COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson ...

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


The Purchase Process

To Buy or Not to Buy?


The Purchase ProcessConsumers decide:

Whether to buy

When to buy

What to buy (product type/brand)

Where to buy

How to pay



Fully Planned Purchase

Partially Planned Purchase

Unplanned Purchase



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



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



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


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


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


Why People Shop


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?


The Purchase Decision Process


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


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


Retail Image


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


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


Nature and Quality of Assortment

Depth, breadth, and quality of assortment

- Specialty stores

- Mass merchandisers

- Department stores

- Value merchants


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)


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


Price

Effects of price promotions on: - Building store patronage- Demand for different brands- Short-term buying behavior- Long-term buying behavior


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


Image Advertising


Advertising and Promotion

Information advertising: Details provided about products, prices, hours of operation, locations, and other attributes that might influence purchase decisions


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


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


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


Physical Store Attributes

Store atmospherics- Elevators- Lighting- Air conditioning- Convenient and visible washrooms- Layout- Aisle placement and width- Parking facilities- Carpeting - Architecture


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


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


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


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)


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


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



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




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




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”



Direct Marketing refers to strategies used to reach consumers somewhere other than a store



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



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



Direct Marketing

Telemarketing

- outbound telemarketing

- inbound telemarketing: use a toll free number to place orders directly



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



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


Consumer Resources: What People Spend When They Purchase

Money

TimeAttention


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


Concept of Time Budgets


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


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-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)



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


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)



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)


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?


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


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


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


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


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


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

COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson ...

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