Beruflich Dokumente
Kultur Dokumente
com
DISSERTATION
www.projectsdeal.com
EXECUTIVE SUMMARY:
The purpose of this research is to understand consumer-buying behavior in retail chains for Indian market. Big bazaar is taken as example to represent the Indian retail scenario. To understand the insight into subject matter, literature review provide in-depth analysis of the theories related to retail development based on which the buying patterns of consumers in Indian retail chains is understood in detail. The analysis of buying behavior patterns of consumers in Indian retail sector reveals some important facts during survey analysis. Many factors such as influence of family, income range, discounts and others are underlying and regulating the overall purchase decision process of consumers in retail scenario. All the attributes such as behavioral outlook, perception, buying necessity, etc also effect the purchase decisions and are capable of affecting buying decisions. Discussion and focus on all these scenarios is given in detail with respect to consumers of the retail chains. This research also highlights the emergence of organized retail and the increasing preference of consumers towards organized retailers. The emergence of big players in Indian retail scenario gives boost to some best practices that were missing earlier from retail habits of Indian consumers. However, the discount structure and reliability are few of the attributes which attracts the Indian consumers and which should not be diluted by organized retailers.
www.projectsdeal.com
www.projectsdeal.com
DECALRATION STATEMENT
This work has not previously been accepted in substance for any degree and is not being concurrently submitted in candidature for any degree. Signed: .. (Candidate) Date: .. STATEMENT 1 This dissertation is being submitted in partial fulfilment of the requirements for the degree of: MBA in Logistics and Supply Chain Management. Signed: Date (Candidate)
STATEMENT 2 This dissertation is the result of my own independent work and investigation, except where otherwise stated. Other sources are acknowledged by footnotes giving explicit references. A bibliography is appended. Signed: . (Candidate) Date: STATEMENT 3 I hereby give consent for my dissertation, if accepted for photocopying and for inter-library loan, and for the title and summary to be made available to outside organisations. Signed: (Candidate) Date:
I hereby give consent for my dissertation, if accepted, to be available for photocopying and for interlibrary loan after expiry of a bar on access approved by the University on the special recommendation of the institution. Signed: (Candidate) Date:
www.projectsdeal.com
www.projectsdeal.com
ACKNOWLEDGEMENT
To be given by the student for departmental heads and professors who helped him to complete the dissertation.
www.projectsdeal.com
www.projectsdeal.com
CHAPTER 1: INTRODUCTION
Retailing segment is the most dynamic one and in India, retail segment is undergoing an enormous roar at present. Indian retail division constitutes almost 10% of the nations GDP and almost 8-9% of the employment area. The business of a retail chain is totally dependent on the purchase habit and buying behaviors of these consumers. Currently there has been a sizeable progress in the retailing perception. According to Chandrasekar (2010) the shift in mindset of the Indian consumer in expressions of selection of predilection, significance for wealth, and the materialization of well thought-out retail systems has altered the countenance of retailing in India. The following reasons as put forward by Sahu (2010) will more effectively elucidate the present scenario of retailing in India: The growth of systematized retailing has been immense constituting to 20% over the last 5 years because of which there is a predilection that retailing sector will contribute approximately US$30 billion by the year 2011. The Indian retail sector although principally patchy through owner-operated mom and pop outlets has been observing the surfacing of a few intermediate sized Indian retail chains, namely Big Bazaar (Future group), RPG retail, Shoppers Stop, West Side (Tata group), Vishal Megamart and Lifestyle International. With the attractiveness of the Indian retail sector, foreign retailers like Wal-Mart, Carrefour SA, Tesco Plc, are more interested to penetrate this growing marketplace, although the Indian retail sector has closed the doors for foreign direct investment (FDI). Within the last few years, as a result of globalization, technological upgradation and increasing purchase parity, Indians have experienced a dramatic transformation in their lifestyle habits, preferences by moving from traditional ways of shopping in small shops for food, groceries, and apparels to lifestyle categories that offer all these services under one umbrella and deliver better services. Indian retail sector is intensifying the number of arrangements of the stores which is a major strategic decision and can support innovation providing a cutting edge competence to the consumers. Structured retail chains in India are curbing out various formats,
www.projectsdeal.com
www.projectsdeal.com
ranging from concession stores to superstores to hypermarkets to departmental chains. Fig. 1 gives example of outlines followed by various retail chains in India:
Figure 1: FORMAT ADOPTED BY KEY PLAYERS IN INDIAN RETAIL SECTOR. TAKEN FROM: THORPE AND THORPE (2011); P: 174. Study of consumer buying behavior in retail chains is an art and science of understanding needs and demands of consumers, and developing acumen to judge how prospective buyers decide to spend their resources like time, money and energy during different stages of the buying process. In a more systematic approach the study of consumer buying behavior involves the following factors as pointed out by Gaur, Madan and Xu (2009): 1. Recognition of the supporting mechanism involved in the overall decision making process of purchase of the consumers. 2. Detection of factors which controls the decision making process. 3. Consideration of ever varying and dynamic retail environment.
www.projectsdeal.com
introduction of Big Bazaar in the year 2001. It is a subsidiary concern of Future Group and is an entity of Pantaloon Retail chains Ltd. Big Bazaar is also known for various offers giving either seasonal discounts, weekend discounts or bulk discounts. Roughly there are 122 stores of Big Bazaar all over in Kolkata, Mumbai, Chennai, Bangalore and other metropolitan cities of India and the crown stores roll a collective pace of 35 lakhs in a month on an average. It first started out with cosmetics, apparels but soon we got to see a whooping number of items available in the stores (Akash, 2009). Hence it is quite necessary to study the consumer buying behavior in Big Bazaar in order to gain a clear understanding of the process of consumer purchase process in retail chains
www.projectsdeal.com
www.projectsdeal.com
Ascertaining and understanding the dynamics of consumer behavior is the most exigent job for any salesperson. Engel, Kollat and Blackwell (1973) define consumer behavior as Acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts. The retail consumer behavior is a complex phenomenon with many phases, dimensions, and influencing factors, hence any attempt to bring it to the retail level is a very valuable process. As suggested by Samli (1989) the definition of retail consumer behavior is functionally related to seven components: cultural background, individual personality, need realization and shopping motivation, shopper characteristics, purchase behavior, store choice, brand choice, and product choice behaviors, and lastly buyer remorse or cognitive dissonance. The figure given below, shows the consumer behavior implications for retailing strategies.
Figure 3: RETAIL CONSUMER BEHAVIOR. ADAPTED FROM SAMLI, (1989). It is, particularly imperative for retailers to build up in-depth consumer imminent as they are in straight contact with consumers. It is often, termed as Know Your Consumer approach. It is the precise reason that one can find top executives of big retailers such as Future Group, tend to spend at least some of their precious times in stores exploring the various mind set of consumers. They observe various activities of the incumbents, interact with them and discusses with store workers to obtain the actual information about the buyer behavior. Shopping manners of consumers in India is quite distinctive from their counterparts elsewhere around the globe in more than one ways. Indian patrons have an elevated amount of assessment point of reference and they have been identified as
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
the most discriminating regulars around the globe. Govindarajan (2007) suggested that the loyalty of Indian consumers tends to fluctuate and since they highly rely on pricing therefore their preferences tend to change from one retail store to another. Indian consumers are traditional and they have a prominent belief that identified items are expensive. Similarly the involvement of Indian consumers in the buying process also varies from high priority products to low priority products. When everything centralizes around consumers so the study of their buying behavior becomes imperative. These studies are important for retailers as they can mix their product, price and promotions accordingly. It also helps retailers to take decision about private levels. So study of consumer buying behavior is crucial and essential for a group to sustain the market competition.
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
3. Literature review: These include literary evidences from various authors revolving around the retailing theories, concept of consumer buying, the decision process, and types of buying of consumers in retail chains. 5. Research Methodology: Systematic analysis of the research approach, paradigm and data collection methods applied for this particular paper and their justifications. 6. Data Analysis: Primary data pertaining to the consumer behavior pattern, income status, buying necessities etc has been given through survey questionnaire analysis and secondary data. 7. Discussion: This would analyze the data collected in the light of the research objectives and tried to evaluate the research question being investigated. 8. Conclusions and Recommendations: This would summarize the research topic; the results obtained and have tried to draw recommendations based on the outcomes
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
Figure 4: RETAIL GROWTH POTENTIAL. SOURCE: http://www.fibre2fashion.com/industry-article/free-retail-industry-article/impact-of-retailmanagement-in-the-growth-of-indian-economy/impact-of-retail-management-in-the-growth-ofindian-economy7.asp. According to Fernandes, et al. (2000), the pace of growth of retail sector in India is very fast and the last few years have witnessed the major changes where organized retail is on a massive development growing at a speed of about 40% of CAGR and amounts to US$ 25 bn according to the IBEF, (2010) sources (Fig. 5). The key drivers which are significant in this swift intensification are outlined below:
Figure 5: GROWTH OF RETAIL SECTOR IN INDIA: SOURCE: http://www.viaworld.in/go/world/ourviews. 1. Shift of demographics: Bennet, et al. (1998) argued that compared to other countries the lowest mean age group for shoppers in India is 25. The assemblage of the population is shuffling towards the age-category of 20-50 which constitutes the working class with increased purchase parity. More than 60% of the Indian consumers who are categorized as shoppers belong to the age group of 30-35 years. Thus India has the biggest youth class in relation to total dimension and this youth category is considered as the main driver of
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
expenditure in shopping as they have the capability and likeliness to squander with their skyscraping income. 2. Increasing Income standards: India is now in the second position amongst developing economic countries around the world. Compared to previous epochs, nowadays many family units are getting added to the consuming category because of their elevated income levels (Fig. 6). Rising levels of dual earnings in almost all the households have got powered with increase in buyer power, spending ability stimulating the growth of retail sector in India.
Figure 6: RISE OF INDIA'S INCOME: SOURCE: http://www.equitymaster.com/5MinWrapUp/detail.asp?date=02/19/2011&story=1&title=IsIndia-in-crisis. 3. Shift in consumer behavior, perception, demands and attitudes: Banerjee and Uniyal, (2002) has pointed out that modern retailing is interwoven with the demands, and attitudes of the consumers. Globalization, increased purchase parity and high income have added to the progression of the Indian middle class category. This has resulted in an overall change of shopping habits and purchasing frequency which are on rise. Previously, Indian consumers were not brand conscious and they did not use to indulge in luxury buying. But today the scenario is quite different with more and more people ready to try new brands, experiment with new purchases, splurging more on retail shops. 4. Improved credit affability: Previously cash payments was the only mode of buying but today with increased banking facilities, consumers are enjoying the credit and debit card facilities. These are called as the plastic money which is easy to handle and shop (Berman and Evans, 2001). Payments have been made much easier with the hassle free usage of net banking, credit and debit cards. The electronic data reading machines in the retail stores have
www.projectsdeal.com
www.projectsdeal.com
all the more facilitated the payments. Because of all this the retail stores have gained prominence (Fig. 7)
Figure 7: CREDIT CARD USAGE RATE IN INDIA. SOURCE: REUTERS, 2011. 5. Increasing consciousness of Indian Consumers: Couglan and Anderson, (2001) reasoned that the rise of the literacy levels, the emergence of satellites and cable channels have made the consumers more aware with more promotions and advertisements. The technological improvements with internet facilities have all the more made the consumers act more reasonably and they consume lot of information before going for a brand or purchase. So the overall awareness of the consumers has increased. Thus all these factors like increase in the number of working women population, growing number of nuclear families has changed the concept of shopping and they prefer retail chains more than the mom and pop stores, small kirana stores like before. For further understanding the phenomenon of growth of consumption, organized retailing which is entering the next high trajectory, and the behavior of consumers in organized retail chains, it is necessary to understand different theories related to the development of retailing in India.
www.projectsdeal.com
www.projectsdeal.com
Figure 8: THE WHEEL OF RETAILING. SOURCE: ADAPTED FROM LEVY, MICHAEL AND BARTON, (2004); P; 75. Entry Phase: It describes how new types of retailers enter the market as low-status, low-rent location, low margin, low-price operators with no-frills products. Trade-up phase: As retailers meet with success, they improve locations, add more services, create ambience in their product offerings.
www.projectsdeal.com
www.projectsdeal.com
Vulnerability Phase: This phase is marked by high cost structure and less adaptability. Existing retailers become vulnerable to new types of low-cost, lowmargin retail competitors who progress through the same pattern.
This theory takes into account changes occurring in the environment. If the management moves away from market realities, it leads to inability to respond to threats to the business. Initially, McDonalds offered selected menu and limited services. But over the period, its product horiz on expanded to include sports facilities as well. It made way for many new, low-cost fast food retailers to start ventures to fill the gap created by upward movement of McDonalds. Similarly, when traditional departmental stores became inaccessible due to high prices for a large chunk of population seeking more value, full line discount stores, (such as Big Bazaar, Wal-mart) emerged as a result. Big Bazaar in India emerged as a discount store in response to similar environments to cater the needs of price-sensitive Indian consumers. 2. Retail Accordion Theory: This was proposed by Hollander in 1966 (Fig.9). According to this theory merchandise mix expands and contracts like an accordion during different time periods (Brown, 1987; Hollander, 1966; Hollander, 1981).
Figure 9: RETAIL ACCORDION. SOURCE: REYNOLDS, ET AL. (2007). Development of retail is linked to human habitation. When a new locality develops for settlement of human population, early retailers there deal in nearly all products to satisfy daily basic needs.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
As the locality develops, few retailers tend to offer specialized merchandise, like footwear, hardware, apparels, consumer durables, lifestyle products etc. and services like restaurants beauty salons, among others.
With passage of time, the specialized retailers may add unrelated products to their existing merchandise in order to increase revenues. Thus gradually some specialized retailers again become general merchants.
This theory is also termed as General-Specific-General theory by Stern and El-Ansary, (1977). In a different context, Crossword, a lifestyle bookstore, chain and a part of Shoppers Stop Ltd., which started its operations in 1998 gradually added non-book categories such as pens, stationery, toys, and music mainly to increase profit margins and traffic flow? These categories currently account for 40-42% of all sales at Crossword, (2008).
www.projectsdeal.com
www.projectsdeal.com
Figure 10: DIALECTIC PROCESS. SOURCE: http://trainsrv.manipalu.com/wpress/?p=130514. According to Oren, (1989) new retail formats maintain continuity with the existing retail formats. It offers simple and logical framework for the understanding of developments of recent retail formats. It can be explained in a different way also. The new retail institute evolves in the same way as synthesis is the outcome of combining thesis (some concept or idea) and anti-thesis (opposite concept or idea). The following example will give a better idea about this theory:
Figure 11: EXAMPLE OF DIALECTIC PROCESS. SOURCE: MADAAN, (2009).P; 18. Take another example, convergence of Traditional (store-based) and direct-marketing (homebased) resulted in the emergence of new retailing format electronic direct marketing.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
2. Theory of Natural Selection/Environmental Theory: Dreesman, (1968) was the first to apply Darwin theory of Natural Selection to the evolution of retail organizations from the general stores to the variety of retail outlets seen today. Many studies have been conducted regarding the same (Blizzard, 1976; Brown, 1987; Gist, 1968; Oren, 1989). It suggests that a process of natural selection operates in retail trade also. Adaptation to changes in the environment is the necessary condition for the survival of the retail formats. Some of the developments during the last few years are given below: Specially retail formats for certain product categories such as infant-wear and toy stores declined as discount stores and category killers gained more market share. Traditional food retailers in India are challenges by fast food joints as lifestyle is changing. Traditional book sellers have been challenged by category killers such as Barnes and Nobles and electronic book sellers such as Amazon.com. In India the organized retailing in books category is growing at a rate of more than 30% and traditional retailers may feel threatened. In fact, many store-based retailers are actually going for multiple channels to minimize the threat posed by internet-based retailers. In general, it can be said that retailers offering premium optimum values have best chances of survival in the retail environment. With demographic changes like shifting of population from central parts of the cities to suburban areas resulted in development of new shopping centers to meet the needs of the new residents, home improvement and home furnishing stores are performing well with boom in housing construction in India. A change is a pervasive factor in retail business. In order to develop successful strategies, it is necessary for retailers to understand the reasons behind the changes. Some changes are lifestyles, shopping patterns, and shorter product life cycles. The retail environment is so complex that many theories may be applied simultaneously in the same example. Segregation of consumer behavior studies may also explain the changing phenomenon.
www.projectsdeal.com
www.projectsdeal.com
Table 1: TYPES OF PURCHASES. SOURCE: MADAAN, (2009); P; 78. Cant, Strydom, and Jooste, (2009) opines that determining whether a decision is major or minor is relative in many situations. For example, a person who is tech savvy and regular purchaser of gadgets, purchase of a laptop may be a routine decision, for him, but for someone else, it can be uphill task-specifying requirements, deciding about brand, after sales service issues, etc. Similarly for a person who has never gone out of town, the decision about staying in a hotel outside the town can involve extensive information search and thus can be a major decision, but for someone else whose job entails a lot of travelling, the decision can be almost automatic. The stages in the purchase decision making process are shown in the Fig.12 below.
www.projectsdeal.com
www.projectsdeal.com
Figure 12: STAGES IN THE PURCHASE DECISION PROCESS. SOURCE: CANT, STYRDOM, AND JOOSTE, (2009); P65.
www.projectsdeal.com
retailer connotes making consumers realize that their patronage is important to the store. Retailers design their CRM programs around this need. On the other extreme esteem needs become outwardly directed. People tend to demonstrate their affluence to others (also known as demonstration effect). Retailers targeting high-end brand conscious consumers tend to address this need (Madaan, 2009) 5. Self-Actualization Needs: These become important when fulfillment of materialistic needs is no longer crucial and a person looks for utmost development of his or her mental or intellectual capabilities, e.g., educational products such as encyclopedia addresses selfactualization needs. Lifestyle retailers such as Wills Lifestyle, Pantaloon Retails, and Shoppers Stop tend to offer products soothing the personalities of their buyers which are usually from upper strata of the society (Madaan, 2009)
Table 2: DIFFERENCE BETWEEN CONSUMER'S NEEDS AND EXPECTATIONS. SOURCE: MADAAN, (2009); P; 80.
www.projectsdeal.com
www.projectsdeal.com
Figure 13: BASIC MODEL OF CONSUMER DECISION MAKING. SOURCE: MADAAN, (2009); P: 80.
www.projectsdeal.com
www.projectsdeal.com
individual by other members of the group or society. There are various roles of consumers in the buying process as given by Kotler and Waldemar, (2006) as shown in the Table.3 below and Fig. 14:
Table 3: ROLES OF CONSUMERS IN BUYING. SOURCE: KOTLER, (2006), P;26. The various groups which exert influence in the purchase process are: Social Class Families Reference Groups
Figure 14: FACTORS INFLUENCING CONSUMER BEHAVIOR. SOURCE: KOTLER, (2006); P: 117. ii. Demographic factors: Demographic is the study of population. It covers genders, age profile, household size, residential status, growth rate of population, education, income distribution, occupation to name a few. Implications of few demographic changes for retailers in India have been discussed as under: (Madaan, 2009; Trehan and Trehan, 2007; Kotler, 2006):
www.projectsdeal.com
www.projectsdeal.com
Comparative younger population indulges in out shopping. They take more risk and thus, there is better scope of selling innovative products for retailers especially in case of fashion, apparels, entertainment, I.T and electronic products.
Increasing percentage of women becoming part of salaried workforce actually means more confident women with greater say in purchase decisions. They have less time for home which means increased demand for convenience products from retailers.
With information technology allowing people to work from home, more husbands may actually become house-husbands and assume many roles traditionally meant for women.
iii.
Other Factors in Environment: In addition to above factors, political environment, economic environment, and legal system are also parts of Macro-level factors affecting buying behaviors of consumers as indicated by Kotler, (2006). Legal system provides regulatory framework for business activities. Consumer Protection Act, 1986 has made big changes in consumer behavior and consumers have become better aware of their rights.
2. Micro Level Factors: Psychological Factors: Consumer behavior itself is a psychological term. So, buying is a manifestation of human behavior. Understanding the terms like perception, attitude, motivation and involvement, learning, ability and knowledge help in better understanding of the concept. According to Kotler, (2006); Madaan, (2009): Perception: According to Pride and Ferell, (2009) Perception is the process of selecting, organizing, and interpreting information inputs to produce meaning. Perception does not always develop in a direct manner and information gets filtered before it is actually stored in the minds, which is termed as perceptual filter. In the context of perception several terminologies are associated with the process of buying like selective exposure, selective retention, and selective distortion. Good visual displays in the store attract consumers, change their perceptions, and motivate them to buy the merchandise. The retailers try to develop their stores as brands to reduce risk perception of prospective buyers and increase value perception. Attitude: According to Parsuraman, Zeithmal, and Berry, (1998) it is the amount of feeling for or against a stimulus in environment. It can be positive, neutral or
www.projectsdeal.com Call us: (+91)9881820151
i.
www.projectsdeal.com
negative. Attitudes are stored in the long term memory and reflected in the behavior of consumers while buying. They drive perceptions also. It can produce the halo effect which develops based on the early purchase experiences. Motivation and Involvement: Kotler, (2006) suggested that motivation is built around the concepts of Needs and desire to achieve a certain outcome. Need is basically a sense of deprivation and the actions are oriented towards satisfying those needs. The consumers motivation can be categorized by: (Puccinelli and Grewal, 2008) a. Economic: Saving Money and relation to value perception. b. Hedonistic: Feeling pleasure. c. Risk avoiding d. Relational: aim is to be recognized as a privileged client by establishing a relationship with a store or its staff. e. Functional: Aim is to reduce the time and effort needed in purchase process. According to Madaan, (2009) the role of personal selling is central in the store. They convert consumers from low involvement situation to high involvement one by establishing personal rapport, answering queries and installing confidence. Learning, Ability and Knowledge: According to Wakefield and Baker, (1998) it is the process through which a relatively permanent change occurs in the behavior, mainly through sharing information and experiencing consumers. Sources of information can be commercial such as advertisement and non-commercial such as family members. Ability is the capacity to learn about products. Retailers should try to assess the ability of their consumers and extend them the opportunity to learn, which is crucial for impulse purchases. Knowledge is the vital force which helps the consumers to know about the products and ultimately help them to buy the products. This is important in case of technical products specially.
ii.
Personal factors include age and stage in lifecycle. Cohen et. al, (2008) suggested that buying preferences of young people are different from those of older people. The needs are different at different stages. According to Madaan, (2009) lifestyle trends, occupation and Personality are other attributes which also affects the purchase decision of a consumer.
www.projectsdeal.com
www.projectsdeal.com
iii.
Purchase situation: Baker and Cameron, (1996); Mehrabian and Russell, (1974) suggested that purchase decision mainly depends upon situation; there can be countless purchase situations where purchase decisions may change such as a desired product or brand id out of stock, upset mood, time of the week, day of the week, purchases while attending mobile phone call and so on. Purchase situation can have greater impact in case of minor purchases.
3.3 CONCLUSION:
This chapter of the dissertation has entailed different theories of retailing and theories pertaining to the consumer buying behavior in retail chains. This has ultimately led to the understanding of the fundamental concepts in the whole buying process of consumers in retail chains. The knowledge earned in this section would further help to analyze and interpret the data in a systematic manner.
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
Qualitative Research: This method tends to be associated with words or images as the unit of analysis. It relies on transforming information from observations, reports and recordings into data in the form of the written word, not numbers. It is associated with description and small scale studies where the population is considerably smaller. It has a holistic approach and involves an emergent research design. Contrast to quantitative research as put forward by Glauser and Strauss, (1967) it is frequently premised on the idea that the theory and the methods will emerge during the course of the research, and will not be specified at the beginning. Drawback of Qualitative Research: This is mostly dependent on the researcher which confers a subjective outlook of the process and the members. The data interpretation is prone to the biasness of the researcher which twists the real meaning. It is quite time consuming (Denscombe, 2007, p; 249).
4.2.1 Research Method for the present study: Since in this case, the main objective is to study
the buying behavior of consumers which involves a large-scale survey analysis of population, hence quantitative method is justified for the present research. The data will be collected by survey questionnaire methods where the questions will be close-ended and enumerative with numerical representation of graphs and charts, hence quantitative method has been chosen.
www.projectsdeal.com
Explanatory Research: This focuses on why variables are related to one another. One main purpose of explanatory research is to test theory. In this kind of research, the investigator measures the variables and then provides evidence that either supports or refutes the contention that there is a cause and effect relationship that exists between these variables. This is also used in quantitative research to explain the relationships between the variables. The main weakness of this type of research it lacks relevancy to a particular situation (Salkind, 2010, p; 1254).
3.3.1 Purpose of the present study: In this case of the research, exploratory approach will be
followed since here, the main objective is to find out the buying behaviors of consumers and then to establish the relation between several factors (variables) which influences the purchase decision. Again since the study concerns a large population.
4.4.1 Approach of the present study: Since the present research aims to examine the cause and
effect relationships between the various factors and the consumers buying process, with methods of collection of data using numerical factors, thus establishing a relationship between the variables, hence deductive theory testing will be most appropriate in this case.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
Primary Data: Original data performed by individual researchers or organizations to meet specific objectives is known as primary data. In this case, primary data is collected for establishing the objectives of the research paper (Schiffman and Kanuk, 2007, p; 46).
Secondary Data: A search for secondary data generally follows the statement of objectives. Secondary information is any data originally generated for some purpose other than the present research objectives. Secondary data includes both internal and external data. Since in this case primary data has been collected, hence this method is not dealt in depth (Schiffman and Kanuk, 2007, p; 44).
www.projectsdeal.com
3. Surveys: If researchers wish to ask consumers about their purchase preferences and consumption experiences, they can do so in person, by mail, by telephone, or online. Each of these survey methods has certain advantages and certain disadvantages that the researcher must weigh when selecting the method of contact given in table. 4
.
Table 4: COMPARISON OF SURVEY METHODS. SOURCE: SCHIFFMAN AND KANUK, 2007, P; 49 Personal Interview Surveys: This most often take place in the home or in retail shopping areas. The latter, referred to as mall intercepts, are used more frequently than home interviews because of the high incidence of not-at-home working women and the reluctance of many people to allow a stranger into their home (Schiffman and Kanuk, 2007, p; 50). Telephone Surveys: These kinds of surveys are also used to collect consumer data; however evenings and weekends are often the only times to reach telephone respondents, who tend to be less responsive-even hostile-to calls that interrupt routine work (Schiffman and Kanuk, p; 50). Mail Surveys: These kinds of surveys are carried out by sending questionnaires directly to individuals at their homes. One of the major problems of mail questionnaire is a low response rate, but researchers have developed a number of techniques to increase returns, such as enclosing a stamped, self-addressed envelope, using a provocative questionnaire and sending pre-notification letters as well as follow-up letters (Schiffman and Kanuk, p; 50). Online Surveys: They are conducted through the internet. Because the samples respondents are self-selected, the results cannot be projected to the larger population (Schiffman and Kanuk, p; 50).
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
For the present study, systematic random sampling has been used and the sampling details have been given below: 1. Sampling Unit: Koramangala retail outlet of Big Bazaar in Bangalore. 2. Sampling Population: 50 respondents chosen randomly from the store visit. 3. Sampling Style: Systematic Random Sampling (In this a member of the population is selected at random and then every nth person is selected. 4. Parameters Measured: Demographics (Age, Sex) Income Profile. Choice of locations. Frequency of Purchase. Items for purchase. Influence of friends and families while buying. Reason for purchase. Effect of promotional discounts and gift coupons. Preference of stores.
www.projectsdeal.com
data has been collected which are related to the topic. The reliability of the whole process lies in the framing of questions which are same for all the respondents and interpretation of those feedbacks are done straightaway from the responses obtained without any manipulation or extrapolation.
4.8 CONCLUSION:
This section thus has explained clearly the methodology, approach, purpose and modes of data collection. From the above discussion, it can be concluded that the present research is quantitative in nature, with a deductive reasoning and exploratory in nature. Primary data has only been collected in this case by survey questionnaire analysis of respondents. From all aspects, reliability and validity of data has been maintained through out the complete research process.
www.projectsdeal.com
www.projectsdeal.com
Age Range
1, 2%
www.projectsdeal.com
www.projectsdeal.com
Figure 15: The range of age for respondents at big bazar.
As we can see that the respondents age falls between the age range of 18 to 36. This indicates towards the young consumers increasing as a customer for big bazaar. It is also analogous from the fact that the middle income group population is increasing in India with buying power. This population is mainly young in India and it falls almost in the same range.
Q3. Gender a. Male b. Female The female respondents clearly exceed male respondents at big bazaar with almost 66 percent representation of female candidates in our sample. This is clear indication of female dominated consumer market for big bazaar. We can safely assume the same as general because Indian households marketing for grocery items and other monthly items are usually preferred by females. Hence, this is not coming as a surprise for Indian scenario.
Male 17 34%
Male
Female Female 33 66%
Q4. Income Profile, Please choose from the below range. a. Less than 15,000 per month b. From 15,000 to 30,000 per month c. From 30,000 to 45,000 per month d. From 45,000 to 60,000 per month e. More than 60,000 per month
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
20
15 11, 22% 10 5 0, 0% 0 < 15000 between 15000 to between 30000 to between 45000 to 30000 45000 60000 > 60000 9, 18% 8, 16%
The above graph indicates the maximum number of respondents falls from the income range of <30,000 Rs per month. This indicates towards lower and middle-income group representation. There can be many interpretations derived from the representation. The first interpretation is of the fact that the target consumers and their buying habits reflects big bazaar as a choice of middle income range persons. Again, this is cumulative to the results of question above where we find maximum respondents from young age group. The most important observation from the graph is of the fact that no high net worth individual was found for response. It means that high-income group individuals do not prefer the big bazaar.
Q5. From where do you prefer purchasing your monthly grocery? a. Local grocery shop b. Any retail outlet c. Any organized retail chain d. Big Bazar This question was asked to understand the loyalty of the customers. The customers are generally coming to big bazaar as a preferred choice and this is reflected in their response. Few others are the one who prefer organized retail for their purchase needs. Clearly big bazaar has established itself as a preferred brand. The other indication for this response is the growing choice of consumers to find an organized retail chain for the purchasing needs.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
Local Shop 3 6%
Figure 18: Consumer buying preference for big bazar and organized retail
www.projectsdeal.com
www.projectsdeal.com
5, 10%
Figure 19: Respondents family size and its effects on overall purchase behavior.
Q7. What is your purchase habit? a. Bring a list of items and purchase accordingly b. I end up buying beyond the list of items c. Never use list and buy impromptu with utility items only d. Buy at random and according to the display This question was put to check the pattern of buying for the consumers. It is also asked to relate it with the previous question and check the impulsive buying behavior with the disposable income and decreased responsibilities for consumers. It is assumed that the responsibilities decrease and disposable income increase with lesser members in the family. Clearly most of the members are either bringing list with them but end up buying extra from the initial assumed items. Otherwise, the respondents are generally buying according to the list. It is reflected from this response that the buying behavior of individuals is affected due to the response of the family. Single individuals depicts random buying habit with almost same representation as earlier question of single buyers. Most of the respondents were family members and female and hence we see clear budgetary purchase habits for the respondents. Most of the respondents are using list for purchase and hence can be concluded that they are also coming up with their budget requirements in mind.
www.projectsdeal.com
www.projectsdeal.com
Figure 20: Respondents and their purchase habit to check impulsive buying response.
Q8. How often do you come to purchase at big bazaar? a. Less than a week b. Weekly c. Monthly d. More than a month e. Unplanned
www.projectsdeal.com
www.projectsdeal.com
The highest frequency of visit is for individuals coming for their monthly needs. This is reflected from the analysis given. Another pattern for monthly visit is also related from above question of planned purchase using the list and the budget. This is mainly because housewives who prefer to purchase all monthly needs according to their budgetary requirements are coming for the purchase. Big bazaar is preferred by such customers because of overall budget discounts offered by the store and ease in buying and choosing the items.
Q9. What is the nature of items you purchase from big bazaar? a. Entertainment b. Grocery items c. Fruits and vegetables d. Garments and footwear e. Others f. Random purchase Big Bazar is known for its cheap and value for money items. It is also a one stop shop for day to day needs. Generally, the homemakers are coming to big bazaar for their monthly household items. It includes a significant amount of grocery items. The responses received reflect this fact effectively. Almost 42% of the respondents are coming for purchase of grocery items. Other categories receive almost identical representation. Random purchase is also significant in Big Bazar.
21, 42%
20 15 10 5 0 Entertainment Grocery Fruits and vegetables Garments and footwear Random purchase Others 9, 18% 6, 12% 3, 6% 7, 14% 4, 8%
www.projectsdeal.com
www.projectsdeal.com
Q10. What is the main reason for purchase from Big Bazar? a. Proximity from home (lesser distance) b. Outing c. Family Needs d. Both outing and family needs e. Discounts f. Reliability of Products
3, 6%
21, 42%
2
0 Proximity Outing Family Needs Both Outing and Needs Discounts Reliability of Products
The big bazaar is preferred for its discounts and reliability. If we see, big bazaar has gained its popularity due to discounting on products. Customers can buy items within budget enjoying discounts. Some people prefer organized retail stores due to reliability of products which is also reflected from the responses above, Another very big reason for purchase from Big bazaar is the outing and family needs at same place, Persons coming with family can preferably enjoy some nice time roaming in market and at the same time fulfill their purchase needs.
www.projectsdeal.com
6, 12%
We see above that friends and family influence decisions either partially or collectively. The graph received is balanced for all the responses. The extreme of two views receive lesser response in comparison. This is because Indian society is family oriented and family and friends influence most decisions. Still as we see that many of the respondents are single, hence the percentage of sole decision makers is also significant. The category has received almost 22% of representation in total.
Q12. How promotional discounts and gift coupons affects your buying behavior? a. End up buying more than budgeted amount b. Buy promotional items often than preferred brand c. Influence impulsive buying decisions d. No effect The promotions and discounts affect purchase decisions of individuals. We see the clear effect in various areas by promotion and discounts. The respondents agree to effects in their responses. 34% of the buyers gets affected and ends up in buying promotional items instead of their preferred brands or products. Almost 28% agree that promotion influence them buying more than budgeted amount. Impulsive buying was seen only in 14% respondents. At the same time, there was no effect on another 24 percent of the respondents. Overall, promotional schemes and discounts are influential and it can affect consumer buying behavior in significant amount.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
Buy more than budget Buy promotional item instead of preferred brand Impulsive buying No effect
Q14. Why do you prefer purchasing of big bazaar stores? a. All items under one roof b. Variety c. Low price and discounts d. Easy to shop and choose e. Brand name and trust
16
14 12 10 8 6 4 2 0
2, 4%
4, 8%
Variety
Figure 26: How big bazaar affect purchase decision and attract as brand.
www.projectsdeal.com
www.projectsdeal.com
This question can answer the individual preference on organized retails or brand purchase. The answer to preference of big bazaar yield clear focus on three main aspects, Low prices and discounts with 34% representation, One stop shop with 30 percent representation, Brand name and trust with 24 percent representation. Other options such as variety and ease in shopping did not receive much response. Hence, we see that brand value, all products at one place and discounts are the main attraction for the success of big bazaar. The company can work on these attributes to attract more customers. Other organized retailers can also learn by this response and align their operations accordingly. Most customers are attracted for price sensitivity and consider India as price sensitive market for the organized retailers to combat competition.
Q15. What are the main problems with organized retail shops? a. Long queues b. No credit facilities as local stores c. Incomplete range d. Sub Standard Products e. No clear assistance
16
14 12 10 8 6 4 2 0 Long queues No credit facility Incomplete range Sub standard products Assistance 6, 12% 6, 12% 12, 24% 10, 20%
The problems that can be clearly identified by the above response chart are with the credit facilities and queues. Generally local retailers give credit facilities that can be arranged in next month purchase. This facility is missing from big retailers. Respondents at billing counters due to long
www.projectsdeal.com
www.projectsdeal.com
queues face other problem. Counters shall increase and the staff should be trained for more effective operations in order to avoid such situations.
5.4 Conclusion:
The study clearly identifies three areas and able to achieve some significant insight in consumer buying behavior based on the discussions and responses received at Big bazaar outlet. These responses provide good indication of buying behavior at organized retailers and can be safely generalized for all organized retail stores. It is instrumental in defining buying patterns and consumer behavior at such retail stores. The effects are discussed in subsequent chapters in detail to seek further insight into the subject area.
www.projectsdeal.com
www.projectsdeal.com
Chapter 6: Discussions:
The above analysis was based on the response received from big bazaar at Koramangala retail outlet. The Survey was based on a questionnaire, which was divided into three parts. The first part about demographics reveals some interesting facts about the nature of visitors at big bazaar retail outlet. Consumers consider big bazaar as discount store and hence the visitors are largely from the middle to higher income group. This fact is reflected from our response analysis. Main attraction of Indian market is its middle-income group and its purchasing strength. All retailers are trying to cash on this aspect of Indian scenario. Any retailer company can become successful if it understand this aspect of consumer behavior, and big bazaar cash on the same aspect in its stores. A majority of visitors at big bazaar are female who plan and act on budgetary requirements of the family. The age group representation is usually young, it is that age group having higher disposable income, and who can spend their earnings more lavishly. Big bazaar can implement policies, offer schemes and promotions to attract this young crowd. The income range is middle to low and big bazaar is able to attract this income group due to its discount structure and lower margin product offering. Most of the respondents are preferring purchase from organized retails and this show the changing trend of purchase from unorganized sector to organized retailers. This is because of the facilities and purchasing experience of such organized stores. The second section reflects purchasing habits and its relation to consumer behavior. The questions are asked to view respondents purchasing preferences and habits in various scenarios. Most of the respondents come from family and hence their decisions are also affected by family opinion and needs. The members usually represent between two to six members. The analysis of buying behavior patterns of consumers in Indian retail sector reveals some important facts during survey analysis. Many factors such as influence of family, income range, discounts and others are underlying and regulating the overall purchase decision process of consumers in retail scenario. The questions also analyze other factors such as behavioral outlook, perception, buying necessity, etc. It is established that such attributes also effect the purchase decisions and are capable of affecting buying decisions. Third section is dedicated to external influences such as schemes and promotions offered and its effects on consumer behavior. While long queues at billing and lack of credit facility are recognized as problems with organized retailers, still many factors such as discounts, reliability, shopping experience, customer assistance are factors, which are attracting consumers towards such retail chains. These stores can attract more customers by offering discounts and promotions. This section
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
examines such discount and promotion schemes and its effects on consumer behavior. It is established from the findings that consumers end up buying promotional items and spend more than budgetary requirements. Hence such schemes can increase customer spend ratio thereby increasing profits. Also customers are effected by family decisions, discounts, brand name, trust, range etc. Hence these factors should be considered while making any retail strategy.
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
www.projectsdeal.com
Chapter 8: References
Agrawal. N., (2000). Management of multi-item retail inventory system with demand substitution. Oper. Res. 48(1) 5064 Aggarwal A (2000), Current Issues in Indian Retailing, European Retail Digest, Issue 25, 70-71 Akash, S.B. (2009), Opportunities and challenges of retailing Business In India-An Explanatory Study, KAIL Journal of Management And Research, 2(1). Alexander N., and Silva M. D., (2002), Emerging Markets and the Internationalization of Retailing: The Brazilian Experience, International Journal of Retail Distribution and Management, 30 (6), 300-314. Anand M., and Rajshekhar, M., (2001), The Retail Puzzle, Business World, 29 October, 38-42. Berman B., and Evans J. R., (2001), Retail Management (8th Ed), Upper Saddle River, N.J. Prantice Hall Bennett R., C., Livstack, D.S., and Singh, D. (1998), Merging theories to explain recent retail evolution, Vision, 2(1) 27-32. Bennison, D. and Boutsouki, C. (1995), Greek retailing in transition, International Journal of Retail Distribution and Management, 23 (1) 24-31. Bhattacharjee, P. (2001), Retails new Godzilla Business World, 28 May, 44-46. Biyani, K. (2007), CEO, Future Group Retailing in the creative economy, India Retail Report, An Images F&R Research, pp.330-333. Available at: www.indiaretailing.com C. P. Chandrasekhar (April 29, 2010), Indian take on capital controls The Hindu, Economy Watch [Online] at http://www.thehindu.com/opinion/columns/Economy_Watch/article415239.ece?css=print Coughlan, A.T., Anderson E., Stern, L.W. and El-Ansary, A.I. (2001), Marketing Channels, (6th ed) New Delhi, Prentice Hall of India Pvt. Ltd. Engel, J. F. Kollat, D.T. and R. D. Blackwell (1973), Consumer Behavior (2nd ed.), New York: Holt, Rinehart and Winston, Inc.
www.projectsdeal.com Call us: (+91)9881820151
www.projectsdeal.com
Ernst, R.,P. Kouvelis. (1999). The effects of selling packaged goods on inventory decisions. Management Sci. 45(8) 11421155. Feeny A., Vongpatanasin, T., and Soonsthan, A., (1996). Retailing in Thailand, International Journal of Retail Distribution and Management 24 (8), 38-44 Fernandes M. Gadi, C., Khanna, A., Mitra, P and Narayanaswami, S., (2000) Indias retailing comes of age, McKinsey Quarterly, 4, 95-102 Gaur, S. S., Madan S. & Xu, Y. (2009) Consumer Comfort and Its Role in Relationship Marketing Outcomes: An Empirical Investigation, Asia Pacific Advances in Consumer Research, Volume 8, 296-298. Glasserman,P. (1994). Perturbation analysis of production networks. D. Yao,ed. Stochastic Modeling and Analysis of Manufacturing Systems. Springer-Verlag, New York. Gellner, A. (2007), The sportswear Retail segment: Problems & Prospects, India Retail Report, An Images F& R Research, pp.202-204. Available at: www.indiaretailing.com Gibson,G. (2007) Who will buy the Most? Business Line, (Brand Line) p.1. Govaindarajan M., (2007), Marketing Management: Concepts, Cases, Challenges, Trends, Prentice Hall of India, New Delhi Horn, A. R.,C. A. Johnson. (1985). Matrix Analysis. Cambridge University Press, Cambridge, U.K Kearney, A.T. (2007) India: The next retail growth story, India retail report, An Images F&R Research, pp.228-233. Available at: www.indiaretailing.com Kotler Phillip (2010), The Principles of Marketing Management, Tata McGraw Hill Publishing, 15th edition, pp 441-457. Lodish M., A marketing decision support system for retailers, Marketing Science, 1982, (1), pp. 31-56. Michael Lewis,(2004)The Influence of Loyalty Programs and Short-Term Consumer Promotions on Customer Retention,Journal of Marketing Research, Vol. XLI, August, 281-292.
www.projectsdeal.com
www.projectsdeal.com
Mohanty, A.K.& Panda, J. (2008), Retailing in India: Challenges and Opportunities, The Orissa Journal of Commerce, Vol. XXIX, NO.2, Bhubaneswar, July, pp. 69-79. Nagesh, B.S (2007), Indian Retail The Way Forward, India Retail Report, An Images F & R Research, pp.246-248,www.indiaretailing.com. Nathan, N.V.R, (2001), Requiem for store based retailing, Indian Management, 40(3), 35-39 Obrien Lousie and Charles Jones(1995),Do Rewards Really Create Loyalty?, Howard Business review,73(May-June),75-82. Panda,A.K.&Mohanty,S.(2008),Emerging Retail Trends in India, The Orissa Journal of Commerce, Vol.XXIX, NO.2, Bhubaneswar, July, pp.81-89. Pickering, P. & Gaur, S. S. (2009) The Incidence of Scanner Fraud at the Grocery Checkout: Does Anyone Care?, Asia Pacific Advances in Consumer Research, Volume 8, 357-358. Radhakrishnan, K., (2003), Organised Retail, Forging ahead, Praxis, 4 (1), 47-51. Rajaram,K.,C. S. Tang. (2001). The impact of product substitution on retail merchandising. Eur. J. Oper. Res. 135(3) 582601. Rajendra Nargundkar (2006), Services Marketing, Tata McGraw-Hill Publishing Company Limited, New Delhi. Second Edition, pp 481 Ramaswamy V.S., and Namakumari, S., (2002), Marketing Management, Delhi McMillen India Ltd. Rao S.L., (2001), Foreign Investment in Retail Trade, Economic and Political Weekly, 36 (41) 389-392. Samli, A. Coskun (1989), Retail Marketing Strategy: Planning, Implementation, and Control, Quorum Books, Westport, CT. 1989. Sahu, R.P. (2010), Higher Sales Boost Retail, Business Standard, section II, 21. Sharma M. K., (2000), Some Issues in Retail Management in India, Vision 4(1), 35 40
www.projectsdeal.com
www.projectsdeal.com
Shivkumar, S(2009),Executive Director, Retail and Consumer Practices Price Warehouse Cooperative, India Retail Report, An Images F&R Research, pp.6. Available at:
www.indiaretailing.com Shukla S., (2001), Can Indias largest retailer bounce back?, Business today, December 8, 41-48. Sinha P.K., Banerjee A. and Uniyal D.P., (2002). Deciding where to buy: Store choice behaviour of Indian shoppers, Vikalpa 27(2), 13-28. Venugopal P., (2001), Marketing Channel Management: A customer centric approach, New Delhi: Response Books. Yuvarani, R. (2010), Future Trends of Retail in India, edit online article: www.articlesbase.com
www.projectsdeal.com