Chapter 04 – Customer Buying Behavior
4-1
CHAPTER 4
CUSTOMER BUYING BEHAVIOR
ANNOTATED OUTLINE
INSTRUCTOR NOTES
• An effective retail strategy satisfies customer needs better
than do competitors’ strategies. Thus, understanding
customer needs and buying behavior is critical for effective
retail decision making.
I. The Buying Process
• The buying process (the steps consumers go through when
buying a product or service) begins when customers
recognize an unsatisfied need. The process ends when
customers make a purchase, use the product, and then
LO 4-1 Describe the process that
consumers go through when
making retail patronage and
buying decisions.
PPTs 4-3 through 4-6 provide a
A. Need Recognition
Chapter 04 – Customer Buying Behavior
4-2
• The buying process is triggered when people recognize
they have an unsatisfied need.
Ask students how and when they
recognized the need for a product
they had never purchased before.
1. Types of Needs
• The needs motivating customers to go shopping and
purchase merchandise can be classified as utilitarian or
hedonic.
• Some hedonic needs that retailers can satisfy include:
• Stimulation. Retailers use background music, visual
displays, scents, and demonstrations in stores and malls to
create a carnival-like, stimulating experience for their
customers.
See PPT 4-08
Ask students to provide examples
of utilitarian and hedonic needs.
Are utilitarian needs more
important than hedonic needs?
benefits they got from their last
shopping trip. Do their parents
seek different benefits than they
seek? Relate these benefits to
stimulation, social experience,
learning new trends, self-reward,
and status and power.
2. Conflicting Needs
• Most customers have multiple needs. Moreover, these
needs often conflict. Typically, customers make tradeoffs
See PPT 4-10 for examples of
conflicting needs.
Ask students to describe a
situation in which they had
Chapter 04 – Customer Buying Behavior
4-3
between their conflicting needs.
• Because needs cannot be satisfied in one store or by one
product, consumers may appear inconsistent in their
shopping behavior.
conflicting needs.
Ask students if they ever engage
in cross-shopping. Some
examples of cross-shopping for
products could be: (1) buying a
3. Stimulating Need Recognition
• Customers must first recognize unsatisfied needs before
they are motivated to visit a store or go online to buy
merchandise.
Discuss with students how visual
merchandising can impact a
customer’s decision to purchase
(either by buying more items than
planned or buying complementary
B. Information Search
• Once customers identify a need, they may seek information
about retailers, channels, or products to help them satisfy
that need.
1. Sources of Information
• Customers have two sources of information: internal and
external.
See PPT 4-12
Ask students to indicate various
sources of information they use to
locate an apartment to rent.
Chapter 04 – Customer Buying Behavior
4-4
traditional media (e.g., advertising); blogs; product
demonstrations on YouTube; friends; and social media.
2. Amount of Information Searched
• In general, the amount of information sought depends on
the value customers feel they’ll gain from searching versus
the cost of searching.
• Marketplace and situational factors affecting information
search include (1) the number of competing brands and
retail outlets and (2) the time pressure under which the
purchase must be made.
See PPT 4-11
Give examples of purchase
decisions for which consumers
need a lot of information
(durables, medical treatment,
obtaining information from the
digital sources was better than if
they had engaged in physical
visits to the stores? Why or why
not?
3. Reducing Information Search
• The retailer’s objective for customers in the information
search stage is to limit the customer’s search to its store or
website.
See PPT 4-13
Ask students how retailers provide
enough information so customers
will not need to visit other outlets
before making a purchase
Chapter 04 – Customer Buying Behavior
4-5
• Retailers must provide a good selection of merchandise so
customers can find something to satisfy their needs within
the store.
4. Internet/Social Media/Mobile: Information Search and
Price Competition
• The Internet in general, social media, and the increasing
applications for mobile devices have had a profound
impact on consumers’ ability to gather external
information.
C. Evaluation of Alternatives: The Multiattribute Model
• The multiattribute attitude model provides a useful way for
summarizing how customers use the information they have
about alternative products, evaluate the alternatives, and
select the one that best satisfies their needs.
See Ancillary Lecture # 4-1 and
Ancillary Exercises 4-1 and 4-2.
Have students use a multi-
Chapter 04 – Customer Buying Behavior
4-6
1. Beliefs about Performance
• The customer mentally processes the “objective”
information about each retailer and forms an impression of
the benefits each store provides.
Ask students what factors they
consider in making a retailer
choice to purchase groceries, get
2. Importance Weights
• The customer forms an overall evaluation of each retailer
based on the importance he/she places on each benefit the
retailer provides.
After listing the factors
considered for a specific retailer
choice, demonstrate how the
importance weights differ across
people by having students vote on
what is most important in their
3. Evaluating Retailers
• Research has shown that the customer’s overall evaluation
of an alternative (retailer) is closely related to the sum of
the performance beliefs multiplied by the importance
weights.
See PPT 4-16
Chapter 04 – Customer Buying Behavior
4-7
customer evaluates and selects merchandise in a store.
Ask students for several examples
4. Implications for Retailers
• Retailers can use the multiattribute attitude model to
improve customers’ experience and encourage them to
shop at the retailer more frequently.
5. Getting into the Consideration Set
• The retailer must make sure that it is included in the
customer’s consideration set. The consideration set is the
set of alternatives the customer evaluates when making a
choice of a retailer to patronize.
See PPT 4-18
Ask students for their
consideration sets for grocery
purchases. What could a grocery
retailer do to get into the
students’ consideration sets?
6. Changing Performance Beliefs
• The first approach involves altering customers’ beliefs
about the retailer’s performance—increasing the retailer’s
performance rating on a characteristic.
Ask students to indicate when
their beliefs about a retailer’s
performance changed. Why did
the belief change? What can
retailers do to change beliefs?
Why is it harder to change beliefs
Chapter 04 – Customer Buying Behavior
4-8
change performance beliefs or
importance weights. Why?
7. Changing Importance Weights
• Altering customers’ importance weights is another
approach to influencing retailer choice.
Ask students to give an example
of a retailer that has tried to
change an importance weight on
an attribute–either to make it
8. Adding a New Benefit
• Retailers might try to add a new benefit to the set of
benefits that customers consider when selecting a retailer.
• The approach of adding a new benefit is often effective
Ask students to think of a retailer
that has offered a new benefit—a
benefit that customers previously
did not consider when selecting a
retailer.
D. Purchasing the Merchandise or Service
• Customers don’t always purchase a brand or item of
merchandise with the highest overall evaluation. The item
offering the greatest benefits may not be available from
the retailer or the customer may feel that the risks
outweigh the potential benefits.
See PPT 4-19
Ask students to describe a
situation in which they have
abandoned a shopping cart online
or in a store. What led to this
choice? What could the retailer
have done to prevent the
Chapter 04 – Customer Buying Behavior
4-9
• Retailers can reduce the number of abandoned carts in
several ways including: making it easier to purchase
merchandise by making it readily available on mobile
E. Postpurchase Evaluation
• The buying process does not end when a customer
purchases a product. After making a purchase, the
• The postpurchase evaluation becomes part of the
customer’s internal information that affects future retailer
and product decisions.
See PPT 4-20
Ask students to describe a
II. Types of Buying Decisions
• Three types of customer decision-making processes are
extended problem solving, limited problem solving, and
habitual decision making.
LO 4-2 Identify the different types
of buying processes.
Ask students how they went
about collecting information,
deciding on a purchase, and
making the purchase once they
Chapter 04 – Customer Buying Behavior
4-10
product purchase decision. Later,
as the lecture proceeds, different
types of problem solving, different
types of information search and
evaluation, different influences on
A. Extended Problem Solving
• Extended problem solving is a purchase decision process in
which customers devote considerable time and effort to
analyzing alternatives. Customers typically engage in
extended problem solving when the purchase decision
involves a lot of risk and uncertainty.
See PPT 4-22
Ask students to provide an
example of when they engaged in
extended problem solving. When
B. Limited Problem Solving
• Limited problem solving is a purchase decision process
involving a moderate amount of effort and time.
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.
See PPT 4-24
Ask students to provide an
example of when they engaged in
limited problem solving.
Chapter 04 – Customer Buying Behavior
4-11
C. Habitual Decision Making
• Habitual decision making is a purchase decision process
involving little or no conscious effort. This decision process
is used when decisions aren’t very important to customers
and involve familiar merchandise they have bought in the
past.
See PPT 4-27
Ask students to provide an
example of when they engaged in
habitual decision making (you
might focus on the store choice
decision, not the merchandise
Ask students to give examples of 1
or 2 items for which they are
brand loyal. Compare the
selections the students identified.
What are the similarities and
differences? What features of the
product make the individual so
brand loyal?
Chapter 04 – Customer Buying Behavior
4-12
III. Social Factors Influencing the Buying Process
LO 4-3 Summarize how the
A. The Economy
• The state of the national and global economy has significant
effects on the way people buy.
B. Family
• Many purchase decisions are made for products that the
entire family will consume or use. Retailers must
understand how families make purchase decisions and how
various family members influence these decisions.
See PPT 4-31
Ask students to give an example
of a purchase decision they made
that was influenced by members
of their family. One decision
might be the choice of college to
attend. How did the family
C. Reference Groups
• A reference group is one or more people that a person
uses as a basis of comparison for their beliefs, feelings, and
behaviors. A consumer might have a number of different
reference groups, although the most important reference
See PPT 4-32
Ask students to give examples of
Chapter 04 – Customer Buying Behavior
4-13
• Some reference groups influence purchase behaviors by
rewarding behavior that meets with their approval.
• By identifying and affiliating with reference groups,
customers create, enhance, and maintain their self-image.
D. Culture
• Culture is the meaning, beliefs, morals, and values shared
by most members of a society.
• As retailers expand beyond their domestic markets, they
need to be sensitive to how cultural values affect customer
needs and shopping behavior.
See PPT 4-33
IV. Market Segmentation
• To increase their efficiency, retailers identify groups of
customers (market segments) and target their offerings to
meet the needs of typical customers in that segment rather
LO 4-4 Determine how and why
retailers group customers into
market segments.
Ask students why retailers
A. Criteria for Evaluating Market Segments
See PPT 4-35
Having described the segments in
Chapter 04 – Customer Buying Behavior
4-14
to satisfy needs for the consumers in the segment.
1. Actionable
• The fundamental criteria for evaluating a retail market
segment are (1) customers in the segment must have
Ask students if this segment is
actionable. Can a product or
retail offering be developed that
will appeal to this segment and
2. Identifiable
• Retailers must be able to identify the customers in a target
segment.
Ask students how they would
identify people in this segment.
Sometimes retailers do not need
to specifically identify customers
in their target segment. They
3. Substantial
• A target segment must have enough buying power to
support a unique retailing mix.
4. Reachable
Ask students how they would
reach people in this segment to
B. Approaches for Segmenting Markets
1. Geographic Segmentation
• Geographic segmentation groups customers according to
where they live. A retail market can be segmented by
Ask students for examples of
retailers who use geographic
Chapter 04 – Customer Buying Behavior
4-15
2. Demographic Segmentation.
• Demographic segmentation groups consumers based on
easily measured, objective characteristics such as age,
gender, income, and education.
Examples of retailers focusing on
demographic segments are Home
Depot (homeowners), Urban
Outfitters (younger customers),
McDonald’s (families with young
children).
3. Geodemographic Segmentation
• Geodemographic segmentation uses both geographic and
demographic characteristics to classify consumers. This
segmentation is based on the principle that “birds of a
feather flock together.”
Ask students if they can identify
the different groups of people in
their neighborhood based on
demographics and behaviors.
4. Psychographic Segmentation
• Psychographic segmentation, 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.
Ask students to classify
themselves, their parents, and
their grandparents in terms of
lifestyle segmentation.
Chapter 04 – Customer Buying Behavior
4-16
ideally have of themselves. Lifestyles are the way we live.
• One of the most widely used consumer segmentation tools
is VALS (values of lifestyle survey), from Strategic Business
Insights. The segments are described by two dimensions:
What can retailers do to appeal to
this segment?
5. Buying Situation Segmentation
• Buying behavior of customers with the same demographics
or lifestyle can differ depending on their buying situation,
such as fill-in versus weekly shopping.
Contrast the differences in the
buying situation target segments
for convenience stores and
supermarkets.
6. Benefit Segmentation
• Another approach for defining a target segment is to group
Relate benefit segments back to
the multiattribute model. A
benefit segment is composed of
demographics.
C. Composite Segmentation Approaches
• No one approach meets all the criteria for useful customer
segmentation.
Ask students to describe different
groups of women (or men)
shopping for moderate to good
quality leisure clothing, based on
V. Summary
• Consumers go through several stages when making a
Chapter 04 – Customer Buying Behavior
• The importance of the buying process stages depends on
the nature of the customer’s decision (important-risky
versus less important).