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Assignment Reflection

How to Generate Larger Profits

This week I had an assignment that involved a simulation. During this simulation, I learned a few things about consumer behavior and retail layout and merchandising. When studying consumer behavior, we try to understand why and how the customers buy. Generally, customers move along the decision-making process each time they go and make a purchase. Depending if the purchase is considered low-involvement or high-involvement, some of the steps may be skipped. For example, buying a gallon of milk is a low-involvement purchase. Most people either get the same brand, or find the cheapest option. This decision is fairly quick so the customer would skip a few steps and just go to the purchase stage.

Retail layout is another huge factor in driving profits. A lot of retailers put the major need products in the back of the store. The reason for this is because it forces the customer to walk buy the rest of the product. An example of this would be the location of milk and eggs within a grocery store. These products tend to be a need for most people so they put these products in the back of the store. Another tip that I learned was to put the inexpensive products up front to create more impulsive purchases. An example of an impulse buy would be candy bars at grocery stores. They place these items by the registers because all customers will see them.

So how can you apply these this information to real life?

  • Put the top sellers towards the back of the store
  • Try to generate impulse buys
  • Place complimentary items next to each other
  • Place salespeople next to the high-involvement products