Understanding the Retail Customer. Why its needed to understand the Customer Retailing means...

Understanding the Retail Customer

Why its needed to understand the Customer Retailing means purchasing and selling of

goods for its further consumption

Consumption = the individuals preferences and choices.

Thus CB plays a crucial role in determining the success and growth of the retail stores

Thus very crucially one needs to analyze 1) The relevance (weight) of the retail market.

2) The structure of the buying population and how it effects the retail

Thus need to make:Define the MarketStructure of the buying populationPopulation analysisDemography analysisGeography analysis

The Market Defining the market is the first step

Since the market consists of consumers whose needs highly differ

And for that Market segmentation is very necessary

so as to understand the needs & to select a consumer group that retailer will serve.

But to define that market a retailer should follow the process below:

Total Population: Total no. of people residing in a particular area

Potential market: filter the individuals who are interested in buying the product

Available market: Those in the potential market who have money

Qualified market: Those from the available market who are legally permitted to buy the product

Eg: Crossword Michael Jackson’s CDProducts Permitted only above 18.

Target market: Portion of qualified and available market that retailer has decided to serve

Penetrated market: Identifying the individuals in the target market who have

purchased the product

Thus with this retailer can define their market as a group of consumers/organizations that are

Interested in their product

Have resources to purchase the product

And permitted by the law to purchase this

product

Structure of the buying populationThe buying population can be divided

Based on the customers nature

And based on his intensions behind purchasing the merchandise

Buying Population

Consumer Market Organizational Market

Corporate

Reseller

Conti.. Consumers

Buy for themselves

For their families

Buying Decisions are influenced buy

Preferences Referrals Status Family Geography Demography

Corporate Are the companies that

make use of merchandise offered for corporate use

And even those who promote sales for retailers by giving coupons to their employees

Resellers

Population Analysis

Population Analysis Next step after defining the market

Since bearing in mind more of consumers

Retailer needs to make a population analysis of the market they have decided

This analysis would be carried out on the facts and figures of various governmental surveys

Like Analyze the total population so as to know

the total maximum demand in the market

Look to the birth rate, death rate, population mobility rate (immigration,

emigration, migration)

Birth and immigration gives pool to retail

Death and emigration (out) gives reduction in the population

Growth rate of income group

Level of increase in female workforce

Race & Ethnicity (civilization):

According to Central Intelligence Agency (CIA) in India

Indo-Aryans 72 % (adjust)Dravidians 25 %Mongols & others 3 %

Demographic

Analysis

It is used to describe the population

Each differ at age, gender, occupation, family size, structure etc.

These individuals of similar character are grouped together to form a customer segment

Demographic

Analysis

Example: Fresh fruit drinks like Tropicana (bigger tetra-packs)

Age group 15-40 Gender Male/female Status upper Middle- higher Family size 3-5 members

We can club them in one group for one product that too for a specific size.

And thereby provide a customized services to each group of population (as only population analysis will not work)

Age distribution of population

YEARBelow 5 yrs

Between 0-15

Between >15-59 years

+ 60 years

1991 12.80 37.76 55.58 6.67

2001 10.70 34.33 58.70 6.97

2011 10.10 28.48 63.38 8.14

2016 9.7 27.73 63.33 8.94

Number of younger people as compared to the population of other age group is on the rise.

Thus India can be called a “Young Nation”

This age distribution explains the increased spending on leisure activities and increased sales of ‘impulsive buy’.

Retailers need to change Need to change their approach on the

basis of the growing population.

Like if the population of 0- 4 and 5-14, the retailer should more concentrate on kids market.

The strategy should be such that they can attract more kids to the retail stores.

Like concentrate on offering more kids product lines.

Credit cards for kids (through parents)0-4 (like petro-card)5-14 (pure credit card to save culture)

Entertainments likeVideos or comics reading areasKids clubsKids oriented visual displays (colorful

signs & lighting) at the exit

--- Retailers LEAVE NO CHANCE Training store personnel to value and assist

child customer

Eg: Citi Kids Futures Master Card

Cardholders can earn up to 2% Kids Futures Rewards with every purchase made by the card.

Holders of Citi Kids Futures Master Card qualify for a 20% bonus from CESG (Canadian Education Savings Grant).

Customers get the facility of 24 hour customer service.

Cardholders are not required to pay any annual fee.

Moreover by analyzing the population retailers can adopt various strategies, that urge people to buy the products

Example: the young population would prefer to have a shopping experience of DIY (Do-it-Yourself)

And aged population would like to have a DIM (Do-It-for-Me)- expecting the retailers to be more cooperative and service-oriented.

(big-bazaar stairs)

Income The National Council for Applied Economic Research

(NCAER) classifies consumer households on the basis of their income in to five category.

Very rich (more than 3,60,001) Consuming (80,001-3,60,000) Climbers (40,001-80,000) Aspirants (28001-40,000) Destitute (needy) (less than 28,000)

These groups are chiefly used by market planners for segmenting the affordability element of the target group

Urbanization Urban areas are the focus of organized

retailers as more concentration of population and wealth in

these markets

Immigrants to these areas could be easily drawn to the cultural attractional base of these cities.

Fewer number of social constraints

And they adopted highest perception of higher income. (intensions to buy are more)

Rank City Country

1 Tokyo Japan

2 Mexico Mexico

3 Mumbai India

8 Kolkatta India

13 Delhi India

Urbanization

The shrinking household The number and composition of households do

affect the purchases made by consumers.

The Indian household distribution is changing rapidly.

The size is shrinking day by day

Mostly because of the prevailing trends of staying alone and even lower birth rates.

No doubt members have reduced but number of houses have risen up with 12 %

Conti.. The Indian family which was

predominantly a joint-family set has been slowly replaced by nuclear set

And even families without children.

How did this changing situation affect retail???????.

The Working Women Be it the purchase of groceries or car, the

majority of purchase decisions in any household have been usually made by women

The increased cost of living and drive to prove themselves has shifted women from there houses to enter in to workforce.

Majority of urban population with double income thus their requirements from a retailer has also changed.

Conti.. As dual earners time spent on shopping

reduced with the decrease in women free time.

The buzz word is convenience.

No longer willing to travel to their favorite stores, for their time and choices

Convenience, Quality and availability became the prime factor

Research says that working women where ready to pay 10 % more than a housewives.

Even began spending more towards lifestyles (apparels, Personnel care products, technologies)

Their spending increased on Eat outs Cosmetics and make-ups Books and music Gifts Mobile phones Movies and other weekend freak outs

What retailers can do for these Women To ensure convenience the retailers hold

sales during weekends.

Can provide Playing rooms for children, well equipped with games so as to give parents an undisturbed shopping experience.

Little gestures like giving chocolates and sweet gifts to children so as to make shopping experience pleasant for both parent and a child.

The Diversified Minorities

Minorities which follow various religion and speak different languages make it necessary for a retailers to consider their

multicolored tastes and preferences

At most while operating in areas having sizeable minority population.

Eg: Retails having events during Christmas

Geographic analysis

Geographic analysis To know the spread of a market, a retailer

should know the density of the population

Should analyze the regional market , metro geography, non-metro geography.

As buying priorities would be entirely different in these areas.

Like

Region-wise spending pattern in India

East West North South

Grocery Grocery Grocery Grocery

Apparel Eating out

Personal care

Saving

Saving Personal care

Eating out

Books

Personal care

Books, music

Books, music

Apparels

Eating out

Saving Saving Eating outC

ust

om

er

Ou

tlooks

Rese

arc

h

Consumer Buying Behavior

The study of consumers helps firms and organizations improve their marketing strategies

By understanding issues such as how

The psychology of how how consumers think, feel, reasons, and

select between different alternatives (e.g., brands, products)

how the consumer is influenced by his or her environment

(e.g., culture, family, society, media)

Limitations in consumer’s knowledge or information processing leads to gr8 problems

As marketers adapt and improve their marketing campaigns and marketing strategies based on Consumer knowledge.

to more effectively reach the consumer.

By the following

Consumer buying behavior

1. Buying considerations- What consumers buy.

2. Buying situations- how much do they buy

3. Buying centers- who buys4. Buying influences- why do they buy

(motives)5. Consumers buying process6. Buying scenes- where do they buy from?

1. Buying considerations- What consumers buy.

Retailers needs to identify What they buy Their motives behind buying them

Generally customers purchase the products that are capable of satisfying their needs

Thus Retailer needs to offer products from buyers perspective

where he looks at the product based on 3 factors

Product Tangibility: refers to its size, shape, weight, along with the ingredients and other features.

Product durability: Useful life span of the product

Product availability: Intensity of availability

Convenience products

Shopping products: (more time spent in information search and

comparisons)

Specialty products: Least concerned about time, effort and

expense as no substitutes can replace)

2. Buying situations-how much do they buy Means the volume of goods purchased buy

each individual

For that needs to analyze the following:

Buys for himself or for household Frequency of buying Ability and authority of buying.

3. Buying centers- who buys Identifying who does the buying

If for oneself – buying depends on personnel choice

If purchases for household- collective buying decision.

If products are for household then retailer needs to concentrate on family as a single customer and try and convince all

4. Buying influence: why do they buy Its because of the motives

There are many factors that motivates them. Supporting their purchase with some reason

For that referring Melvin Hattwick, Inventories of motives

Inventories of MotivesFood & Drink

Majority today prefer having food outside/ ready to eat concept

Freedom from fear and dangerRise to the needs of safety thus retailers established

Smoke detectors, emergency alarms, better packaging.

Personnel ComfortRetail itself gives them comfort

To be superiorIncrease in competitive spirit among the customersThus retailers came up with various products claiming

to be fastest, smartest or the strongest so that one who owns feels superior

Welfare of loved onesInsurance policies, infant clothing

Home safety devices, kitchen gloves, aprons

Social ApprovalHigh requirement of acceptance of the group they are inThus retailers follow latest trends of having personnel grooming and

personnel hygiene (shampoos, tooth pastes, deodorants)

Personnel attractiveness Major motive is to look attractiveThus retailers coming up with cosmetics, accessories

and health products

To live longerDesire to live longerLed to development of health clubs and fitness centers

Physiological factors that Motivates Perception about

Retail stores Merchandise Price Location Convinience Parking Friendly sales persons Varieties and brand

Personal Factors Personality Family Stage in life-cycle Social factors effecting oneself (class,

reference group, aspiration group (sports/film)

Consumer Buying Process

5 Decision Making Process – How do they buy

Stimulus1. Social Cue:

A Non-commercial source, a friend tells you that there is a scheme at shoppers stop

2. Commercial Cue: adssales pitchesPoint-of purchase displays

3. Physical Drive:Retailer puts it for all but only can attract

fewshould touch ones senses like hunger, thirst, heat.

If such a drive is strong then action and if weak it may be ignored

Problem Awareness If the retailer has succeeded in creating

stimulus. (social, commercial, physical)

Customer moves further from arousal stage to realization stage Realizes his need to repurchase Realizes his need to replace Realizes his unfulfilled desire Realizes his need for a try

Information search Once he/she decides to purchase he further

moves to collect information

Searches for the alternative goods available and even study the characteristics of each alternative.

Retailers play a major role by helping them in making decisions To make it more convenient came with Point of sale advertising, Product displays and

appoints knowledgeable salespeople

Evaluation

Price QualityColors / Varieties availableAffordabilityRetails brand name (if couldn't decide)

Finally purchase, discuss terms and post services

Buying Scenes : From where

CategoryOutlet

Saree Salwar suits

Sport shoe

T-shirts

Exclusive store

13 % 12 % 54% 15%

Multi-brand

79 % 83 % 42 % 54 %

Departmental store

2 % 2 % 4 % 3 %

Street Market

6 % 3 % - 10 %

For Apparels and Footwear

For the Researchers