Outlet Selection 233c31
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In Consumer Decision Process
Presented By:
Abhinav Aggarwal MBA GEN(B)
How the traditional retailing environment is changing Factors that affect retail outlet selection Why consumer characteristics can also affect outlet selection In-store influences that can affect brand choice How marketers can capitalize on these influences
University Business School ,Panjab University ,Chandigarh
2
Where will consumers shop? How do they choose a retail outlet? – Consumer characteristics – Store characteristics • In-store decision alterations • The purchase process • Alternative to store selection • Implications for strategy
University Business School ,Panjab University ,Chandigarh
3
Selecting a retail outlet involves the same process as selecting a brand. That is, the consumer ◦ ◦ ◦ ◦
recognizes a problem that requires outlet selection engages in internal and possibly external search evaluates the relevant alternatives, and applies a decision rule to make a selection
University Business School ,Panjab University ,Chandigarh
4
1. Brand (or item) first, retail outlet second
2. Retail outlet first, brand second
3. Brand and retail outlet simultaneously
University Business School ,Panjab University ,Chandigarh
5
Marketing strategy based on the consumer decision sequence
LEVEL IN THE CHANNEL DECISION SEQUENCE
RETAILER
MANUFACTURER
Outlet First ,Brand Second
•Image Advertising, •Margin Management on shelf space, displays •Location analysis
•Distribution in key out lets •Point of purchase shelf space, position •Program to strengthen existing outlets
Brand first , Outlet Second
•Appropriate pricing •Many brands and/ or key brands •Cooperative ments featuring brands
•More exclusive distribution •Brand availability Advertising(Yellow pages) •Brand image management
Simultaneous
•Price specials on brands, yellow pages listing under brands •Margin training for sales personnel •Multiple brands/ key brands •High service/ low price structure
•Programmes targeted at retail sales personnel •Distribution in key outlets •Cooperative advertising
University Business School ,Panjab University ,Chandigarh
6
Retail outlet selection involves a comparison of the alternative outlets on consumer’s evaluative criteria: ◦ ◦ ◦ ◦
Outlet Image Retailer Brands Retail Advertising Outlet Location and Size
University Business School ,Panjab University ,Chandigarh
7
Outlet image
A consumer’s or a target market’s perception of all the attributes associated with a retail outlet
University Business School ,Panjab University ,Chandigarh
8
Outlet Image
Store image - perception of all the attributes associated with a retail outlet
Dimension
Components
Merchandise Service
Quality, selection , Style and Price Layaway plan, sales personnel , easy return, credit and delivery Customers Cleanliness , store layout, shopping ease and attractiveness Location and parking Advertising Congeniality, fun , excitement, comfort Store reputation satisfaction
Clientele Physical facilities Convenience Promotion Store Atmosphere Institutional Post transaction
University Business School ,Panjab University ,Chandigarh
9
Retailer Brands Store brands are closely related to store image, and at the extreme, the store or outlet is the brand.
◦ Traditionally, retailers carried only manufacturers' brands, and only a few, such as Kapson”s, developed their own brands. ◦ Increasingly retailers such as Kapson’s are developing and promoting high-quality brands with either the store’s name or an independent name. ◦ The key to success of store brands--high quality at a reasonable price. University Business School ,Panjab University ,Chandigarh
10
Retail Advertising Retailers use advertising to communicate their attributes, particularly sale prices, to consumers. Tracking the purchases of an d item understates the total impact of the ad. Spillover sales are the sales of additional items to customers who came to purchase an d item.
University Business School ,Panjab University ,Chandigarh
11
Retail Advertising Retailers evaluating the benefits of price or of the promotions must consider the impact on overall store sales and profit. Studies show that price is frequently not the primary reason for selecting a particular outlet. Many retailers could benefit from emphasizing service, selection, or affective benefits. Online retailers in mass media to build image and attract consumers
University Business School ,Panjab University ,Chandigarh
12
Retail Advertising Price Advertising Decisions Retailers face three decisions when they consider using price advertising: 1. How large a price discount should be used? 2. Should comparison or reference prices be used? 3. What verbal statement should accompany the price information?
University Business School ,Panjab University ,Chandigarh
13
Retail Advertising Price Advertising Decisions A reference price is a price with which other prices are compared. ◦ An external reference price is a price presented by a marketer for the consumer to use to compare with the current price. ◦ An internal reference price is a price or price range that a consumer retrieves from memory to compare with a price in the market.
University Business School ,Panjab University ,Chandigarh
14
Outlet Location and Size Location and size play an important role in store choice. All else equal, consumers generally select the closest store. Outlet size is also important. Generally, customers prefer larger outlets over smaller outlets. The retail attraction model, or the retail gravitation model model, is used to calculate the level of store attraction model based on store size and distance from the consumer.
University Business School ,Panjab University ,Chandigarh
15
Retail Attraction model MSi = (Si / Ti(λ times) )/( Σ (Si / Ti(λ times)) ) MSi = market share of store i Si = size of store i (or mall) Ti = travel time to i λ = attraction factor for a particular product category
University Business School ,Panjab University ,Chandigarh
16
Shopping
orientation Perceived risk Financial risk Social risk
University Business School ,Panjab University ,Chandigarh
17
Shopping Orientation A Shopping orientation is a shopping style that puts particular emphasis on certain activities or shopping motivations. A recent study used projective techniques (in this case, thinking about an animal) to ascertain the ways college students approach shopping.
University Business School ,Panjab University ,Chandigarh
18
Shopping Orientation:
Chameleons
• Shopping style situation specific or constantly changing • Shopping approach is based on product type, shopping impetus, and purchase
task Collectors/Gatherers
Propensity to stockpile items and to purchase large quantities to either save money or alleviate the need for shopping • Attempt to get the best price and take advantage of retailer guarantees
Foragers
• Particular and motivated to purchase only the desired items • Willing to search extensively and have little store loyalty; Prefer to shop alone University Business School ,Panjab University ,Chandigarh
19
Shopping Orientation Hibernants
II little store loyalty; Prefer to shop alone • Indifferent toward shopping, with opportunistic shopping patterns rather than need driven • Will often postpone even required purchases
Predators
• Purposeful and speed oriented in shopping; plan before shopping and like to shop alone • Do not enjoy shopping and tend to shop outlets where assured of getting needed items quickly
Scavengers
• Enjoy shopping both to make purchases and as an activity • Like to go to sales and consider shopping to be entertainment • Make numerous unplanned purchases University Business School ,Panjab University ,Chandigarh
20
Perceived Risk The purchase of products involves the risk that they may not perform as expected; such failure may result in a high
◦ Social cost - e.g., a hairstyle that is not appreciated by one’s peers ◦ Financial cost - e.g., an expensive pair of shoes that become too uncomfortable to wear ◦ Time cost - e.g., a television repair that required the set to be taken to the shop, left, and then picked up later ◦ Effort cost - e.g., a computer jump drive that is loaded with several hours of work before it fails ◦ Physical cost - e.g., a new medicine that produced a harmful side effect
University Business School ,Panjab University ,Chandigarh
21
Perceived Risk The perception of these risks differs among consumers, depending in part on their past experiences and lifestyles. For this reason perceived risk is considered a consumer characteristic as well as a product characteristic
University Business School ,Panjab University ,Chandigarh
22
Thank you…
University Business School ,Panjab University ,Chandigarh
23
Presented By:
Abhinav Aggarwal MBA GEN(B)
How the traditional retailing environment is changing Factors that affect retail outlet selection Why consumer characteristics can also affect outlet selection In-store influences that can affect brand choice How marketers can capitalize on these influences
University Business School ,Panjab University ,Chandigarh
2
Where will consumers shop? How do they choose a retail outlet? – Consumer characteristics – Store characteristics • In-store decision alterations • The purchase process • Alternative to store selection • Implications for strategy
University Business School ,Panjab University ,Chandigarh
3
Selecting a retail outlet involves the same process as selecting a brand. That is, the consumer ◦ ◦ ◦ ◦
recognizes a problem that requires outlet selection engages in internal and possibly external search evaluates the relevant alternatives, and applies a decision rule to make a selection
University Business School ,Panjab University ,Chandigarh
4
1. Brand (or item) first, retail outlet second
2. Retail outlet first, brand second
3. Brand and retail outlet simultaneously
University Business School ,Panjab University ,Chandigarh
5
Marketing strategy based on the consumer decision sequence
LEVEL IN THE CHANNEL DECISION SEQUENCE
RETAILER
MANUFACTURER
Outlet First ,Brand Second
•Image Advertising, •Margin Management on shelf space, displays •Location analysis
•Distribution in key out lets •Point of purchase shelf space, position •Program to strengthen existing outlets
Brand first , Outlet Second
•Appropriate pricing •Many brands and/ or key brands •Cooperative ments featuring brands
•More exclusive distribution •Brand availability Advertising(Yellow pages) •Brand image management
Simultaneous
•Price specials on brands, yellow pages listing under brands •Margin training for sales personnel •Multiple brands/ key brands •High service/ low price structure
•Programmes targeted at retail sales personnel •Distribution in key outlets •Cooperative advertising
University Business School ,Panjab University ,Chandigarh
6
Retail outlet selection involves a comparison of the alternative outlets on consumer’s evaluative criteria: ◦ ◦ ◦ ◦
Outlet Image Retailer Brands Retail Advertising Outlet Location and Size
University Business School ,Panjab University ,Chandigarh
7
Outlet image
A consumer’s or a target market’s perception of all the attributes associated with a retail outlet
University Business School ,Panjab University ,Chandigarh
8
Outlet Image
Store image - perception of all the attributes associated with a retail outlet
Dimension
Components
Merchandise Service
Quality, selection , Style and Price Layaway plan, sales personnel , easy return, credit and delivery Customers Cleanliness , store layout, shopping ease and attractiveness Location and parking Advertising Congeniality, fun , excitement, comfort Store reputation satisfaction
Clientele Physical facilities Convenience Promotion Store Atmosphere Institutional Post transaction
University Business School ,Panjab University ,Chandigarh
9
Retailer Brands Store brands are closely related to store image, and at the extreme, the store or outlet is the brand.
◦ Traditionally, retailers carried only manufacturers' brands, and only a few, such as Kapson”s, developed their own brands. ◦ Increasingly retailers such as Kapson’s are developing and promoting high-quality brands with either the store’s name or an independent name. ◦ The key to success of store brands--high quality at a reasonable price. University Business School ,Panjab University ,Chandigarh
10
Retail Advertising Retailers use advertising to communicate their attributes, particularly sale prices, to consumers. Tracking the purchases of an d item understates the total impact of the ad. Spillover sales are the sales of additional items to customers who came to purchase an d item.
University Business School ,Panjab University ,Chandigarh
11
Retail Advertising Retailers evaluating the benefits of price or of the promotions must consider the impact on overall store sales and profit. Studies show that price is frequently not the primary reason for selecting a particular outlet. Many retailers could benefit from emphasizing service, selection, or affective benefits. Online retailers in mass media to build image and attract consumers
University Business School ,Panjab University ,Chandigarh
12
Retail Advertising Price Advertising Decisions Retailers face three decisions when they consider using price advertising: 1. How large a price discount should be used? 2. Should comparison or reference prices be used? 3. What verbal statement should accompany the price information?
University Business School ,Panjab University ,Chandigarh
13
Retail Advertising Price Advertising Decisions A reference price is a price with which other prices are compared. ◦ An external reference price is a price presented by a marketer for the consumer to use to compare with the current price. ◦ An internal reference price is a price or price range that a consumer retrieves from memory to compare with a price in the market.
University Business School ,Panjab University ,Chandigarh
14
Outlet Location and Size Location and size play an important role in store choice. All else equal, consumers generally select the closest store. Outlet size is also important. Generally, customers prefer larger outlets over smaller outlets. The retail attraction model, or the retail gravitation model model, is used to calculate the level of store attraction model based on store size and distance from the consumer.
University Business School ,Panjab University ,Chandigarh
15
Retail Attraction model MSi = (Si / Ti(λ times) )/( Σ (Si / Ti(λ times)) ) MSi = market share of store i Si = size of store i (or mall) Ti = travel time to i λ = attraction factor for a particular product category
University Business School ,Panjab University ,Chandigarh
16
Shopping
orientation Perceived risk Financial risk Social risk
University Business School ,Panjab University ,Chandigarh
17
Shopping Orientation A Shopping orientation is a shopping style that puts particular emphasis on certain activities or shopping motivations. A recent study used projective techniques (in this case, thinking about an animal) to ascertain the ways college students approach shopping.
University Business School ,Panjab University ,Chandigarh
18
Shopping Orientation:
Chameleons
• Shopping style situation specific or constantly changing • Shopping approach is based on product type, shopping impetus, and purchase
task Collectors/Gatherers
Propensity to stockpile items and to purchase large quantities to either save money or alleviate the need for shopping • Attempt to get the best price and take advantage of retailer guarantees
Foragers
• Particular and motivated to purchase only the desired items • Willing to search extensively and have little store loyalty; Prefer to shop alone University Business School ,Panjab University ,Chandigarh
19
Shopping Orientation Hibernants
II little store loyalty; Prefer to shop alone • Indifferent toward shopping, with opportunistic shopping patterns rather than need driven • Will often postpone even required purchases
Predators
• Purposeful and speed oriented in shopping; plan before shopping and like to shop alone • Do not enjoy shopping and tend to shop outlets where assured of getting needed items quickly
Scavengers
• Enjoy shopping both to make purchases and as an activity • Like to go to sales and consider shopping to be entertainment • Make numerous unplanned purchases University Business School ,Panjab University ,Chandigarh
20
Perceived Risk The purchase of products involves the risk that they may not perform as expected; such failure may result in a high
◦ Social cost - e.g., a hairstyle that is not appreciated by one’s peers ◦ Financial cost - e.g., an expensive pair of shoes that become too uncomfortable to wear ◦ Time cost - e.g., a television repair that required the set to be taken to the shop, left, and then picked up later ◦ Effort cost - e.g., a computer jump drive that is loaded with several hours of work before it fails ◦ Physical cost - e.g., a new medicine that produced a harmful side effect
University Business School ,Panjab University ,Chandigarh
21
Perceived Risk The perception of these risks differs among consumers, depending in part on their past experiences and lifestyles. For this reason perceived risk is considered a consumer characteristic as well as a product characteristic
University Business School ,Panjab University ,Chandigarh
22
Thank you…
University Business School ,Panjab University ,Chandigarh
23
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