retail customers[1]

8/8/2019 Retail Customers[1]

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UNDERSTANDINGUNDERSTANDING THETHE RETAILRETAILCUSTOMERCUSTOMER

Peter Drucker, business exists to

satisfy customers


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Intro It is the consumer who determines the growth, prosperity, and even

existence of a Retailer.

The ability to understand the customers is the key to developing a

successful retail strategy.

The behavior of retail shoppers varies across markets.

An integral part of understanding customers is identifying the customers----- target segment

----demographics of this segment

----their needs and buying behavior


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In short span of little 10 years, the change thatoccurred in the Indian consumer is phenomenal.Liberalization and a steady economic growth havebeen the main factors that have driven this stage.

Retail strategy is largely information based. Thegathering and analysis of data relevant to the retaileris done by market research.

In a world of increasing competition, research can aidthe retailer in satisfying the customer and thereby,building loyalty.


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Need For UnderstandingConsumer Behavior

Accurate understanding of the consumerneeds helps the retailer to create the

products that are likely to besuccessful in the market.

nderstanding of the consumer behavior is

the starting point of strategy creation.

Helps the firm to assess how well it hasachieved its product positioning goals.


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Understanding how the need for aproduct/service was determined

Understanding how information wassought by the customer

The process of evaluation of variousproducts and stores

The payment process

The post purchase


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Paco Underhill in his famous book why

we buy, The science of shopping bring

out some key facts about howconsumers buy and the various

influences on them. The book brings out

the key fact that most purchasing

decisions are influenced and made on

the shop floor itself.


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Factors Influencing The Retail

Shopper Range of Merchandise:

If merchandise is similar to that ofanother store or what is commonlyavailable, the customer may not see anyreason why he should not switch stores.

The range of merchandise offered playsan important role in the case ofcategories like durables, book, music andother lifestyle products.


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Convenience of shopping at a

particular outlet:

Example: while buying medicines, mostparties would prefer to buy from the

chemist near the doctors clinic or nearthe hospital.


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Time 2 Travel

The time taken to reach a particularretail location in fast is becoming critical.

Take the case of metros like Mumbai,

where the travel time is high.


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Socio Economic Background &Culture

The Socio Economic Background & Culture of theconsumer largely determines his life style.

This influences the kind of store that he may becomfortable shopping in.

Consumer buying behavior varies from market

to market and is largely influenced by theculture of the region.

Example: Asian culture is very different fromWestern culture.


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The need hierarchy is different for eachmarket

It would be important to the retailer toconsider socio economic changes in ageographic region over a period of timeas it would be an indicator of the

facilities available at various levels andthe quality of life of the population,which would indirectly be related to thespread of organized retail.


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SOCIO ECONOMIC INDICATORS OF CHANGES IN INDIA

1991 - 92, 1996 - 97, 2006 07

INDICATORS 1991- 92 1996 - 97 2006 - 07

LIFE EXPECTANCY (IN TERMS OF YEARS) Male 57.7 60.1 66.1

Female 58.7 61.1 67.1

Infant mortality rate (per thousand births) 78 (a) 68 (b) 48

Death rate (per thousand) 10 8.7 7.4

Birth rate (per thousand) 28.9 28.72 21.7

Fertility (per thousand) 130.3 113 91.4

Literacy rate (%) 15 35 years 56 90 100

7 years & above 52 75 90

Per capita consumption of food grains (Kg) 182 193.6 225

(a) Village without drinking water (thousands) 3.0(D) 0 0

(b) Village partially covered 150 NEG 0

Electricity as a source of lighting Rural 27 ( c) 50 80

Urban 75 ( c) 80 95


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The Stage of Family Life Cycle

The stage of FLC that the customerbelongs to, largely influences his needs.

Example: The needs of a young bachelorwill be different from the needs of family

with children and it is again differentfrom an elderly one.


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Customer Decision Making

Process The need for a product or service starts at

the time when the need for that particularproduct or service is recognized. A need

may be psychological or functional.

Psychological needs are associated withpersonal gratification that the customermay get from purchasing or owning the

product.

A functional need is directly related to thefunction of the product.


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Need

Recognitio

n

Search

for

Inform

ation

Evaluation

of OptionPurcha

se

Decisio

n

Store

Visits

Steps Involved In Consumer

Decision Making Process:


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Steps Involved In Consumer

Decision Making Process:

Identification of a need for the productor service

Search for information

Evaluating alternatives

The purchase decision


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Identification of a need for the

product or service:

Typically, a consumer may realize

that he needs a product when thecurrent product he is using does notmeet his expectations or when hesees a product or an advertisement

for the same and feels the need topurchase it.


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Search for information: This step involves how the gathering

of information on how to solve the

problem. This search may be

Internal from memory

External friends, family, publishedsources, sales person, internet etc.


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Evaluating alternatives:

This evaluative criteria are used byconsumers to consider different options.

These could vary from person to personand may be influenced by situation.

It also depends on product, occasion forpurchase and the buying environment.


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The purchase decision:

Here the decision is made about first,whether to buy or not.

Numerous displays in a store may causea person to change his/her mind while in

the store perhaps , a sales clerk mayconvince him to change brands or eventhe amount he planned to spend.


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Key factors influencing consumer

behavior: Psychological Factors

Consumer Needs and Motivation Perception Learning Believes and Attitudes

Cultural Factors Culture Subculture ( Social class (occupation ,education, income)

Social Factors Reference Group Family Family life cycle Role and Status


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Personal Factors

Age and life cycle

Personality

Self Image

Occupation

Life style (way in which people live and spends money)

Economic Factors

Personal income

Family income

Income expectations Savings

Liquidity position

Consumer credit


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RecognizeDesire to

shop

Evaluate optionsAnd select store

Storevisits

decision outcome

PreviousShopping

experience

Beliefs andattitude

How customers develop loyalty towards a store


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Market research Retail strategy is highly information based.

Timely and relevant information is essentialto provide an adequate basis for day to daydecision making.

A market activity deals with followinglogical steps

Collection of Data

Analysis of the data collected &

Deriving conclusions on the basis of datacollected.


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The data collected may be

Primary data

Retailer collects this for a specific purpose

Secondary data This may be Internal Sources like sales figure,

company reports, consumer complaints etc., &External Sources like government statistics,research done by commercial research agenciesand financial agencies.


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From the retailers perspectivemarket research is done:

Prior to setting up a Retail Store

&

After setting up a Retail Store


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Prior to setting up a Retail

Store: Whether he should go ahead with the

store in the region/state/country.

The primary information that hewould need to look at would be:

Demographic Data

Customer Data


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Demographic Data A study of the overall population, the age,

the literacy rate, social and economictrends are termed as DemographicTrends.

They help the retailer understand thediversity of retailing in a particularregion/nation.

Many times this serves as the starting pointfor understanding consumer profile.


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Issues that a retailer would look

into: The population: second in the world after china and

worlds largest democracy

GDP and purchasing power parity: india is considered

to be fourth largest economy in terms ofPPP.

Age profile of population: cause of needs varies.

Information on customers: National council ofAppliedEconomic Research ( NCEAR), Market information

survey of Indian households (MISH)-primary data,National Readership survey- trends in both urban andrural-conducted by 3 agencies ( IMRB, TNS Model ,AC Nielson)


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After setting up a Retail Store Now Retailer would be concerned primarily

with the level of satisfaction of the targetcustomer.

Here the research can help the retailer inthe areas: Evaluating Customer Satisfaction with the range

ofProducts and Services.

Generating Ideas for and Developing Products.

Evaluating the Acceptability Of The Products andPricing of New Products.

Understanding Customer Profile.


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As the retailer expands to multiplelocations, research becomes

essential. The methods commonlyused by retailers are:

Focus group discussions

Accompanied observation

Profiling customers as they enter/ leavethe store to understand what they havepurchased etc.

retail customers[1]

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