Chapter 4 notes, with video case, and the other case
Chapter 4 notes, with video case, and the other case MKT 320
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This 4 page Class Notes was uploaded by Shristi Tuladhar on Sunday February 7, 2016. The Class Notes belongs to MKT 320 at University of Miami taught by Ian Scharf in Summer 2015. Since its upload, it has received 34 views. For similar materials see Retailing in Marketing at University of Miami.
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Date Created: 02/07/16
Unit 1, Class 4 I. What has the census taught us? Baby Boomers: 19461964. There was spike in baby related products like diapers. Individualistic. Leisure time is a high priority for them they are selfsufficient. They want to maintain their youth. (Health care, Retirement and living communities, drugs and pharmaceuticals, cosmetic surgeries are the industries that will be affected by this population spike. All baby boomers went through Vietnam wars, civil rights movement, and the strategies to reach them is sell nostalgia, sell natural products and sell youth and fitness. Approx,76 million people. st Generation X: 19651978. Massive decrease in birth rate. Birth dirth. No unifying characteristics. Approx.18 million people. 1 generationLatch key children where both parents work. First generation exposed to television advertising. Strategies to reach them is through, do no rush them to buy, present a lot of options, use technology as much as possible, more computer savvy than baby boomers. Generation Y: 19791995 Respike in the birth rate. Approx.50 million people. Internet. One word to describediversity. By far the most technological savvy, formally educated. Wealthiest generation ever it would befrom the inheritance from previous generations and from own efforts. Strategies to reach generation Y: get young people involved in the stores, be conscious about the environment, be honest, use sports and music and be active in the community service. II. Course Content: Buying Process: 1. Need recognition: the buying process is triggered when consumers recognize they have an unsatisfied need. An unsatisfied need arises when customers desired level of satisfaction differs from their present level of satisfaction. Like recognizing that you need a new shirt as your current old shirt is outdated. Information Search: once customer identify a need, they typically seek information about retailers, channels, or products to help them satisfy that need. Like information from the Internet or by going to stores. Customers have two sources of information: internal and external. Internal sources are information in a customer’s memory such as names, images, and past experiences with different stores. The major source of internal information is the customers past shopping experience. Even of they remember just a small fraction of the information to which they are exposed, customers have an extensive internal information bank to draw on when deciding where to shop and what to buy. External sources consist of information provided by a host of sources like traditional media, internet, websites of the retailers and manufacturers, blogs, ask friends in person or through social media. When customers believe that they are not well enough informed or that their international information is inadequate then they turn external information sources. Amount of information searched: the amount of information search depends on the value customers believe they can gain from searching versus the cost of searching. The value of the search stems from the degree to which the additional information improves the customers purchase decision. The cost of the search includes customers time and money. Technology has reduced the cost of search. Like searching on the internet. The amount of information search is affected by the characteristics of individual customers, like some search less due to past shopping experience and some enjoy and search more, and also the aspects of the market and buying situation in which the product is made. The market situation involves the number of competitors and the time pressure under which the purchase must be made. Like amount decreases with greater time pressures. Everyday low pricing (EDLP): It is a strategy that stresses continuity of retail prices at level somewhere between the regular non sale price and the deep discount sale price of its competitors. This strategy helps assure customers that they wont find a lower price for these products at a different store. The stores with EDLP also offers money back guarantees if a competitor offers the same merchandise at a lower price. These pricing policies tend to limit the customer information search to the retailers offerings. 2. Purchasing the merchandise or service: the product of service offering the highest benefits and evaluation may not be available from the retailer or the customer may feel that its risks outweigh the potential benefits. Other consumers make purchase choices based on a single attribute regardless of how well the offering performs on other characteristics. Like visiting cvs because its convenient though other stores has more varieties and offer low prices such as target. Retailer use various tactic to increase the chances that the customer will convert their positive evaluations into purchases. They make it easier to purchase like making their website mobile friendly. Having more checkout lanes to save time of the consumers. Digital displays to entertain customers waiting in line. Sending reminder emails to visitors about items they have abandoned in carts. Provide sufficient information that reinforces customers positive evaluation like through sales person. Liberal return policy and money back guarantees and refunds if the customers find the same merchandise at a lower prices from another retailer. The another one is creating a sense of urgency like making customers alert if an item in their shopping carts is about to sell out, flashsale sites and limited products. Post purchase Evaluation: buying process doesn’t end when a customer purchases a product. After purchase, the customer uses the product and then evaluates the experience to determine whether it was satisfactory or unsatisfactory. Satisfaction is a post consumption evaluation of how well a store or product meets or exceeds customer expectations. This post purchase evaluation then becomes a part of the customers internal information and affects store and product evaluations and purchase decisions. To improve post purchase assessments and satisfaction retailers can make sure that they build realistic customer expectations so that they never let those shoppers down with their performances and they should provide proper use and care of the items purchased. Guarantees and warranties should be provided. The best retailers make contact periodically with their customers to make sure they are satisfied and correct any problems. Types of buying decisions: Extended problem solving: purchase decision process in which customers devote considerable time and effort to analyze their alternatives. They involve in their buying decision when the purchase decision involves a lot of risk and uncertainty. Financial risk arise when customers purchase an expensive product or service. Physical risk involves when customers feel that the product of service may effect their health or safety. Social risk is when customers believe that the product will affect hoe others view them like eye surgery which changes their appearance. They engage in this extended problem solving when they are making buying decisions to satisfy an important need or when they have little knowledge about the product or service. Customer go beyond the internal sources of information. Retailer stimulate sales from customers engaged in extended problem solving by providing necessary information readily available and an easily understandable manner hence other steps in facilitating their buying process. Limited problem solving is a purchase decision process involving a moderate amount of time and effort. Customers engage in this type of buying process when they have had some prior experience with the product or service and their risk is moderate. Rely more on personal knowledge than on external information. Choose retailer that they have shopped before and products they have bought before. Retailers need to reattempt the pattern and make it habitual by offering coupons. Hence to break the habit of consumers shopping elsewhere and the customers buy undiscounted items when they are in store. One common type of limited problem solving is impulse buying or unplanned purchasing, which is a buying decision made by the customers on the spot after seeing the merchandise. The retailer encourage impulse buying behavior by using point of purchase or point of sale displays to attract customer attention. Habitual decisionmaking: it is a purchase decision process involving little or no conscious efforts. The decisions aren’t very important to the customers, and involve familiar merchandise they have bought in the past. Customer loyal to a brand or store. Brand and Retailer loyaltysame brand, same store. Social Factors Affecting Behavior: Family: many purchase decisions involve products that the entire family will consumer or use. Needs of all family members. Children play an important role in the family buying decision. Example, providing toys to the children at hotels during check in or check out, child meal menu, making the trial room bigger, etc. Reference Groups: it includes one of more people whom a person uses as a basis of comparisons for beliefs, feelings and behaviors. Reference groups such as family, friends, celebrities, and opinion leaders. These reference groups affect buying decisions by offering information, providing rewards for specific purchasing behavior and enhancing consumers self image. They provide information to consumers directly through conversation either face to ace or electronically or indirectly through observation. Like observations as in looking at others and then deciding. Through this the customers maintain their selfimage. Culture: it is the beliefs, morals and values shared by most members of a society. As the basis of social factors that influence peoples buying decisions, the culture of cultures in which each consumer participates align with his or her reference groups. These cultural inferences affect consumer behavior. Economy: the state of the national and the global economy has significant effects on the way people buy. Global recessions, consumers feel uncertainty and risk. Like using private label brands instead of named brands. People have reduced their spending on luxury goods and prefer one stop shopping experience. Spending more on higher quality products to gain more value and make the purchases last. Market Segmentation: group of customers who are attracted to the same retail mix because they have similar needs. Criteria: o Actionable: customers in the segment must have similar needs, seek similar benefits and be satisfied by similar retail offering, and those customer needs must differ from the needs of customers in other segments. Actionable means the retailer should know what to do to satisfy needs for the consumers in the segment. Like segmenting on the basis of demographics or sizes. o Identifiable means that the retailer is able to determine which customers are in the market segment. When the customers are identifiable, the retailer can determine the segments size, the consumers to whom the retailer needs to target its communications and promotions. o Reachable: means that the retailer can target promotions and other elements of the retail mix to consumers in the segment. o Substantial: if a market is too small or its buying power is insignificant i.e. not substantial then it cannot generate sufficient profits to support the retailing mix Approaches: Geographic: groups customers according to where they live. Segmented by countries, or by areas within a country such as states, cities and neighborhoods. Demographic: groups consumers on the basis of age, gender, income, and education. However demographics many not be that useful for defining segments. Lifestyle: also referred to as psychographics, refers to how people live, how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world in which they live. Benefit segmentation: grouping customers seeking similar benefits. Like customers who place higher importance in fashion or price. It clearly indicated how retailers should design their offerings to appeal to those customers. III. Staples Factors in multichannel success: existing experience, distribution infrastructure, customer service, strong brand name, understanding the target market, be aware of cannibalization. Advantages and Disadvantages of kiosks: the advantages of kiosks are more SKU options and reduce inventory. The disadvantages are no use of sales people. SKU’s in stores vs. internet: the complexity, the popularity and the profitability of the item. Staples Copy and Print Centers….how are they different? Enable customers to order remotely and pick them up in stores, they are smaller in space.
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