Consumer Behaviour Gap Inc

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Introduction

Consumer behavior refers to “the decision making process and physical activity involved in acquiring, evaluating, using and disposing of goods and services”. Consumer behavior studies attempt to investigate the shopping patterns in terms of when, why, how, as well as, where individuals purchase or do not purchase a product. The importance of understanding consumer behavior includes the following.

First, it helps in developing effective marketing mix in terms of the right price, product, place and promotion. Second, consumer behavior helps in formulating marketing strategies in terms of good timing, effective advertising and excellent customer services. Third, it helps managers to understand public policy and the impact of the product in the society.

Finally, it helps in changing consumer behavior in order to enhance sales. Given these benefits, marketers have focused on market research in order to understand consumer behavior. Through such studies, marketers have been able to understand consumers’ perception of products and substitutes.

Market research has also facilitated understanding of how a product is used by consumers and the improvements that consumers expect to be made on the product. Additionally, researchers have been able to understand buyers’ attitudes towards a product, adverts and the influence of family and friends on purchasing decisions.

E-commerce or online shopping was introduced to leverage the determinants of purchasing decisions. In particular, online shopping attempts to reduce costs and time involved in shopping.

However, the problems of online shopping such as insecurity, lack of adequate product information and inaccessibility to internet have negatively impacted consumers’ online purchasing decisions. This paper focuses on consumer behavior by analyzing the situational factors that influence the purchase of ladies handbags.

The Company

Gap Inc is a leading international specialty retailer in the fashion and apparel industry. The company was founded in 1969 in San Francisco where its headquarters is located (Gap Inc, 2012, pp. 3-85). The company retails fashion accessories, clothes, ladies handbags, and personal care products.

These products are sold under the five brands of Gap Inc. The brands include “gap, banana republic, old navy, piper-lime and athleta” (Gap Inc, 2012, pp. 3-85). As at January 2012, Gap Inc had 13,200 employees working in its 3,000 stores around the world (Gap Inc, 2012, pp. 3-85). Gap Inc also operates 200 franchise stores in various parts of the world.

The Problem

Despite being one of the largest firms in the global apparent industry, Gap Inc has not been able to improve its profitability in the last financial year (2011 financial year). In general, Gap Inc reported a significant reduction in both sales and profits in the 2011 financial year.

The company’s net income for the fourth quarter of 2011 was $218 million which was 40.27% less than the $365 million recorded in 2010’s fourth quarter (Gap Inc, 2012, pp. 3-85). The company’s sales in the fourth quarter of 2010 were $4.4 billion. However, the sales decreased to $4.3 billion in the fourth quarter of 2011. Overall, the sales had declined by 4% in the last quarter of 2011(Gap Inc, 2012, pp. 3-85).

The full year results indicate that Gap Inc realized a net income of $833 million which was 17% less than the income reported in 2010 financial year. The decrease in profits is partly attributed to reduction in sales in 2011. In 2012, the company’s international sales for the month of February declined by 9%.

The decline in Gap Inc’s sales is attributed to the following factors. First, the company has not been able to overcome the competition in the US and international market. Second, the tastes and preferences associated with the purchase of fashion items such as handbags are varied and keep changing.

However, Gap Inc and its franchisees have not been able to successfully gauge fashion trends, as well as, changes in consumer preferences. Consequently, most of its stocks for handbags and other products do not meet the needs of customers.

Finally, the poor economic performance in some regions such as Europe has resulted into low demand for fashion products. Hence, Gap Inc’s marketers should understand consumer behavior and its effect on the purchase of ladies handbags in order to improve sales and profits.

Situational Influences on Consumer Behavior

Situational influences refer to “the temporary environmental factors that form the context within which a consumer activity occurs at a particular time and place”. Consumer activities include processes such as comparing alternative products, seeking information about a product and purchasing a product, among others. The situational factors are external to the consumer.

This means that the consumer has no control over the situational factors. However, the situational factors influence the consumers’ decisions regarding the purchase of a given product. Situational factors are categorized into five groups namely, physical surroundings, social surroundings, task definition, time and antecedent states. These broad categories of situational factors can be explained as follows.

Physical surroundings refer to the actual physical, as well as, the spatial features that describe the environment in which a consumer activity takes place. The store from which ladies purchase their handbags can be used to illustrate the physical surrounding. The spatial features or aspects of the store include its location, the display of handbags in the store and the level of crowding within the store.

The non-spatial features of the store include the music, noise and air condition within the store. According to the preference theory, the physical surroundings determine the consumer’s choice of store. The concept of preferences asserts that consumers will choose one product or store over the rest, based on the expected marginal utility. Thus, the consumer will prefer to shop in a store that offers maximum marginal utility.

Social surroundings refer to the “effect of other people on an individual engaged in a consumer activity”. Consumers normally engage in consumer activities in the presence of their colleagues, friends and relatives. Socially, individuals normally behave differently in the presence of others.

The change in behavior is attributed to the relationship between the individual and the people he is interacting with, as well as, the norms that guide behavior in public places.

Thus, a consumer’s behavior will be different in the presence of other people. From the perspective of group influence, the behavior of a consumer in the presence of others will depend on culture, subculture and social class. Additionally, the consumer’s behavior will depend on reference group and family influences.

Task Definition

Task definition refers to the reason for getting involved in a consumer activity such as buying or consumption.Task definition determines the choice of product to be bought and the place where such product is to be bought. Ladies normally buy handbags for different purposes. Thus, a lady going for an interview is likely to buy a different handbag compared to a lady going for a holiday.

Time and Temporal Perspective

Time and temporal perspective describes how time influences the behavior of consumers. Shopping and consumption patterns tend to vary with time. For instance, men are likely to buy handbags for their wives as gifts during festive seasons such as valentine day. Thus, the demand for handbags will be high during the festive seasons.

Antecedent States

Antecedent states refer to the attributes of the consumer that do not last for a long time. Such attributes include momentary moods and conditions. A momentary mood such as high excitement is likely to encourage a person to engage in shopping activity.

Situational Factors that Affect the Purchase of Handbags

Physical surrounding affects the purchase of handbags. Consumers who visit the stores are affected by the spatial aspects of the stores. The display of the handbags in the shelves determines the ease with which the customers can reach them. Additionally, customers prefer less crowded stores with short checkout queues.

In online shopping, the layout of the website in terms of the visual designs, the use of colors and graphics affect the consumer’s attitude towards the company and its products. For instance, a website that uses appealing graphics for handbags is likely to attract more traffic. Other aspects of the sales website that affect consumer behavior include music and multi-media applications that enhance the shopping experience.

Time and temporal perspective also affects the purchase of handbags. The rational behavior theory asserts that a consumer, as a rational being, attempts to use his resources in a manner that facilitates utility maximization. In this case, the consumer’s resources include the money and time to be spent in shopping. A rational consumer will prefer to spend the least time possible in shopping.

Online shopping is driven by the convenience it offers. With the aid of an internet enabled device such as a smart phone or a computer, customers can easily purchase a handbag from the comfort of their homes or workplaces. Online shopping also enables consumers to search through a variety of handbags in stores located in different parts of the world.

Consequently, the consumers benefit from high chances of getting the right handbag. Additionally, all consumers have a budget constraint. This means that consumers have limited amount of money to shop. Thus, online shopping enables consumers to spend less by avoiding the travelling costs associated with visiting several stores. However, not all websites can facilitate quick search and shopping for handbags.

Consumers have different internet connections, and this determines their ability to access information about the handbags on offer. A website that does not facilitate quick access to product information through basic internet connection is likely to be avoided by consumers. In such cases, the consumers will prefer to visit the nearest store to purchase handbags.

Social surroundings also influence the purchase of handbags. Given the importance of handbags to women, consumers always try to consult as many people as possible before deciding to purchase a particular handbag. Thus, buyers of handbags normally prefer websites that enable them to consult their reference groups during the shopping process.

For instance, a website that is connected to twitter can enable the buyer to discus the qualities of the handbag with her reference group. Some times, ladies prefer to purchase handbags in stores since they are able to get immediate help from store assistants. The effect of social class also drives online shopping. The upper class tends to prefer online shopping due to the prestige associated with it.

Thus, a lady of high social status is likely to purchase her handbag online instead of visiting a crowded mall to purchase the same handbag. Some men usually shy off from buying ladies fashion accessories such as handbags in public areas. Such men tend to prefer online shopping as a way of ensuring privacy while purchasing ladies handbags.

Influence on the Purchase of Handbags

A clear understanding of the situational factors will help Gap Inc to persuade customers to buy its handbags. At the store level, Gap Inc should improve the physical surrounding of its stores. Improving the ambiance of the stores will enhance consumers’ shopping experience, thereby increasing sales for handbags. Additionally, the visibility of the handbags can be improved through attractive shelf displays.

The context of Gap Inc’s sales website should also be improved. Context refers to the layout of the website, the use of graphics, colors and visual designs to market the product. The company should use the right font, text and graphics to effectively convey the information about the handbags’ features. Additionally, music and video demonstrations should be used to communicate a theme that encourages customers to purchase the handbags.

According to the time and temporal perspective, a website will be effective if it facilitates quick access to product information and purchase of the product. In this case, Gap Inc should enhance the commerce, customization and communication aspects of its website. Commerce refers to the website’s ability to facilitate sales transaction activities such as ordering, payment, and returns.

The sales transactions should take place in the shortest time possible and in a safe manner. Communication refers to the extent to which the company can engage the consumers in conversations through its website. Multimedia capabilities such as live chats, email, as well as, message boards should be used to market the handbags. For instance, consumers can be informed about new stock through emails.

Besides, consumers’ questions about the handbags can be answered immediately through live chats. At the store level, the efficiency of the checkout systems should be improved in order to save customers’ time.. Customization eases the process of online shopping by providing consumers with information about their past purchases. It also offers suggestions on alternative products that customers can choose from.

In the context of social surroundings, consumers should have the privacy they need to purchase a product. Additionally, the consumers should be able to consult with their reference groups, families and friends in order to make the right choices when purchasing a handbag. Consequently, Gap Inc should improve the community and connection aspects of its website.

Community refers to the extent to which consumers are able to communicate among themselves. To facilitate communication between consumers and their reference groups, Gap Inc should incorporate social media in its websites. By sharing information about the handbags, the consumers will be acting as advocates of the company’s products.

Additionally, Gap Inc will be able to access opinions or feedback about the quality of the handbags from both actual and potential customers. Such feedback can be used to formulate better marketing strategies. Connection refers to the ease of accessing the website and linking with related websites.

Accessing Gap Inc’s website can be improved by avoiding sophisticated technology that requires very high internet speed that majority of customers can not afford. Additionally, related links should be included in the website to enable consumers to access product information or seek assistance from the company’s representatives.

Conclusion

Consumer behavior encompasses all the activities involved in the process of purchasing, using and disposing of a product. Consumer behavior is determined by situational factors. The situational factors are external to the consumer, but influence the consumer’s decision to purchase or not to purchase a product.

The situational factors include physical surrounding, social surrounding, time and temporal perspective, task definition and antecedent states. The situational factors that affect the purchase of handbags include physical surrounding, social surrounding, as well as, time and temporal perspective. A clear understanding of the situational factors will help Gap Inc to increase its sales, especially for handbags.

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