consumers perspective retail business
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Consumers Perspective: Retail Business
PERCEPTION MANAGEMENT THE NEW DISCIPLINE
The seven key issues retailers face today are
1. Customer Satisfaction Retailers know that satisfied customers may become
loyal customers. Consequently, retailers they attempt to develop strategies
intended to build relationships2. Ability to Acquire the Right Products A customer will only be satisfied if
they can purchase the right products to satisfy their needs. Since most retailersdo not manufacture their own products, they must seek suppliers who will supply
products demanded by customers. Thus, an important objective for retailers is toidentify the products customers will demand and negotiate with suppliers to
obtain these products.
3. Product Presentation Once obtained products must be presented in a way
that generates interest. This requires hiring creative people who can understand
and relate to the market.
4. Traffic Building Like any marketer, retailers must use promotional methods to
build customer interest. For retailers a key measure of interest is the number of
people visiting a retail location or website. Building "traffic" is accomplished witha variety of promotional techniques
5. Layout For store-based retailers a store's physical layout is an important
component in creating a retail experience that will attract customers. Thephysical layout is more than just deciding in what part of the store to locate
products. Layout is also important in the online world where site navigation andusability may be deciding factors in whether of a retail website is successful.
6. Location Where to locate a retail store may help or hinder store traffic. Well
placed stores with high visibility and easy access, while possibly commanding
higher land usage fees, may hold significantly more value than lower cost sitesthat yield less traffic. Understanding the trade-off between costs and benefits of
locations is an important retail decision.
7.Keeping Pace With Technology Technology has invaded all areas of retailingincluding customer knowledge (e.g., customer relationship managementsoftware), product movement (e.g., use of RFID tags for tracking), point-of-
purchase (e.g., scanners, kiosks, self-serve checkout), web technologies (e.g.,online shopping carts, purchase recommendations) and many more.
INDIAN RETAIL THE NEW AWAKENING
The Indian consumer story is one that has caught the attention of the rest of the world.Rising incomes in the hands of a young population, a growing economy, expansion in the
availability of products and services and easy availability of creditall this has given rise
to new consumer segments and spend levels.While consumerism has seen a gradual build-up, what is certain today is that there has
been a genuine uptake in consumption, notwithstanding the current downturn. Whetherit is mobile phones, credit cards, apparel or organized retail, people clearly seem to be
spending more, particularly on discretionary items. The consumer seems to beeverywherethe large metros, the emerging new cities, the small towns or even rural
India. What is more, these new segments are also quite diversewith tech-savvychildren, independent youth, the empowered urban woman or the first-time rural
customer.
LEADERSHIP CHALLENGES
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While this bodes well for firms in terms of demand, it has also raised new challenges.The most critical is the question of leadership development. Two pertinent questions that
a leader has to face
1. What kind of talent will companies need now that they are selling to a new,
emerging consumer who is not well understood?
2. More importantly, what kind of leadership will be required to manage growth
effectively?
These questions gain special importance, given that individuals very unlike the majorityof their consumers are increasingly leading companies. Urban professionals are
hypothesizing about rural India and making decisions that affect the lives of the middleclasses in the small towns. Is this business as usual, or should companies be concerned?With the Indian consumer maturing fast, and upgrading occurring within product
segments at an exponential pace, consumer companies are finding it a challenge to keepup with their expectations and needs. If Companies want to succeed, they now need to
straddle the whole consumer pyramid rather than focus on one part of it. Withexpanding global footprints, Indian companies also need to deal with a culturally diverse
employee base and an international customer segment. In such an environment, dealingwith diversity is a major challenge for todays leaders. This includes diversity of ideas,
diversity of businesses and diversity of talentall of which require flexibility ofleadership and the ability to shift and turn with every opportunity.
STORE IMAGE AND THE CONSUMER
The American marketing guru Martineau was among the first to link the personality ofthe store, to the image that a shopper has of oneself. Martineau suggested that a
shopper is unable to differentiate based only on price amongst various grocery storesand would tend to shop at that store which is congruent with the self-image. A store
may be acceptable for one type of goods and not for others. The four psychologicalattributes that contribute to creation of the store image are (1) Layout and architecture
of the store, (2) Symbols (emblems) and colors, (3) All types and dimensions ofPromotion and (4) the store Sales personnel.Economic factors will always be important,
but unless the store image is acceptable to the shopper, price announcements are
meaningless. What elements one consumer sees as functional may be emotional /
psychological triggers for another. What is important for a retailer then is to obtaininformation on how the consumer uses cues from the retailing mix elements to perceive,
process and create the resultant image. This knowledge can be used to identifysegments based on similarity of interpretation orientations and resultant cue processing.
Converting image research to image strategies started as early as 1984. Image hasbeen made operational using the factors of
1. General characteristics of object (the physical characteristics of object make up
the image)2. Perception (perception of the object is the image of the object)
3. Beliefs and attitudes (attitude to object characteristics combine as the image of
object)
4. Personality of the consumer
5. Linkages between characteristics, feelings and emotions.
Store image is anything from the perception of a store in the mind of a consumer to areflection of the attitude of the consumer toward the store to complex association of
meanings and symbols.Store image has three broad components:
1. The actor: The consumer who perceives the store. His or her self-concept as
divisible and comprises 3 selves:
The personal identity (both actual and ideal)
The social identity (both actual and ideal) and
The public identity (actual and ideal)
2. The activity: The process of perception operates at two levels
The Consumer Value perspective
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The Congruity Perspective
3. The object: The store that is perceived
A retail store is the literally just a physical structure in spatial dimensions involved in themarketing activity of retailing. However, all the store mix elements convey a meaning to
the actor whether in functional or symbolic terms. The store itself is thus a composite
whole of all these mix elements.Significantly, it is certainly possible that many consumers will not be aware of the
intricate mental exercises being done before, during and after the transaction.
David Ogilvy had once famously declared that the consumer is not a moron she is yourwife. Perhaps, he ought to have added, If she perceives you as loyal she'll buy more.It is perceptions that define every buy-sell reaction; and as we know, communications is
the primary tool for managing perceptions to motivate the desired behavior in the targetaudience.
This is understood very well in marketing. If you want the target audience to buysomething, you must create a need and manage the audience's perception so that it
feels that need and belief that the product will satiate it.There is a difference here between manipulation (creating something that people really
do not need and creating an impression in their minds that they need it) and givingpeople both the opportunity to express a need and the best way to fulfill that need
through products or services. The boundary is getting fuzzy these days as even thecommonplace and ordinary is packaged as extraordinaire! It is election time now, and
politicians do this by instinct, particularly when the behavior they desire is a positivemandate or vote for themselves. They know that every outcome requires someone
somewhere to do something.The time has come for companies to have a specific function for perception
management, just as they have specialists to manage monetary assets, people assetsand technological assets through systems and precision. They are rigorous about
measuring the results of efforts in every area, and yet fail to have a specific functionthat manages the perceptual assets of a company or a product.
Ask any executive to analyze the value of his company's shares. In almost every case,
the logical explanation, which includes price earnings, ratios, dividend policies andreturns on investments, only makes up about 60 to 70 per cent of the market valuation.
The rest has to do with perceptions: perceptions of management quality, perceptions of
industry outlook, perceptions of the quality of a company's strategy, perceptions ofbrand value. Yet those perceptions are seldom systematically managed. They may be
managed by an investor-relations person or function, a role, which often tends to bereactive and fact-driven.
If a company has to succeed in today's marketplace it has to shape perceptions toachieve desired business results with the financial community, consumers, and policy
makers to get into the heads and hearts of their audiences.Changing perceptions requires powerful combinations of messages, messengers and
media. In today's world, to survive, one has to create motivating communications, whichhave emotional relevance to the listeners that one wants to reach.
Perceptions can be more powerful than reality. In the financial marketplace, the value ofa stock can be driven up or down by expectations for the future. So, is it a powerful idea
that drives the company, or is it the perception of a powerful idea that drives the
company?In government relations and public affairs, companies often try to influence the minds ofgovernment officials about an issue or a proposal. The argument is seldom won on its
own merits. It is usually won by creating the perception that the decision-makers' ownconstituency is best served by one particular outcome.
Perceptions differentiate a product and make it relevant to the consumer, allowing for apremium price. Perceptions filter what we see, how we comprehend and infer, what we
believe, and how we act. They add or diminish value. The brand itself, for a start, is aperception. In this context, therefore, the store is a perception and the particular retail
format decided upon is also a perception. A bad perception can be disastrous.
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Even the rise and fall of companies and brands may depend upon the consumerperceptions. The effective management of perceptions can translate into success or
failure in the market place. A case in point in the Indian context is - Real Value fireextinguishers. Real Value "burnt" into the mindscape of consumers with its masterly use
of perception management by whipping up emotions about man's primordial 'fear offire'.
An astonishing volume of fire extinguishers were sold and amazingly created an FMCGkind of category for hand-held portable fire suppressants. Until then, fire extinguishers
were an industrial category. The advertising platform was panic-centric revolving around
fear of loss arising out of outbreak of a fire. A negative emotion was exploitedeffectively. Real Value positioned itself as a protector and created a perception of peaceof mind. The same company's next line of products - vacuum jars - bombed due to the
ill management of consumer perceptions about the category as containers and jars.Even bigger ad spends than earlier and roadblock advertising on all TV channels could
not change the perceptions of consumers. No strong emotion could be whipped up inthis case and the product benefit was perceived as a no show. Not even the tangibility
of the benefit could be showcased.BJP's perception of India shinning boomeranged in the hinterland; countryside India
perceived the feel good factor as untrue. The management of the perception waswrongly done and the results are there for all to see. Vajpayee sat pensively in the
opposition while the NDA wondered if it could come back to power.
In the last decade, TATA Tea's management of the ULFA episode speaks volumes aboutthe company's approach to perception management. It not only quelled any negative
fallout for the TATA brand but put the matter in the correct perspective by issuingnotices, corrective advertising and media management. The entire PR machinery was in
overdrive to clear the brand name of any negative perception. Coming back to today one
can see that Laloo Yadav is a master of grabbing mindshare. The day he took over asrailway minister, he branded his ascendancy with a kullharculture (an earthen cup) in
rail travel wherein chic gave way to rustic khadi(hand woven fabrics) decor in upperclasses and mattha (buttermilk) as the downer instead of MNC colas. He has managed to
put his label on the railway ministry and the public at large can distinguish his brand ofoperations.
Tenets of perception management (PM) include questions like:
Who is the audience?
What is the current mind-set?
What do they think now about this company or this product?
Who has the greatest influence over these people?
What is the best selling proposition?
What is the best message that can be offered to help them understand the
company point of view?
How can one reach them with the power and the impact that gets them to want
to buy or to recommend buying the stock/product? And finally,
How does one increase the perceptual asset, which is critical to the valuation of
the share?In this day and age, companies cannot afford not to manage perceptions of these critical
audiences. It should be part of competitive strategies. It should also be part of business
strategies. Use of basic communication techniques to get into the heads and hearts ofstakeholders leads to-identification of current perceptions, targeting key groups,refocusing on reality, and bringing about desired behaviors and measurable results.
Perceptions and style can never be a substitute for lack of substance. However, they goa long way in sustaining the offering for an extended period. Experts say that for a
sustainable future an ongoing PM program can help in every conceivable way.As far as retail is concerned, it is generally agreed that it purports to achieve three
things: break bulk, get the product as close as possible to the consumer and add
value. From a marketers perspective, the consumer looks at value in four differentways
1. Value is low price I pay
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2. Value is everything I want in a product or service3. Value is the quality I get for the price I pay
4. Value is all that I get for all that I pay (time, money, effort, emotion)
The point is that different segments would require a different combination of value. A
consumer buying a PC from the retailer is different from a consumer buying a PC as areplacement directly online from Dell. The value as perceived by a lower-end consumer
when he buys a watch from the unorganized sector (assembled) is different from a
consumer wanting to buy the Nebula jewelry watch from Titan. The former wouldnormally look at the functional utility, price and to some extent the aesthetic design of
the watch. The latter at the retail store experience, the degree to which the brandserves his self-expression needs, the credibility of the retail outlet and the after sales
service.A different kind of psychological benefit in the form of value could be perceived when
perceived risk is involved. A consumer shopping for a ready-made home may perhapsfind psychological security in choosing a brand with a great reputation for being trusted.
This consumer has paid more for obtaining the value of "security and risk avoidance".Before a marketer can choose a value proposition, he needs to do a category
assessment. This is not only because of the difference in categories but also because ascompetition evolves, the value proposition could also undergo a change. The choice of
value depends on the category as well as whether it is high-involvement or low-involvement or commodity type of product. There could be low-involvement products,
which may sell because of imagery associations such as cola or soaps. Commodity typeof products are tires, components, antiseptic cleaning lotions, notebooks or products
where consumers buy more out of inertia than any involved purchase. Technologicaladvances can provide value to such products and create a preference for them among
consumers. A technologically advanced packaging of frozen vegetables adds value to thecommodity type of offering. Choosing a value depends on two basic factors:
a) Perception of value in the mind of the consumerb) Evolving market structure with regard to the category
Perception of value may even extend beyond the attributes of the brand. For example,
sachets bought over a period are clearly more expensive than a large packaging of atube of fairness cream. However, the consumer may perceive value with regard to the
control it gives over the usage of the product given the affordability levels. Similarly,sheer affordability of a particular SKU may provide value to a segment of consumers
Price also sends a signal towards value perception (value meaning quality in thiscontext). An exclusive showroom in the apparel category like the up market Park Avenueor Levi's provides the perception of high quality. In certain cases, this may even
discourage consumers from visiting the showroom as they feel that the offering isexpensive. This segment, while perceiving high quality with the associated offering, is
unable to perceive value because of the price. One more approach is to highlight theprice in the advertisements so that the consumer does not think that the price is not as
high as he had perceived it to be. This brings the consumer closer to the acceptance ofvalue (even if a cross-section of the consumers get convinced because of this approach,
these advertisements are beneficial). Levi's and Tanishq have adopted this approach.A precaution the seasoned marketer would take is that this would be counter-productive
if the major part of the segment is at the higher end of the market. At times consumersmay perceive a value with regard to component or part used in the product. Puf used in
Godrej brand of refrigerators became a major selling point in the past (though it was notthe first brand to use it).
Herbal offerings may be perceived as products, which are very safe (which may not bethe case in several categories). A brand of shampoo containing a chemical may have to
convince consumers about the safety of the brand, as consumers may perceive damageto hair because of chemicals involved.
Sometimes offerings may create confusion if the brand does not clearly communicatethe offering and its benefits. Ice creams and yoghurt have had this problem in the Indian
context.Brand names could create a negative impact on the perception of consumers after being
successful. Titan was associated with elitist orientation and the company had to come
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out with Sonata for the lower end of the market, which contributes significantly to thevolume of the company.
The perception of value in the mind of the consumer evolves over a period of time withcompetition. This is one of the strong reasons for marketers to introduce brand
personality whenever possible. The idea is to bring in differentiation through theinclusion of emotional value, which would appeal to consumers faced with a choice of
several brands, which are equally acceptable.For example, in the category of motorcycles, it was initially the speed, pick-up and style
that mattered. Later, the preference shifted to the brand's personality. This happened
despite the fact that Hero Honda literally created a revolution by introducing its bikes,which gave double the mileage of any competing brand at the time of introduction. Thesuccess of Caliber has its underpinnings on such change of perception on what matters
to consumers at a specific point in time in an environment, which is driven, by change.Peter England, with the "honest proposition" of delivering value at a reasonable price,
went on to create a niche for itself in the history of readymade wear. The timing of thebrand with the proposition, and more importantly, the delivery, was most appropriate if
one considers the market structure, which existed at the time when the brand waslaunched. There were higher-end brands firmly entrenched, there were a few brands,
which were in the middle price segment, and there were regional offerings. PeterEngland advertised the core attributes with regard to value and backed it up with the
right price. After being successful, the brand is attempting to provide lifestyle value
through subsequent TV spots.Good packaging can also change consumer perception. Smaller manufacturing
companies, that include private labels, have taken to innovative packaging to hit theirtarget consumers. Dadimas Magic mango pickle, ITS fruit tomato ketchup, Mehek Dehra
Doon Basmati, 24 Letter Mantra and Bread & More are some of the products available in
shops with good packaging motifs.Most of these companies have an advertising budget of Rs 2-5 crore, of which a good
amount is invested in packaging the product. It is prudent to assign 5-7% for packagingalone. Many companies end up spending more in packaging than the product itself.
Unless the goods stand out from the clutter, it is not sold. Packaging is usually reviewedevery two years. This was not so a few years back. Technology up gradation, awareness
and increased competition has helped smaller brands establish themselves in a littletime. This, backed by innovative communication ideas, promotions and packaging, has
helped these companies grow.The retail boom of the last few years has also helped these companies to get a platform
to showcase their products in multi-brand outlets. The consumer buying behavior is veryimpulsive and it is the pricing, color scheme, offers and packaging that often attract
them to buy a product.The consumer can now have a visual impact of the various product lines available at one
go. The consumer behavior has also changed. The recent trend is to evolve thepackaging constantly. No one continues with the same look for too long. Most brands
that have identified the importance of packaging constantly evolve to cater to theevolving needs of the consumer.
Impulse buying is another separating factor. It happens when you get trapped in abuildup situation propagated by effective retail communication or out of the mind
discount offers and you buy without thinking much about it. Impulse items can be
anything, a new product, samples or well-established products at surprising low prices.Instincts are driven by emotions and emotions are driven by attitude and perception.
Fishbein extended model 'Theory of Reasoned Action' explains the interrelationships ofpsychological factors and external factors that initiate purchase behavior.
Self Belief + Evaluation = AttitudeSelf Perception + Referral Opinion = Subjective Norm
Attitude + Subjective Norm = Intention to perform action
The twisted form of this theory in terms of impulse purchase is:
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Self Belief + Instant Evaluation (optimum sensation) = AttitudeSelf Perception + Self Opinion (absolute threshold) = Subjective Norm
Attitude + Subjective Norm = perform impulse action
Ladies and Gentlemen, my final submission is that the future is likely to look ratherdifferent from what you and I see today. Modern retail is in its initial stages, the
progressively transforming economy stands clearly as evidence of the evolution oforganized retail. Although there are some disruptions along the way, the overall impact
will certainly be positive. Organized retail will take years to touch all the households in
the country. Currently only 14 million households embrace modern retail outlets as theyare geographically concentrated. Even after seven to eight years from now, it would not
go beyond a few hundred towns in India. Over a period, price, location andmerchandising will diminish in importance. Only professionalism, process and people will
make the winning difference. The four key abilities required to emerge as a successfulretail brand are Profitability, Scalability, Sustainability and Respectability are. Eighty per
cent of the total expenses / investments are on real estate, utility charges and
manpower, which are not in the hands of the retailer. The supply chain efficiency is theonly area, which can be effectively leveraged for better profitability in the retail
business. The country will witness a lot of mergers and acquisitions happening in theindustry, and finally only a small number of big players will be there in the organized
sector. However, there will be traditional stores which will co-exist with them in themarket place, As a retail store is an effective communication medium, retailers and
manufacturers will work closely to bring in the difference in visual merchandising.
Customer value is a complex issue and marketers will continue to research, probe,understand and interpret it based on the category, context and changes, which occur in
consumer behavior and competitive offerings.
After all, Reason persuades but Emotion motivates.
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