consumer behaviour in max lifestle retail

8/12/2019 Consumer Behaviour in Max Lifestle Retail

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Concentration, dedication and application are necessary but not sufficient to achieve an

goal. These must be awarded by guidance, assistance and co-operation of some person t

make it enable.

Many people have given their valuable time and ideas to enable me to complete th

research and the report. I am deeply indebted to all for their ideas and assistance, whil

bearing the entire responsibility for weakness in the report.

I am highly obliged to MR. NIKHIL RANJAN (STORE MANAGER) and MRS. RITA

CHATTERJI (ASSISTANT STORE MANAGER), MAX LIFESTYLE, LUCKNOW

for providing me an opportunity to undergo this project report.

I am also indebted to MR. RAZAUR RAHMAN & ALL FACULTY MEMBERS o

SRMCEM, LKOwho have been a constant source of inspiration and provided guidanc

to me at every point of time.

My gratitude to all those, who RESPONDED TO MY QUESTIONNAIRE in a we

defined manner and helped me acquiring knowledge.

Lastly, I thanks all those, who have directly or indirectly, helped me in this project..

ABHISHEK PANDEY

PGDM- I YEAR


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I, ABHISHEK PANDEY, student of POST GRADUATE DIPLOMA IN MANAGEMEN

hereby declare that the project report entitled A DETAIL STUDY OF CONSUME

BEHAVIOUR AND BUYING BEHAVIOVR OF CUSTOMERS IN MAX STORE O

LUCKNOW CITYhas been compiled by me on the basis of my project report and has not bee

submitted any where in any manner.

It is a report, which is based on various interviews, surveys that is conducted during m

project report period in LUCKNOW as a student of P.G.D.M. from SHR

RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOW.

ABHISHEK PANDEY

PGDM- I YEAR


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This study is a modest effect at understanding the consumer behavior especially i

retail store in Lucknow. Analysis to Lucknow people perception of retail store (survey onl

retail channel in Zee mall). The survey was constituted in visiting of Zee Mall Customer

were interviewed by means of carefully prepared questionnaire to study and understan

customer behaviour in depth. I study also the consumer decision making in retail store i

Indian city and what effect consumer decision-making in retail store.


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The sea of change can pull customers in many directions. It is our responsibility to light the wa

and take care of them before the competition does.

RETAILING Means Re-tailing to the customers so that they comeback

Retailing consists of all activities involved in selling goods and services to consumers for the

personal, family, or household use. It covers sales of goods ranging from automobiles to appare

and food products, and services ranging from hair cutting to air travel and computer education

Sales of goods to intermediaries who resell to retailers or sales to manufacturers are no

considered a retail activity.

The retail sector in India is highly fragmented with organized retail contributing to only 2% o

total retail sales. The retail sector in developed countries was also highly fragmented at th

beginning of the last century but emergence of large chains like Wall Mart, Sears, an

McDonalds led to rapid growth of organized retail and growing consolidation of the reta

industry in the developed countries.

Organized retail is growing rapidly and we see the emergence of large organized retail chains lik

Shoppers Stop, Lifestyle, and Westside. We also find retail malls mushrooming all over th

country. The opportunities in retail industry in India will increase since Indian retailing is on th

threshold of a major change.

The study of retailing is very important to MBA students interested in employment opportunitie

with large retail chains.


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The remarkable world of etail


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Retail, according to Concise Oxford English Dictionary, is "the sale o

goods to the public for use or consumption rather than for resale."

World over, the retail segment has performed exceptionally since it

inception in the 20th century. Sample these facts:

Retail is currently the biggest industry in the world with sales o

$7.2 trillion

Every 10th billionaire in the world is a retailer.

25 of the top 50 Fortune 500 companies are in retail.

The Indian retail story couldn't have been more different. India ha

approx 12 million retail stores, more than rest of the world put togethe

But the per capita square feet area under retail is just 2 sq.ft or 0.2 sq

meters with fragmented keerana stores being the predominant players.

Retail ing in I ndia has remained in the unorganized sector and large

untouched by corporate.

The first decade of modern retail in India has been characterized by a shi

from traditional channels to new formats including department store

hypermarkets, supermarkets and specialty stores across a range o

categories.

Modern retail formats have mushroomed in metros and mini-metros, i

Retailing

including all

activities

involved in

selling goods or

services directly

to the final

consumers for

personal, non

business use

Any organisation

selling to final

consumers-

whether it is a

manufacture,

whole seller, or

retaileris

doing retailing.

Consumers today

can shop for

goods & services

in a wide variety

of retail Org.The best- known

type of retail is

the Department

store.


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the last few years modern retail has also established its presence in the second rung cities. Thu

exposing the residents of these cities to shopping options, they have never experienced before.

has been forecasted that the share of modern retail will increase from 2 per cent currently, to abou

15-20 per cent over the next decade.

To begin with, retail ers today wil l have to support the large retail inf rastructur e in terms o

Malls and Superstores that are being created.

The challenge for leading retail ers shal l therefore shi f t fr om diverting demand to creatin

demand.

With all the modern stores offering convenience in terms of an assortment of products, ambienc

service and innovative products, the paradigm shall shift from competing with the kirana stores t

an in-house demand creation. Relevant experiences from consumer goods companies, which hav

successfully crafted an explosion in demand in their sectors, through innovation, consumer drive

strategies, will be head runner.

Times are changing. With the GDP at an all time high and income levels shooting through th

roof, the average Indian consumer has never had it so good. The propensity to consume ha

reached peaks that had never been scaled before. Credit cards are flashed with disdain an

shopping baskets are getting bigger all the time. Here are some factors that indicate the potenti

of retail in India:


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customers redefine the retail business. They are on the lookout for convenience, speed, efficienc

and a wide range of products. Retailers need to explore different channels of retailing to cater t

customers' needs.

The days of brick-and-mortar's limited potential are fading and retailers need to tap the immens

opportunities that other channels offer.

Driven by increasingly intense competition in an increasingly global marketplace, retailers mu

seek new ways of capturing the hearts and minds of consumers. The traditional levers of price

selection and location although still important are no longer sufficient as bases fo

competitive differentiation. Retailers should be focused on improving the end-to-end shoppin

experience, boosting sales and winning customer loyalty by connecting to the shopper in ever

possible way.

Multi channel retail ingis all about giving the customer a choice of which shopping channel he o

she wishes to purchase products through. The most popular shopping channels include the store

Internet and catalogues and telemarkets (including mobile shopping).

Retailers must provide a seamless multichannel experience for their customers. For this, the

become the most valuable consumers within a retailer's customer base.


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Mul tichannel retail ing needs to be adopted:

Growmarket share

I ncreasecustomer base

Offer convenience

Achieve cost reductions through economies of scale, supply chain efficiencies, an

logistics

Improvecustomer analytics

Opennew revenue streams by cross-sell & sell ups

Reducecycle time between order and delivery

Lowerfulfillment cost & Improve demand planning

However, going multichannel, the retailer should not ignore the critical part: the custome

Customers have become more sophisticated and expect a retailer to recognize them.


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Traditional Rural Retai l Fairs

Traditional Family Run Convenience Stores

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Traditional rural retail fairs are a very big attraction to foreign tourists. We

have the Pushkar fair in Rajasthan which brings in a lot of revenue both from

domestic buyers and buyers from abroad. In the Pushkar fair l ive stock like

camels, horses, cows, goats, and sheep are sold as well as bought . A range of

exotic i tems are also avai lable. The traditional i tems here are handmade

jewelry and other colorful memorabil ia of Rajasthan.

Traditional rural retail fairs in India deal in a good number of handcrafts

itemswhich are mentioned below:

Hand painted wooden chest drawers

Wooden wall brackets

Embossed wooden table
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Hand painted chairs in chowki

Wooden corner stand

Wooden Hand painted table

Embossed wooden chairs

Brown wooden stool

Camel bone Jewelry

Metal jewelry

Snake charmer puppets

Handmade candles

The Suraj Kund mela is also a huge galore of Indian traditional i tems. This

fair is held at Haryana which is 8 kilometers from South Delhi. The fair has

been held for the last 20 years . The fair deals in i tems categorized as

Indian arts

Handicrafts

Heritage

Culture and tradi t ion

Traditional rural retail fairs have a typical rural set up like:

Huts of mud

Thatched platforms


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lamps of wood

String cots

Plainness ground

The small thatched stores are a vibrant display of handcraft i tems. The focus

every year is on a particular State for instance, in 2006 it was Maharashtra. The

other group of i tems representing the Indian Subcontinentavai lable there

are:

Classical

Tribal art

Folk art

As such Traditional Rural Retai l fairs involve credi t worthy art isans and

weavers of over 350 in number and they are selected from across the country.

Along with the county's r ich cultural heritage being showcased, the fair is

open to foreign traditional goods as well. The more rejuvenating side of these

fairs would be l isted as under:

Indian Sweets Snacks

Indian folk music

Classical dance

Bengal t iger show


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Elephant r ides

Tiger show and rides

Giraffe t r icks

Balloon and Clay items

Painting

Games

Therefore, traditional rural retai l fairs are a never ending occupation and the

key to it l ies in the originality and attractiveness of the items.

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Traditional family run convenience stores are too well establ ished in India

than to be wiped out and besides there is uniqueness in the t radi t ional i tems

that represent the sub-continent . The retai l stores in Indiaare essential ly

dominated by the unorganized sector or t radi t ional stores. Infact t he t radi t ional

stores have taken up 98 percent of the Indian retai l market . Now stores run by

families are primarily food based and the set up is as Kirana or the 'corner

grocer ' stores. Basical ly they provide high service with low prices. If the stores

are not food based then the type of retail i tems available are local in nature.


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The tradi t ional family run convenience stores can take pride in the fact that the

Kirana is the most common outlet forms for the consumers. The tough

competi t ion for convenience stores are coming from organized retai l stores

deal ing in food i tems, l ike:

Apna Bazaar

Canteen stores

Food World

Subhiksha

Food Bazaar

Convenience Storesare open for long hours and is one of the formats of

the Indian retai l stores that cater to b asic needs of the consumer. A good

example of such would be Convenio. These stores are found in both

residential as well as commercial markets. The food products of

tradi t ional family run convenience stores are comprised of branded as

well as non-branded i tems. The benefi ts of family run convenience stores

is that they give importance to:

Personal touch

Facilit ies of credit


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Quick home del ivery

Non-food based stock comprises of mult iple and variet ies of local brands.

The future of such stores as they face competi t ion from organized sector,

would depend on the fol lowing part iculars:

Place and capacity

Diligent area coverage

Disciplined work schedule

Managing turnover

Revenue from assets

Customer service and satisfaction

The traditional family run convenience stores serves the purpose of the

housewives who defini tely wants to avoid travel ing long distances to purchase

daily needs. The convenience factor in terms of items, among people in general

can be highlighted as below:

Groceries

Fruits

Drug Store

Necessary s tat ionery


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As such tradit ional family run convenience stores are here to stay and canno

be oversized by the organized retai l sector besides, i t represents the variety of

India

Indian retail industry

India retai l industry is the largest industry in India, with an employment of

around 8% and contributing to over 10% of the country 's GDP. Retai l industry

in India is expected to r ise 25% yearly being driven b y strong income growth,

changing l i festyles, and favorable demographic pat terns.

I t is expected that by 2016 modern retai l industry in Indiawill be worth US$

175- 200 bi l l ion. India retai l industry is one of the fastest growing industries

with revenue expected in 2007 to amount US$ 320 bi l l ion and is increasing at a

rate of 5% yearly. A further increase of 7-8% is expected in the industry of

retai l in India by growth in consumerism in urban areas, r ising incomes, and a

steep rise in rural consumption. I t has further been predicted that the retai l ing

industry in India will amount to US$ 21.5 bill ion by 2010 from the current size

of US$ 7.5 bi l l ion.


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Shopping in India have witnessed a revolution with the change in the consumer

buying behavior and the whole format of shopping also altering. Industry of

retai l in India which have become modern can be seen from the fact that there

are mult i - stored malls, huge shopping centers, and sprawling complexes which

offer food, shopping, and entertainment al l under the same roof.

India retai l industry is expanding i tself most aggressively, as a resul t a great

demand for real estate is being created. Indian retai lers preferred means of

expansion is to expand to other regions and to increase the number of their

outlets in a ci ty. I t is expected that by 2010, India may have 600 new shopping

centers.

In the Indian retai l ing industry, food is the most dominating sector and is

growing at a rate of 9% annually. The branded food industry is t rying to enter

the India retai l industry and convert Indian consumers to branded food. Since a

present 60% of the Indian grocery basket consists of non- branded i tems.

India retai l industry is progressing well and for this to continue retai lers as

well as the Indian government will have to make a combined effort.


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Retail market in the organized sector in India is growing can be seen from the

fact that 1500 supermarkets, 325 departmental stores, and 300 new malls are

being buil t . Many Indian companies are entering the Indian retai l market

which is giving Indian organized retai l market a boost . One such company is

the Reliance Industries Limited. I t plans to invest US$ 6 bi l l ion in the Indian

retai l market by opening 1000 hypermarkets and 1500 supermarkets.

Pantaloons is another Indian company which plans to increase i ts retai l space to

30 million square feet with an investment of US$ 1 bill ion. Bharti Telecoms an

Indian company is in talks with Tesco a global giant for a 750 mil l ion joint

venture. A number of global retail giants such as Walmart, Carrefour, and

Metro AG are also planning to set up shop in India. Indian organized retai l

market will definitely grow as a result of all this investments.

Indian organized retai l market is increasing and for this growth to continue the

Indian retai lers as well as government must make a combined effort .


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Retail has played a major role world over in increasing productivity across a wide range o

consumer goods and services .The impact can be best seen in countries like U.S.A., U.K., Mexico

Thailand and more recently China. Economies of countries like Singapore, Malaysia, Hong Kon

Sri Lanka and Dubai are also heavily assisted by the retail sector.

Retail is the second-largest industry in the United States both in number of establishments an

number of employees. It is also one of the largest world wide. The retail industry employs mor

than 22 million Americans and generates more than $3 trillion in retail sale annually.

Retailing is a U.S. $7 trillion sector. Wal-Mart is the worlds largest retailer. Already the world

largest employer with over l million associates, Wal-Mart displaced oil giant Exxon Mobil as th

worlds largest company when it posted $219 billion in sales for fiscal 2001. Wal-Mart ha

become the most successful retail brand in the world due its ability to leverage size, market clou

and efficiency to create market dominance. Wal-Mart heads Fortune magazine list of top 50

companies in the world. Forbes Annual List of Billionaires has the largest number (45/497) from

the retail business.


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Rank Retailer Home Country

1. Wal-Mart Stores, Inc. U.S.A.

2. Carrefour Group France

3. The Kroger Co. U.S.A.

4. The Home Depot. Inc. U.S.A.

5. Metro Germany

(Source: STORES / Deloitte Touch Tomahastsu)


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The factors responsible for the development of the retail sector in India can be broad

summarized as follows:

Rising incomes and improvements in infrastructure are enlarging consumer markets an

accelerating the convergence of consumer tastes. Looking at income classification, th

National Council of Applied Economic Research (NCAER) classified approximate

500Io of the Indian population as low income in 1994-95; this is expected to decline t

17 by 2006-07.

Liberalization of the Indian economy which has led to the opening up of the market fo

consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. t

make significant inroads into the vast consumer market by offering a wide range o

choices to the Indian consumers.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

The internet revolution is making the Indian consumer more accessible to the growin

influences of domestic and foreign retail chains. Reach of satellite LV. channels i

helping in creating awareness about global products for local markets. About 47% o

Indias population is under the age of 20; and this will increase to 55h by 2015. Thi

young population, which is technology-savvy, watch more than 50 TV satellit

channels, and display the highest propensity to spend, will immensely contribute to th

growth of the retail sector in the country.


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As India continues to get strongly integrated with the world economy riding the waves o

globalization, the retail sector is bound to take big leaps in the years to come. The Indian retail

sector is estimated to have a market size of about $ 180 billion; but the organised sector represen

only 2% share of this market. Most of the organised retailing in the country has just starte

recently, and has been concentrated mainly in the metro cities. India is the last large Asia

economy to liberalize its retail sector. In Thailand, more than 40% of all consumer goods are sol

through the super markets and departmental stores. A similar phenomenon has swept through a

other Asian countries. Organized retailing in India has a huge scope because of the vast marke

and the growing consciousness of the consumer about product quality and services. A stud

conducted by Fitch, expects the organized retail industry to continue to grow rapidly, especiall

through increased levels of penetration in larger towns and metros and also as it begins to sprea

to smaller cities and B class towns. Fuelling this growth is the growth in development of th

retail-specific properties and malls. According to the estimates available with Fitch, close to 2Sm

sq. ft. of retail space is being developed and will be available for occupation over the next 36-4

months. Fitch expects organized retail to capture l5%- 20% market share by 2010. A McKinse

report on India says organised retailing would increase the efficiency and productivity of entir

gamut of economic activities, and would help in achieving higher GDP growth. At 6%, the shar

of employment of retail in India is low, even when compared to Brazil (l4%), and Poland (12%).


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The key to success is identifying a superior value-promise and who is in a better position to do

than retailers? Retailers are the closest to the point of purchase and have access to a wealth o

information on consumer shopping behaviour. Retailers have some unique advantages fo

managing brands such as continuous and actionable dialogue with consumers, control over bran

presentation at point-of-sale, control over shopping environment, display location/adjacencie

and signage. And they have used this advantage with tremendous success.

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Extended Limited Direct

Manufacture

Depo/CNF

Distributor

Retailer

Shopper

Manufacture

Depo/CNF

Retailer

Shopper

Manufacture/ Retailer

Shopper


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As seen, the role of the intermediary is being diminished gradually, which has obviou

implication of backlash of the trade channel upwards towards the suppliers. This is more severe i

countries such as India, where the channel economics in favour of the middlemen is still stron

enough given the fragmentation of the retail sector. Therefore when FoodWorld, the largest groce

in

India has a direct supply contract with over 20% of its key suppliers, it gives rise to conflict o

interest with the distribution infrastructure that suppliers have painstakingly built over the years.

Thus companies like HLL have evolved a distinct distribution channel altogether (called Moder

Trade) to service the needs of such large grocers. Even the mom and pop stores (known as kiran

shops) are affected due to this unfair back-end advantage extended by the suppiier to its leadin

accounts (the emerging supermarket chains).

The strategies adopted by the retailer to compete with branded goods are illustrated by th

following diagram. Branding the store and following a private label strategy is the key strategy

which helps the retailer to compete with branded products.


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1. Typically large retailers

2. Greater enforcement of taxation mechanisms

3. High level of labor usage monitoring

7

Weekly Markets

Village FairsMelas

Convenience StoresMom and

Pop/Kiranas

PDS Outlets

Khadi Stores

Cooperatives

Exclusive Brand

OutletsHyper/Super Markets

Department Stores

Shopping Malls

Traditional/Pervasive

Reach

Government

Supported

Historic/Rural

Reach

Modern Formats/

International

Evolution of Indian retail

Source of

EntertainmentNeighborhood

Stores/Convenience

Availability/ Low

Costs /

Distribution

Shopping

Experience/Efficiency


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1. Corporate Houses

Tatas: Tata Trent

RPG group: Food World, Health and Glow, etc

ITC: Wills Life Style

Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc.

2. Dedicated brand outlets

Nike, Reebok, Zodiac etc

3. Multi-brand outlets

Vijay Sales, Viveks etc

4. Manufacturers/ Exporters

Pantaloons, Bata, Weekender

CCClllaaassssssiiifffyyyiiinnngggIIInnndddiiiaaannnrrreeetttaaaiiilll

(A)Modern Format retailers

1) Supermarkets (Foodworld)

2) Hypermarkets (Big Bazaar)

3) Department Stores (S Stop)

4) Specialty Chains (Ikea)

5) Company Owned Company Operated


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(B)Traditional Format Retailers

1) Kiranas: Traditional Mom and Pop Stores

2) Kiosks

3) Street Markets

4) Exclusive /Multiple Brand Outlets


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(C)Large Indian retailers

I. Hypermarket

1) Big Bazaar

2) Giants

3) Shoprite

4) Star

II Department store

1) Lifestyle

2) Pantaloons

3) Piramyds

4) Shoppers Stop


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5) Trent

III Entertainment

1) Fame Adlabs

2) Fun Republic

3) Inox

4) PVR


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D) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this market, very few large an

modern retailers have established specialized stores for these products. However there

considerable potential for the entry or expansion of specialized retail chains in the country.

E) DURABLE GOODS

The Indian durable goods sector has seen the entry of a large number of foreign companies durin

the post liberalization period. A greater variety of consumer electronic items and househol

appliances became available to the Indian customer. Intense competition among companies to se

their brands provided a strong impetus to the growth for retailers doing business in this sector.

F) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have encouraged consume

expenditure on leisure and personal goods in the country. There are specialized retailers for eac

category of products (books, music products, etc.) in this sector. Another prominent feature of th

sector is popularity of franchising agreements between established manufacturers and retailers.


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Benefit to customer through retailer sector

There has been a significant change in retail trading over the years, from sm

kiranawalas in the vicinity to big super markets; a transition is happening from t

traditional retail sector to organized retailing. The unorganized sector still holds a domin

position in this industry. The organized segment holds just about 1.2% of the current U

245 billion retail market, which is expected to reach about US $ 385 billion by the middle

this decade.

With consumers looking at convenience with multiplicity of choice under one roof a

expectations evolving over time, consumer demand is truly the driving force for organiz

retailing in the country. Food and beverages form the main chunk of the retail market. Th

are followed by apparel and footwear. The Indian textile industry, the backbone of t

apparel segment, has a large share of the Indian economy, accounting for over 20%

industrial production as well as providing direct and indirect employment to around

million people.

Despite the retail store density in India with regard to population being the largest, it

estimated that over 90% of the stores are less than 500 sq. ft in size. Industry estimates p

the number of retail outlets at 12 million. This is clearly indicative of small-shop owners

crowding the unorganized segment of retailing. While this fragmented market structure d

pose significant challenges for organized retailing, potential does exist if mod


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information and supply chain management systems are to support the development

convenience shops that match customer expectations.

Today trend is the development of integrated retail cum Entertainment centers

shopping malls. An increasing number of retailers are focusing on malls now as opposed

stand-alone developments. While the number of shopping malls has seen a massive surge

the recent past in the metros and their suburbs, the latest trend in this sector is the increasi

focus on providing leisure activities such as multiplexes, facilities for kids' entertainme

eateries etc. within the mall premises. Customer less the time consumes and mo

entertainment with his family in malls because they within shopping mall number of ret

shop and variety of products and selected the product they want. Good environment in ma

Less crowed and These are enclosed, air-conditioned, multi-level malls of at le

100,00 sq ft. Critical to these malls is the concept of the anchor, the key outlet or st

around which other outlets cluster. The most popular Indian anchors include Shoppers' St

Globus, Pantaloon, Lifestyle and hypermarkets like Big Bazaar and Giant. Cinemas a

often anchor malls. Driven by the lucrative tax breaks, the old single screen theatres

being divided into three-five smaller screens, as was done in the US, years ago. Example

wave and PVR.


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LLLaaannndddmmmaaarrrkkkGGGrrrooouuuppp

The Landmark Group, founded in 1973 with a single store in Bahrain has grow

into one of the largest retail conglomerates in the Middle East and is expandin

rapidly in India. I t current ly operates over 750 stores across the region with

retai l presence in China as well . In addit ion to i ts retai l sector, the Group ha

also diversif ied into leisure, food, hotels and electronics and has created

comprehensive infrastructure including i ts own logist ics and distr ibut io

division, to support i ts retai l operat ions and other businesses.

KKKeeeyyyFFFaaaccctttsss

35 Years of retail experience.

Turnover in excess of US$2.5bn.

Total retail space over 10 million sq ft.

Retail Presence across 12 countries: Bahrain, China, India, Jordan, Kingdom of SaudiArabia, Kuwait, Oman, Qatar, Spain, UAE, Pakistan & Egypt.

Operates over 825 stores.

Employs 24,000 personnel.


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CCCooorrreeeVVVaaallluuueeesssooofffLLLaaannndddmmmaaarrrkkkGGGrrrooouuuppp

1.Passion for excellence We are committed to setting industry benchmarks

be i t our product or practices. Our doctrine is to str ive and maintain the lead i

whatever we do, with str ict adherence to qual i ty and del ivering value fo

money.

2. Integrity in everything we do - Our business is driven by trust , st ron

ethics and mutual respect .

3. Empowering people to strive and deliver Our core strength is ou

employees. We bel ieve in giving our personnel the opportunity an

responsibi l i ty that are integral to their professional development and ou

Groups success.

4. Adapting to changing market and customer needs We keep ourselve

abreast with industry t rends and dynamic consumer preferences. Our offering

keep evolving to address changing and discerning consumer needs.


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3

LLL ooo ooo kkkGGG ooo ooo ddd FFF eee eee lll GGG ooo ooo ddd

Max a value retail store for the family was launched in May 2004 in th

UAE.

With stores that typical ly measure between 25,000 to 30,000 sq. f t , Ma

retai ls i ts own label clothing for men, women and chi ldren as well a

footwear and home ware.

A pioneer in the Middle East of the global trend of delivering quality and

value at very attractive prices, Max is being increasingly recognized as

key player in the value retail format.

With 75 stores across UAE, Saudi Arabia, Jordan, Kuwait, Bahrain, Qatar

Oman & India, Max plans to expand i ts network in more potential market

within the Middle East , Turkey and India to build a significant presenc

for the brand by target ing to have 100 stores by 2009.

A good shopping experience and great value is an assurance tha

t ranslates into making customers Look good. Feel good with Max.

KKKeeeyyyFFFaaaccctttsss

Established in 2004.

75 stores spread across 8 countries.

The Largest Value Fashion Chain in the Middle East

Products designed and developed exclusively for Max, by a large team ofin-house designers and buyers.


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KIDSWEAR DEPARTMENT

INFANTS SECTION: -

BOYS (SIZES) PREPACK GIRLS (SIZES) PREPACK

6-12 MONTHS 3 6-12 MONTHS 3



TOTAL 9 9

BOYS SECTION: -

SUB SECTION 1-8 YEARS PREPACK 8-14 YEARS PREPACK

SIZES SIZES

2-3 YEARS 3 8-9 YEARS 3




TOTAL 12 12

GIRLS SECTION: -

SUB SECTION 1-8 YEARS PREPACK 8-14 YEARS PREPACK

SIZES SIZES





TOTAL 12 12


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4

INFANTS GIRLS

TUNIC

V-NECKR- NECKCOLLERFRONT OPEN

SKIRTCAPRISHIRT

2-8 BOYS

T-SHIRTDENIM JEANSTROUSERS

CARGOPAINTS

CAPRICOTTON WOVENKNITTEDDENIM

2-8 GIRLS

TUNICSKIRTST-SHIRT

HALTER NECKPOTSEGDEHALF SLEAVESCUT SLEAVESSLEAVELESS

HOODED SKIRTSPORTS CAPRILEGINGS

LEGINGSFULL LEGINGS

LONG TOPSMINI SKIRTSCALF LENGTH SKIRT


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4

DENIMJEANSCAPRI

STYLES: -KNIT TOP, KNIT BOTTOM, WOVEN TOP, WOVEN BOTTOM, SPEGDEE, HALTENECK TOP, DRESS, TUNIC, DENIM, CAPRI, DONGRIE, 3 PIECE PACK (SPORTS, SLEAVELESHALF SLEAVES), 2 PIECE PACK (NIGT WEAR, SKIRTS).

ETHNIC

FUSION

KURTIROUND NECKV-NECKHALTER NECKMATKA NECKCUT NECKSQUARE NECKCUT SLEAVESSTEPS KURTI

SKIRTSTRAIGHT SKIRTS

CRUSH SKIRTSCRUSH ANKLE SKIRTS

FABRICS: - ACOBA, COTTON, GORGET, SHIFFON, LINEN, VISCOS.

SIZES PREPACK

XS 1S 2M 2L 2

TRADITIONAL

KURTISHORT LENGTH KURTIHE KURTALONG KURTA


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4

DUPATTACOTTONSHIFFON

SALWARPATIALANORMALCHOORIDAR

SIZES PREPACKS 2M 3L 3XL 2

XXL 1

ETHNIC WEAR BASICS: -

KURTASALWARCHOORIDARPATIALADUPATTAPANTSBASICS SLIPS

HOMES

TABLE MATTABLE RUNNERTABLE COVERDUBLE BED SHEETSINGLE BED SHEETDOUBLE BED COVERSINGLE BED COVER

NAPPKINTOWELBATH MATSCUSHION COVERS


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4

WESTERN WEAR

CORE

KNIT TOPWOVEN TOPKNIT BOTTOMWOVEN BOTTOMSKIRTS

YOUNG

KNIT TOPWOVEN TOPKNIT BOTTOMWOVEN BOTTOMDENIM BOTTOM

JACKETSHORTSSKIRTS

SPORTYJACKETKNIT TOPWOVEN TOPKNIT BOTTOMWOVEN BOTTOM

DENIM

DENIM FULL LENGTH

CAPRINIGHT WEAR

GOWNSSLEEPWEAR


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4

FOOTWEAR

MENS FOOTWEAR

CASUAL SHOES FORMAL SHOES CASUAL LACE UPS FORMAL LACE UPS CASUAL SLIP UPS CASUAL SLIP ONES CASUAL SANDALS FORMAL SANDALS SPORT SHOES

LADIES FOOTWEAR

H-HEAL SANDAL M-HEAL SANDAL WEDGE HEAL SANDAL FLAT SANDAL CASUAL SANDAL SPORTS SANDAL COMFORT SANDAL FORMAL SANDAL EVA SANDAL

KIDS FOOTWEAR

KIDS BOYS KIDS GIRLS INFANT BOYS INFANT GIRLS BOTIES


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4

STORE OPENING

1. Check the lock before unlock.

2. unlock the door at 9:30 am.3. Switch on optimum lights on floor.

4. Security in place with complete uniform.

5. Adequate housekeeping staff sould be in store.

6. Select the housekeeping workdone, cleaning, moppng.

7. Switch on A.C. at 10:00 am.

8. Switch on the music.

9. Trials rooms are empty and clean before 10:30 am.

10.Floats issued in tills and dedicated cashier by 10:25 am.

11.Ensure that staff is complete uniform by 10:30 am.

12.Merchandise well present on the floor.

STORE CLOSING

1. All the tills closed.

2. Switch off sensomatic, E.D.C. machine, music at till point.

3. Recycling of Security ags and hangers.

4. Merchandise well present on the floor.

5. Trial rooms are empty.

6. Switch off A.C.

7. Switch off all lights.

8. Lock Managers room.

9. Lock I.T. room.

10.Switch off Sensomatic on both floors and at entrance.

11.Security in place with complete uniform at back door.

12.Manager signature.

13.Security signature.


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4

DUTIES &RESPONSIBILITIES OF STORE MANAGER

Duties & Responsibilities

Sales Forecast ing & Budget

Personnel Recrui tment , select ion, t raining, motivat ion and evaluat ion

Merchandise Display, Inventory Management and merchandise reorders

Handling store receipts, preparing bank transact ions, opening and closing

store

Reviewing customer complaints

Reviewing computer data forms

Review of overal l operat ions and reports to top management.

DEPARTMENT MANAGERS DETAIL CHECKLIST

Cleaning and Dusting

Floor cleaned and Mopped

Fixture (Clean, Alignment & Breakage)

Stock Replenishment

All style displayed on floor.

Size cubing on all merchandise


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4

Ensure the presence of al l staff on the f loor in peak hours between 5:00

pm to 9:30 pm

Time and again check on walk-ins, average bi l l size, sales on hourly basis

an accordingly

Encourage the staff for further improvement

Ensure your morning shift staff and weekly off for the next day is

conveyed to al l staff .

Maintain DMs log book on dai ly basis & acknowledge by SM, ASM on

daily basis

CRE DETAIL CHECKLIST

Cleaning and dust ing of shelves, browsers, arms & back bars.

Check at 10:30 am floor clean & mopped

Fixture (Clean & Alignment)

Have a walk on the f loor after 10:30 am and check the replenishment

require

Stock replenishment for new l ines & broken sizes on the f loor

Remove broken sizes from the f loor i f i t is not avai lable in back


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5

Ensure that al l style displayed on floor

Price t ickets on al l merchandise

Start size cubing on al l merchandise

Securi ty tags on al l merchandise

Merchandise well presented

Start i roning of merchandise at 10:00am t i l l 4:00 pm

Trials rooms (clean, tokens and manned) by 10:30 am

Try and attend each and every customer, greeting is very important.

Distribution Of Target In Departments

Let,

Sto re targ et = Rs 50,00,000Departm ent Target = Rs . 9,50,000

Departm ent Target in % = 19%One Month = 8 weekends and 23 week days

One Weekend Target = Rs 9,50,000/23 = Rs 41304

Total weekend target = Rs 41304*8 = Rs 3,30,434

Total weekday target = Rs 9,50,000- Rs 3,30,434 = Rs 6,19,566

One weekday target = Rs 6,19,566/23 = Rs 26,937

CRE target (Monthly) = Rs 9,50,000/5 = Rs 1,90,000


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One Weekend Target = Rs 41304

One Weekday Target = Rs 26937


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5

DIPSTICK PARAMETERS

Enable retai lers to f ind out about the heal th of

specific area of operat ion in an instant .

Customer Transactions


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5

Customer Conversion Ratio

Return To Net Sales

Transact ions Per Hour

Sales Per Transaction

Hourly Customer Traffic

Stocks

Average Selling Price

Average Stock Price

Stock Turnover/Inventory Turnover Rate

Percentage Inventory Costs

Gross Margin Return on Inventory

Markdown Goods Percentage

Shrinkage to Net Sales

Space

Occupancy Cost Per Square Foot Sel l ing Space

Sales Per Square Foot

Stock Per Square Foot

Percentage of Sel l ing Space


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5

Employees

Net Sales Per Full Time Employee

Labour Productivi ty

Gross Margin Per Full Time Employee



= Number Of Transact ions x 100

Customer Traffic

-Reflects Retai lers abi l i ty to turn a potent ial customer into a buyer

-Low figure means that promotional act ivi t ies are not being converted into sale

or that the overal l sales effort needs to be assessed afresh

-Automatic counting mechanisms or periodic surveys of customer t raffic

Returns to Net Sales

Returns to Net Sales

= Total Returns x 100

Net Sales

-Indicat ion of Customer sat isfact ion-Increase in value is an early warning indicat ion

-Quali ty of merchandise is a suspect


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5

-Can be applied to an ent ire store or a single department to schedule hours an

establ ish staff levels

-Used to t rack customer t raffic

Average Selling Price

Average Sel l ing Price

Total Values of Good Sold

Total Quantity Sold

Average Stock Price

Average Stock Price

= Total Values of Goods in Stock

Total Quanti ty in Stock

-Turning stocks around efficient ly yields bet ter profi ts

-If dai ly sales account for 2% sales i t wil l take 50 days to sel l stock and in 36

days the turnaround of the stock is 365/50 i .e 7.3 t imes

Stock Turnover / Inventory Rate Turnover

Stock Turnover / Inventory Rate Turnover

= Net Sales

Average Retai l Value of Inventory


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5

-Indicates how often the inventory is sold and replaced in a given period o

t ime

-When this rat io decl ines there is a possibi l i ty that the inventory is excessive

Percentage Inventory Carrying Costs

Percentage Inventory Carrying Costs

= Inventory Carrying costs x 100

Net Sales

-Important measure as there is a r ise in inventory carrying costs due to highe

interest rates

-Important to reduce stock obsolescence and prevent blockage of workin

capital

-Retailers use this measure to track the percentage of their net sales represente

by the f ixed costs of maintaining inventory.



= Gross Margin

Average Value of Inventory


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5

-GMROI compares the margin on sales with the original cost value o

merchandise to yield a return on merchandise investment

-Preferably the inventory is to be valued at cost rather than retail value as i

gives a bet ter indicat ion of investment

Markdown Goods percentage

Markdown Goods percentage

= Net Sales at Markdown

Total Net Sales

-If the ratio increases, the retailer may need to take a closer look a

merchandising pract ices, especial ly pricing

-Markdowns may be symptoms of other problems l ike o r buying, advert ising o

store layout .



= Actual Inventory Book Inventory x 100

Net Sales


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5

-Percentage of net sales lost due to shrinkage

-Does not indicate cause of shrinkage but the magnitude of the problem.

Occupancy Cost Per Square Foot Selling Space

Occupancy Cost Per Square Foot Sel l ing Space

= Occupancy Cost

Square Feet of Selling Space

-Translates into occupancy cost per unit of sel l ing space

-In other words the amount that needs to be generated by that uni t of space t

justi fy occupancy costs

-For multi-unit retailer i t is a useful tool to compare the performance of units a

different locations.



= Net Sales

Square Feet of Selling Space

-Used to compare different departments or stores using a common standard

-Important tool to decide al ternate uses of the space


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Percentage of Selling Space

Percentage of Sel l ing Space

= Sell ing Space x 100

Total Space

-Efficiency of space ut i l i ty

-Ratio varies with merchandise and can be used to compare differen

departments or stores.



= Net Sales

Total Full Time Employees

-Average Sales generated by each ful l t ime employee

-Can be used to set performance targets.

Labour Productivity


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Labour Productivi ty

= Total Labour Costs x 100

Net Sales

-Tracks labour costs incurred to achieve a given sales volume

-Can be applied purely to sales employees



= Gross Margin

Total Full Time Employees

-Gross profit generated per employee, used to gauge performance of sale

employees

-Not the only measure but a start ing tool .


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6

THE STORE LAYOUT

The store design and layout tells a customer what the store is all about. It is a very strong tool i

the hands of the retailer for communicating and creating the image of the store in the minds of th

customers.

For a retailer store layout is:

The primary considerations that the retailer takes into account while choosing the look for h

store are his target audience, their needs, and buying habits and the merchandise that he is goin

to sell. Creating a store image is like giving a personality to the store

For the consumer:

A store needs to be simple to navigate; it must appeal to his sensory perceptions and must create

sense of belonging, a sense of relationship, a sense of security or assurance and a sense o

pleasure in the shopping experience

Finally it is the physical attribute of the store which affects the customers sensory perception

and makes him relate to the store in a particular manner.

The store layout can be classified into

Grid

Race track

Free form.


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Grid layout: It is most commonly used in a supermarkets and discount stores. It Is

preferred layout in many retail stores that adopt self service.

Race track layout:This layout is popularly found in department stores. The display is in the form

of the race track or a loop with a major aisle running through the store. It links the variou

departments or the sections inside the store.

Free form layout: In a freeform, merchandise is arranged in an asymmetrica

manner. It allows for free movement and is often used in retail outlets t

encourage people to browse and shop.

MAX STORE LAYOUT

Kids wear Department

Foot wear Department

Western wear

Department

Ethnic wearand home

Department

Accessories

Menswear

Department

CashTill

Baggage

Counter

700 ft

2350 ft

1502 ft

2315 ft2

1805 ft

2234 ft

12 3

4

Pantry


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6

Consumer Behavior and Marketing Strategy

The study of consumers helps f i rms and organizat ions improve their market in

strategies by understanding issues such as how

The psychology of how consumers think, feel , reason, and select betwee

different al ternat ives (e .g. , brands, products);

The the psychology of how the consumer is influenced by his or he

environment (e.g., culture, family, signs, media);

The behavior of consumers while shopping or making other market in

decisions;

Limitations in consumer knowledge or information processing abilit ie

influence decisions and market ing outcome;

How consumer motivat ion and decision strategies differ between product

that differ in their level of importance or interest that they entai l for th

consumer; and

How marketers can adapt and improve their marketing campaigns an

marketing strategies to more effectively reach the consumer.

Understanding these issues helps us adapt our strategies by taking the consumeinto considerat ion. For example, by understanding that a number of differen

messages compete for our potential customers attention, we learn that to b

effective, advertisements must usually be repeated extensively. We also lear

that consumers will sometimes be persuaded more by logical arguments, but a


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6

other t imes wil l be persuaded more by emotional or symbolic appeals. B

understanding the consumer, we wil l be able to make a more informed decisio

as to which strategy to employ.

One "official" defini t ion of consumer behavior is "The study of individuals

groups, or organizat ions and the processes they use to select , secure, use, an

dispose of products, services, experiences, or ideas to sat isfy needs and th

impacts that these processes have on the consumer and society." Although i t i

not necessary to memorize this defini t ion, i t brings up some useful points:

Behavior occurs ei ther for the individual , or in the context of a grou

(e.g. , fr iends influence what kinds of clothes a person wears) or a

organizat ion (people on the job make decisions as to which products th

firm should use).

Consumer behavior involves the use and disposal of products as well a

the study of how they are purchased. Product use is of ten of great interes

to the marketer, because this may influence how a product is bes

posit ioned or how we can encourage increased consumption. Since man

environmental problems resul t from product disposal (e .g. , motor oi

being sent into sewage systems to save the recycling fee, or garbag

piling up at landf il ls) this is also an area of interest .

Consumer behavior involves services and ideas as well as tangibl

products.

The impact of consumer behavior on society is also of relevance. Fo

example, aggressive market ing of high fat foods, or aggressive market in


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of easy credit , may have serious repercussions for the national health an

economy.

There are four main applicat ions of consumer behavior:

The most obvious is for market ing strategyi .e . , for making bet te

marketing campaigns. For example, by understanding that consumers ar

more receptive to food advertising when they are hungry, we learn t

schedule snack advert isements late in the afternoon. By understandin

that new products are usually initially adopted by a few consumers an

only spread later , and then only gradually, to the rest of the populat ion

we learn that (1) companies that introduce new products must be wel

financed so that they can stay afloat until their products become

commercial success and (2) i t is important to please initial customers

since they will in turn influence many subsequent customers bran

choices.

A second applicat ion is publ ic pol icy . In the 1980s, Accutane, a nea

miracle cure for acne, was introduced. Unfortunately, Accutane resul te

in severe birth defects if taken by pregnant women. Although physician

were instructed to warn their female pat ients of this, a number st i l

became pregnant while taking the drug. To get consumers attention, th

Federal Drug Administration (FDA) took the step of requiring that ver

graphic pictures of deformed babies be shown on the medicine containers

Social market ing involves get t ing ideas across to consumers rather tha

sel l ing something. Marty Fishbein, a market ing professor, went o


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sabbatical to work for the Centers for Disease Control t rying to reduce th

incidence of t ransmission of diseases through i l legal drug use. The bes

solut ion, obviously, would be if we could get i l legal drug users to stop

This, however, was deemed to be infeasible. I t was also determined tha

the pract ice of sharing needles was too ingrained in the drug cul ture to b

stopped. As a resul t , using knowledge of consumer at t i tudes, Dr. Fishbei

created a campaign that encouraged the cleaning of needles in bleac

before sharing them, a goal that was bel ieved to be more real istic.

As a final benefit , studying consumer behavior should make us bette

consumers. Common sense suggests, for example, that i f you buy a 6

l iquid ounce bott le of laundry detergent , you should pay less per ounc

than if you bought two 32 ounce bott les. In pract ice, however, you ofte

pay a size premium by buying the larger quantity. In other words, in thi

case, knowing this fact wil l sensi t ize you to the need to check the uni

cost labels to determine if you are real ly get t ing a bargain.

There are several units in the market that can be analyzed. Our main thrust i

this course is the consumer. However, we wil l a lso need to analyze our ow

f i rms strengths and weaknesses and t hose of competing f irms . Suppose, fo

example, that we make a product aimed at older consumers, a growing segment

A competing firm that targets babies, a shrinking market , is l ikely to conside

reposi t ioning toward our market . To assess a competing firms potential threa

we need to examine its assets (e.g., technology, patents, market knowledge

awareness of i ts brands) against pressures i t faces from the market . Final ly, w

need to assess conditions (the marketing environment). For example, althoug

we may have developed a product that offers great appeal for consumers,

recession may cut demand dramatically.


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Segmentation

Segmentation is important in consumer analysis because understanding th

consumer will allow us segment the market more meaningfully.

Segmentation basically involves dividing consumers into groups such tha

members of a group (1) are as similar as possible to members of that sam

group but (2) differ as much as possible from members other segments

This enables us then to "treat" each segment differentlye.g., by:

Providing different products (e.g., some consumers like cola taste

while others prefer lime)

Offering different prices (some consumers will take the cheapes

product available, while others will pay for desired features)

Distributing the products where they are likely to be bought by th

targeted segment.

Culture

Culture is part of the external influences that impact the consumer. That is

culture represents influences that are imposed on the consumer by othe

individuals.

The definition of culture is "That complex whole which include

knowledge, belief, art, morals, custom, and any other capabilities an

habits acquired by man person as a member of society."


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Culture has several important characteristics:

(1) Culture is comprehensive . (2) Culture is learned rather than bein

something we are born with. (3) Culture is manifested within boundaries o

acceptable behavior. (4) Conscious awareness of cultural standards i

l imited. (5) Cultures fall somewhere on a continuum between static an

dynamic depending on how quickly they accept change.

Different perspectives exist in different cultures on several issues; e.g.:

Monochronic cultures tend to value precise scheduling and doing onthing at a time; in polychronic cultures, in contrast, promptness i

valued less, and multiple tasks may be performed simultaneously

(See text for more detail).

Space is perceived differently. Americans will feel crowded wher

people from more densely populated countries will be comfo rtable.

Symbols differ in meaning. For example, while white symbols purit

in the U.S., i t is a symbol of death in China. Colors that ar

considered masculine and feminine also differ by culture.

In terms of etiquette, some cultures have more rigid procedures tha

others. In some countries, for example, there are explicit standards a

to how a gift should be presented. In some cultures, gifts should b

presented in private to avoid embarrassing the recipient; in others

the gift should be made publicly to ensure that no perception of secre

bribery could be made.

The United States has undergone some changes in its predominant cultur

over the last several decades. Again, however, it should be kept in min


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that there are great variations within the culture. For example, on th

average, Americans have become less materialistic and have sought mor

leisure; on the other hand, the percentage of people working extremely

long hours has also increased. The text discusses changes in values in mor

detail .

Demographics and Social Stratification

Demographics are clearly tied to subculture and segmentation. Here

however, we shift our focus from analyzing specific subcultures to tryin

to understand the implications for an entire population of i ts makeup.

Several issues are useful in the structure of a population. For example, in

some rapidly growing countries, a large percentage of the population i

concentrated among younger generations. In countries such as Korea

China, and Taiwan, this has helped stimulate economic growth, while i

certain poorer countries, i t puts pressures on society to accommodate a

increasing number of people on a fixed amount of land. Other countrie

such as Japan and Germany, in contrast, experience problems with

"graying" society, where fewer non-retired people are around to support a

increasing number of aging seniors. Because Germany actually hover

around negative population growth, the German government has issue

large financial incentives, in the forms of subsidies, for women who hav

children. In the United States, population growth occurs both througbirths and immigration. Since the number of births is not growing

problems occur for firms that are dependent on population growth (e.g

Gerber, a manufacturer of baby food).


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7

Family Decision Making

The Family Life Cycle. Individuals and families tend to go through a "lif

cycle." The simple l ife cycle goes from

child/teenager ---> young single ---> young couple*---> full nest

---> empty nest ---> widow(er).

*For purposes of this discussion, a "couple" may either be married o

merely involve l iving together. The breakup of a non-marital relationshi

involving cohabitation is similarly considered equivalent to a divorce.

In real l ife, this si tuation is, of course, a bit more complicated. Fo

example, many couples undergo divorce. Then we have the scenario:

full nest ---> single parent

Family Decision Making : Individual members of families often serv

different roles in decisions that ult imately draw on shared famil

resources. Some individuals are information gatherers/holders , who see

out information about products of relevance. The decision maker(s) hav

the power to determine issues such as:

o whether to buy;

o which product to buy (pick-up or passenger car?);

o which brand to buy;


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Diffusion of Innovation

The diffusion of innovation refers to the tendency of new products

practices, or ideas to spread among people. Usually, when new products o

ideas come about, they are only adopted by a small group of peopl

init ially; later, many innovations spread to other people. The bell shape

curve frequently illustrates the rate of adoption of a new product

Cumulative adoptions are reflected by the S-shaped curve. The saturatio

point is the maximum proportion of consumers likely to adopt a product. In

the case of refrigerators in the U.S., the saturation level is nearly on

hundred percent of households; it well below that for video games that

even when spread out to a large part of the population, will be of interes

to far from everyone.

Some cultures tend to adopt new products more quickly than others, base

on several factors:

o Modern i t y: The extent to which the culture is receptive to new

things. In some countries, such as Britain and Saudi Arabia

tradition is greatly valuedthus, new products often dont far

too well . The United States, in contrast , tends to value progresso Homoph i l y : The more similar to each other that members of

culture are, the more l ikely an innovation is to spreadpeopl

are more likely to imitate similar than different models. The tw

most rapidly adopting countries in the World are the U.S. and


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Japan. While the U.S. interestingly scores very low, Japan

scores high.

o Physi ca l d i stance: The greater the distance between people, th

less l ikely innovation is to spread.

o Opin i on leadersh ip : The more opinion leaders are valued an

respected, the more l ikely an innovation is to spread. The style o

opinion leaders moderates this influence, however. In les

innovative countries, opinion leaders tend to be more conservat ive

i .e . , to reflect the local norms of resistance.

Perception

Background. Our perception is an approximation of reality. Our brai

attempts to make sense out of the stimuli to which we are exposed. This work

well, for example, when we "see" a friend three hundred feet away at his or he

correct height; however, our perception is sometimes "off"for example

certain shapes of ice cream containers look l ike they contain more tha

rectangular ones with the same volume.

Factors in percpetion. Several sequential factors influence our perception

Exposure involves the extent to which we encounter a stimulus. For example

we are exposed to numerous commercial messages while driving on th

freeway: bi l l boards, radio advert isements, bumper-st ickers on cars, and signand banners placed at shopping malls that we pass. Most of this exposure i

randomwe dont plan to seek it out. However, i f we are shopping for a car

we may deliberately seek out advertisements and "tune in" when deale

advert isements come on the radio.


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Learning and Memory

Background. Learning involves "a change in the content or organizat ion o

long term memory and/or behavior." The first part of the defini t ion focuses o

what we know (and can thus put to use) while the second focuses on concret

behavior. For example, many people will avoid foods that they consume

short ly before becoming i l l . Learning is not al l knowledge based. For example

we may experience the sales people in one store being nicer to us than those i

the other. We thus may develop a preference for the one store over the other

however, i f pressed, we may not be able to give a conscious explanat ion as t

the reason for our preference.

Motivation, Personality, and Emotion

Perspectives on Consumer Behavior and Motivation. We considere

several perspect ives on behavior as a way to understand what motivates th

consumer. Each of these perspect ives suggests different things as to what th

marketer should do and what can (and cannot) be controlled. Note that eac

perspective tends to contain a "grain" of truth and that one should not be to

dogmatic in emphasizing one over the others.

Maslows Hierarchy of Needs . The late Abraham Maslow suggeste

the intuitively appealing notion that humans must satisfy the most basi

object ives before they can move onto "higher level" ones. Thus, an individua

must sat isfy physiological needs (such as food and l iquid) before he or she wi


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be able to expend energy on less fundamental objectives such as safety. Onl

when basic objectives have been met will a person move on to seek suc

object ives as love and belonging, and only a small minori ty of people make i

as far as seeking self-actual izat ion.

Maslows Hierarchy is useful in understanding different needs of consumer

across the World. However, one must be careful not to take it too li terally

since people may occasionally "swing" between needs. For example, a homeles

person who current ly does not have shelter may seek that out even though he o

she is hungry.

Properties of motivation. Motivation is described through several properties:

M ot ivat ion is composed of ener gy and di r ec t ion. A person may or ma

not have enough motivat ion to engage in a given act ivi ty. For example,

person may be motivated enough to go and shop for food, but not enoug

to engage in a comprehensive exercise program.

M ot ives may be over t , h i dden, and mu l t i p le. Some motivations ar

publicly expressed (e.g. , the desire to buy an energy efficient house)

while others (e.g., the desire to look wealthy by buying a fancy car) ar

not. Individuals may also hold multiple motivations (e.g., buy a car an

save money for retirement) which may conflict.

M any mot ivat i ons ar e dr i ven by the desi r e f or t ens ion r educt i o

(e .g. , e l iminate thirst or hunger) .

M ot i vat i on s can be dr i ven by bo th i n tern a l an d ex ter na l fac to rsThat is, a person may want a painting either because he or she likes i

( internal motivat ion) or because this wil l give her status among th

art ist ic el i te (external) .


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M ot ivat ion s may have ei t her a posi t i ve or negat i ve va lence--peopl

may either be motivated to achieve something (e.g., get a promotion a

work) or avoid something (e.g. , being hospital ized without havin

adequate insurance).

Consumer s ar e mot i vated to achi eve goals. Achieving these goals ma

require sustained activity over time (e.g., exercising every day for month

or years) as opposed to just taking some action once.

Consumer s mai nta i n a bal ance between the desi r es for stab i l i t y an

var ie ty. Most consumers want some variety (e.g., they do not want to ea

the same meal every day), but also want a certain stability (they do nowant to try an entirely new food every day).

M ot i vat i on r ef l ec t s in d i v i dua l d i f f er ences. Different consumers ar

motivated to achieve different things, and i t may be diff icul t to infe

motivations from looking at actual behavior without understanding thes

differences in desired outcomes.

Self-Concept, Situational Influences, and Lifestyle

The self-concept. The consumer faces several possible selves. The actua

self reflects how the individual actual ly is, a l though the consumer may not b

aware of that real i ty (e .g. , many anorexic consumers who are dangerously thi

bel ieve that they are in fact fat) . In contrast, the ideal self reflects a self that

person would like to have, but does not in fact have. For example, a couc

potato may want to be a World famous athlete, but may have no actual athleti

abi l i ty. The private self is one that is not intent ional ly exposed to others. Fo

example, a pol ice officer may l ike and l isten to rap music in private, but projec

a public self- image of a country music enthusiast , playing country songs a


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work where police officers are portrayed as heroes. The key here is to keep i

mind which kind of self we are trying to reach in promotional messages. If w

appeal to the hidden self , f or example, we must be careful to make our appeal

subtle and hint , i f appropriate , on how the individuals confidential i ty an

privacy can be enhanced.

Individuals wil l often seek to augment and enhance their self concepts, and i

may be possible to market products that help achieve this goal . For example,

successful attorney may want to wear (in politically correct terms) cowchil

boots and a cowchild hat to bring home an image as a ranch enthusiast .

Lifestyles. Self-concept often translates into a persons l i festyle, or the wa

that he or she l ives his or her l i fe . For example, a person may be ver

materialistic, preferring to wear flashy clothes and drive expensive cars, o

prefer instead a simpler l ife with fewer visible status symbols. Attempts hav

been made to classify consumers into various segments based on thei

lifestyles. The Values and Lifestyle (VALS) Project, developed by the Stanfor

Research Inst i tute (SRI), a t tempts to classify people based on a combinat ion o

values and resources. Thus, for example, both "Achievers" and "Strivers" wan

public recognition, but only the Achieve rs have the resources to bring thi

about . A global analogue is the Global Scan.

Situational influences. Specific circumstances often influence consume

behavior. For example, consumers in a rush are l ikely to take the mos

convenient product avai lable. Consumers whose at tent ion is demande

elsewhere are l ikely to disregard commercial messages. Consumers shopping fo

a special occasion (e.g. , a wedding) may buy different products.


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Consumer Decision Making

Definitions.Consumer decision making comes about as an attempt to solv

consumer problems. A problem refers to "a discrepancy between a desire

state and an ideal state which is sufficient to arouse and activate a decision

process." Thus, problems can be major (e.g., a consumer has been fired an

is without a job) or minor (e.g. , the consumer lacks an eraser necessary t

take an exam the next day), and the broader and more ambiguous a problem

is, the more potential solutions are generally available (see class slides f o

examples).

Consumer Problem Recognition. Consumers often note problems b

comparing their current, or actual, situation, explicitly or implicitly, t

some desired situation. In terms of the "big picture," what is compare

may be the totali ty of ones l i festyle. Once a discrepancy is found,

determination is found as to whether this is large enough to warrant action

in which case a search for solutions is init iated.

Problems come in several different types. A problem may be an active on

(e.g., you have a headache and would like as quick a solution as possible

or inactive -- you are not aware that your situation is a problem (e.g.,

consumer is not aware that he or she could have more energy with a new

vitamin). Problems may be acknowledged (e.g., a consumer is aware tha

his or her car does not accelerate well enough or unacknowledged (e.g.,

consumer will not acknowledge that he or she consumes too much alcohol)


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Finally, needs can be relatively specific (generic), as in the need fo

enjoyment (which can be satisfied many different ways), or specific, as i

the need for professional att ire to wear at a new job.

Several different methods can be used to detect consumer problems, whic

are discussed on pp. 508-509 in the text.

Creating problems for consumers is a way to increase sales, albeit

questionably ethical one. One way to create new problems, and resultan

needs, is to create a new ideal state. This is often done quite arbitrarily i

the fashion industry, as skirt lengths and the appropriate number of button

on a suit often change arbitrarily up and down. It may also be possible to

create dissatisfaction with current states--e.g. , a f irm may publicize curren

crime statist ics to increase the sales of handguns and alarms. Many

vocational training schools advertise that better careers than th

consumers current one are available upon graduation (a promise on which

by the way, they may not deliver in the end).

There are two main approaches to search. Internal searches are based o

what consumers already know. Thus, it may be important for certain firm

to advertise to consumers before they actually need the product. Fo

example, one bail bond company advertised its existence to people "in cas

you ever f ind yourself in jail ." As another example, if you decide to go ou

for fast food, you may not consult any directories, but instead search you

memory for fast food restaurants conveniently located. A problem is tha

some excellent ones which are not remembered, or have never been heard

of, are not considered. External searches get people to either speak t

others (getting information by word of mouth) or use other sources (such


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as advertisements now sought out or yellow page listings). Because th

yellow pages are often the first place to which people turn, this medium i

able to charge very large advertising rates.

Consumers often do not consider all alternatives. Some are not known (th

"unawareness" set), some were once known but are not readily accessibl

in memory (the "inert" set) , others are ruled out as unsatisfactory (th

"inept" set--e.g. , Glad bags attempts to get "bargain bags" into that set)

and those that are considered represent the "evoked" set, from which on

alternative is l ikely to be purchased.

The amount of effort a consumer puts into searching depends on a numbe

of factors such as the market (how many competitors are there, and how

great are differences between brands expected to be?), produc

characteristics (how important is this product? How complex is th

product? How obvious are indications of quality?), consume

characteristics (how interested is a consumer, generally, in analyzin

product characteristics and making the best possible deal?), and situationa

characteristics (as previously discussed).

Two interesting issues in decisions are variety seeking (where consumer

seek to try new brands not because these brands are expected to be "better

in any way, but rather because the consumer wants a " change of pace," an

"impulse" purchases . Impulse purchases are, generally speaking

unplanned, but represent a somewhat fuzzy group. For example, a shoppe

may plan to buy vegetables but only decide in the store to actually buy

broccoli and corn. Alternatively, a person may buy an item which i


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currently on sale, or one that he or she remembers that is needed only onc

inside the store (remember the Wal-Mart article).

Several different strategies for influencing consumer decision making ar

discussed in the text on pp. 537-541.

Consumer Outlet Selection

Retail evolution and consumer choice. For many products, consumer

frequently have numerous choices as to where they are going to actually obtai

the product . Although we are used to thinking of buying automobiles only from

dealerships, for example, i t is today possible to buy them through brokers o

fleet sales organizations that may both (1) offer a lower price and/or (2

provide the help of a neutral third party which does not have a vested interes

in the sales of one make over the other.

In general , the evolut ion of diversi ty in the retai l scene has provided consumer

with more choice. In the old days, most consumers had access only to "generalstores for most products. Gradually, in urban environments, special ty an

discount stores evolved. Today, a consumer may general ly choose to buy mos

products either at a relat ively high price, frequently with a significant amoun

of service, in a specialty store, or with lower service in a discount store. A

special case of the discount store is the category ki l ler--a store that tends t

special ize in some l imited area (e .g. , e lectronics) , lacking the breadth of

t radi t ional discount store often undercutt ing the t radi t ional discount store oprice (which they are able to do because of the bargaining power that resul t

from high buying volumes of a narrow assortment of merchandise from th

same manufacturer).


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"At home" shopping and electronic commerce. During the las

several decades, the incidence of "at home" shopping has increased. The growt

of catalog sales can be traced to advances in computer technology an

subsequent l ist avai labi l i ty (as we discussed in the sect ion of direct market in

segmentation methods). A more recent development is Internet based market ing

Although sales are modest in this domain at the moment, i t is too early to j udg

the total potent ial of this medium. Although many of the concerns tha

consumers hold about computer crime tend to be exaggerated and/or largel

unwarranted, public fears are a major holdback. Another problem is th

demographics of computer and Internet use--the majori ty of U.S. consumersand certainly the great majori ty of residents of even highly industrial ize

countries, are not regular Internet users. Certain products specifical ly aimed a

heavy Internet users (e .g. , records, software) and product s/services that requir

a high level of customization (e.g. , a ir l ine t ickets) may find good opportunit ies

An interesting problem with Internet commerce, which may well have spillove

effects outside the realm of the Net , is the relat ive ease with which consumer

may compare prices of different retailers, resulting in intense priccompetition. Note that recent legislation has limited taxation of Internet sale

in the U.S. , in a sense at tempting to "jump start" this innovation.

Stor

consumer behaviour in max lifestle retail

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