment breadth: how vast or wide the variety of products sold(mass retailers)
Assortment depth: how deep the categories of product sold (specialty store)
Category killers: specialize in one category of merchandise and provide a dominant assortment of products (Home Depot, Toys ’R Us)
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Price
Price as a determinant of store patronage varies by type of product
Importance of price depends on the nature of the buyer
The consumer’s perception of price is usually more important than the actual price
Consumers ultimately rely on their overall image of a retailer to filter the effects of price advertising
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Price
Effects of price promotions on: - Building store patronage- Demand for different brands- Short-term buying behavior- Long-term buying behavior
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Advertising and Promotion
Image advertising: Visual components and words that help consumers form an expectation about their experience in the store and about what kinds of consumers will be satisfied with the store’s experience
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Image Advertising
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Advertising and Promotion
Information advertising: Details provided about products, prices, hours of operation, locations, and other attributes that might influence purchase decisions
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Salespeople are important when choosing a store or shopping center
What makes a salesperson effective?
- Perceived knowledge and expertise
- Perceived trustworthiness
- Customer knowledge
- Adaptability
Sales Personnel
Recruiting, training, and motivating effective sales associates benefits retailers
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Services Offered
Varies depending on the type of outlet and consumer expectations
Includes such considerations as self-service facilities, ease of merchandise return, delivery, credit, and overall good service
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Physical Store Attributes
The physical properties of the retail environment designed to create an effect on consumer purchases are referred to as store atmospherics
Can help shape the direction and duration of consumer attention, express the store’s character, or elicit particular emotional reactions
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Physical Store Attributes
Store atmospherics- Elevators- Lighting- Air conditioning- Convenient and visible washrooms- Layout- Aisle placement and width- Parking facilities- Carpeting - Architecture
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Store Clientele
The type of person who shops in a store affects consumer purchase intention because of the tendency to match one’s self-image with that of the store
Some customers may be attracted to or repelled from a store due to their perception of the store and its clientele
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Point-of-Purchase Materials
POP displays and signs can increase the odds of capturing attention and stimulating purchase
- E-Theater
- Digital POP
- Computer Enhanced Merchandising
- Digital Self-Service
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Point-of-Purchase Materials
Advantages of POP displays:
Inexpensive compared to other forms of promotion
They reach people where they buy the products
They add atmosphere to retail stores
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Consumer LogisticsThe speed and ease with which consumers move through the retail and shopping process
- Preparation to shop
- Arriving at the store
- Entering the store
- Movement through the store
- Checkout
- Travel home and home-warehousing
- Inventory stockouts (which prompt repurchase)
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Consumer LogisticsThe purchase process is facilitated, positively or negatively, by consumer logistics
What consumers expect and demand from a purchase situation changes depending on what type of store they are visiting
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Consumers want to purchase goods and services from a variety of retailing formats
Marketers have implemented multichannel retailing to reach diverse segments through a variety of formats based on their lifestyles and shopping preferences
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Location-Based Retailing
Retailers that have a physical location for consumers to visit
Can be free-standing or housed in a mall, strip center, central market, or central business district
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Location-Based Retailing
Value-oriented retailers- offer consumers lower prices than other retailing forms because of the large economies of scale generated by high sales volume
- convenience of buying many different types of products in one store or have a large selection of items
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Location-Based Retailing
The Shopping Mall- People visit malls less often and spend less time than they used to
- Malls are becoming lifestyle centers and emphasizing the entertainment value of shopping
- Shift toward making malls become “a place to be,” not just “a place to shop”
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Direct Marketing refers to strategies used to reach consumers somewhere other than a store
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Direct Marketing
More consumer shopping and buying activities are occurring in someplace other than the store
Most in-home shoppers are active retail shoppers who shop at home for reasons other than deliberate avoidance of the store or shopping mall
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Direct Marketing
Direct selling: any form of face-to-face contact between a salesperson and a customer away from a fixed retail location
-door-to-door selling-in-home parties
Direct mail ads
Direct mail catalogs
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Direct Marketing
Telemarketing
- outbound telemarketing
- inbound telemarketing: use a toll free number to place orders directly
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Direct Marketing
Telemarketing
- outbound telemarketing
- inbound telemarketing: use a toll free number to place orders directly
Direct response ads: ads that require a direct response from consumers
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
The Changing Retail Landscape
Purchase Behavior and E-Commerce
The technology of websites determines what can be offered to consumers, but only consumers determine which technologies are accepted
Today, more people use the Internet for search and pre-purchase evaluation than purchase
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Consumer Resources: What People Spend When They Purchase
Money
TimeAttention
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Concept of Time Budgets
People have “unlimited” money budgets: have potential to earn as much money as they want
People have limited time budgets: maximum of 24 hours per day
How consumers allocate their time depends on their timestyles
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Concept of Time Budgets
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Time and Money Budgets
Timestyles: determines how consumers allocate their time
As people work and make more money, leisure time decreases—leading to an increased value of time
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Discretionary time: leisure time when individuals feel no sense of economic, legal, moral, social or physical compulsion or obligation
Nondiscretionary time: Includes physical obligations, social obligations and moral obligations
Time and Money Budgets
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Time and Money Budgets
Time-Using Goods
Goods that require time to use, such as television, skiing, fishing, golfing, and playing tennis
As consumer have less leisure time, they are often willing to spend more money on the precious time they do have (travel, extreme sports, and eating out)
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Time and Money Budgets
Time-Saving Goods
Goods and services that gain leisure time by decreasing nondiscretionary time expenditures
Housecleaning services or dishwashers and microwave ovens free up time to spend on leisure or other activities
Some firms position products with time-saving benefits
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Polychronic Time Use
Polychronic time involves combining activities simultaneously
Trend has given rise to products:cellular phones (talk and walk or drive)
online radio services (listen to music while working on computers)
beepers for dental patients (wait for appointments and shop)
prepared meals (shop for groceries and buy completed dinner at same store)
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Time and Money Budgets
Time Prices
Products have economic prices as well as time prices
How much time it takes to shop for, install, or use a product
Firms sometimes use time prices in their ads (only takes 2 hours to install or 10 seconds for quick-dry paint)
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Cognitive Resources
Cognitive resources: mental capacity available for undertaking various information-processing activities
Capacity: cognitive resources that an individual has available at any given time for processing informationHow much of this resource do consumers spend when shopping or making a purchase?
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Cognitive Resources
Attention: allocation of cognitive resources
Attention consists of two dimensions:
Direction: focus of attention
Intensity: the amount of capacity focused in a particular direction
Gaining attention represents one of the most formidable challengers a marketer may face
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Cognitive Resources
Shallow AttentionMany products are not important enough to warrant consumers investing a large amount of cognitive resources
Consumers attempt to find acceptable rather than optimal solutions for their consumption needs
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Cognitive Resources
Exceeding Cognitive CapacityBecause capacity is limited, it is possible to provide too much information and exceed capacity (information overload)
Consumers can become confused and make poor choices or they may stop processing information before they are overloaded
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Cognitive Resources
Exceeding Cognitive Capacity
The amount of attention given to a product or specific purchase choice depends on factors such as involvement, situation, personality, and other variables
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Communicating with Consumers:Integrated Marketing Communications (IMC)
A systematic, cross-organizational marketing communication process that is customer-centric, data-driven, technically anchored, and branding effective
COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Integrated Marketing Communications (IMC)
IMC programs are comprehensive
IMC programs are unified
IMC programs are targeted
IMC programs have coordinated execution of all the communications components of the organization
IMC programs emphasize productivity in reaching targets when selecting communication channels and allocating resources to media