Chapter 3

Customer Buying
Behavior (Retail)
Dr. Civi
Chapter 3
Consumer Behavior

Describe the process that consumers go through

when making retail patronage and buying
decisions.

Identify the different types of buying processes.

Summarize how the economy and social factors

affect customer purchase decisions.

Determine why and how retailers group

customers into market segments.
Why Customer
Buying Behavior
Matters in Retail
• Retail strategies work only if
they match how customers
actually behave
• Customers don’t buy products
— they choose stores,
channels, and experiences
• Same customer, different “Claire’s didn’t fail because teens stopped liking jewelry — it failed because
behavior in different retail the shopping experience no longer matched how tweens wanted to feel in-
store.” (Sep 18, 2025, WSJ)
settings
How Customers
Choose Retailers
Customers choose retailers
based on:
• Needs (task vs pleasure)
• Effort & convenience
• Perceived value
Perceived value → not just low price, but fairness
• Past experience Past experience → “Amazon used to be cheaper”
Effort & convenience → customers won’t tolerate extra effort and
higher prices

“When Amazon raised prices on basics, customers didn’t just pay

more — they started rethinking which retailer deserved their loyalty.”
(WSJ, July 20, 2025)
Stop & Think: What Matters Most to You?
When choosing where to shop, which matters most
right now?

a) Need (task vs pleasure)

b) Effort & convenience
c) Perceived value
d) Past experience
Consumer Buying Process
Big Retail
Question
Why does the same person
shop differently at:
• a grocery store
• a clothing store
• online
The Retail Buying Process (Big Picture)
• Need recognition
• Information search
• Evaluation of alternatives
• Purchase
• Post-purchase evaluation
Need Recognition:
Why Shopping
Starts
• Utilitarian needs → task-oriented (I need
milk)
• Hedonic needs → pleasure-oriented (I want
to browse)
Stylist Stacy London has partnered with QVC on livestream
events aimed at women 50 and older. QVC, Inc.(WSJ, Sep5,
Examples 20225)

• Weekly grocery run “Here, shopping doesn’t start with a problem — it

• Browsing at a mall on a Saturday starts with a feeling.”
• Treating yourself after exams
Stop & Think—
Need Recognition
Think of your last retail purchase.
Was it mostly:

• utilitarian (task-oriented)?
• hedonic (pleasure-oriented)?
• a mix of both?
Stimulating
Needs
Retailers trigger needs using:
• Displays
• Promotions
• Layout
• Digital notifications

The display of shoes can stimulate

customers need for shoes.
Information Search:
How Customers Decide
Where to Shop

• Internal sources: memory,

habits, past experience
• External sources: reviews,
friends, social media, websites
Retailers are increasingly allowing customers to keep unwanted
items and still get a refund. It isn’t just a question of costs. (WSJ,
July 24, 2025)

Reality
• Checking reviews in-store “A generous return policy becomes
information customers rely on.”
• Price comparison on phones
Information
Search Today
• Search happens:
• before the store
• inside the store
• after leaving the store Aldi wins by reducing decisions, not offering more choices
(Sep,1, 2025, WSJ).
• Phones reduce effort, not
thinking
Stop & Think:
When Do You
Search?
When do you usually search for information?

• Before entering the store

• Inside the store
• After leaving the store
• All of the above

Quick discussion (2 min):

• Turn to a neighbor and compare answers
Reducing
Information Search
(Retail Advantage)
Retailers reduce effort by:
• Clear pricing
• Knowledgeable staff
• Easy navigation
• Everyday low pricing

“Costco wins by making comparison unnecessary — customers trust that if

Costco carries it, it’s a good deal.”
Evaluation of Alternatives:
How Customers Compare
Stores

Customers compare retailers based

on:
• A few key attributes
• Price
• Convenience
• Assortment
• Trust
• Not everything
• And not equally
Stop & Think:
Breadth vs Depth
“Imagine you are choosing between two grocery
stores — before you go shopping.”

Which store would you be more likely to choose?

A. Breadth – a store that carries many different
product categories, even if each category has
fewer options
B. Depth – a store that carries many options
within fewer categories, but does those
categories very well
Why? What matters most in this comparison?
The Consideration
Set
If a retailer is not considered, it
cannot be chosen. “Location puts you in the set before branding does.”

How retailers get considered:

• Habit
• Location
• Awareness
• Past experience
A Walmart employee loads up a robotic warehouse tool with an empty cart to be filled
with a customer’s online order at a Walmart micro-fulfillment center in Salem, Mass. on
Jan. 8, 2020.
Stop & Think:
Who Didn’t Make the List?

• When you need groceries, how

many stores do you actually
consider?
• Why are others ignored?
PURCHASE &
POST-PURCHASE
• Friction
• Ease of purchase
• Situational Factors
• Time pressure
• Mood
• Environment
• Satisfaction → future behavior

Taco Bell will work with restaurants to figure out the best use for AI,
and when a human might be better (WSJAugust25, 2025).
Stop & Think: Have
You Ever Walked
Away?
Have you ever decided not to buy
because of:

• long lines?
• out-of-stock items?
• confusing checkout?
• poor mobile experience?
From Evaluation to
Purchase: Where
Sales Are Lost

Purchase barriers:
• Long lines
• Out-of-stock items
• Confusing checkout
• Poor mobile
experience
Post-Purchase
Evaluation
Starbucks is training employees to better connect with customers
• Satisfaction → loyalty
• Dissatisfaction → returns, switching,
bad reviews

A negative first review for a product online tends to lead to

fewer total reviews and a lower star rating.
Types of Buying
Decisions in Retail
• Habitual decision making
• Limited problem solving
• Extended problem solving

Aldi = routine shopping

Weekly grocery run
•Low cognitive effort
•Store loyalty through simplicity
Impulse Buying (Retail
Gold)

• End-cap displays
• Checkout items
• Limited-time offers
• Free shipping
Why Buying Decision
Type Matters to
Retailers

Buying decision type affects:

• Store design
• Service level
• Information provided
• Pricing & promotions

Customers at some Canada Goose stores can try on parkas and other cold-weather gear
in cold rooms where temperatures dip below freezing. (WSJ, June 6, 2025)

“Retailers are adding VIP lounges, coffee bars and lawns to locations to get
shoppers to stay longer”
Stop & Think: What
Kind of Decision
Was That?
Which buying decision type best
describes:
• your last grocery trip?
• buying a phone or laptop?
Social Influences
on Buying
• Family roles
• Friends & peers
• Social proof

“Which social influence affects you most — family, friends, or

culture?”
Culture &
Multicultural Retail
Markets
• Customers don’t discard
culture
• Retailers must adapt:
• Product mix
• Communication
• Accessibility
Situational Factors
• Time pressure
• Mood
• Weather
• Crowding
Stop & Think: Same
You, Different
Situation
Would you shop differently if:
• you were rushed?
• shopping with friends?
• shopping for someone else?
Why Retailers
Segment Markets
• You cannot be all things to all
customers.

Retailers segment customers because:

• Customers differ in needs
• Customers differ in how they decide
• One retail mix cannot satisfy
everyone
Criteria for Good
Retail Segments
• Identifiable → Can we clearly
describe who they are?
• Actionable → Can we design
offers for them?
• Substantial → Are there enough
of them to matter?
• Reachable → Can we actually
reach them through channels?
Stop & Think: Why
Segment at All?
If customers behave differently:
• Can one retail mix satisfy
everyone?
Key Segmentation
Approaches

• Geographic
• Demographic
• Buying situation
• Benefit segmentation
Buying Situation
Segmentation
• Weekly grocery trip vs quick trip
• Emergency vs browsing
• Holiday shopping vs routine
shopping
• In-store vs online vs curbside
How Retailers Influence
Every Stage

Retailers shape behavior through:

• Store design
• Pricing
• Promotions
• Service
Chapter 3
Takeaways
• Buying behavior explains retail
success and failure
• Customers are not always
rational
• Understanding behavior is the
foundation of retail strategy