Several environmental factors influence shopping attitudes and behavior, including:
䉴 State of the economy.
䉴 Rate of inflation (how quickly prices are rising).
䉴 Infrastructure where people shop, such as traffic congestion, the crime rate, and the ease of parking.
䉴 Price wars among retailers.
䉴 Emergence of new retail formats.
䉴 Trend toward more people working at home.
䉴 Government and community regulations regarding shopping hours, new construction, consumer protection, and so forth.
䉴 Evolving societal values and norms.
Although all of these elements may not necessarily have an impact on any particular shopper, they do influence the retailer’s overall target market.
When considering the strategy that they offer their customers, retailers should also know the following about the standard of living:
Factors such as discretionary income are important, but the standard of living includes not only the material articles of consumption but also the number of dependents in a family, the environment, the educational opportunities, and the amount spent for health, recreation, and social services. Unemployment, low wages, crowded living conditions, and physical calamities, such as drought, flood, or war, may bring a drop in the standard of living, and, conversely, an increase in social benefits and higher wages may bring about a rise. While the standard of living may vary greatly among various groups within a country, it also varies from nation to nation, and international comparisons are sometimes made by analyzing gross national products, per capita incomes, or any number of other indicators from life expectancy to clean water. Overall, industrialized nations tend to have a higher standard of living than developing countries. In the United States, as in most Western nations, the standard of living has shown a steady trend upward.31
Chapter Summary
1. To discuss why it is important for a retailer to properly identify, understand, and appeal to its customers. To properly develop a strategy mix, a retailer must identify the characteristics, needs, and attitudes of consumers;
understand how consumers make decisions; and enact the proper target market plan. It must study environ-mental influences, too.
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2. To enumerate and describe a number of consumer demo-graphics, lifestyle factors, and needs and desires—and to explain how these concepts can be applied to retailing.
Demographics are easily identifiable and measurable population statistics. Lifestyles are the ways in which consumers live and spend time and money.
Consumer demographics include gender, age, life expectancy, literacy, languages spoken, income, retail sales, education, and ethnic/racial background. These data usually have to be localized to be useful for retail-ers. Consumer lifestyles comprise social and psycholog-ical elements and are affected by demographics. Social factors include culture, social class, reference groups, the family life cycle, and time utilization. Psychological factors include personality, class consciousness, atti-tudes, perceived risk, and purchase importance. As with demographics, a firm can generate a lifestyle profile of its target market by analyzing these concepts.
There are several demographic and lifestyle trends that apply to retailing. These involve gender roles, con-sumer sophistication and confidence, the poverty of time, and component lifestyles. Research has enumer-ated consumer profiles in a useful way for retailers.
When preparing a target market profile, consumer needs and desires should be identified. Needs are basic shopping requirements, and desires are discretionary shopping goals. A retail strategy geared toward satisfy-ing consumer needs is appealsatisfy-ing to their motives—the reasons for behavior. The better needs and desires are addressed, the more apt people are to buy.
3. To examine consumer attitudes toward shopping and consumer shopping behavior, including the consumer decision process and its stages. Many people do not enjoy shopping and no longer feel high prices reflect value. Different segments have different attitudes. More people now believe private brands are of good quality.
Consumer patronage differs by retailer type. People often cross-shop, whereby they shop for a product cate-gory at more than one retail format during the year or visit multiple retailers on the same shopping trip.
Retailers should have an awareness of consumer behavior—the process individuals use to decide whether,
what, when, where, how, from whom, and how often to buy. The consumer’s decision process must be grasped from two perspectives: (a) the good or service the con-sumer thinks of buying and (b) where the concon-sumer will buy that item. These decisions can be made separately or jointly.
The consumer decision process consists of stimu-lus, problem awareness, information search, evaluation of alternatives, purchase, and post-purchase behavior.
It is influenced by a person’s background and traits.
A stimulus is a cue or drive meant to motivate a person to act. At problem awareness, the consumer not only has been aroused by a stimulus but also recognizes that a good or service may solve a problem of shortage or unfulfilled desire. An information search determines the available alternatives and their characteristics.
Alternatives are then evaluated and ranked. In the pur-chase act, a consumer considers the place of purpur-chase, terms, and availability. After a purchase, there may be post-purchase behavior in the form of additional pur-chases or re-evaluation. The consumer may have cog-nitive dissonance if there is doubt that a correct choice has been made.
In extended decision making, a person makes full use of the decision process. In limited decision making, each step is used, but not in depth. In routine decision making, a person buys out of habit and skips steps. Impulse pur-chases occur when shoppers make purpur-chases they had not planned before coming into contact with the retailer.
With customer loyalty, a person regularly patronizes a retailer.
4. To look at retailer actions based on target market plan-ning. Retailers can deploy mass marketing, concentrated marketing, or differentiated marketing. Several examples are presented.
5. To note some of the environmental factors that affect consumer shopping. Consumer attitudes and behavior are swayed by the economy, the inflation rate, the infrastructure where people shop, and other factors.
Retailers also need to consider how the standard of living is changing. family life cycle (p. 193) household life cycle (p. 193) personality (p. 194) evaluation of alternatives (p. 204) purchase act (p. 204)
post-purchase behavior (p. 205) cognitive dissonance (p. 205) extended decision making (p. 205) limited decision making (p. 206) routine decision making (p. 206) impulse purchases (p. 207) customer loyalty (p. 207)
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Questions for Discussion
1. Comment on this statement: “A competitive retail sector, facing an uncertain economic future, is being challenged by consumers to compete for their business. In this envi-ronment, only the fittest and those really listening to what their customers really want are likely to survive.”
2. Analyze the global population data in Table 7-1 from a retailing perspective.
3. How could a national consumer electronics chain use the U.S. population data presented in Table 7-2?
4. Explain how a retailer selling expensive art could reduce the six types of perceived risk.
5. Why is it important for retailers to know the difference between needs and desires?
6. Why do some consumers engage in outshopping? What could be done to encourage them to shop closer to home?
7. Is cross-shopping good or bad for a retailer? Explain your answer.
8. Describe how the consumer decision process would operate for these goods and services. Include “what”
and “where” in your answers: an HD TV, a lawn mower, and a haircut. Which elements of the decision process are most important to retailers in each instance? Explain your answers.
9. Differentiate among the three types of impulse purchases.
Give an example of each.
10. Contrast the mass-market approach used by a super-market with the concentrated super-marketing approach used by a fruit-and-vegetable store. What is the key to each firm succeeding?
11. Visit a nearby Toys “R” Us (www.toysrus.com), and then describe its target market strategy.
12. Why is it valuable for retailers to understand the com-plexity of the standard-of-living concept?
Web Exercise
Best Buy has widely promoted its “Geek Squad” as a major customer service initiative. Visit the Geek Squad Web site (www.geeksquad.com). Evaluate the target mar-keting efforts that you find described there, in terms of the concepts in this chapter.
Note: Stop by our Web site (www.pearsonhighered.
com/berman)to experience a number of highly interactive, appealing Web exercises based on actual company demonstrations and sample materials related to retailing.
ISBN 0-558-55519-5
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