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Chapter 04 - Customer Buying Behavior
4-1
CHAPTER 4
CUSTOMER BUYING BEHAVIOR
ANNOTATED OUTLINE
INSTRUCTOR NOTES
I. The Buying Process
• 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.
• Retailers attempt to influence consumers as
they go through the buying process to
encourage them to buy the retailer’s
merchandise and services. Each stage of
the buying process is addressed in the
following sections.
PPTs 4-3 through 4-6 provide a detailed
example of each stage of the buying decision
process.
PPT 4-7 illustrates the stages in the buying
selection process. Ask students to describe the
steps they went through to purchase low price
merchandise such as cereal, shampoo, etc.
List the steps and compare them with the
buying process for high price merchandise.
A. Need Recognition
• 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. Ask them how they analyzed how important
that need was to them at that time.
Chapter 04 - Customer Buying Behavior
4-2
1. Types of Needs
• The needs motivating customers to go
shopping and purchase merchandise can be
classified as utilitarian or hedonic.
• Utilitarian needs are focused on
accomplishing a specific task.
• 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.
• Learning New Trends. By visiting
retailers’ stores and Websites, people learn
about new trends and ideas.
• Status and Power. Some customers have
a need for status and power that is satisfied
See PPT 4-08
Ask students to provide examples of utilitarian
and hedonic needs. Are utilitarian needs more
important than hedonic needs? Why or why
not?
Ask students to indicate what 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
Chapter 04 - Customer Buying Behavior
4-3
through shopping.
• Self-reward. Customers frequently
purchase merchandise to reward
themselves when they have accomplished
something or want to dispel depression.
2. Conflicting Needs
• Most customers have multiple needs.
Moreover, these needs often conflict.
Typically customers make tradeoffs
between their conflicting needs.
See PPT 4-10 for examples of conflicting
needs.
Ask students to describe a situation in which
they had conflicting needs.
B. Information Search
• Once customers identify a need, they may
seek information about retailers and/or
products to help them satisfy the need.
1. 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.
See PPT 4-11
Give examples of purchase decisions for which
consumers need a lot of information (durables,
medical treatment, etc.) and purchase
decisions made with limited information
Chapter 04 - Customer Buying Behavior
4-4
• Today, technology can dramatically reduce
the cost of information search.
• 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.
Ask students if they have searched the Internet for
information about a product, brand or price. Did
they feel that obtaining information from the
2. Sources of Information
• Customers have two sources of
information: internal and external.
• Internal sources are information in a
customer’s memory such as the names,
images, and past experiences with different
stores.
See PPT 4-12
Ask students to indicate various sources of
information they use to locate an apartment to
rent. What sources can apartment owners
influence? What sources do they use when
trying to decide which course or instructor to
take?
Reducing the Information Search
• The retailer's objective at this stage of the
See PPT 4-13
Ask students how retailers provide enough
information so customers will not need to visit
Chapter 04 - Customer Buying Behavior
4-5
buying process is to limit the customer's
information search to its store or website.
Each element of the retailing mix can be
used to achieve this objective.
• Services provided by retailers can also
limit the search.
other outlets before making a purchase
decision.
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.
• Retail buyers can also use the
multiattribute model to evaluate
merchandise and vendors.
See Ancillary Lecture # 4-1 and Ancillary
Exercises 4-1 and 4-2.
Have students use a multi-attribute model to
make a choice between buying fashionable
clothing from a catalog and from a specialty
1. Beliefs about Performance
• The customer mentally processes the
“objective” information about each retailer
and forms an impression of the benefits
Ask students what factors they consider in
making a retailer choice to purchase groceries,
get a haircut, buy jeans, eat a meal, etc.
Chapter 04 - Customer Buying Behavior
4-6
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
3. Evaluating Stores
• 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
• In general, customers don’t thoroughly
evaluate each alternative as suggested in
the multiattribute model. They simply buy
merchandise that’s good enough or very
good on one particular attribute. They
often don’t spend the time necessary to find
the very best product.
Ask students for several examples of how they
determine the “good enough” level in a retailer or
product choice situation.
a. 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 selection.
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?
The choice rule described in the text is a linear
b. 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 about a competing retailer than about
yourself? Use automobiles to illustrate how
Chapter 04 - Customer Buying Behavior
4-8
c. 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 more
important because they are doing really well
on that dimension or less important to
d. Adding a New Benefit
• Retailers might try to add a new benefit to
the set of benefits that customers consider
when selecting a retailer.
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
• 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 abandoned cart in
each instance?
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,
reducing actual or perceived waiting time
to purchase, and reducing perceived risks
of the purchase through liberal return and
refund policies.
E. Post-purchase Evaluation
• The buying process does not end when a
customer purchases a product. After
making a purchase, the customer consumes
or uses the product and then evaluates the
experience to determine whether it was
satisfactory or unsatisfactory.
See PPT 4-20
Ask students to describe a situation in which
they were dissatisfied after visiting a retailer.
What could the retailer have done to satisfy
them? Ask students to describe a satisfying
experience. What did the retailer do to create
II. Types Of Buying Decisions
• Three types of customer decision-making
processes are extended problem solving,
limited problem solving and habitual
decision making.
Ask students how they went about collecting
information, deciding on purchase and making the
purchase once they realized that they needed any of
the following: (1) new music for their MP3 player
(2) jeans (3) sneakers (4) laptop (5) apartment to
rent.
Chapter 04 - Customer Buying Behavior
4-10
each of the products on which a discussion was
generated at the outset.
See PPT 4-21 for a review of the types of customer
decision-making processes.
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 did they evaluate several retailers? Why
did they evaluate several? Ask students for
examples of financial, physical, and social
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.
REFACT: Seventy percent of all supermarket
purchases are unplanned, impulse purchases.
Chapter 04 - Customer Buying Behavior
4-11
• Retailers encourage impulse buying
behavior by using prominent displays to
attract customer attention and stimulate a
purchase decision based on little analysis.
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 selection decision). Have
students describe a situation when they
Ask students their favorite store to buy jeans.
Group the students together who answered
with the name of the same store. Ask what
makes them so brand loyal to that specific
store. Compare their answers to the alternative
answers offered. Compare and contrast the
similarities and differences.
III. Social Factors Influencing Buying Decisions
See PPT 4-30 for an overview of the factors
influencing customers’ buying decisions.
A. The economy
The state of the national and global economy has
significant effects on the way people buy. With the
recent recession, consumers continue to feel a sense
of uncertainty and risk. Many customers now
Chapter 04 - Customer Buying Behavior
4-12
enjoy searching and shopping for bargains.
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 influence the decision?
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 group is the family.
See PPT 4-32
Ask students to give examples of their purchase
decisions that are influenced by their reference
groups. What are the different reference
groups that influence their decisions?
Chapter 04 - Customer Buying Behavior
4-13
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.
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 than the needs of a specific
customer.
Ask students why retailers segment markets.
What are examples of retailers who clearly
appeal to a specific segment of customers?
Describe the segment or segments of customers
that buy Red Bull, shop at Toys R’ Us, buy
Chapter 04 - Customer Buying Behavior
4-14
A. Criteria for Segmenting Markets
• Four criteria for evaluating whether a retail
segment is a viable target market are (1)
actionable, (2) identifiable, (3) substantial,
and (4) reachable.
See PPT 4-35
Having described the segments above, evaluate
each of the segments on the criteria listed.
1. Actionable
• The fundamental criteria for evaluating a
retail market segment are (1) customers in
Ask students if this segment is actionable. Can
a product or retail offering be developed that
will appeal to this segment and not to other
types of customers? Would you use unique
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 promote their stores to
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
B. Approaches for Segmenting Markets-
Geographic
• Geographic segmentation groups
customers based on where they live. A
Ask students for examples of retailers who use
geographic segmentation.
Chapter 04 - Customer Buying Behavior
4-15
as states, cities, and neighborhoods.
• Segments based on geography are
identifiable, reachable, and substantial.
Discuss differences in merchandise students may
expect to see at a sporting goods store in Florida
versus a sporting goods store in Vermont.
C. Approaches for Segmenting Markets-
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),
Limited Express (young women), McDonald's
(families with young children).
Ask students for other examples.
D. Approaches for Segmenting Markets
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.
