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Chapter 3 Notes

by: Emylee Smith
Emylee Smith
GPA 3.4

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These notes will be on the quiz on Tuesday September 13th
Product Deviation, Evaluation, and Distribution
Lisa Williams
Class Notes
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This 13 page Class Notes was uploaded by Emylee Smith on Thursday September 8, 2016. The Class Notes belongs to RFPD 3830 at Ohio University taught by Lisa Williams in Fall 2016. Since its upload, it has received 9 views. For similar materials see Product Deviation, Evaluation, and Distribution in Retail Merchandising and Fashion Product Development at Ohio University.

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Date Created: 09/08/16
Chapter 3: Consumer Markets Note Outline The Consumer Should not be only classified by demographics and lifestyle data. Today’s consumers expect a one-on-one relationship when purchasing apparel. Product developers and retailers must collect data at every possible point to understand their customer. The customer may change loyalties to another brand or retailer if not satisfied. Consumers expect innovation, value and quality as well as transparency of conditions under which the garments were made. Forming an emotional connection with the consumer will help increase profitability. Market Segmentation or Micromarketing Breaking markets down into smaller, well-defined niche markets Uses consumer data such as demographics, psychographics and generational cohort. 80/20 marketing principle – 20% of customers typically account for 80% of sales for a product. Made possible by sophisticated methods of collecting and analyzing consumer data. Demographics Statistics about a given population with respect to age, gender, occupation, etc. One source is the U.S. Census of Population Affects what information consumers desire before purchasing and how they want to be able to access that information. Age Some apparel products are age specific Page | 1 Consumers of different ages use different criteria in relation to styling, price, fit, care and performance. Product developers define an age range for their target market before they begin to develop a product. Trend research will focus on the preferences of their targeted age market. Companies need to be aware of how population projections by age will influence the goals they set. The young are more experimental but not willing to spend as much. Older consumers want more timeless and age-appropriate clothing. Gender Women now outnumber men in the U.S. Women buy more clothes, but men spend more on individual items Men are purchasing more of their own wardrobes Marital Status Single consumers without children often have higher interest in fashion and more opportunity to experiment with fashion. Married consumers have to balance needs and resources of the family and ten to conform to a more conservative dress code. Family Size Size of family affects the resources available for apparel expenditures. As family size increases so do clothing expenditures. Maternity wear and clothing for each child will be needed. Income Disposable income determines what brands are affordable to individuals and shapes their lifestyles. Despite income, all people need to be clothes Page | 2 Spending Habits As age and income levels change, so do spending habits. The lower the income, the higher the percentage of income must be used for necessities. Increasing energy and food costs leave less money to spend on clothing The government monitors consumer spending through the Consumer Price Index (CPI) – measures the monthly and yearly changes in the price of selected consumer items in different product categories. Spending depends on:  Income  Size of family  Age Occupation and Education Educational influences occupation, income and lifestyle, all of which affect apparel preferences. Occupation may have formal or informal dress expectations. Education may affect the value consumers place on function and serviceability of apparel. Religion Religious values will influence apparel selection and tends to lead to more conservative dress. Ethnicity Ethnicity demographics can stereotype ethnic groups. Cultural assimilation builds on our heritage and that of our extended network to enrich our cultural exposure and appreciation. Regional Demographic Data Demographic census data is available by region – city, county, state and zip code which provides a picture of specific populations. Page | 3 Allows product developers and retailers to assort the merchandise they offer to a specific regional population. Helps the stocking of stores and editing of advertisements. Weather and favored sports teams influence advertising in the region. Must be careful not to stereotype Data can become quickly dated Psychographics The study of social and psychological factors that influence consumer lifestyles Includes:  Reference groups  Life stage  Activities  Personality  Attitudes  Class consciousness  Motivation Reference Groups People who influence a person’s thought or actions Can be from:  Association  Membership  Aspiration  Disassociation Life Stage The typical junctures of adult life that have an impact on decision making At each life stage, needs, experience, household compositions and resources influence what consumers buy and how much they spend Junctures in life such as:  Marriage Page | 4  Having children  Aging  Retirement Activities and Personality Activities – How people spend their free time Personality – the behavioral and emotional traits that make an individual unique. Influences decision making and behavior. Expressed as:  Self-confidence  Sociability  Flexibility  Emotional reactions Attitudes, Class Consciousness and Motivation Attitudes – A person’s opinions about issues, products, services and institutions that are influenced by experience, peer group thinking, demographics and personality. May influence how a person relates to marketing approaches. Class Consciousness – reflects an individual’s desire for social status  High low refers to the practice of mixing high-end purchases with low-end purchases. Motivation – an internal or external stimulus that causes an individual to act Psychographic Tools Psychographic factors are difficult to measure because they are subjective Data can be gathered through:  Activity, interest and opinion inventories completed by consumers  Focus groups and surveys (not used as often)  Online and purchasing history TM  Marketing tools such as VALS (Values and Lifestyles) segmentation system- categorizes adult consumers into groups based on psychological characteristics correlated with purchases behavior and key demographics. Page | 5 Generational Cohort Groups Each generation passing through a life stage is characterized by its own unique set of values and behavior. Members of a generation are called a cohort group Members of a generation are linked through shared life experiences in their formative years with common experiences such as:  Pop culture  Economic conditions  World events  Natural disasters  Celebrities  Politics  Technology Generational Marketing The study of the values, motivations and life experiences that drive generational cohorts, influencing how they spend and save their money. Four recurring types of peer personalities within generational cohorts:  Idealist  Reactive  Civic  Adaptive Generational Cohort  Generation Z or C?  Millennials  Generation X  Baby Boomers  Matures Generation Z or C? Born 2001 – 2020 Page | 6 As yet unnamed Never know life without digital devices Expected to be more reactive and price conscious due to digital tools used to find the best price and growing up in extended recession. Place a high value on customization and co-creation. Millennials (or Generation Y) Born 1979 – 2000 30% of the population Confident, optimistic about the future, globally oriented, technically savvy, prefer social media Respond to interactive marketing that respects their intelligence and asks for their opinion Influenced by brands, but their loyalties change rapidly. Early millennials are consumption oriented, later millennials don’t have as much disposable income. Want personalized, customized and individualized products. Generation X Born 1965-1978 Culturally, politically, sexually, racially and socially diverse More conservative than their Baby Boomer parents See the future as uncertain More spontaneous than the generations before them. Value functionality, practicality, affordability and a sense of style. Baby Boomers Born 1946 – 1964 Page | 7 23% of the population Can be challenged by technology Health and wellness are priorities Spending decreases as near retirement Want ads to be informative, lifestyle oriented and have models their age. Matures Includes the GIs (served during war) and the Silents (supported those who were serving) Conservative. Believe security comes from saving Respect institutions which makes them brand loyal More willing to spend as they get older. Market Research Tools – Quantitative vs. Qualitative Research Quantitative Research – collecting data about a sample population and analyzing for patterns Qualitative Research – observing and conducting case studies to record experiences to describe observed behaviors in the context of environmental factors. More subjective. Data Collection Analyzing consumer behavior by analyzing purchase transactions in the context of current events. Collected by:  Environmental scanning  Point of Sale Data  Data Profiling and Data Mining  Video Documentation  Neuromarketing Page | 8 Environmental Scanning Interpreting the political, economic, social, demographic and psychographic forces that affect a consumer’s motivation to buy Point of Sale (POS) Data Capturing information during a transaction about what style, size and color was purchased and how it was paid for, the price, selling season and what is returned. Uses the UPC - universal product codes to capture data about size, style, and color of products purchased; whether purchases are cash or credit; average price; selling seasons; and returns. Data can be aggregated by store, zip code, city, state and region. Data is used to streamline marketing and inform merchandising and buying decisions. Can be shared through Electronic data interchange (EDI) – computer sharing between business partners Data Integrity - The accurate entry of receiving, pricing, transfer, sales and return data. POS data allows analysis down to the individual stock-keeping unit (SKU) by store and time period. SKU – product numbers that identify individual products for inventory purposes by style, color and size. Product developers and buyers use POS data to determine which styles and colors to carry over into the next season and which to phase out. It helps them send the right products at the right time to stores in different locales by responding to variations in selling seasons (due to climate and other factors) and target customer demographics. Data Profiling and Data Mining POS data is enhanced by information the customer shares when applying for credit cards, exploring a company’s website or making an online purchase. Page | 9 Data Profiling – Gathering, assembling and collating data about individuals in databases The profile patterns may be sued to predict trends and define geographically based purchase behavior. Data mining helps develop automatic replenishment programs, which trigger an automatic reorder of stock at an agreed-upon inventory level. Inventory levels can be maintained using:  Attribute Replenishment - replace an item with a similar but different item.  Data Warehouse - Collected information used to determine patterns and trends. Store performance information allows manufacturer to customize assortments and match consumer characteristics to each store Sell – Through - the percentage of merchandise a retailer sells at full price. Data mining can help marketers plan more effective advertising campaigns Video Documentation Video and digital cameras can be used to observe and analyze shopping patterns. Customer can also be interviewed Could be seen as an invasion of privacy Neuromarketing Uses brain imaging to study how consumers assess, deliberate and choose in a variety of contexts. Could help increase the effectiveness of advertising and marketing campaigns and to gauge a product’s appeal while it is still being designed Subjects wear an electro cap or video headset. Engaging the Consumer Page | 10 Customer opinions and feedback are collected online Collection used to be through focus groups and surveys and only reflected a small sample of customer responses. Helps identify customer preferences Website Engagement Monitoring the most innovative websites and online businesses helps others to understand the tools available and the services consumers set their standards by. Crowdsourcing Product Developers and retailers have found they can engage consumers as collaborators and also learn more about their preferences. Crowdsourcing - outsourcing a job once performed by employees through an open call to a large undefined group and people, generally using the internet. It is a form of mass collaboration. Mass collaboration invites customers to come together virtually to achieve goals, vote on solutions, or solve problems to create a product. Can be used to vote for new logos or advertisements, upload videos of customers using a product, editing an apparel line, co-designing a product and to test styles. Style Testing and Wear Testing Style testing – allows retail buyers and consumers to see product prototypes and offer opinions. Could be done by using buyers to edit a line or to open a prototype store that allows consumers to give their response to new product lines. Wear Testing – A variation of style testing used as a research tool, often in active sportswear where performance is a key part of purchasing decisions. Focus Groups Page | 11 Guided discussion with a moderator and members of a specific target market. Captures feelings and attitudes about a product Researchers have found that there is a poor correlation between what consumers say they want in the focus group and their actual buying behavior. Tends to generate more reliable information with older customers. Surveys Systematic gathering of information from respondents by communicating with them in person, over the phone, by mail or through the Internet. Sample - who will be studied in a survey Online collection is less expensive Consumer Privacy Most consumers are unaware of the collection of data. Cookies are one form of collection which allows websites to place small text files on personal computers allowing the site to remember the user. The government studies the issue of new privacy guidelines. General Consumer Trends Long-term recessionary Impact – Consumer is more thoughtful about purchases and more careful with credit Time as a commodity – tend to shop and comparison shop from home before going to a store Fashion Independence – Millennials and women want more individual style. Consumers are more influenced by friends than family or advertising. Comfort – value comfort over style Relaxed dress codes Importance of Fit – Lack of consistency in sizes Page | 12 Masstige or high-low – combination of mass-market and prestige - exclusive merchandise available in the mass market. Quality vs. Quantity Tension between quality and quantity Quality has decreased with rise of fast fashion Consumers are increasingly aware of the scarcity of natural resources and the issue of waste created by fast fashion. Desire for quality increases with age Defining your Target Customer Once a company has analyzed their customer, this understanding must permeate the corporate culture. The company “speaks” to the customer through:  Price  Assortment of the line  Aesthetic  Marketing in advertising or websites Page | 13


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