Consumer Behaviour

Who are your Customers?

In business, this is one of the most important questions you will answer. What type of customer do you want to serve? Does this ideal customer exist in enough quantity to make a business of it? If so, great. If not, you may want to adjust your ideal customer to fit more closely with what customers want from your store.

What are Customers Looking For?

Your initial market research has brought some issues to your attention. Customers today are more aware of price and quality than they were years ago. They know that items are marked up and that they eventually go on sale. They know that they don’t have to buy it today. Customers know that competition is fierce. I’s usually easy to find another retailer to shop at. Customers get retailer and product information from friends, the Internet, magazines and a variety of other sources. It's possible today to compare prices on the Internet. Many consumers today research before they buy. Customers want it all. They want good prices, good quality and convenience (in the form of high selection, convenient location and ease of payment and return if necessary). The good news is that many consumers realize that they can't have everything and are will to pay more than the lowest price to have quality and service. More importantly, realize that you cannot and should not be all things to everyone. This is why it is so important to segment the market and target a market or markets. Customers are looking for stores that follow through on their promises. If you don't follow through, they won't come back. Customers who do come back, time and time again, expect to be treated with better service than first-time customers. Your research shows that these customers should be treated very well. Repeat customers make a larger portion of sales than many retailers think.

The Consumer Decision-Making Process

All consumers follow the same series of steps outlined below when they make a purchase. It’s helpful to understand this when communicating with your customers, either directly and in person on the sales floor, or through advertising or promotion. Sometimes a person will move quickly through this process. For example, a consumer may decide to buy an item right on the spot after seeing it in the store. This is called impulse buying. Other times, they may go to the same store and buy the same item out of habit. Other times customers will shop around at several stores before making a purchase.

Emotions that Sell

What are some of the emotions that sell? Fear (the mitigation of fear), vanity (pride and ego), greed (make money or save money), sensual pleasure (sex sells, food) and altruism (help others).

Need Awareness
The buying process begins when customers recognize an unsatisfied need. People have basic survival needs such as food, shelter and clothing. They have social needs that might involve being trendy and fashionable. Some people have a strong need for status and power. Sometimes customers will buy to celebrate an event, reward themselves for an accomplishment or to dispel feelings of depression. Sometimes needs are conflicting. Cross-shopping is a term used to describe the buying pattern of purchasing both premium and low-priced goods. For example, some people may purchase a very expensive designer pair of jeans in one store, and wear it with an inexpensive T-shirt from another store. Some people live a luxurious lifestyle but frequent discount stores to buy their cleaning and paper products. Your initial market research reports have helped you to identify some of these needs. Next, consumers seek information.
Information Search
How much time and effort a consumer will spend on gathering information depends on how important that need is to them, how much time and money they have, how much information they already have, and how much they enjoy the process. However, generally speaking, the more expensive a product is, the more likely the average consumer will spend time and effort on gathering information. Also, the more options there are to choose from in the marketplace, the more effort the average person will spend on
gathering information.  Be sure to provide your customers with the information they require. If you don't, someone else will. Customers have different levels of information needs. For example, would a 25-year old man will require more technical details before making a purchase of a computer than a retired
Potential customers may be aware of your competitors, but are they aware that you exist? You want them to be aware of what you offer.
Interest. Are customers interested in your product and business?  They may not know much about it yet, but from what they do know are they interested?
Comprehension. Customers need to understand what your business is selling. Don’t confuse customers with conflicting messages. Your core customers don’t want to be shocked when they enter your store to find that your fashion tastes have completely turned around and gone another direction.
Retention. Will customers remember you when they go looking?  What will they remember?  Simple and concise things are easier to remember.
Evaluate Alternatives
Customers make decisions that will attempt to maximize their happiness.  Since each person is different, each person places a different value or importance on each attribute of the product or service you are selling.  Attributes can be either product-related or service-related. The product has a certain function it performs for the user, thereby meeting a need, and it also has packaging, meeting another need. Your offered services will make a product easier to obtain, use and continue to use. Another aspect of service is it’s reputation and brand image. Knowing what attributes your customers are looking for and focusing on these will help ensure success. Some customers will only buy if a product or service has certain specific attributes or perhaps excludes other attributes. Some customers will want all attributes, some more than others and will be willing to trade-off one attribute for another. Consumers place different weights of importance on different perceived attributes of the product or service. From a retail perspective, this would include their choice of retailers to shop in. Once customers are in the store, it includes the products and services you offer.
After having evaluated all of the alternatives and decided on a product that meets needs or wants, the consumer may purchase a different one. Why? The product may not be available. The lineup at the checkout may be too long. There could be any number of reasons. As a retailer,
you will want to take these potential services into account when you decide which customers to target. The person who purchases the item may or may not be the one who uses it.
The person
who uses the product may not have purchased it. For example, consider clothing for infants.
Post-Purchase Evaluation
Consumers who use the product will evaluate their product experience and either feel satisfied or unsatisfied. Did it meet their need or needs? Do they feel comfortable with the price they paid? Are they happy with the quality? Did they buy the wrong type or style of product for them because they felt pressured into buying it by the sales staff?  Did they see an advertisement for the same product from another retailer at a fraction of the price? Would any customers who shopped in other stores have negative feelings toward the other retailers? Could you persuade them to shop at your store instead? How a customer feels about their purchase will affect future buying decisions. High levels of satisfaction may build loyalty.

Retail Competition Strategies

Each customer is different. You treat them as individuals when they enter your store. However, when it comes to consumer behavior, it helps to think about which customers have which similarities. Retailers will use five types of strategies to compete for customers. From the perspective of the four P’s, they are: price, place (location) and three components of product. To compete on price is to have the lowest prices. To compete on place is to have a convenient location. You will sell more if your location has more foot traffic and/or more car traffic with easier access to ample parking. The three components of product are service, quality and selection. Good personal service in the store can set your store apart from the others. This is where the smaller retailers can really shine compared to some of the big retailers such as department stores or big box stores. Carrying good quality products can attract customers. If you have established your store’s good reputation, customers will trust your judgment on the quality of products you sell, even if they are not familiar with some of the brand names you carry. The last area for retailers to compete on is selection. Having a large selection to chose from increases
the chances that the customer will find what they are looking for and buy it. This feature will attract customers if they know about it. This also gives you more opportunity to sell them more than what they just came in for. Many retailers use combinations of the above five strategies.

>Social Factors

Consumers are affected by social factors. They are affected by their beliefs, values, attitudes, family reference groups and culture. Their beliefs about the products and services themselves clearly affect their decision to buy or not. Each person has their own set of values and what’s important to them. If a customer believes that a product has a certain attribute and the customer doesn’t value that attribute, the fact that the product has that attribute is irrelevant to them. Attitudes are about how people evaluate a company and its offering. Their attitude may be positive, negative or neutral. When families make purchase decisions, they consider the needs of the whole family. Children can play an important role in the family decision process. With this in mind, some retailers provide play areas and sitting areas in the store.Advertisers know that if they appeal to children, the children can influence their parents and convince the parents to purchase the product. A reference group is one or more persons who a consumer uses as a basis of comparison for beliefs, feelings or behaviours. This reference group could be a family member, a friend, work associates, a celebrity or some other person or group that the consumer values. Reference groups provide information and opinions, rewards for a particular purchasing behaviour such as compliments and can enhance a consumer’s self-image. Culture is the meaning and values shared by most members of a society. For example, in the Americas, individualism, freedom, self-improvement, achievement, material comfort and good health are valued. In other cultures there is more value placed on the group than in the Americas. Europeans are generally a little less individualistic than those in North America. Chinese people are also less individualistic.

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