UNIT V

RETAIL SHOPPER BEHAVIOUR

Understanding of Retail shopper behavior Shopper Profile Analysis Shopping Decision Process - Factors influencing retail shopper behavior Complaints Management - Retail sales force Management Challenges in Retailing in India- Case studies. UNDERSTANDING OF RETAIL SHOPPING BEHAVIOUR Consumer behaviour refers to the decisions that are taken by them regarding how to use their resources like time, money and effort for buying and using the goods and services. In the retail context, the retailers would be specifically more interested to know about the shopping behaviour of customers, which involves an understanding of the following - When is he shopping? - Why is he shopping? - Where does he prefer to shop? In the case of customers buying pickles, the retailer will be interested to know - What type of pickle ( Is it vegetable-based or fruit based, Is it spicy or is it salty, vegetarian or not) - What brand is preferred? ( National brands or local brands or store brands) - The reason ( To add to taste, to eat with rice, to eat with snacks etc) - The place of purchase ( The customers prefer to buy from Supermarket, convenience store, home made etc) - Frequency of purchase ( Daily or weekly or monthly orquarterly) Once the marketer understands these, he then evolves the best possible marketing mix to attract the target customers. DECISION-MAKING with regard to retail outlet selection is very similar to consumer decisionmaking on brands where the consumer goes through a process starting from identifying needs to postpurchase issues. There are a few interesting and important dimensions associated with consumer behaviour and retail outlet selection. Does the retail outlet have psychological implications on the target segment? When Titan and Timex watches were retailed through exclusive shops, consumers wanting lower-end watches probably felt that a typical Titan showroom was too elitist, which could have had a negative impact. Does selection of outlets vary in accordance with types of product categories? While buying a TV or a washing machine, would consumers visit an exclusive showroom of BPL, Onida or Sony, or would they visit a multi-brand outlet? Would there be differences in the psychographic (and demographic) profiles of consumers choosing outlets? What is the sequence in which consumers are likely to go about their decisions? Will they select the brand or the category first before choosing the outlet? What is the impact of the image developed by a retail outlet? Is FoodWorld different from a neighbourhood grocery shop in the minds of consumers? What kind of perception are 1

consumers likely to have with regard to shopping from an online outlet such as Fabmart vis-vis a brick-and-mortar outlet like Fountainhead or Landmark? Would consumers be interested in store or retail brands? Traditionally, retailers have been carrying manufacturers' brands. But in recent times (at least to a significant extent in the foods category), supermarkets such as FoodWorld have started carrying retail or store brands. Nilgiri's is another example in the South which carries its own brands of chocolates, biscuits and other commodities.

Marketers need in-depth knowledge about the various dimensions which link retailing and consumer behaviour. There is research required to handle retail decisions in a competitive context. McDonald's found that a major chunk of its consumers decide to eat a few minutes before they make the purchase decisions and hence it is building small outlets in large supermarkets such as Wal-Mart and Home Depot. It is providing play areas to ensure a number of families visit its outlets with children. A few companies also operate through kiosks in airports, malls and high-traffic areas. There are three fundamental patterns which a consumer can follow and they could be: (I) Brand first, retail outlet second (ii) Retail outlet first, brand second (iii) Brand and retail outlet simultaneously. Why do people shop? There are two motives on the part of the customers attributed for shopping. They are Personal motives and Social motives 1. Personal motives : To play the role : A husband or a house wife or mother is expected to shop. This is part of their duty when they play that role As a diversion : Shopping becomes a diversion when one is bored or doing a monotonous thing for a long time. People want to have a change and then they decide to go shopping Learning about new trends: Some People feel that they come to know about new products / processes / technology etc and about changing life styles while shopping Physical activity: Some customers take it as a form of physical activity and prefer shopping to stay indoors Sensory stimulation: Shopping can provide sensory benefits like looking at things, handling merchandise, listening to sounds and smelling scents 2. Social motives : Shopping will provide opportunities to meet new people or meet friends / relatives etc Peer group attraction : All students from a college or colleagues from a company may like to go together or to give company to each other Status and authority: The customer may want others to see him in expensive outlets and that may give him perceived status Bargaining pleasure 2

Factors affecting consumer decision-making or factors affecting consumer behaviour A customers purchase decisions are affected by the following four factors 1. Demographic factors : Gender, age, occupation, education, family size , income 2. Psychological factors: Motives, perception, learning, attitude, personality 3. Environmental factors: Physical, social 4. Life style: Activities and interests, Nature of occupation, availability of leisure 1. Demographic factors : These are unique to a particular person. They are objective, quantifiable, and easily identifiable population data such as gender, age, marital status etc. An aged man may be very price-conscious whereas an younger man may not mind the prices so much. Similarly a married man will give priorities to different aspects of a product as compared to a bachelor. 2. Psychological factors: Consumers respond differently towards the same retail marketing mix due their own motives, personality, perception etc Motives : If the marketers can identify the motives behind the purchase, then they can develop an appropriate retail mix. Maslows hierarchy of needs (Physiological, safety, social, esteem and selfactualisation) is one of the best frame works which can be used to determine where the customer is on the scale. In rural India, customers visit periodic markets regularly because besides purchasing goods, this also serves as an outing with family (social needs) In Chennai, it is considered a status symbol if the women go to Kanchipuram and shop for silk sarees (status needs) Perception: What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. IE we chose what info we pay attention to, organize it and interpret it. Information inputs are the sensations received through sight, taste, hearing, smell and touch. The same service provided by a retailer may be perceived differently by different customers. One customer may feel that Saravana Stores gives him variety of merchandise at competitive prices and may not perceive the lack of attention negatively. Another customer in the same store may perceive it to be a reflection of lack of interest on the part of management One set of customers may perceive that Apollo Hospital offers the best medical attention in the country comparable with the best in the world. Another set of people may perceive it to be too expensive a place to get treatment. Selective Retention-Remember inputs that support beliefs, forgets those that don't. Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement per day. Can't be expected to be aware of all these inputs, and certainly will not retain many. Interpreting information is based on what is already familiar, on knowledge that is stored in the memory. 3

Learning: Learning is a process through which a relatively permanent change in behaviour results from the consequences of past behaviour. For example, in the past, self-service restaurants or super markets were not perceived well in our country. However over experience, they found that this format helps them in looking at all options closely and make the right choice. Now such stores have become accepted and are preferred. Time Zone , the first organized retail network for watches, was introduced by Titan. Before the advent of Time Zone, watches were sold through unorganized retail set up. Time Zone has made efforts to educate the customers about the availability, technology, service provided, etc. Attitude: Attitude is consumers pre-disposition to respond favourably or unfavaourably to an element of retail mix. It comprises knowledge and feelings about an object or activity. An individual develops attitudes through his own experience and interaction with others Some customers may not want to shop in a crowded locality and may avoid going to stores located there. Personality: Personality refers to all the internal traits and behaviours that make a person unique. Examples of these traits are workaholism, self confidence, friendliness, adaptability, aggressiveness, extrovertism, etc These traits affect the way they behave. 3. Environmental factors: This covers all the physical and social characteristics of a consumers external world and this affects the consumers wants, learning , motive etc.which in turn influences the responses to the retail marketing mix. The environment can be at the macro level and at the micro level. The macro environment includes the economic conditions of the country / region and the available credit facilities. The shopping activities suffered a great deal in the past two years in USA because of the economic downturn. In India, with the advent of credit facilities, the retails sector is witnessing a boom. The micro environment refers to the more tangible physical and social aspects of the individuals immediate surroundings. The temperature control, visual merchandise and display, roads to the store, etc are the physical factors and have an immediate influence on shopping behaviour. Social factors are that include the customers interaction with family members, friends, co-workers etc Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups, social class and culture. Marketers try to attract opinion leaders...they actually use (pay) spokespeople to market their products. Sachin Tendulkar or Dhoni are endorsing several products

Roles and Family Influences-Role...things you should do based on the expectations of you from your position within a group. People have many roles. Husband, father, employer/ee. Individuals role are continuing to change therefore marketers must continue to update information. Family is the most basic group a person belongs to. Marketers must understand:
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that many family decisions are made by the family unit consumer behavior starts in the family unit family roles and preferences are the model for children's future family (can reject/alter/etc) family buying decisions are a mixture of family interactions and individual decision making family acts an interpreter of social and cultural values for the individual.

The Family life cycle: families go through stages, each stage creates different consumer demands:
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bachelor stage newly married, young, no children full nest I, youngest child under 6 full nest II, youngest child 6 or over full nest III, older married couples with dependant children empty nest I, older married couples with no children living with them, head in labor force empty nest II, older married couples, no children living at home, head retired solitary survivor, in labor force solitary survivor, retired Modernized life cycle includes divorced and no children.

4. Life style: Activities and interests, Nature of occupation, availability of leisure The customers can be broadly classified as below based on their economic conditions as below: - Upper elite class : Constitute less than 0.1% of the population. They prefer antiques. Expensive jewelry, beauty treatment, traveling abroad etc - Upper middle class: Career oriented professionals, and corporate managers who prefer to spend on education, books, travel, computers etc - Middle class: Average-pay white collar job holders prefer to spend on homes, education, consumer durables etc - Working class: Blue-collar class of society prefer to spend on cheap food, unbranded goods etc

BUYING PROCESS The following diagram outlines the buying process. the stages in selecting a retailer and buying merchandise. Retailers attempt to influence the consumers as they go through the process. To encourage them to buy from their stores

RECOGNISE NEEDS

RECOGNISE NEEDS

SEARCH FOR INFORMATION ABOUT RETAILERS

SEARCH INFO ON MERCHANDISE

EVALUATE RETAILERS AND CHANNELS

EVALUATE MERCHANDISE

SELECT A RETAILER AND CHANNEL

SELECT MERCHANDISE

VISIT STORE OR INTERNET SITE

PURCHASE MERCHANDISE

REPEAT PATRONAGE OF DEALER Stages of the Consumer Buying Process

POST PURCHASE EVALUATION

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity. The 6 stages are: 1. Problem Recognition or need recognitionAn unsatisfied need arises when a customers desired level of satisfaction differs from his present condition.(difference between the desired 6

state and the actual condition). The need can be as simple as wanting to have a hair cut or may be a more complex one where one is feeling bored and he wants to have a change. Types of needs: when consumers go shopping for a business suit, he is going to satisfy an utilitarian needs. On the other hand, when he goes for entertainment he is going for hedonic needs. Thus from the customers view point, utilitarian needs are associated with work and hedonic needs are associated with fun. Successful retailers try to satisfy both the above needs of the consumer. Consumers with utilitarian needs will expect the shop to have items at a easily identifiable location and handle the customer swiftly and efficiently. But hedonic needs are more complex and will involve the following: Stimulation : Retailers use background music, visual displays, scents and product demonstrations etc to create a carnival-like atmosphere. Social experience: Market place has always been a place for social meetings. Students gather at big malls like Spencers and spend time together. In order to cater to their needs, the malls provide food courts where different kinds of food are available. Malls have other facilities like cinema complex, fast food joints etc for this purpose. Learning new trends: By visiting the retailers, the consumers learn about the latest fashion and technology. Status and power: Certain retail stores are created in such formats and are known for the status and power that they offer. Rich and famous people in India dine in five star hotels because of the status and position that it offers them Self reward: Sometimes the customers like to gift themselves when they have accomplished something good. Perfumes and cosmetics are in this category of gifts. Adventure: Some customers feel that they must have a good bargain. They treat shopping as a game to be won. Retailers cater to this by putting the merchandise at various locations within the store so that the customers go and hunt for the same. 2. Information search Once the customers identify the need, they have to go in search of information on how they can satisfy their needs. Some need will require only a minimum of information to be collected whereas some complex needs will require a lot of information. Amount of information: In general the amount of information search depends on the value that the customers feel they will be getting from searches versus the cost of searching. If they ant to get price details of competing stores, they can visit all the stores and collect data. But this will involve lot of time, cost and efforts. The internet can dramatically reduce the cost of such efforts. Factors influencing the amount of information search include 1) the nature and use of product being purchased 2) characteristics of the individual customer and 3) aspects of the market and buying situation in which the purchase is made. Some people search more than the others. Customers who enjoy shopping search more. Customers who are very self-confident or have prior experience of purchasing and using similar products search less. Market place and situational factors that affect information search include 1) the number of competing brands and retail outlets and 2) the time pressure for decisions to be made. When 7

competitions are greater and there are more alternatives, the amount of information search increases. Sources of information: Customers have two sources, internal and external
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Internal search memory from earlier shopping experience External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set. Hungry, want to go out and eat, the internal search reveals alternatives as o Chinese food o Indian food o burger king External sources of information are those provided by the advertisements and other people besides the news items etc. When customers feel that their internal information is inadequate, they turn towards getting information from the external agencies. Reducing the information search: The retailer must try and reduce the time required by the customer to search for information. He should have all the information required by the customer. He should also provide a wide selection of the merchandise so that he customers find something within the stores itself. If wide assortments of brands, colours, patterns are provided, the chances ae that the customer will not go for additional information. The information being searched is not only on the products but also on the retail stores, their credit policy and additional service provided like free home delivery etc. Retailers must ensure that their sales people convey all this information to customers so that they can decide faster. 3. Evaluation of Alternatives After collecting all eh desired information, the consumer will be having more than one option in terms of product or brand or retail store. He will then have to evaluate them. The multi-attribute model is based on the notion that the customers view the retailer or a product or a service as a collection of various attributes. The model is designed to predict the customers response based on 1) the performance on relevant attributes and 2) the importance of these attributes to the customer Store characteristics Retailer A Retailer B Internet Prices 20% below average Average 10% above average Travel time to store 30 minutes 15 minutes 0 Time at the counter 10 min 5 min 2 min Variety 40,000 25,000 20,000 Ease of finding items Difficult Easy Easy Ease of getting info Difficult Difficult Easy

Beliefs about performance: The customer mentally processes the information above ands forms an impression about the service provided by each. The belief about the benefits offered by different retail units as perceived by the customer is given below: Performance benefits Retailer A Retailer B Internet Economy 10 8 6 Convenience 3 5 10 Assortment 9 7 5 Availability of information 4 4 8 This rating is on a 1 to 10 scale. 1= poor. 10 = Excellent Each customer gives different weightage to different benefits. An old man with four children may give more weightage to economy where as an young software engineer may give more weightage to convenience. Now let us take the case of the old parent and an young software engineer and assume tht the following are the weightage given by them Characteristics Young software Parent with four Retailer Retailer Internet Engineer Children A B Economy 4 10 10 8 6 Convenience 10 4 3 5 10 Assortment 5 8 9 7 5 Availability of information 9 2 4 4 8 Overall Evaluation Young software 151 153 221 Engineer Parent with four 192 164 156 Children Evaluating the scores as given in the table above : Research has shown that the customers overall evaluation of the alternatives ( in this case the two retail stores and the internet), is closely related to the sum of benefits multiplied by the weightages given. In the case of he young software engineer, the overall score for internet is 221 and it is very likely that he will buy through the net. In the case of the old parent, he may opt for retailer A because this retailer offers the benefits that this customer is attaching importance to. In actual practice, the customer does not draw the tables and put these benefits and weightages on the paper and calculates. However this gives an idea of the thought process that the customer will be engaged in. 4. Purchase: Customers do not simply end up buying the item or in a store which has the highest score. The item may no be available in the store or there may be a risk associated with the purchase like the return policy of the stores not being friendly. Some of the steps that the retailer should take to ensure that the customer buys from his stores are: Have a complete assortment of all merchandise in sizes, colours etc. For service retailers, the service provider should be available always Have liberal return policies so that the customer does not perceive any risk Offer credit Make it easy by having as many payment counters as possible 9

5. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. The post-purchase evaluation then become part of customers internal information that affects the future decision making. Unsatisfactory experiences will lead one to complain to the stores or decide not to go to the same store again. Consistently high levels of satisfaction leads to store loyalty or brand loyalty which are distinctive competitive advantages. Types of Consumer Buying Behavior Types of consumer buying behavior are determined by:

Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation. Buyers level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk:

Personal risk Social risk Economic risk

The four type of consumer buying behavior are:

Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand. Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. Spend alot of time seeking information and deciding. Information from the companies ; friends and relatives, store personnel etc. Go through all six stages of the buying process. Impulse buying, no conscious planning.

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SHOPPER PROFILE ANALYSIS Customer research helps a retailer in defining the customer segment he can and should serve and how he can serve them more effectively. A useful customr research should find answers for the following questions. What is the average age and what is the age distribution? Is the gender proportion equal or heavily skewed? What is the average income level and what is the income level distribution Do customers come alone or with family members? What is the preferred shopping time? Day? How do they like to pay? What is the quality expectation? Is it the best quality or the right quality or the affordable quality? What type of features, facilities and luxuries attract the customers? How does the customer take care of the after-sales service of mechanical products? What is his preference? What are the newspapers / magazines that he reads? What programs and how much does he watch TV ?

Answers to these questions give a good idea to the retailer about the customer profile . He can then direct his retail marketing mix more effectively.

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