Kardan University | School of Business

Identifying and Understanding

Consumers

RM02
Mr.Waleed Khan Afridi
Summer 2009
waleedafr@yahoo.com

Mr.Afridi, Kardan Institute, Kabul 1

 Overview
• The quality of a retail strategy depends on how well a firm identifies and
understands its customers and forms its strategy mix to appeal to them.
• This entails identifying consumer characteristics, needs, and attitudes;
recognizing how people make decisions; and then devising the proper
market plan.(Barry,185)
• We will explore – in a retailing context – the impact on shoppers of each of
the elements shown in figure below;

Life Styles

Retail Needs and

Demographics Shoppers
Desires

Shopping
Attitudes and
Behaviors
Mr.Afridi, Kardan Institute, Kabul 2
 Consumer Demographics
• Both, Groups of consumers and Individual consumers can be
identified by such demographics as gender, age, population, literacy
rate, language, household size, marital and family status, Income,
mobility, where people live, place of residence, occupation,
education etc. (Barry,186)

Income
Employment Where people
Status live

Marital and Demographics Age and Gender

Family Status

Retail Sales Birth Rate

Market size

Mr.Afridi, Kardan Institute, Kabul 3

 Consumer Demographics
• For a given business and location, the characteristics of
the larger market (the customer group to be sought by
the retailer) can be studied on the basis of some
combination of these demographics factors, and a retail
strategy can be planned accordingly.
• Market Size: How many people are in the potential target
market?
• Gender: Is the potential target market more male or
female , or they are equal in proportion?
• Age: What are the prime age groups to which the firm
wants to appeal or to offer products or services?
• Household size: What is the average household size of
potential consumers?

Mr.Afridi, Kardan Institute, Kabul 4

 Consumer Demographics
• Where People live: How large is the trading area from
which potential customers can be drawn?
• Employment Status: Does the potential target market
include working women?
• Occupation: In what industries and occupations people
are working?
• Education: Are potential customers college educated?
• Retail Sales: What is area’s sales forecast for the
retailer’s goods/services category?
• Income: It is potential target market lower income,
middle income, or upper income? Is the
discretionary income available for luxury purchase?

Mr.Afridi, Kardan Institute, Kabul 5

 Life Styles
• Life Styles are the ways in which individual consumers and families
(households) live and spend time and money.(Barry,188)
• Consumer Life-Styles are based on social and psychological
factors, and influenced by demographics.
• These social factors are useful in identifying and understanding
consumer life-styles.

CONSUMER LIFE-STYLES

Social Factors Psychological Factors

Mr.Afridi, Kardan Institute, Kabul 6

 Life Styles
Social Factors
• Culture: A culture is a distinctive heritage shared by a group of
people that passes on a series of beliefs, norms, and customs.
• E.g. U.S. culture stresses individuality, success, education etc.
• Social Class: Social Class involves an informal ranking of people
based on income, occupation, education, and other factors.
• E.g. Upper-Upper Class, Upper Lower Class, and Lower-Lower
class etc.
• Reference Groups: Reference Groups influence people’s thoughts
and behavior.
– Membership Group: A person does not belong but wishes to join.
– Dissociate Group: A person does not want to belong.
– Face-to-Face Group: Such as families and relatives.
• Family Life Cycle (FLC): Family Life cycle shows how a family
moves from bachelor hood to children to solitary reaper (Old single).
At each stage of FLC, the attitudes, income, needs, purchases
change. Retailers must be alert to those, who are married, or
marries in a society/area.
Mr.Afridi, Kardan Institute, Kabul 7
 Life Styles
Psychological Factors

• Psychological factors help in identifying and

understanding consumer life styles. Some of the
Psychological factors are mentioned below;
• Personality: Personality is the sum total of an individual’s
traits (qualities/behaviors), which may make that
individual unique. It includes a person’s self confidence,
innovativeness, sociability, emotional
stability.(Barry,189)
• Attitudes (Opinions): Attitudes are positive, neutral or
negative feelings a person has about different topics,
products or services. They are also feelings consumer
have about a given retailer and its activities.
• E.g. A consumer may think that does the retailer is
desirable, unique and fairly priced?
Mr.Afridi, Kardan Institute, Kabul 8
 Life Styles
Psychological Factors

• Perceived Risk: Perceived Risk is a level of risk

a consumer believes exists regarding the
purchase of a specific good or service from a
given retailer.
• Kinds of risk;
– Functional: Will a good or service perform well?
– Physical: Can a Good or Service hurt me?
– Financial: Can I afford to buy?
– Social: What will peers think of my shopping here?

Mr.Afridi, Kardan Institute, Kabul 9

 Shopping Attitudes and Behaviors
• Attitudes towards shopping: Consumer attitudes
towards the shopping have a big impact on the
ways in which they act in a retail environment.
• Shopping Enjoyment: In general, people don’t
enjoy shopping as much as in the past.
• According to a survey conducted recently, when
the shoppers were asked that what would make
them choose one retailer from a group of similar
retailers situated in near each other, the
shoppers said;
– The Retailers with the best employee attitudes.
– The Retailer appeared neatest and nicest from inside.

Mr.Afridi, Kardan Institute, Kabul 10

 Shopping Attitudes and Behaviors
• Attitudes Toward Private Brands: Many
consumers believe private (retailer) brands are
as good as or better than manufacturer brands.
• Private (Dealer, Store) Brands: Contain names
designated by wholesalers or retailers, are more
profitable to retailers, are better controlled by
retailers are not sold by the competing retailers,
are less expensive for consumers, and lead to
customer loyalty to retailers.(Barry,195)

Mr.Afridi, Kardan Institute, Kabul 11

Consumers Needs and Desires
• From a Retailing perspective, Needs are a
person’s basic shopping requirements
consistent with his/her present demographics
and life-style.
• Desires are discretionary shopping goals that
have an impact on attitudes and behavior.
• When a Retailer strategy aims to satisfy the
consumer needs and desires, it appeals to
consumer motives (objectives/purpose), the
reasons for their behaviors.

Mr.Afridi, Kardan Institute, Kabul 12

 Consumers Needs and Desires
(Questions)

• There are just a few questions that needs

to be resolved (determined) by the
Retailers:
– How important is convenience?
– How important is Price?
– How far will customers travel to get to the
retailer?
– What level of customers services is
preferred?
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 Consumer Decision Process
• The consumer decision making process involves
six steps i.e. Stimulus, Problem Awareness,
Information search, Evaluation of alternatives,
Purchase, and Post Purchase Behavior.

A. The Decision Process

Evaluation
Problem Information Post-purchase
Demographics of Purchase
Awareness Search Behavior
Alternatives

Mr.Afridi, Kardan Institute, Kabul 14

 Consumer Decision Process
• Stimulus: A stimulus is a cue (hint) (social or
commercial) or a drive (physical) meant to motivate
or arouse a person to act. When one talks with
friends, fellow employees, family members, a social
cue is received. A commercial cue is a message
sponsored by a retailer or some other seller.
Advertisements, Sales Banners and Promotions. A
third type of stimulus is a physical drive and it
occurs one or more of a person’s physical senses
are effected.
• A potential consumer may be exposed to any or all
the three types of stimuli. And if aroused (motivated)
he or she goes to the next step of process.
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 Consumer Decision Process
• Problem Awareness: At problem awareness stage,
the consumer not only has been aroused by social,
commercial, and or/physical stimuli but also
recognizes that the good or service under
consideration may solve a problem of shortage or
unfulfilled desire. Recognition of shortage occurs
when a person discovers a good or service should
be repurchased.
• A good could wear down beyond repair or the
person might run out of an item such as milk.
• Ser vice might may be necessary if a good such as a
Car requires a repair or a wash.

Mr.Afridi, Kardan Institute, Kabul 16

 Consumer Decision Process
• Information Search: If problem awareness merits
further thought, information is sought(
wanted/gathered). Information search has two parts;
• (1) Determining the alternatives that will solve the
problem at hand (and where they can be bought)
• (2) Ascertaining (determine) the characteristics of
each alternative
• Evaluation of alternatives: In this stage a consumer
selects one option from among the choices. This is
easy if one alternative is superior on all features. An
item with excellent quality and a low price is a
certain pick over expensive , average-quality ones.
The consumer may evaluate the alternatives on the
basis of Price, quality, fit, durability and so on.
Mr.Afridi, Kardan Institute, Kabul 17
 Consumer Decision Process
• Purchase Act: A person is now ready for the purchase act – an exchange of
money or a promise to pay for the ownership or use of a good or service.
– Place of Purchase: This may be a store or non store location. Place of
purchase is evaluated thin the same way as the product is evaluated.
Alternate places are evaluated and then the most desirable place is
chosen.
– Purchase Terms: These include the method of payment. Method of
payment is the way the price may be paid (cash, short term credit etc)
– Availability: This relates to the stock on hand and delivery. Stock on
hand is the amount of an item that a place of purchase has in stock.
Delivery is the time span between placing an order and receiving and
item and the ease with which an item is transported to its place of use.

• Post Purchase Behavior: Post Purchase behavior falls into two categories;
further purchases or re-evaluation. Sometimes, buying one item leads to
further purchases and decision making continues until the last purchase is
made.
• A person may also re-evaluate a purchase. Dissatisfaction leads to
unhappiness, brand or store switching , and unfavorable conversation with
friends. (Barry,197)

Mr.Afridi, Kardan Institute, Kabul 18

 Questions…….! If any!
• Thank you very much for your time!
• Mr.Afridi
• waleedafr@yahoo.com

Mr.Afridi, Kardan Institute, Kabul 19