Targeting Customers and Gathering Information

Identifying and Understanding

Consumers

Information Gathering and Processing in

Retailing

Identifying and Understanding Consumers

Why it is important for a retailer to properly identify, understand and appeal to its customers

Enumeration and description of consumer demographics, lifestyle factors, and needs and desires and to explain how these concepts can applied to retailing

Examining consumer attitude towards shopping and consumer shopping behavior, including the consumer decision process and its stages

Retailers actions based on target market planning Environmental factors affecting consumer shopping

Why it is Important for a Retailer to Properly Identify, Understand and Appeal to its

Customers

The quality of a retail strategy depends on how well a firm identifies and understands its customer and forms its strategy mix to appeal to them.

This entails identifying consumer characteristics, needs and attitudes; recognizing how people makes decisions, and devising the proper target market plan.

It also means studying the environmental factors that affects purchase decisions.

Enumeration and Description of Consumer Demographics, Lifestyle Factors, and Needs and Desires- and To Explain How these Concepts can

Applied to Retailing

Consumer demographicsConsumer lifestylesRetailing implications of consumer

demographics and lifestylesConsumer profilesConsumer needs and desires

Consumer demographics

• Consumer demographics is consumer data that is objective, quantifiable, easily identifiable, and measurable.

Consumer Lifestyles• Consumer life styles are based on Social and Psychological factors,

as given below:

Lifestyle

Culture ReferenceGroups

FamilyLife

Cycle

Time Utilization

HouseholdLife

Cycle

Social Class Lifestyle

Personality Attitudes

PerceivedRisk

PurchaseImportance

ClassConsciousness

Social Factors Psychological Factors

Retailing implications of consumer demographics and lifestyles

• Demographic and lifestyle factors need to be considered from several perspectives, as given below:– Gender Roles– Consumer Sophistication and Confidence– Poverty of Time– Component Life Style

Consumer profiles

• Considerable research has been aimed at describing consumer profiles in a way that is useful for retailers.– Shoppers at Wal-Mart and Kmart– Shoppers at Target etc

Consumer needs and desires

• Needs are person’s basic shopping requirements

• Desires are discretionary shopping goals that have an impact on attitudes and behavior.

• There are three particular market that attract retailer attention– In-Home Shoppers– Online Shoppers– Out shoppers

In-Home Shoppers

• Shopping is discretionary, not necessary.

• Convenience is important• Active, affluent, well-

educated.• Self-confident, younger,

adventuresome.• Time scarcity is not a

motivator.

Online Shoppers

• Use of Web for decision- making process as well as buying process.

• Convenience is important• Above average incomes

well-educated.• Time scarcity is a

motivator.

Out shoppers• Out-of-hometown

shopping.• Young, members of a large

family, and new to the community.

• Income and education vary.

• They like to travel, enjoy fine food, are active, and read out-of-town newspapers.

Examining Consumer Attitude towards Shopping and Consumer Shopping

Behavior, including the Consumer Decision Process and its Stages

Attitudes towards shoppingWhere people shopThe consumer decision processTypes of consumer decision makingImpulse purchase and customer loyalty

Attitudes towards shopping• Shopping enjoyment• Attitudes towards shopping time• Shifting feelings about retailing• Why people buy or do not buy on a shopping trip• Attitude by a market segment (Thrifties, Allures, Speedsters,

Elites).• Attitudes towards private brands

Top Reasons for Leaving an Apparel

Store Without Buying

Cannot find an appealing style Cannot find the right size Nothing fits No sales help is available Cannot get in and out of the store easily Prices are too high In-store experience is stressful Cannot find a good value

Where people shop

• Cross shopping– Shopping for a product category at more than one

retail format during the year.– Visiting multiple retailers on one shopping trip.

The consumer decision process

• Consumer decision process• Factors affecting the process

Types of consumer decision making

High

RISK & TIME

Low

Extended

Limited

Routine

Impulse purchase and customer loyalty

Completely unplanned Partially unplanned Unplanned substitution

Could you pass by this vending machine without making a purchase ?

Retailers Actions Based on Target Market Planning

Mass Marketing Kohl’s Department Stores

Concentrated Marketing Family Dollar

Differentiated Marketing Foot Locker

Devising a Target Marketing Strategy

Environmental Factors Affecting Consumer Shopping

State of the economy Rate of inflation Infrastructure where people shop, such as traffic congestion, the

crime rate, and the ease of parking Price wars among retailers Emergence of new retail formats Trends towards more people working at home Government and community regulations regarding shopping hours,

new constructions, consumer protection and so forth Evolving societal values and norms

Although all of these elements may not necessarily have an impact onany particular shopper, they do influence the retailers overall targetmarkets.

Information Gathering and Processing in Retailing

How information flows in a retail distribution channel

Why retailers should avoid strategies based on inadequate information

Retail information system, its components, and the recent advances in such systems

Description of Marketing research process

How Information Flows in a Retail Distribution Channel

Information flows among SupplierRetailer and Consumer

Informationand theSupplier

Informationand theRetailer

Informationand the

Consumer

Suppliers Need To Know

From the Retailer Estimates of category

sales Inventory turnover

rates Feedback on

competitors Level of customer

returns

From the Customer Attitudes toward styles

and models Extent of brand loyalty Willingness to pay a

premium for superior quality

Retailers Need To Know

From the Supplier Advance notice of new

models and model changes

Training materials Sales forecasts Justifications for price

changes

From the Customer Why people shop there What they like and dislike Where else people shop

Consumers Need To Know

From the Supplier Assembly and

operating instructions Extent of warranty

coverage Where to send a

complaint

From the Retailer Where specific

merchandise is stocked in the store

Methods of payment acceptable

Rain check and other policies

Why Retailers Should Avoid Strategies Based on Inadequate Information

• Using intuition• Continuing what was done before• Copying a successful competitors strategy• Devising a strategy after speaking to a few

individuals about their perceptions• Automatically assuming that a successful

business can easily expand• Not having a good read on consumer

perceptions

Retail Information System(RIS), its Components, and the Recent Advances in

RIS

• Building and using a RIS• Data base management• Data warehousing• Data mining and micromarketing• Gathering information through the UPC and

EDI

Retail Information System (RIS)

Anticipates the information needs of retail managers

Collects, organizes, and stores relevant data on a continuous basis

Directs the flow of information to the proper decision makers

A Retail Information System

Data-Base Management

A major element in an RIS System gathers, integrates, applies, and stores

information in related subject areas Used for

– Frequent shopper programs– Customer analysis– Promotion evaluation– Inventory planning– Trading area analysis

Five Steps to Approaching Data-Base Management

Plan the particular data base and its components and determine information needs

Acquire the necessary informationRetain the information in a usable and accessible

formatUpdate the data base regularly to reflect changing

demographics, recent purchases, etc.Analyze the data base to determine strengths and

weaknesses

Retail Data-Base Management in Action

Data Warehousing

Components of a Data Warehouse Physical storage location for data – the

warehouse Software to copy original databases and

transfer them to warehouse Interactive software to allow processing of

inquiries A directory for the categories of

information kept in the warehouse

Data Mining and Micromarketing Data mining is the in-depth analysis of

information to gain specific insights about customers, product categories, vendors, and so forth

Micromarketing is an application of data mining, whereby retailers use differentiated marketing and develop focused retail strategy mixes for specific customer segments

Description of Marketing Research Process

Marketing research in retailingMarketing research processIssue/Problem definition to be researchedExamining secondary data, gathering primary

data, analyzing the data, making recommendations, and implementing findings.

The Marketing Research Process

Marketing Research in Retailing

The collection and analysis of information relating to specific issues or problems facing

a retailer

Secondary Data

Advantages Inexpensive Fast Several sources and

perspectives Generally credible Provides background

information

Disadvantages May not suit current study May be incomplete May be dated May not be accurate or

credible May suffer from poor

collection techniques

Secondary Data Sources

Internal Sales reports Billing reports Inventory records Performance

reports

External Data bases

– ABI/Inform, etc. Government

– U.S. Census of Retail Trade

– Statistical Abstract of the U.S.

– Public records

Primary Data

Advantages Collected for specific

purpose Current Relevant Known and controlled

source

Disadvantages May be more expensive Tends to be more time

consuming Information may not be

acquirable Limited perspectives

Primary Data Decisions

• In-house or outsource?• Sampling method?

– Probability– Nonprobability

• Data collection method?– Survey– Observation– Experiment– Simulation

Survey Methods

In-personOver the

telephoneBy mailOnline

DisguisedNondisguised

Mystery Shoppers

Retailers hire people to pose as customers and observe operations from sales presentations to how well displays are maintained to service calls