Retail Shopper Behaviour

MBA(DISTANCE MODE)

DBDBDBDBDBA 1740A 1740A 1740A 1740A 1740

RETRETRETRETRETAIL SHOPPER BEHAAIL SHOPPER BEHAAIL SHOPPER BEHAAIL SHOPPER BEHAAIL SHOPPER BEHAVIOURVIOURVIOURVIOURVIOUR

IV SEMESTER

COURSE MATERIAL

Centre for Distance EducationAnna University Chennai

Chennai – 600 025

Author

DrDrDrDrDr. K. Chitr. K. Chitr. K. Chitr. K. Chitr. K. ChitraaaaaAssistant Professor

Department of Management StudiesKCT, Business School, Kumarakuru College of Technology

Coimbatore - 641 006

Reviewer

DrDrDrDrDr.T.T.T.T.T.V.V.V.V.V.Geetha.Geetha.Geetha.Geetha.GeethaProfessor

Department of Computer Science and EngineeringAnna University Chennai

Chennai - 600 025

DrDrDrDrDr.H.P.H.P.H.P.H.P.H.Peereereereereeru Mohamedu Mohamedu Mohamedu Mohamedu MohamedProfessor

Department of Management StudiesAnna University Chennai

Chennai - 600 025

DrDrDrDrDr.C.C.C.C.C. Chella. Chella. Chella. Chella. ChellappanppanppanppanppanProfessor


Chennai - 600 025

DrDrDrDrDr.A.K.A.K.A.K.A.K.A.KannanannanannanannanannanProfessor


Chennai - 600 025

Copyrights Reserved(For Private Circulation only)

Editorial Board

ii

DrDrDrDrDr.H.P.H.P.H.P.H.P.H.Peereereereereeru Mohamedu Mohamedu Mohamedu Mohamedu MohamedProfessor

Department of Management StudiesAnna University Chennai

Chennai - 600 025

iii

ACKNOWLEDGEMENT

The author has drawn inputs from several sources for the preparation of this Course Material to meet the

requirements of the syllabus. The author gracefully acknowledges the following sources:

• Retailing Management, Michael Levy & Barton A Weitz, Tata McGraw-Hill Publishing Company Limited,

New Delhi.

• Consumer Behaviour, Leon G.Schiffman & Leslie Lazar Kanuk, Pearson Education, Delhi.

• Consumer Behaviour, David L Loudon & Albert J Della Bitta, Tata McGraw Hill Publishing Company

Limited, New Delhi.

• Shopper, Buyer and Consumer Behaviour , Jay D Lindquist & M.Joseph Sirgy, Biztantra, New Delhi.

• Consumer Behaviour, Satish K Batra & S H H Kazmi, Excel Books, New Delhi.

• Consumer Behaviour, The Institute of Chartered Financial Analysts of India, Hyderabad.

• Customer Behavior: A Managerial Perspective, Jagdish N Sheth and Banwari Mittal, Thomson Asia Pte

Lts, Sinagapore.

• Consumer Behaviour, J Paul Peter & Jerry C Olson, Mc Graw Hill, Singapore.

In addition to the above, the author wishes to acknowledge the contributions of the following Authors/

Websites / Journals / Magazines in the retail Management.

• Knowledge @ Wharton

• Tom Reeher

• Junxiang Lu

• Dale Zetocha

• Cheol park

• Roman Lenzen

• V.Kumar

• Sunil Gupta et.al

• Saharon Rosset et.al

• Nicolas Glady et.al

• Uta Werner

v

• P.Ryan

• www.insight.kellogg.northwestern.edu

• www.hbswk.hbs.edu

• www.wikipedia.org/wiki/customer_life_time_value

• www.harvardbusinessonline.com

• www.indiafdiwatch.org

• www.kbm1.com

• Investment monitor January 2007

• DLF- Trends and detail

• Ernst and young

In spite of at most care taken to prepare the list of references any omission in the list is only accidental and not

purposeful.

K.CHITRA

Author

vi

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DBA 1740 RETAIL SHOPPER BEHAVIOUR

UNIT I - INTRODUCTION

Profile of Indian Retail and Retail shoppers – Indian Retail shopping environment – Changing trends in shopping

behaviour – Need and importance of the study of shopping behaviour.

UNIT II- SHOPPING PROCESS

Dimensions and approaches to retail shopping behaviour –Pre shopping, shopping and post shopping behaviour

–Diffusion of innovations in retail context.

UNIT III – INTERNAL INFLUENCES ON SHOPPER BEHAVIOUR

Personal – attitude, perceptions, learning, personality, lifestyle and self-image.

Inter personal – Communications, persuasion, family, group, and store’s employees.

UNIT IV - EXTERNAL INFLUENCES ON SHOPPER BEHAVIOUR

External – store location, Shop atmospherics- social, cultural, cross cultural – online retail shoppers behaviour-

Technology influence on shopper behaviour.

UNIT V - ADDITIONAL DIMENSIONS

Customer Relationship Management - its impact on retail shopper’s behaviour – complaint management system

– lifetime value of retail shoppers – Emerging issues.

REFERENCES:

1. Leon G. Schiffman, Leslie Lazar Kanuk, “Consumer Behaviour”, Pearson Education, New Delhi, 2002.

2. David L.Loudon, Albert J Della Bitta, “Consumer Behaviour”, McGraw Hill, New Delhi 2002.

3. Jay D. Lindquist and M.Joseph sirgy, “Shopper, buyer & consumer Behaviour, Theory and Marketing

application”, Biztantra Publication, New Delhi 2005.

4. Sheth Mittal, “Consumer Behaviour A Managerial Perspective”, Thomson Asia (P) Ltd., Singapore,

2003.

5. K.K.Srivastava, “Consumer Behaviour in Indian Context”, Goal Gotia Publishing Co, New Delhi 2002.

6. S.L. Gupta & Sumitra Pal, “Consumer Behaviour an Indian Perspective”, Sultan Chand, New Delhi

2001.

7. Ms.Raju, Dominique Xavedel, “Consumer behaviour, Concepts Applications and Cases”, Vikas publishing

house (P) Ltd., New Delhi – 2004.

8. Henry Assael, Consumer behaviour strategic approach Biztantra, New Delhi, 2005.

9. H.Peeru Mohamed, CRM A Step by Step Approach, Vikas publications, New Delhi, 2005.

ix

CONTENTSUNIT I

INTRODUCTION

1.1 INTRODUCTION 1

1.2 LEARNING OBJECTIVES 1

1.3 GLOBAL RETAIL TREND 1

1.4 PROFILE OF INDIAN RETAIL SCENARIO 4

1.5 CHANGING TRENDS IN THE INDIAN RETAIL SCENARIO 9

1.6 PROFILE OF RETAIL SHOPPERS AND CHANGING

TRENDS IN SHOPPING BEHAVIOUR 14

1.7 NEED AND IMPORTANCE OF THE STUDY OF

SHOPPING BEHAVIOUR 20

1.7.1 Importance to Retailers 23

1.7.2 Importance to Shoppers 25

1.7.3 Importance to Public Policy makers and regulators 25

UNIT II

SHOPPING PROCESS2.1 INTRODUCTION 29


2.3 DIMENSIONS AND APPROACHES TO

RETAIL SHOPPING BEHAVIOUR 30

2.3.1 Traditional models 30

2.3.2 Contemporary models 33

2.3.3 Approaches to retail shopping behaviour 44

2.4 PRESHOPPING, SHOPPING AND

POST SHOPPING BEHAVIOUR 45

2.4.1 Stages in shopping decision process 49

2.5 DIFFUSION OF INNOVATIONS IN RETAIL CONTEXT 68

2.5.1 Diffusion process 68

2.5.2 The Adoption process 71

2.5.3 Factors influencing adoption, resistance and diffusion 73

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UNIT III

INTERNAL INFLUENCES ONSHOPPING BEHAVIOUR

3.1 INTRODUCTION 77


3.3 PERSONAL INFLUENCES 78

3.3.1 Attitude 78

3.3.2 Perceptions 89

3.3.3 Learning 94

3.3.4 Personality and self image 97

3.3.5 Lifestyle 105

3.4 INTERPERSONAL 108

3.4.1 Communication and persuasion 108

3.4.2 Family 114

3.4.3 Group influences 118

3.4.4 Store’s employees 121

UNIT IV

EXTERNAL INFLUENCES ONSHOPPER BEHAVIOUR

4.1 INTRODUCTION 125


4.3 EXTERNAL INFLUENCES 126

4.3.1 Store location 126

4.3.2 Shop atmospherics 129

4.3.3 Social influences 136

4.3.4 Cultural and cross cultural influences 141

4.4 ONLINE RETAIL SHOPPERS’ BEHAVIOUR 150

4.5 TECHNOLOGY INFLUENCE ON SHOPPER BEHAVIOUR 163

UNIT V

ADDITIONAL DIMENSIONS

5.1 INTRODUCTION 169


5.3 CUSTOMER RELATIONSHIP MANAGEMENT &

RETAIL SHOPPER’S BEHAVIOUR 170

5.4 COMPLAINT MANAGEMENT SYSTEM 178

5.5 LIFETIME VALUE OF RETAIL SHOPPERS –

EMERGING TRENDS 181

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NOTES

1 ANNA UNIVERSITY CHENNAI

RETAIL SHOPPER BEHAVIOUR

UNIT I

INTRODUCTION

1.1 INTRODUCTION

The Indian retail industry - a sun rise industry has registered a strong growth duringthe recent past, which is evidenced, in terms of volume, size of operations and style offunctioning across the nation. A shift from traditional retailing to well organized retailing hasbeen very much noticeable and that stands to testify the pattern of development in the retailindustry in India. However in India, even now most of the retail business rely on unorganizedretail business units each one is spread smaller in size catering to the needs of neighbourhoodareas.

The development of retail industry of India is in correspondence with the global trendof retailing. Against this background this unit provides a snapshot of global retail trend asa prelude for the understanding of Indian retail industry. The profile of Indian retail scenarioand the changing trends is also explored along with the changing trends in the shoppingbehaviour. The need and importance of studying shopping behaviour is also highlighted.

1.2 LEARNING OBJECTIVES

After reading this unit you will be able to understand

• The global retail trend

• Profile of the Indian retail sector and the changing trend

• Changing trend in the shopping behaviour

• Need and importance of understanding the shopping behaviour

1.3 GLOBAL RETAIL TREND

A detailed discussion on the global trend in retailing was presented in the Coursematerial “Retail Management: Concepts and environment”. As an additional input, a briefencapsulation of global trend in retailing is explained in this section as a prelude to furtherdiscussion.

The retail organizations started moving across the boundaries that goes with the ideologyexpressed in the Dunnings electric theory. Dunning’s electric theory is worth to be referred

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here. According to the theory the firm engage itself in the global retail operations mainlyon account of three major factors ownership specific advantages, transactional advantageand locational advantages.

Ownership advantages are related to firm specific advantages that emerges fromproprietary know how, that can be utilized for competitive advantage in the global market.Such proprietary know how includes patents, trade marks, copy rights etc. that are legallyprotected.

Transactional advantages include a firm’s ability to minimize cost of operations in theoverall business system and thereby gain the competitive advantage.

Locational advantages refer to such of those advantages that are derived from locatinga retail unit in foreign market. This include, lesser labour cost, lesser market risk and widermarket opportunity and so on.

The global retail industry has registered almost 5% growth rate per annum. Unitedstates of America is the leading player in the retail industry accounting for about 35% ofthe global retailing business that is followed by countries such as Japan, Germany, China,United Kingdom, France, Italy, Spain, Canada, Mexico, India, Russia, South Korea, Braziland Australia. The impact of retail can be witnessed in countries like USA, UK, Mexico,Thailand and more recently in China and India. Economics of countries like Singapore,Malaysia, Hong Kong, Sri Lanka, Dubai are heavily rely on retail.

The following table presents largest retailers in the world.

The retail industry contributes to the global economy in terms of revenue as well asemployment generation. The investments in global retail business has also witnessedremarkable growth. The retail organizations have spread their wings across boundariesand launched their outlets specially in developing nations. As a result global retail playersare the providers of employment opportunities to people of developing nations. Such

Retail Organization Revenue in million $ Appx.

Wal-mart 287000 Carrefour 903800 Home Depot 730100 Metro 70160 Royal Aholo 64650 Target 49300 Cost co whole sale 48180 Albert Tsons 40050 Aeon 38940 Walgreen 37508

NOTES



global retail players includes Wal mart, Mc Donald, Carrefour, Target, Kroger, HomeDepot, Sears Roebuck, Tesco, Metro, Subway and so on.

The globalised retail operations has thrown brand new challenges to the local retailers.Until recently most active globalization of retailing was only with luxury and specializeditems. Today the global retailing is centered around Food items, Fashion items, Jewellery,Leather goods, books, Furniture, Toys, electrical and electronic items, cloths, medicalitems and so on. As such, to be a winner in the global retail market a player is expectedto be mass merchandiser coupled with the capability of category dominance and havingthe ability to launch own store brand.

Players who operates in India have followed any one or combination of the followingentry strategies viz.

• Exporting

• Licensing

• Franchasing

• Joint venture

• Self-start entry

• Acquisition

Retailers with a fairly strong brand of their own might attempt to enter retail industryof other countries through export. This involves minimum risk at the same time the marketshare through export might also be minimum. Licensing on the other hand ensures theforeign retailers to use, another country’s retailers’ product, brand name, retail strategyand so on.

Franchising yet another method of retail market entry in another country. This methodinvolves permitting retailers of another country to carry on business as per specification ofparent company. While the major control rest with the parent company the day to dayoperations shall be decided and dealt with home country retail operators. Fast Food retailerslike Domino, Pizza Hutt have entered India through the Franchise route.

Joint venture permits a retailer entering into joint agreement with a multinationalretailer and both of them operators in one country as per the norms, terms and conditionsso prescribed.

Self start retail organizations are original build up in the way the foreign retail organizationwants its existence in another country. May be started at a small level it will emerge as a bigretail mall over a period of time. On the contrary thanks to the in flow of Foreign DirectInvestments a very big size retail shops also possibly be established at the very beginningitself on the self start mode of operation.

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Acquisition is yet another form of entry in the retail industry. A retail organization havingsatisfied with the performance of another organization might attempt to acquire the sameand run the retail business. This type of acquisition may be quiet common at the developingmarket. At times leading players may merge their operations with other retailers. Takingcompetitive advantage of both organizations a sizeable market share shall be enjoyed.

World’s Retail industry is controlled by a handful of powerful corporations mainlyfrom US and western Europe. Retail Corporations, such as Wal-mart, TESCO, Carrefourand Metro are now entering into India. This has lead to Indian corporate giants such asReliance, Tata and Birla to enter into the retail arena.

1.4 PROFILE OF INDIAN RETAIL SCENARIO

The retail sector in India, is highly fragmented and organized retail is at its growthphase. There are about 15 million retail outlets spread across India. More than 80% ofthese are run by small family business.

India possesses the largest density of small retail shops in the world, with 11 retailoutlets for every 1000 people. This number is very high comparing with internationalaverage. Unorganized retail outlets account for approximately 97% and the rest 3% byorganized retail outlets. However organized retail outlets have a plan to grasp 15 to 20%of total market share within 5 years with a gross investment ranging from $ 25 billion to$ 30 billion mainly in the food and grocery retail domain. In India organized retailing isprojected to grow 20-30% per annum. In India the top six cities contribute 66% of theorganized retailing. With Metros’ already been exploited the focus is now been shifted totier-II cities.

India in the yore has been famous for its traditional markets - bazaars and fairs.However the turn of this Millennium witnessed organized retail shopping malls in India.The number of malls are expected to grow to a very greater extent by 2010.

Shopping streets (High streets) bazaars, Malls, Departmental store have becomeintegral part of life. Prime shopping streets have been at the forefront of retailing Retailingbecoming an indispensable part of consumers every day life.

Large number of international brands have also lined up in India including Armani,Versace, Cartier, Marks and Spencer, Salvatore, Ferragamo, Canali, Mont Blanc, Ladroetc.

Luxury retail market centred around Delhi, Kolkatta, Bangaluru, Mumbai, Chennai,Coimbatore, Ludhiana, Thiruvananthapuram, kochi, Pune, Ahamedabad, Surat andHyderabad. The luxury market in India becoming bigger day by day. This avalanche ofluxe brands easing their way into India. A luxuries buy is not just about purchasing abeautiful product also it is about understanding the power of its imagery and what it connotes

NOTES



to the shopper. There is an easier acceptance of luxury and an increased willingness toexperiment with main stream fashion. This results in an increased tendency towardsdisposiability and casting out – from apparel to cars.

• Jimmy Choo and Gucci latest makers of luxury goods are targeting India.

• Luxury Hi-style brands like Hugoboss, Ferrari, Nina Ricci, Burberry, Davidoff,Nike, Adidas, Versace, Park avenue, Black berry (for apparels)

• Citizen, Casio, Tommy Hilfiger, Giordano (for watches).

• Evoluzione (For furniture)

• Rechance (Designer outfit)

• Soles (Shoe)

• Atmosphere (furnishing)

• Studio 100 (stylish bath room fitting)

• Wills life style (club wear)

• 02 (Health Studio)

• Sports locker (Sports accessories) etc. are focusing Indian retail markets.

In India the corporate retailers have mega plan for expansion by 2009-10. A briefreport runs as below:

• Reliance : Rs.30,000 cr ($ 6.67 bn) investment to set up multiple retail formatswith expected sales of Rs.90,000 + cr ($20 bn) by 2009-10. The companyplans thousands of stores across 784 cities and towns.

• Bharati Group : Plans Rs.31,500 cr (US$ 7 bn) investment in creating retailnetwork in the country including 100 hypermalls and several hundred small stores.

• Pantaloon : Expansion into all possible formats of retail across categories andsegments, 30 mn sq.ft by FY 2010, foray in insurance, real estate and consumerfinance the turnover is expected to touch Rs.30,000 cr ($6.67 bn) in FY 2010-11.

• RPG : Planning IPO, 450 + Music World, 50 + Spencer’s Hyper covering 4 mnsq ft by 2010.

• Lifestyle : Rs.450 +cr($90 mn) investment in next 5 years to expand on MaxHypermarkets & value retail stores, Home & Lifestyle Centres.

• Rahejas: Shoppers’ Stop, Crossworld, Inorbit Mall, ‘Home Stop’ and recentlylunched hypermarket named ‘Hypercity’, 55 hypermarkets across India, by 2015.

• Subhiksha: 750 stores and Rs.650 + cr ($145 mn) sales by March 2007.

• Piramyd : 1.75 mn sq ft of retail space and 150 stores in next 5 years.

• Trent : Trent to open 27 more stores across its retail formats adding 1 mn sq ft ofspace in the next 12 DLF malls.

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• Trinethra : Recently acquired by the AV Birla group, Trinethra (currently withtwo formats – Trinethra and Fabmall) plans 220 stores with a turnover of overRs.300 cr ($667 mn) in the fiscal year 2007-08.

• Vishal Group : Plans include an IPO and investment close to Rs.1250 cr ($ 278mn) by 2010, targeting 220 outlets, taking its cumulative retail space to 5 mn sq ftand sales turnover of Rs.5000 cr ($ 1 bn+). With 50 + new stores getting readyin the fiscal year 2007-8 the chain is investing Rs.300 cr (66.67 mn) with salestarget of over Rs.700 cr ($ 155.6 mn). Vishal Retail is a retailer focused on thelower to-middle income group, with presence mainly in tier III locations.

The corporate retails are not without criticisms. India FDI Watch is attempting tobuild awareness and facilitate grassroot actions to prevent entry of corporations in theretail sector. It is claimed that thousands of small family run shops will go out of businessin developing countries by virtue of corporate retails.

According to A.T. Keareney’s Global Retail Development Index India has beenranked as number one as regards retail market potential and attractiveness fueled by aGDP growth rate of an average of about 6% over the last two decades, second only toChina, India’s market potential on retail front is so much promising. In terms of penetrationby the organized retail sector, footwear is the highest category, followed by clothing.

Footwear is driven by the dominance of home-grown players like Liberty as well asthe 15% market share that MNC retailer Bata commands. Foreign presence, especiallythrough the franchisee route, e.g. Adidas, Reebok, Nike etc. Franchisee activity in thiscategory, especially in Tier II cities, is pegged to rise.

The clothing segment is positioned for further organized retail penetration due to thehigh level of branding activities by apparel retailers and merchandising spread across formatssuch as department stores, hypermarkets, own retail outlets and franchises. The brandsthat dominates Indian retail fabrics levis, plant fashion, arrow, Lee, Reebok, John player,Peter England, Colour plus Zodiac, Louis Philippe, Wrangler, Excalibur Flying machinepark avenue and the like

Retail on Books & Music, which is still concentrated in the big 8 cities, is also slatedfor increase. The jewellery sector on the other hand will see increased competition, especiallyon price, as smaller retailers challenge the might of the larger ones.

Growth in consumer durables has traditionally been driven by the post-liberalizationera. Retail revenues in this segment will grow further in proportion with increase in urbanincomes.

The home furnishings segment has been relatively unorganized so far and growth willbe driven by new formats introduced by innovative retailers. The medical care, health andbeauty segments too require an innovative, aggressive approach on the part of Indian andinternational retailers to grow.

NOTES



India’s retail giants, including Kishore Biyani’s Future Group, Mukesh Ambani’sReliance Retail and Sunil Mittal-promoted Bharti group, have started negotiations withthe railways for leasing land for retail development. The companies are also looking at analliance by which they will use the railways’ network for their supply chain by carryingtheir products to different warehouses across the country. They had talks with Indian retailchains, which have shown interest in lending their land to set up retail outlets.

Retail companies are also looking at tying up with the railways for setting upwarehousing and a cold chain. The railways expect to earn about 4 per cent of theirprojected revenues next year from retail-related activities. With over 44,000 hectares ofvacant land they want to commercially exploit, the railways set up the Rail Land DevelopmentAuthority this year for this purpose. They have been looking at various options of using theland, including setting up retail outlets, hotels, a cold storage network and warehouses.After Reliance Industries, Tata, Bharti and the AV Birla group, the $ 3.2-billion Munjalfamily-promoted Hero group is all set to become the next big entrant in the Indian retailsector.

Organized Retail trade is largely in the hands of private independent owners anddistribution structure for fast moving consumer goods consisted of multiple layers such ascarrying and forwarding agents, distributors, stockists, wholesalers and, retailers. Theretailing system in India operated at three parallel levels: the formal sector, informal sector,and the fair price shops under the government’s public distribution system.

India’s retail sector is wearing new clothes and with a three-year compounded annualgrowth rate of 46.64 per cent, retail is the fastest growing sector in the Indian economy.Traditional markets are making way for new formats such as departmental stores,hypermarkets, supermarkets and specialty stores. Western style malls have begun appearingin metros and second-rung cities alike, introducing the Indian consumer to an unparalleledshopping experience.

The study of the history of retailing business throws up the fact that in most economiesorganized retailing passes through four distinct phases in its evolution cycle. In the firstphase, new entrants create awareness of modern formats and raise consumer expectations.During the second phase, consumers demand modern formats as the market develops,leading to strong growth. As the market matures, intense competition forces retailers toinvest in back-end operating efficiency. In the final phase, retailers explore new marketsas well as enormous opportunities as growth tapers off. Supply chain management (SCM)attains top priority in the third phase of evolution.

Fierce competition forces retailers to respond quickly to changes in the market, bringingforth the importance of SCM in handling availability of stock, supplier relationships, value-added services and cost cutting. Traditional retailers are expected to enhance theirinvestments in supply chain, whilst new entrants are likely to look at supply chain first

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broadening their national reach. India is currently in the second phase of the retail evolution,with domestic customers becoming more demanding with their rising standard of livingand changing lifestyles. Change in customer’s focus from just buying to broad shopping(buying, entrainment and experience) has led to a pick-up in momentum in organized formatsof retailing.

Unavailability of quality retail space has been one of the main constraints fordevelopment of organized formats in India. In the past, negative yield on leased propertyand lack of bank funding due to unorganized property market resulted in a dearth ofquality retail space in the country. The spread between yield on property and its financingcost has turned positive with the fall in interest rates. Attractive yields on investments haveresulted in a sharp increase in property development. With a cumulative estimated spaceof 40 million sq ft and over 600 malls by 2010, with as much as 100 million sq ft retailspace.

Pro-active steps taken by the government permitting use of land for commercialdevelopment in various cities, including Mumbai and Delhi, have also contributed to increasedavailability of retail space in the country. Availability of retail space is expected to increasefurther whenever property funds and investment trusts are permitted, which will help createa secondary market for real estate in the country.

Consumerism and brand proliferation also enhanced organized retailing in the country.Most of the world’s leading brands, like

L’Oreal

Espirit

Louis Vuitton

Marks & Spencer

Tommy Hilfiger

Louis Phillipe

Levis, Pepe

Lee

Arrow

Dockers

Red Tape

Clairns

Hugo Boss Tiffany

Bulgari

Ecco

NOTES



Chambor

Revlon

Philips

Corelle

Magppie

Nike

Reebok

Parker

Ray Ban

Lego and

Mattel, are now present in India. Another factor that accelerated the growth of organizedretailing is media proliferation. Increased advertisements and brand promotions have ledto a growing consumer spending across a wide range of product categories. The remarkableextent of retail operations of MNC’s in India are of recent origin. The dominant retailplayers have strongly set their foot in India.

Entry by these retail organizations have given a shift for the retail operations in India.The very profile of the Indian retail and retail shoppers have changed to a greater extentwhich is captured in the following pages.

1.5 CHANGING TRENDS IN THE INDIAN RETAIL SCENARIO

Indian retail organizations have made greater shift in terms of their formats, which isvery much noticeable in the recent past. There has been remarkable changes in the retailformat from traditional shops to ultramodern state-of-the art retail malls. In India while thetraditional retail stores tends to survive the modern retail outlets tends to grow at a rapidspeed as evidenced from the track records. The following are the major reasons forthe growth of organized retailing

• Availability of lands at a comparatively cheaper rates

• Movement of people from rural to urban.

• The entry of MNC in the retail Industry

• Flow of Foreign Direct Investment

• Government of India’s liberalization policy

• Changing life style of people

• Shift in the consumer demand to foreign brands

• Influence of technology and media that had greater access to an domestic andforeign retail products

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• Improved standard of living and similar factors are responsible for the organizedretail outlet to grow in India.

The following retail formats are prominent in India as an date

• Traditional shops

• Discount shops

• Speciality shops

• Departmental stores

• Chain shops

• Shopping Malls

• Cooperative stores

• Speciality store

• Multi Brand outlets

• Hyper markets / super market

• Large super markets

• Convenient shops and so on.

Brief explanation to select formats of retail shops are presented below :

Shopping Malls: The largest form of organized retailing today. Located mainly in metrocities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft andabove. They lend an ideal shopping experience with an amalgamation of product, serviceand entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd,and Pantaloon.

Specialty Stores : Chains such as the Bangalore based Kids Kemp, the Mumbai booksretailer Crossword, RPG’s Music World and the Times Group’s music chain Planet M,are focusing on specific market segments and have established themselves strongly in theirsectors.

Discount Shops: As the name suggests, discount stores or factory outlets, offer discountson the MRP through selling in bulk reaching economics of scale or excess stock left over atthe season. The product category can range from a variety of perishable / non perishablegoods.

Department Stores: Large stores ranging from 20000-50000 sq.ft catering to a varietyof consumer needs. Further classified into localized departments such as clothing, toys,home, groceries, etc.

Hypermarts/Supermarkets: Large self service outlets, catering to varied shopper needsare termed as Supermarkets. These are located in or near residential high streets. Thesestores today contribute to 30% of all food & grocery organized retail sales. Super Markets

NOTES



can further be classified into mini supermarkets typically 1,000 sq ft to 2,000 sq ft andlarge supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus onfood & grocery and personal sales.

Convenience Stores : These are relatively small stores 400-2,000 sq.ft located nearresidential areas. They stock a limited range of high-turnover convenience products andare usually open for extended periods during the day, seven days a week. Prices areslightly higher due to the convenience premium.

MBO’s: Multi Brand outlets, also known as Category Killers, offer several brands acrossa single product category. These usually do well in budy market places and Metros.

The growth of shopping malls in the recent past in India specially in cities like Delhi,Mumbai, Kolkotta, Hyderabad, Kochi, Chennai, Thiruvananthapuram, Bangalore are verymuch remarkable. As India is rapidly moving into an exciting and competitive marketplace many more foreign players are in the pipeline with innovative products and retailmarketing strategies.

The volume of sales as well as value of by retail organizations have also increased toa greater extent. As the Indian retail industry is growing from the stage of infancy to thestage of consolidation, a significant share of volume as well as value of products sold isattainable by retailers.

The organized retail outlets focus on variety of offerings including retail financial andother services. Retail banking in India is at great-boom Major Indian retail shops may bebroadly classified, as below on the basis of products they offer.

• Food

• Health and Beauty

• Clothing

• Home furniture

• Durable goods

• Leisure and personal goods

• Financial services

• Life style products

• Cultural products

• Medical products

• Ethinic Products

• Jewellery

• Handicrafts

• Handlooms

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• Footwear

• Skincare

• Perfumes

• Books

• Toys

• Games

• Leather goods

• Home appliances

• Accessories

• Electronics and the like

The retail organizations quite often suffer from the following threats viz.

• Threats of new entrants

• Bargaining power of suppliers

• Bargaining power of shoppers

• Threats of substitutes

• The intensity of rivalry

After the liberalization, privatization and globalization the retail industry is open up toprivate players and many MNC’s started floating their operations in India. This trendpose severe threat to the local players. As such local retailers have to align all theiractivities, to win over the situation.

Bargaining power of the suppliers have improved significantly. As such quality productsare costing much more than what it was earlier. This is by virtue of the control of resourcesby the suppliers. This has lead for the introduction of private labels (store labels) and theirby setting new trends, in almost all products available.

The number of substitute available also has increased. A retail shop is expected tokeep in stock all varieties of such products preferred by a prospective buyer leading toone shop buying for all requirements.

The retail organizations are forced to face the intensity of rivalry leading to a compulsionof product differentiation, store image buildup and strategic group formation. There appearsa strong need for differentiating the offerings by a retail organization and to build up theretail store image in a distinct way so as to create a positive mind set about the retail shop.To survive in the competitive environment and to withstand the rivalry pressure retail strategicgroups are getting formed. These group consider similar target market with similar retailmarketing approaches. The strategic group approach is an enabler to gain greater marketshare.

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The retail organizations as an date focus on the following additional dimensions.

The locational shift

Location plays vital role as to attract and retain the shoppers. Most of the organizedretail formats are located at the urban centres to gain the advantage of the urban atmosphere.

Atmospherics

Added to this the focus of the retail outlets are on the internal and external storeatmospherics: It is found that internal atmospherics has a positive association with shoppingbehaviour of retail shoppers. The internal atmospherics include layout, lighting, music,directional sinage and so on. The external atmospherics include parking space storeambience and the like. The retail organizations have started focusing attention on storeatmospherics to increase the foot fall of shoppers.

Multiple services:

The retail organizations have also started focusing attention on multiple services.This services are in addition to the core services offered by the retail outlets. For examplea retail outlet for petrol offers many additional services to engage the retail customers.Such additional services include sale of stationery items, food items, auto repairings andthe like.

Customization:

To a greater extent the retail shops are attempting to customize the services includingservice timing, service conditions charges for the services and so on according to theexpectations of the target customers.

Customer Pull:

Retail organizations to a target extent are assuming the characteristics of customerpull organizations. This leads to customized service packages delivered through customizedservice channels together with customer desired supply chain management. In this processretail organizations are emerging as learning organizations, learning from customers,competitors, employees, and so on.

Empowered employees:

In addition the retail organizations have started empowering its employees to a greaterextent. In this process the retail organizations share information at all levels setting its ownvision and motivate employees to have relentless focus on retail shopper expectations.Such empowered retail employees shall energize the system and structure towardsgenerating delighted customers.

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Shift in focus:

The main thrust of retailers has drastically shifted from mere a service provider toprovider of total shopping experience that is memorable and repeatable again and again.

The challenges ahead of Indian retailing

The following are the major challenges ahead of Indian retailing

• Barriers to Foreign Direct Investment, which leads to restrictions on the entry ofglobal best players and thereby limited exposure to best practices.

• Government of India is yet to provide industry status to retailing that leads torestricted financial availability

• Lack of urbanization together with poor development in transportation andinfrastructure.

• Increasing land cost that leads to difficulty in locational choice.

• Supply chain bottle necks resulting in constrains on distribution network

• Complex taxation system leading to differential taxation

• Multiple legistrations regarding licensing, and clearance practices

• Lack of availability of trained manpower on different aspects of retailing.

1.6 PROFILE OF RETAIL SHOPPERS AND CHANGING TRENDS INSHOPPING BEHAVIOUR

In India the retail market witness shoppers with changing profiles. A brief account ofthe profile of retail shoppers is presented in the following lines.

Spread of sophisticated retail shoppers:

Until recently shoppers at Tier : 1 cities such as Delhi, Mumbai, Bangaluru, Chennaiclearly had an upper hand as regards product choice, sophisticated retail outlets, affluencyincome level and the like. Now such scenario have spread across the nation on a phasedmanner. This leads to wider spread of sophisticated shoppers.

Demographics:

The target shopper base for most retailer stands approximately 500 million and asnap shot of he demographic profile of the shoppers reveals the following facts.

Twin income

Most family have shoppers with twin income, that leads to increasing demand foritems of their choice. By the way it has widened the retail market opportunity.

More things to shop

In tune with the above, while the husband and wife are earning partners, necessarilythey have to balance with work life and domestic requirements. This leads to depend onretail outlets for foods, leisure time spendings, hospitality and the like.

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Greater Disposable income

There appears greater disposable income for the booming Indian middle class whichis currently 22% of the total population which is expected to increase by 32% by 2010.Disposable incomes are expected to rise at an average of 8.5% per annum until 2015.

Raise in Discretionary spending

In India the discretionary spending has been a 16% rise for the urban upper andmiddle classes and the number of high income house hold has grown by 20% almost everyyear since 1995.

Agewise distribution

A sizeable number of population is less than 25 years and a strong growth in thenumber of shoppers expected in this age bracket

Urban Shoppers

The Indian urban population is projected to increase from the present 28% to 40%of the total population

Credit friendliness

Credit availability has enormously increased in the recent years that had made retailshoppers to shift from the traditional mind set of “save and buy” to buy and repay”, creditfriendliness, easy availability of finance have changed mindsets. Capital expenditure(jewellery, homes, cars) has shifted to becoming redefined as consumer revenue expenditure.“No more sinking with sorrow, but floating with joy” a finance provider address toretail shopper. Average Indian salary surged by 14%. The expense basket has shiftedfrom necessity to life style products.

Life style goods

Preferences towards life style goods have increased. Graceful inflow of such lifestyle products in the Indian retail market is the current attraction.

Retail experience

Shoppers have started enjoying organized retailing experience as much as attendinga party, visiting a theme park and so on.Retail shopping especially after the emergence ofMall types of retailing formats attract shoppers not exclusively for shopping alone: formany shoppers, shopping has emerged as an entertainment. These shoppers considershopping at big malls, shopping centres etc. as a day’s time out, at the same time gettingexposed to brand new arrivals latest incentive schemes available, and so on. A minimumlevel of shopping is also likely to happen Retailers are making use of these category of footfall, to window display their new arrivals and promote the sales by other means.

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Shift from price focus:

There is an increasing shift from price consideration to design and quality, as there isa greater focus on looking and feeling good (apparel as well as fitness). At the same time,the new Indian shoppers are not beguiled by retailed products which are high on pricebut commensurately low on value or functionality.

Self employed segments :

The self-employed segment of the population has replaced the employed salariedsegment as the mainstream market. 40% of primary wage earners in the top 2-3 socialclasses in towns with a population of 1 million or more are self employed, professionalsand businessmen. This has driven growth in consumption of mobile phones and two andfour-wheelers.

Information rich:

The shoppers are becoming information rich thanks to the exposure of media, suchinformation richness enable greater awareness and induces variety seeking behaviour.Shoppers are well informed about all aspects connected with the retail marketing mix.

Variety seeking behaviour:

Today’s retail shoppers exhibits variety seeking behaviour style. Becoming not satisfiedwith what they have purchased and in search of additional value for money they tend tosearch for varieties available in a product line, substitutes, brand new items, additionalbenefits offered and so on. This variety seeking behaviour appears to be one of the majorchallenges to the retailers of the present day to attract such variety seeking shoppers, amarketer has to struggle and has to convince the prospective shoppers that they provideevery thing the shoppers looking for. As Reliance mobile claims for their Black Berry, thatthe product has hi-capacity battery, smart organizer, Blue tooth enables, SMS,Multimedia player, expandable memory, Data and voice across CDMA and GSMcountries, Instant push e-mail, Hi-speed internet browsing, Track ball for easynavigation, digital voice clarity, voice activated dialing and so on. On the same lineconcord watches claims:

What other watch has a 3.3 mm thick sapphire crystal?

What other watch has 7 side screws for greater structural strength?

What other watch has a distinct 3 level dial ?

What other watch has a case made of 53 elements that, stands 16.7 mm tall?

What other watch has a formula for the ultimate construction ?

These examples show how the makers are struggling to retain variety seeking shopperswithin their market fold.

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Status consciousness

Retail shoppers are becoming more and more status conscious. They are going infor products that suits to their own personal status, that too they choose such items fromretail shops that corresponds to their personal status and style. Such status consciousnessof the retail shoppers pose new challenges to the retail marketers. ‘Asian tiles world’claims, we make “not just tile, its style” goes in tune with the trend.

Brand Consciousness

In continuation of the above, shoppers are more and more brand conscious shoppersopting for select list of branded items. This is particularly so in the case of Textiles,Jewells, fashion items, food items, leather items, electronic items, home furnishing and soon. This attitude of retail shoppers have made the retail markets to be flooded withbranded items irrespective of the product line.

Liking for store brands

To cater to the specific requirements of retail shoppers many retailers have startedoffering products of their own make that are generally terms as store brands or privatelabels. The tendency towards accepting store brands / private labels are on the increase,specially in grocery, food textile,and other fast moving consumer goods categories to citefew examples store brands available at shoppers stop, Globus, Pantaloon Food world,Nilgiris, Subhiksha, Reliance, and the like.

Fond of atmospherics:

Among other things, the retail shoppers are influenced by the store conditions thatprevail within the shop. What so ever may be the decision of the shopper, before the walkin the retail shop the internal conditions that prevail within the shop has the potential toinfluence the shopping decision in terms of what brands are opted at what price. Ultimatelyit is leading to impulse buying also. The store condition includes the internal atmosphericssuch as a good painting, pleasant smell, comfortable layout, attractive window display,courtesy embedded services of the sales personnels, instant incentive schemes and so on.

Gone are the days, the shoppers are simply satisfied with the brands as long as itmeets the core functional needs associated with such brands. These days, shoppersexpectation goes much beyond that, in search of total satisfaction that the shoppers aim toderive from every aspects connected with the purchase and usage of the brands. Thisincludes the internal as well as external atmospherics of the retail outlets, service quality,pre, during and post purchase responsiveness of the retail outlets and other related aspects.All these become vital components of totality of satisfaction, which the retail shoppersseek in the present highly competitive retail environment.

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Fascinated by corporate retailing

Retail shoppers are more and more fascinated towards corporate retailing. Retailingin style has attracted large number of shoppers who have hitherto satisfied with streetcorner shops. This is in view of manifold advantages a shopper might drive from out ofcorporate retail shops. Shoppers perceive that they get value for money, from out oflatest brands together with services delivered in a state-of-the art surroundings.

Investment orientation

Investment orientation have also started dominating the mindset of shoppers. Assuch in anticipation of future benefits, shoppers started spending as jewels, financial products,insurance products etc. As such a new world of retailing has just opened its door.

Avenue for socialization

The culture of week end outing, party with friends and family members are on theincrease. This trend look for retail outlets amenable to keep celebration mood stored withjoyful entertainments, involving shopping and other related activities. Such shoppers wantsaccess to retail outlets 24 hours a day 7 days per week.

Customized products

Shoppers today are more in favour of customized products and services. They expressin clear terms what might suit to them the best. Retailers also fine tuning their products andservices in alignment with that they listen from their customers, as Amway says “wemake better products in the whole new way: we use our ears”

Tech Savvy

The tendency towards application of technology has been rapidly increased. Shoppersare becoming tech savvy and has emerged as on line shoppers. They navigate, collectinformation process the same and act online. This is specially in the case of shopping forgift items, books, electronics item, apparels, eatables, leather goods and so on.

Fast track approach

Shoppers are showing fast track approach when it comes to adoption of a newproduct. They adopt new products, new brands at a much faster rate than their counterparts have done a few years back.

Brand and shop switchers

In continuation of the above shoppers are fast as regards both brand switching aswell as retail shop switching. Brand as well as retail shop switch over are also taking placeat a much faster rate. This is in view of the availability of unlimitedly abundant choicesboth in respect of product as well as retail stores.

NOTES



Organized shoppers

Shoppers are becoming more and more organized shoppers. They are sure as towhat to buy when, how, where and such decisions are taken in advance and implemented,the outcome is revisited and fine tuned for future purchase activities.

Brand ambassadors

Retail shoppers to day are the brand ambassadors, in the real sense. Both satisfiedshoppers and dissatisfied shoppers convey their shopping experience and brand satisfactionin their own way to the prospective as well as existing shoppers.

Better negotiators

The retail shoppers have emerged as better negotiators as they are totally aware ofthe offerings in terms of quantity and quality offered by competing retailers. Also they areprovided with multiple options at their door steps. Further the purchasing power hasappreciated either with own money or with borrowed money. Retailers have to necessarilyrespond to the spirit increasing negotiation skill of retail shoppers.

Time pressure

The time pressure now the shoppers have are compelling them to do shopping forevery thing under one roof shoppers are becoming one stop shoppers. This has resultedfor the dawn of malls, hypermarkets and so on.

Minimum level of tolerance

The level of tolerance of retail shoppers is diminishing at a faster rate. Any defectassociated in the overall service/product delivery system, however minimum it may bemight leads to cause irritation at the maximum and result in ultimate shopper attrition.Getting them back to the shopper inventory is a tough and costly affair to the retailorganization.

Eco friendliness

Yet another face, the retail shoppers project is eco friendliness. There is increasingawareness among the shoppers on green products. Shoppers started look for referencesof greenness of product. The trend to accept such green products is on the increase andmany retailers are making this as their unique selling proposition to attract and sustainshoppers. Eg. Nokia green electronics, ITC papers and boards, Reva cars, HondaHybrid cars, Dells recycling services. Dell takes back the product at the end of its life andrecycle or dispose it using approved procedure. WeP peripherals started setting up e-waste bins across Bangaluru. That take care of collection and segregation of CD’s floppydiscs and dry cell batteries.

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Fascination towards foreign brands

The fascination towards foreign brands, of late china products are on the increaseamong our retail shoppers. This may be because of our retail shoppers perceptiontowards such foreign brands as superior brands. The image of global brands among localshoppers are a point of severe consideration while local brands competiting against globalbrands.

Awareness of consumer rights

Retail shoppers are becoming more and more knowledgeable as regards their rightsgranted within the legal framework. The rights are protected by consumer courts whichare within easy access to retail shoppers.

The changing profile of retail shoppers have been narrated in the above line. Anunderstanding of this changing profile of retail shoppers would enable to arrive at meaningfulretail marketing strategic decisions.

1.7 NEED AND IMPORTANCE OF THE STUDY OF SHOPPING

BEHAVIOUR

The study of shopping behaviour has manifold advantages to the retail strategists andall other stake holders connected with retailing. The following pages deal with the retailshopping model and the need and importance of an understanding of shopping behaviour.

Retail shopping behaviour

A basic conceptual model of retail shopping behaviour is presented below:

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The model above reveals that once the need is felt of course that is the paramountimportant to ignite the shopping activity, the shopper proceed with search for information,processing and analyzing such information captured. The shopper might depend on mediapeer groups, family, integrated marketing communications, sales persons, on line accessand so on for the purpose of gathering information. The gathered information shall beprocessed and analysed. This analysis would lead to take decision either not to buy theproduct under consideration or to buy the product.

The decision of ‘not to buy’ may leads to further information search and analysis. Onthe other hand, if the shopper has opted for a decision to buy, that in turn will leads todecide further on the associated issues of the purchase such as what brand to be purchased?

Internal and external influences

Felt needFelt need

Information search and AnalysisInformation search and Analysis

DecisionsDecisions

ExecutionExecution

Purchase madePurchase made

Purchase delayedPurchase delayed

Purchase deniedPurchase denied

Loyal to Store & BrandLoyal to Store & Brand

Loyal to Brand OnlyLoyal to Brand Only

Loyal to Store OnlyLoyal to Store Only

Non Loyal to Store & BrandNon Loyal to Store & Brand

Search for SubstitutesSearch for Substitutes

AbandonmentAbandonment

Internal and external influences

Inte

rna

l an

d e

xte

rna

l influ

en

ce

s

Search for SubstitutesSearch for Substitutes

What to buy (brand choice)What to buy (brand choice)

Where to buy (store choice)Where to buy (store choice)

When to buyWhen to buy

At what price to buyAt what price to buy

With whom to buyWith whom to buy

Inte

rna

l a

nd

ex

tern

al

infl

ue

nc

es

To Buy

Not to Buy

How much to buyHow much to buy

How to buy ( terms )How to buy ( terms )

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Which shop that is to be purchased ? When the purchase activity to carried out ? Preferablywithin what price range the brand should be purchased? With whom the shopper mightmake the purchase? In terms of volume, how much to purchase, is that purchase to bedone on cash or credit basis? and similar associated decisions are to be arrived at. Oncethe decision is arrived the execution of the same take place. It is likely that there may betime gap between the decision and its execution, depending on the financial and otherconsiderations involved in the purchase.

The execution of the decision might take three possible routs viz actual purchase tobe made delaying the purchase and denial of the execution of the idea of the purchaseitself. The probable causes for delay as well as denial of execution of purchase decisionmight be that the shopper may be in search of additional values for the money or the feltneed itself would have been filled in otherwise by other means or the need for fulfillment ofthe fact need has become ceased its very purpose. Delayed purchase will lead to searchfor substitute. Where as denial will lead to either abandonment or search for substitute.

However, it is likely that as long as felt need present a shopper will attempt to go in forfurther information search and analysis. Once the shoppers have made the purchase thefollowing outcome are possible. The shopper, in the event of satisfaction may turn to be aloyal shopper for both brand as well as to the store. Repeat purchase possibility is verymuch obvious in this case. As an alternative the shopper may prefer to have the brandalone and loyal to that but not to the shop as he may not be convinced either with theservice delivery system or other aspects pertaining to the shop. Possibility is also therethat, the shopper may like to continue shopping in the same shop but with different brands.It is quiet contrary to the previous conditions. Finally, one more likelihood is possible thatthe shopper say good bye to both the brand and the shop. This situation is likely when theshopper is in total disagreement with services offered in the shop as well as claims made bythe brand concerned. All the above behivoural outcome are subject to the influence ofboth internal as well as external variables. Of course, a detailed discussion about thosevariables are presented in other sections.

While the main thrust of this model is an the implementation aspects of retail shoppingdecisions and the related behaviour. Few other models, explaining the overall purchasedecisions are dealt in other sections, which will enable to gain more insights on behaviouralpattern.

Need and Importance

Shopping is an indispensable activity of any individual be it be out of necessity or forpleasure. Success of a retail store depends to a greater extent on its understanding theconsumers. However this is the biggest challenge faced by consumer analyst and the retailers.The profitability of a retailer depends on his ability to attract shoppers, satisfy and retainthem.

Shoppers influence can be felt at both micro and micro level. At the micro level theydetermine the retail concerns profitability, share prices, acquisition and merger. At the

NOTES



macro level they determine which nations are able to sell their goods to other nations forneeded foreign currency and investment, jobs and prosperity of the nation as a whole.Knowledge regarding how people shop and consume the products enables the retailer toascertain the type and volume of products to be stocked, the manner in which they have tobe displayed so as to attract the shoppers to buy more products. Understanding shopperswill enable the retailer to design and develop strategies relating to products, prices,promotions and operations that will meet the needs of the shoppers. A retail concern canbe successfully run by understanding the shoppers’ influence rather than attempting toinfluence the shoppers. This section deals with the discussion on the important ofunderstanding the shopping behaviour from the perspective of retailers, consumers, publicpolicy makers and regulators.

1.7.1 Importance to Retailers

The study of shopping behaviour provides critical information to the retailers indeveloping marketing strategies and tactics. It provides information regarding the shoppersneeds and wants and thereby enables the retailers to design appropriate strategies to attractand retain consumers. Ultimately the success of a retailer depends on knowing, servingand influencing the shoppers.

Market segmentation

Shoppers are not alike, their needs differ. Understanding and addressing the needs ofdifferent groups of shoppers would lead to increased consumer satisfaction. Retailer couldsegment the market based on the extent of price consciousness, importance attached toquality, variety seeking behaviour of shoppers, volume of purchases made etc. In & Outstores target on the segment of customers who are time conscious and look out forconvenience goods. A retail store could operate different outlets based on the needs ofdifferent segment of customers. For eg Wal-Mart and Sams club. Studying the shoppingbehaviour would help the retailer to identify the underserved segments- those segments ofshoppers whose needs are not met.

Identifying the target market

A retailer may not be able to serve all the needs of all the entire gamut of shoppers.This may be due to resource constraints or any other limitations. The retailer should reviewthe market opportunities so as to identify the distinct group of shoppers whose wants andneeds could be addressed profitably. Understanding the shopping behaviour would enablethe retailers to determine the viable target market. Knowledge of shopping behaviour alsohelps the retailers to identify the individuals involved in preshopping, shopping and postshopping process which would enable to frame strategies to identify and attract the targetmarket.

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Positioning

Positioning enables a retail store to differentiate itself from that of the competitors.Effective positioning strategies should enable a consumer to attach the retail store with acertain image which reflects what the retail outlet is how it is different from that of thecompetitors. Positioning decisions play a critical role in ensuring the success of a retailorganization. The retailer should understand whether the shopper will like the positioningstrategy and how the same can be communicated clearly in a persuasive manner.Understanding the shoppers behaviour will enable an retail concern to arrive at attractivepositioning/repositioning strategies acceptable by the consumers.

Merchandising decision

Understanding the shoppers behaviour would enable the retailer to make a number ofdecisions like the type of products, brands, depth and width of assortments , the SKUsand display, space management, POP displays etc. Retailers should also identify the fastmoving and slow moving merchandise, the extent of satisfaction of the shoppers relating tothe various aspects of merchandise dealt. Accordingly the retailer may modify the strategiesto meet the shopper’s expectations.

Pricing decisions

Among other things price of the merchandise offered is an important factor influencingthe shoppers decision making. It is important for a retailer to understand how shoppersreact to pricing decisions. The economic theory suggest that a decrease in the price couldenhance the demand. However the reaction of the shoppers of price changes could bevery complex. The shoppers could be price sensitive with respect to some category ofmerchandise whereas in other cases they may not be. Low prices could be perceived byshoppers as low quality at the same time they might be willing to pay more for a productsymbolizing status. Understanding the shoppers behaviour is needed to get inputs fordeveloping the pricing strategies.

Decisions regarding retail format, location and layout

The decision regarding retail stores format, location and layout can affect the footfalland conversion rate. Shopper’s preference for location should be taken into considerationwhile setting up a retail store. knowledge on the shoppers behaviour would enable a retailerto arrive at a retail format that would suit the shopper’s requirement. Domino’s pizzaaddresses the needs of shoppers to stay at home by undertaking home delivery. The layoutin a supermarket should be designed in manner that would enable the shoppers to easilyfind the products needed. Insight into shoppers behaviour also enables the retailer to developthe other aspects of retail environment. It is found through research that bright colours andloud, fast-paced music will make consumers move quickly through the store. Softer, moresubdued colors and music will have the opposite effect.

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Promotion decision

Promotional decisions can often influence the shoppers’ decision to buy the productor service, the consumption and the disposition of the same. Knowledge on the shoppersbehaviour would equip the retailers decisions regarding the promotional mix viz., advertising,personal selling, sales promotion and public relations. Retailers can influence the shoppers’expectations using the promotional measures. If the expectations set are not meet, it willinfluence the shoppers’ level of satisfaction judgment. The promotions should be designedin such a way to influence the consumer attitudes in a positive manner. It is also used byretailer to influence the consumer memoires for retailer store name and the product attributesdealt by him. The use of color, language, body language etc., has different meaning indifferent culture. Their use in advertising, sales promotions and personal selling efforts mayelicit different reactions and interpretations from different categories of shoppers whichshould be understood thoroughly before the designing and launching a promotional mix.

Decisions regarding the customer service

Retailers resort to customer service so as to differentiate themselves from that of thecompetitors. The decision regarding the customer service should take into account theneeds of the shoppers, their expectations and the importance attached by them. Thecustomer service model that is designed based on the shoppers’ inputs is more likely tosatisfy them.

Shoppers satisfaction resulting in Repeat visits

Understanding the shopper beahaviour would enable to satisfy their expectationswhich will result in more shopping visits. Retaining an shopper will result in cost efficiency.This is because the cost of serving an existing customer is less than attracting a new customer.A new shopper would require more pre-sale and post-sale service than a continuing shopper.Also a retail concern cannot aim at satisfying all segments of shoppers. Identifying andselecting the right customers and retaining them will lead to more benefits. This requires athrough understanding of the shopping behaviour which will enable the retailers to selectright shoppers and build strategies to retain them.

1.7.2 Importance to Shoppers

Understanding the shoppers behaviour can help to create a better environment forshoppers. It enables to create an ambience attractive to the shoppers. Knowing thepreference, expectations and importance attached by shoppers would enable to createattractive product display, merchandise arrangements, layout, space planning of sign boards,advertisement, pull carts etc so as to enhance the shopping experience.

1.7.3 Importance to Public Policy makers and regulators

The policy makers need to understand the consumer behaviour in order to makedecisions regarding the laws to protect the shoppers from unfair, unsafe or inappropriate

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marketing practices. The shoppers should be protected from deceptive and misleadingadvertisement which requires an understanding of how, when and whether shoppers aredeceived or misled by advertisements, sales promotional offer etc.

To sum up, understanding shopper behaviour enables retailers to arrive at appropriatedecisions on retail strategy formulation with specific reference to

• Retail format

• Attracting more shopper footfall

• Retaining shoppers

• Designing relationship strategy

• Logistics and supply chain adjustments

• Decisions on visual merchandising

• Designing integrated marketing communications

• Execution of shoppers response corporate social responsibility

• Venturing new offers

• Vertical as well as horizontal retail business expansion

• Employee empowerment on shoppers complaint handling etc.

A clear understanding of shopper behaviour will enable retail organization as a highperforming organization most preferred by all its stake holders. In fact such an indepthunderstanding of shoppers’ behaviour will drive the retail organisation, a learning and proactive organization which will cater to all the requirements of the present as well asprospective shoppers on a fast tract mode.

Customized retail marketing mix can be designed and executed based on theunderstanding of shoppers’ behaviour. Retailers can buildup their own competitive edge,drawing clue from the shoppers’ behavioural perspectives. Over a long run, a sustainablecompetitive advantage can be developed and maintained.

The retail organization might turn around as a shopper driven organizations re-engineering its scarce resources towards maximization of shoppers’ satisfaction. Satisfiedshoppers are the real performing assets of the retail organizations. Shoppers’ extent ofsatisfaction will reflect on their behavioural pattern. Constant tracking and monitoring ofshoppers satisfaction would lead to appropriate actions which in turn leads to profitmaximization.

Shoppers behaviour pattern analysis would provide insight into the specific behaviourof different segments of shoppers. Such insight would lead to design strategies appropriateto the specific shopper segment to improve upon their retail store patronage.

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On the above lines and on similar lines an understanding of retail shoppers’ behaviourwould provide, an inspiring, innovative and influential road map to retail organizations tomarch ahead of a sustainable and rewarding growth under the competitive environment.There arise the need and importance of the study of retail shopping behaviour.

SUMMARY

This unit has aimed at providing the basic framework to understand the retail shoppers’behaviour. The chapter has started with an input into the global trend in retailing. This isfollowed by the discussion on the trend of retailing in Indian context. The changing trend inIndian retail scenario and the shopper’s behaviour is presented in detail. A model of shopper’sbehaviour is also presented to provide the impetus needed for understanding the discussionpresented in the following chapters.

HAVE YOU UNDERSTOOD?

• Discuss the global trend in retailing.

• A MNC wants to start a retail concern dealing with apparels. As a marketingconsultant you are asked to advice the company regarding the retailing trend inIndia.

• Explain the need and importance of understanding the shopper behaviour.

• What factors have contributed to the change in the Indian shoppers’ behaviour?

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UNIT II

SHOPPING PROCESS

2.1 INTRODUCTION

Understanding the shopper behaviour is the first step to frame effective retail strategies.In order to succeed in the business a retailer should attract and retain the existing shoppers.This requires an understanding regarding what makes a shopper to buy or not to buy aproduct? To visit or not to visit a retail store? Against this background this unit attempts toprovide insight into the various dimensions and approaches to study the shopping behaviour.The shopping behaviour is considered to be synonymous with the consumer behaviourand the inputs are drawn from the insights provided by various authors regarding theconsumer behaviour.

A shopper undergoes a series of steps in evaluating the purchase of a product, andthe retail outlet where the purchase is to be made. Understanding these stages wouldenable a retailer to frame strategies in order to place the products dealt by him and hisretail outlet in the ‘consideration set’ of a shopper. In this context the three stages involvedin the shopping process viz., pre shopping , shopping and post shopping are explained.

The term shopper in the ordinary parlance refers to anyone who is just looking around,he may end up only with collecting information and may or may not purchase any productor services. However in this book the term shopper refers to an individual who purchasesfor the purpose of individual or household consumption. In this context the shoppingprocess involved by the individuals are explained.

Innovations are needed for a retailer in order to differentiate himself from that of thecompetitor. In this context a detailed discussion the meaning of the term innovation asapplicable to the retailer, product and shopper are explained in addition to the diffusionprocess. The categorization of shopper on the basis of adoption of innovation is explainedalong with an insight into the reasons for non adoption or resistance to innovation.



• Various dimensions and approaches to the retail shopper behaviour

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• Stages in the shopping process

• Elements involved in the diffusion of innovation

• Adoption process of an innovation

• Reasons for adoption , resistance and diffusion

2.3 DIMENSIONS AND APPROACHES TO RETAIL SHOPPING BEHAVIOUR

Shopping behavior refers to the decision process and physical activity individualsengage in when evaluating, acquiring, using or disposing of goods or services. A number ofvariable influences the shoppers choice of a retail store and the products/brands purchased.Many of these variables are internal and are not observable for eg the attitude. Somevariables like the economic climate are external and can be observed. It is not possible toexactly measure the nature and relative strength of the influence of the variables. Againstthis setting the models provides necessary input to understand the shoppers’ behaviour.The models are derived from the consumer behaviour models. A model can be defined asa simplified representation of reality. For the purpose of simplification and avoidingcomplexity the models includes only certain aspects of relevance and interest and excludesaspects that are not relevant to the shoppers behaviour. Since shoppers behaviour involvesdecision process, the models that focus on the process are discussed. Some models depictonly very specific aspect of the shopper behaviour for eg brand loyalty while other arecomprehensive and include a great variety of shopper behaviour.

2.3.1 Traditional models

The earliest models of shopping behaviour are devised by economist which focusedon the allocation of scarce resources among the unlimited wants and needs. Two majordisciplines viz., the micro and macro economics provide alternative views about theconsumers.

Microeconomic model

Micro economic model focuses on the one aspects of the shoppers behaviour ie theact of purchase which is only a portion of the shoppers behaviour. Micro economistsconcentrated on explaining what consumers would purchase and in what quantities thesepurchase would be made. Knowledge on the tastes and preferences leading to purchase isassumed to have been acquired. Microeconomics does not provide input on why theshoppers develop various needs and preferences and how they rank the need andpreferences. A number of assumptions are made on the following lines;

• The shoppers needs and wants are unlimited and thereby cannot be fully satisfied

• The shoppers have limited budget and they am to allocate the budget so as tomaximize the satisfaction of wants and needs

NOTES



• The shoppers develop their own preferences without the influence of others andthe preference is consistent over a period of time.

• The shoppers have an understanding of exactly how much satisfaction the productpurchased can give them

• As the additional units of product or service are purchased the marginal ie., theadditional satisfaction or utility provided by the next unit will be less than the marginalsatisfaction or utility provided by the previously purchased units.

• Shoppers use price of the products as the sole measure of sacrifice involved inobtaining it and price plays no other role in the purchase decision.

• Shoppers are perfectly rational and they will always act in a deliberate manner tomaximize their satisfaction.

On the basis of above given assumptions economist argue that perfectly rationalshoppers will always purchase the goods that provides the highest ration of additionalbenefit to the cost. The benefit/cost ration is expressed as a ratio of its marginal utility toprice (MU/P). The shopper would seek to achieve a situation where the following expressionholds for any number of goods;

MU1 MU2 MU3 MUn

———— = ——— = ———— = …………. = —————

P1

P2

P3

Pn

If any one product’s ratio or choice of a retail store is greater than the others theshoppers can achieve greater satisfaction and will immediately purchase the same. Untilthe products MU/P ratio is equal to other ratios the consumer will purchase the productafter which the additional purchase of the good will stop.

The micro economic theory suffers from the following limitations;

The assumptions are highly unrealistic and act as the major limitation. For exampleshoppers lack complete knowledge regarding the products and often influence each otherspreference. The choices made by them are influenced by many variables apart from price.Macroeconomic model also focuses on the specific act of purchase. Shopper’s behaviourbefore and after the act is not taken into consideration. As such the model is notcomprehensive.

Macroeconomic view

Macro economics focuses on the aggregate flows in the economy. It takes intoaccount the monetary value of goods and resources, where they are directed and howthey change over time. The shoppers’ behaviour is inferred from the economic flow as theyare the ones who influence the flows. Though macro economic view does not offer aunified model it provides insights into the shopper’s behaviour. For example ‘The relative-income’ and the ‘permanent-income’ hypotheses.

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The relative income hypothesis argues that people’s consumption standards are mainlyinfluenced by their peers and social groups rather than their absolute income levels. Theproportion of family income devoted to consumption is expected to change only when anincome change places the family in a different social setting.

Permanent income hypothesis explains why specific individuals do no change theirconsumption patterns even when their incomes suddenly change. The hypothesis proposesthat consumers do not use actual income to determine the amount of their consumptionexpenditures but are influenced by their estimate of some average, long term amount thatcan be consumed without reducing their accumulated wealth. Sudden increase or decreasein income are viewed as temporary and therefore are expected to have little influence onconsumption activity.

Others variable suggested by macroeconomist as influencing the consumption patternsare previous income, experiences, accumulated liquid assets, variation in taxes etc. Thestress is on economic variables however the influence of psychological factors are notconsidered.

Katona’s Behaviourial economics perspective

The traditional economic theories focused on the economic behaviour of the shopperie the supply, demand prices etc. Behaviourial economics focuses on the behaviour of theshoppers. George katona argued that the study of the influence of psychological variableswould lead to a deeper understanding of the behaviour of economic agents. Katona’sargument is now viewed as the behaviourial economics. His argument is presented belowin a simplified manner;

The illustration shows that as in traditional economic models the actual economicconditions are shown to influence the shoppers. This includes the interest rate, inflation,unemployment, level of the GNP, taxes, income and debt. These influences are howevermodulated by the psychological factors like the individual’s level of motivation, knowledge,attitude, perception and the like. The consumer sentiment results from the psychologicalprocess which modifies the effect of actual economic condition. Consumer sentiment canbe viewed as the consumer’s level of confidence about the current economic condition hefaces and his expectations about the status of economic conditions in the future. Thisconsumer sentiment play a major role in deciding the amount of discretionary spending ata given point of time. Katona argued that people in the economy share a similar view and

Actual economic condition

Psychological process

Consumer sentiment

Economic behaviour

NOTES



a result large number of consumers will hold back on the discretionary income if theyforesee an economic slowdown leading to an economic downturn. This may happen evenif the current economic conditions are quite acceptable.

2.3.2 Contemporary Models

Contrary to the economic model the contemporary models focus on the decisionprocess of the consumer. Ti place emphasize on the mental activity that occurs before,during and after purchases are made. The model is based on the material developed in thebehavioral sciences. Most of the variables identified in the models are drawn frompsychology and sociology. Most widely quoted models are presented below;

Nicosia model

Francesco Nicosia was one of the first consumer behaviour modeler to shift focusfrom the act of purchase itself to the more complex decision process that consumers engagein regarding the product and services. The model is a pioneering attempt to consolidateabout consumers. The model is presented in a flowchart format. All the variables areviewed as interacting and no variable is viewed as inherently dependent or independent.The model describes a circular flow of influences where each component provides input tothe next.

The model contains four major components viz.,

1. The firms attributes and outputs or communications and the consumer’spsychological attributes

2. The consumers search for and evaluation of the firm’s output and other availablealternatives

3. The consumer’s motivated act of purchase and

4. The consumers storage or use of the product

It is assumed that the consumer is seeking to fulfill specific goals and that the consumerdoes not have any prior experience with the firm so that no positive or negative predispositionstowards the firm exist in the consumers mind.

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The diagram shows that the firm produces some type of communication that theconsumer is exposed to. Attributes of the message and the consumer determine the natureof the consumer’s exposure to it and its influences on him. One positive consequence isthat the message might influence the consumer’s attitudes towards the brand. This attitudeis the input to field two.

At this point the consumer might become motivated to gain information and searchfor the same. The search could be internal or external. Internal search refers to searchinginternal memory for relevant information whereas external search occurs when the consumervisits stores, reads journals/magazines etc. The search is likely to lead to evaluation.

If the evaluation result is positive the consumer will be motivated towards a firm’sbrand. If nothing intervenes the motivation will lead to shopping activity and purchase ofthe brand. After the purchase a number of outcomes may occur. The firm may receive afeed back and the consumers attitudes toward the brand may change because f theexperience gained with the product usage. This experience is the feedback to the consumer’spredispositions.

NOTES



As could be seen the model views the act of purchase as only one stage in the moreimportant ongoing decision process of consumers. The model has contributed the ‘funnelapproach’ which views consumers as moving from general product knowledge towardspecific brand knowledge and from a passive position to an active state which is motivatedto a particular brand. The model however suffers from the following limitations;

• The computer like flow is sometimes restricting and numerous factors internal toconsumers are not considered

• The assumption that the consumers begin without predisposition regarding the firmis also restricting.

• There is an overlap between the firm attributes and the consumer attributes in themodel

Howard-Sheth Model

Howard-Sheth model is an integrating framework for a vary sophisticatedcomprehensive theory of consumer behaviour. The terms buyer is used in this model torefer to both the industrial and the ultimate consumers thus attempting to develop an unifiedtheory useful for understanding a great variety of behaviours. The model depicts the rationalbrand choice behaviour of buyers under condition of incomplete information and limitedabilities. The model depicts three levels of decision making;

1. Extensive problem solving: early stages of decision making in which the buyer haslittle information about brands has not developed well defined and structured criteriaby which to choose among products

2. Limited problem solving: In this more advanced stage choice criteria are welldefined but the buyer is still undecided about which set of brand will best servehim. The consumer experiences uncertainty about which brand is ‘best’

3. Routinized response beahviour: Buyers have well-defined choice criteria and alsohave strong predisposition towards one brand. Little confusion exits in the consumersmind and he is ready to purchase a brand with little evaluation of alternative

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NOTES



The model involves four major components which are explained below;

1. Input variables

The input variables act as the stimuli which may be of two kinds. Significance stimuliare actual elements of brand that are confronted by the buyer viz., quality, pricedistinctiveness, availability and service. Symbolic stimuli also involve the above attributes.They are generated by producers representing their products in symbolic form such asin advertisements. Social stimuli are generated by the social environment includingfamily and groups.

2. Output variables

The output variables include the buyer’s observable responses to stimulus inputs. Thefollowing are the five output variables arranged in order from attention to actualpurchase.

• Attention – the magnitude of the buyers information intake• Comprehension – the buyers store of information about a brand• Attitude – the buyers evaluation of a particular brands potential to satisfy his

motives• Intention – the buyers forecast of the brand to be purchased• Purchase behaviour – the actual purchase which reflects the buyer’s predisposition

to buy as modified by any inhibitors.

3. Hypothetical constructs

A number of intervening variables are proposed represented by hypothetical constructs.The constructs can be categorized into two major groups viz., perceptual constructsdealing with information processing and learning constructs dealing with the buyersformation of concepts.

The three perceptual constructs are explained below;i. Sensitivity to information ie the degree to which the buyer regulates the stimulus

information flow.ii. Perceptual bias – distorting or altering informationiii. Search for information – active seeking of information about brands or their

Characteristics

The six learning constructs are defined as

i. Motive – general or specific goals impelling actionii. Brand potential of the evoked set – the buyers perception of the ability of the

brands in the evoked set to satisfy his goalsiii. Decision mediators – the buyers mental rules for matching and ranking purchase

alternatives according to his motives.iv. Predisposition – preference towards brands in the evoked set expressed as an

attitude toward them.v. Inhibitors – price, time pressure and other environmental forces which restrain

purchases of a preferred brand.vi. Satisfaction – the degree to which consequences of a purchase measure up to the

buyers expectations for it.

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4. Exogenous variables

Exogenous variables refer to a number of external variables that can significantly influencethe buyers decisions. It includes the personality, social class, culture and other variables.These variables are not as well defined as other aspects of the model because they areexternal to the buyer.

The process starts when the buyer confronts an input stimulus. The stimulus is subjectedto perceptual bias as a result of the influence of the buyer predispositions as affected bymotives, decision mediators and evoked set. The modified information will also influencethe variables which in turn will influence the predisposition to purchase. The actual purchaseis influenced by the buyers intentions and inhibitors. A purchase leads to the evaluation oflevel of satisfaction which in turn increases the buyer’s predisposition towards the brand.As the buyer acquires more information about brands, less external search for informationis made leading to more routine purchase behaviour.

The model makes a significant contribution to the understanding of the consumerbehaviour. It identifies many of the variables influencing the consumers and explains howthey interact with each other. Also the model depicts the different types of consumer problemseeking and information search behaviour. It has also highlighted that the outcome ofconsumers’ decision other than just purchases. The model however suffers from the followingdrawbacks;

• The model does not make a sharp distinction between exogenous and othervariables.

• Some of the variables are not well defined and are difficult to measure.• The model has limited generality for example ti is not useful in explaining joint

decision making between family members or other members of an organization.

• The model is quite complex and difficult to understand for a novice.

Engel-Blackwell-Miniard Model

The model is originally developed by Engel, Kollat and Blackwell in 1968. Subsequentlyit has undergone many revisions including the contribution of Miniard and it stands as themost popular representations of consumer behaviour. The decision process is viewed toconsist five activities which occurs over a period of time.

1. Motivation and need recognition2. Search for information3. Alternative evaluation4. Purchase and

5. Outcomes

The model groups variables into four general categories viz., stimulus inputs, informationprocessing, decision process and variables influencing the decision process.

NOTES



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Similar to the Howard-Sheth model consumers are recognized to undergo two distinctmodes of operation viz., Extended problem solving(EPS) and Limited Problem solvingsituations(LPS). EPS is characterized by high levels of involvement and/or high levels ofperceived risk. The product evaluation process is expected to be regress and consumermay shop at different outlet. Satisfaction with the brand is crucial for continued commitmentwith the same brand. In limited problem solving situations the consumer operates underlow level of involvement and /or low levels of perceived risk. This results in low motivationalsearch for brand information and non rigorous evaluation of alternatives. The consumermay not be motivated to shop at many outlets and satisfaction with the product will encouragerepurchase because of disinterest and not due to real loyalty towards the product/brand.The basic model depicted in the diagram characterizes both EPS and LPS situations.However the degree to which various stages will be used by consumers will be differentwith the different situations.

In the case of extended problem solving situation the model is activated with therecognition of need by the consumer. The need could be recognized from three possibleinfluences viz., information stored in the memory, environmental influences and individualcharacteristics such as the level of involvement of the consumer. In the need recognitionstage the consumer becomes aware of the disparity between the present state and hisconcept of the ideal state- the state at which he would like to be.

In the information processing stage, the consumer involves himself in both in internaland external search. Internal memory is searched by consumer to determine the extent ofinformation known about the alternatives and how to choose among them. If the knowledgelevel is not adequate the consumer will indulge in external search. The extent of search willalso depend on various other aspects like the extent of risk which the consumer is willing toundertake. In the case of a low risk taker, the consumer will tend to seek more information.Apart from these aspects information search is also influenced by the environmental influencessuch as urgency of need. The information accumulated will be subjected to processing in afive step. The first step involves exposure to stimuli which may involuntary or throughactive mode. The stimuli must capture the consumer attention so as to significantly influenceextensive problem solving. The attention stage is highly selective as the individual paysimportance to only most important aspects he believes in. The comprehension stage involvesderiving meaning from information and holding the same in short term memory so that itcan be retained to allow further processing. The next two stages viz acceptance and retentionrelates to the third stage in decision process viz alternative evaluation.

Alternative evaluation stage involves comparing information about alternative brandsgained through search process to the information regarding the standards stored in thepermanent memory. Acceptance occurs when information is compared to the evaluativecriteria and as a result the existing belief in memory is either reinforced or changed.Reinforcement or change depends on the degree to which the consumer generates supportive

NOTES



or negative thoughts about the information received. Acceptance leads to retention ofinformation and lack of acceptance result in loss of information.

The alternative evaluation process leads to an intention to make the purchase of themost favourably evaluated brand. Unless situations like lack of finance etc arises, intentionwill lead to actual purchase. Evaluation of the product continues in the usage stage alsowhere the performance of the product is matched with the expectations. If the performancedoes not meet the expectations it results in dissatisfaction.

In limited problem solving situation the consumer is not highly involved and he maynot go through the all the stages. Need recognition may often arise when the consumer hasran out of the product. External search may be minimal. Alternatives are often evaluated bydetermining whether they meet some minimal level of acceptability and purchase is madewith minimal deliberation. If the brand meets expectation repurchase may arise but brandloyalty is not likely due to lack of involvement.

The Engel-Blackwell –Miniard model include many variables influencing consumerwith a specific focus on the levels of consumer involvement and emphasis on the decisionmaking process regarding purchases. The model however suffers from the followinglimitations.

• The role of some variables is not clearly indicated. For example the influence ofenvironmental variables is noted but their role in affecting behaviour is not wellspecified.

• The role of motives in influencing behavior is also not well defined

• The model is also criticized for being somewhat mechanistic in its treatment ofdecision process.

Schiffman and Kanuk explain the models of consumers in terms of the following fourview viz., economic view, passive view, cognitive view and emotional view.

An Economic view

In theoretical economics where perfect competition is assumed, the consumer is oftencharacterized as making rational decisions. This model is popularly known as economicman theory. The model has been criticized for a number of reasons. To make rationaldecision a consumer has to be aware of all available product alternatives, should be capableof ranking each alternative in terms of its benefits and disadvantages and should be able toidentify the best alternative. However in real time consumers rarely have all information orsufficiently accurate information to make the perfect decision.

The economic model of all rational consumers is unrealistic due to the following reasons.

• People are limited by their existing skills, habits and reflexes

• People are limited by their existing values and goals and

• People are limited by the extent of their knowledge

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In the realistic situation consumers are generally unwilling to engage in extensive decisionmaking activities. They settle for a ‘satisfactory; decision instead of maximizing their decisionsin terms of economic considerations such as price-quantity relationship etc. Due to thisreason the economic model is often rejected as too idealistic and simplistic.

A Passive View

Passive view depicts consumers as basically submissive to the interests and promotionalefforts of the marketers. The consumers are perceived as impulsive and irrational purchasers.The passive model suffers from the limitations of failing to recognize the role of consumers.Consumers often play an equal role in many buying situations. They play their role either byseeking information about product alternatives or by selecting the product of their interestor by indulging in impulse buying to satisfy their mood or emotion. The consumers theirown motivation, perception, attitude etc and as such they cannot be easily manipulated.

A cognitive view

The cognitive view describes consumers who fall between the extremes of the economicand passive views. The consumers do not have total knowledge about the productalternatives and therefore cannot make perfect decisions, but they actively seek informationand attempt to make satisfactory decisions. In cognitive model consumers are viewed asinformation processors. Information processing enables formation of preferences whichultimately lead to purchase intention. The cognitive view recognizes the fact that theconsumer is unlikely to attempt to obtain all information about the choices underconsideration. They may stop the information collection when they perceive that they havesufficient information about the alternatives to make a ‘satisfactory’ decision. This informationprocessing viewpoint suggests that the consumers often develop shortcut decision rulescalled heuristics to facilitate the decision making process. They also use decision rules tocope with the exposure of too much of information ie information overload.

An emotional view

Emotion view takes into account the feelings or emotions such as joy, fear, love,hope, fantansy etc., which is associated with certain purchases. Purchases of consumersmay at be made on impulse instead of careful search, deliberation and evaluation ofalternatives. Such purchases are usually ‘emotionally driven’. In case of emotional purchaseless importance is given to search of pre purchase information. More emphasize is given tothe mood and feelings. Mood is defined as a ‘feeling state’ or state of mind. Emotion is aresponse to a particular environment whereas mood is a pre existing state, already presentat the time the consumer view an advertisement or enters a retail environment. Mood playsan important role in consumer decision making as it impacts on whether shopping will bedone , when and where it will be done, whether the shopping will be done alone or withother etc. Mood also influences how the consumer responds to actual shopping environment

NOTES



for example point of purchase display etc. The retailers attempt to create a mood forshoppers so as to encourage them to spend more time in the shop. Consumers in a positivemood will be able to recall more information about a product than those are in a negativemood

Simple model of consumer behaviour

Henry Assael suggests a simple model of consumer behaviour place emphasize onthe interaction between the marketer and consumer. Consumer decision making is thecentral component of the model. The decision making process involves perceiving andevaluating brand information, brand alternatives and decision making. The model is depictedbelow;

The consumer’s choice is influenced by the environment and the consumer himself.The individual consumer’s needs, perceptions regarding the brand characteristics andattitudes towards alternatives influences the choice. In addition to this the consumer’sdemographics, culture, lifestyle and personality characteristics also play a major role indecision making. The second influence on consumer behaviour viz environment is representedby culture, subculture, friends, family members and reference groups. Marketingorganizations are also a part of the environment as they provide the product or services tosatisfy the consumer needs. Once the purchase decision is made and executed, postpurchase evaluation happens and it acts as the feed back to the individual consumer. Theconsumer will learn from experience and may change the process of acquiring information,evaluating brands and selection of a brand. The experience will directly influence theconsumer’s future behaviour.

The individual consumer

Consumer decision making

Consumer response

Environmental influences

Feedback to consumer

Feedback to environment

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Feedback is also provided to the environment by way of communication regardingthe purchase to friends and families. Input mat also be provided to Marketers who seekinformation from the consumers so as to arrive at better marketing strategies to satisfyconsumer’s needs.

2.3.3 Approaches to Retail Shopping behaviour:

Shopper behaviour can be approached from two perspectives viz., managerial andholistic view. Managerial approach view Shopper behaviour as an applied science. It isstudied as adjunct to and as a basis for developing marketing strategies. Holistic approachviews shoppers behaviour as a pure rather than applied social science. Shoppers behaviouris treated as legitimate focus of inquiry in itself with necessarily being applied to marketing.

Managerial Approach:

Managerial approach is more micro and cognitive in nature. It is micro in emphasizingthe individual shopper, his or her attitudes, perceptions, lifestyle and demographiccharacteristics. Environmental influences viz., the reference groups, family, culture etc arestudied in the context of how they influence the individual shopper. It is cognitive in thesense that emphasize is placed on the thought process of individual shopper and the factorinfluencing their decisions.

The managerial approach provided inputs to the marketing strategies to fulfill the goalof satisfying the needs of the individual shoppers in a socially responsible manner. Informationis collected on the consumer needs ie the desired product benefits, thought process ieattitudes and perceptions, and characteristics ie lifestyle and demographics. This informationis aggregated to define segments of shoppers who can be targeted with the marketers’offerings.

The risk involved in taking a too rigid a managerial perspective is ;

• It might overemphasize the rationality of shoppers. The search for information andprocessing of the same may not be done in a systematic manner as perceivedespecially in the case of product purchased for their symbolic value on impulseand on addictive basis. Following a strict cognitive approach may not reveal theunderlying nature of consumer’s decision.

• The dynamics of the environmental factors which are independent of the individualmay be overlooked.

• The managerial approach tends to focus more on purchase rather than theconsumption. The inputs regarding consumption patterns and consumptionexperience would lead to arrive at successful marketing strategies.

Holistic Approach

A holistic approach is macro in its focus. The emphasis is place on the nature ofconsumption experience rather than on the purchasing process. Consumption is viewed assymbolic as well as functional, antisocial as well as social, and idiosyncratic as well as

NOTES



normative. Purchase behaviour is viewed as of little inherent interest outside its impact ofthe consumption experience. It is studied in the context of shopping rather than decisionmaking as shopping is more culturally derived. The managerial orientation is more focusedin predicting what the shopper might do in the future, whereas the holistic approach ismore interested in understanding the environmental context of the shopper’s actions. Theholistic approach has the following drawbacks

• Findings regarding the culturally derived meaning of consumer actions andconsumption experiences may not be actionable from the marketer’s perspective.

• Sufficient emphasize is not given to the purchase decisions. It is imperative formarketers’ to understand how consumers reach decisions so as to influence them.

• Though many consumer decisions are not arrived through systematic processing,understanding the cognitive process is necessary so as to meet the consumer needs.

2.4 PRESHOPPING, SHOPPING AND POST SHOPPING BEHAVIOUR

Shoppers today are faced with myriad of decision options. The options if filtered,will lead to five main type of decision ie., what to buy, how much to buy, where to buy,when to buy and how to buy. Decision regard what to buy is the basic and fundamentaltask for the entire shopping process. The decision involves not only the generic categoryof product desired, but more specifically a narrow range of item and sometimes the shoppereven makes the decision regarding the brand to be purchased. With this decision theshopper completes the overall shopping decision process. The second basis decision dealswith how much of each item to be purchased. This will lead to the decision regarding thequantity to be purchased. The decision regarding where the selected product or serviceswill be purchased will be the next step. The shoppers do not perceive all retail outlets asthe same. The shopper must decide not only on the type of retail store but also the particularretail outlet from where the purchases are to be made. The product and outlet choice isusually made together. The decision sequence differs from one product to other productand also within products it varies form one individual to other.

The decision regarding when to buy is influenced by factors as urgency of need ,availability of the product to be purchased, retail stores operating time, availability offinance, period of sales and clearances etc. The decision of how to buy is also influencedby various factors. The consumer may shop extensively or buy from the first outlet.

Traditionally shoppers’ decision making have been approached by researchers froma rational perspective. The process is expected to involve clearly recognized problem,leading to careful evaluation of attributes, and choice of product and brand that woulddeliver the maximum satisfaction at the lowest cost. Richard W Olshavsky and Donald HGranbois note that such a process is not accurate portrayal of many purchase decisions. Ifshoppers were to follow this deliberate process their entire lives would be spent in makingsuch decisions, allowing them little or no time to enjoy the things they actually buy. Some

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decisions are made by shoppers in the rational manner but many others are performedwith little conscious effort and shoppers seem to make snap decisions based on very littleinformation. The amount of efforts put on purchase decision also differs based on theimportance attached. Shoppers’ decision is many a time focused on the feelings and emotionsassociated with acquiring or using the brand or with the environment in which it is purchasedor used rather than its attributes.

There are various types of shoppers’ decision process. It can be viewed as a continuumranging from low involvement to high level involvement. Based on the amount of effort thatgoes into decision making, the decision making process can be grouped on one end ashabitual purchase decision making or nominal decision making and at the other extreme isextended decision making. Many decisions fall in middle and are characterized as limiteddecision making. The types of decision process are not distinct but rather blend into eachother. The decision process in each of this situations is depicted below; Nominal decisionmaking.

Nominal decision making

Low involvement purchase

High involvement purchase

Problem recognition (Selective )

Information search (limited, internal)

Product choice and purchase

Post purchase action, No

dissonance , very limited evaluation

Limited decision making

Extended decision making

Problem recognition (generic )

Information search (internal, limited externa)l ernal


Post purchase action, No dissonance,

limited evaluation

Problem recognition (generic )

Information search (internal, external )


Post purchase action,

Dissonance, Complex

evaluation

Evaluation of alternatives

Evaluation of alternatives

NOTES



Purchase involvement refers to the level of concern for or interest in the purchaseprocess. The involvement of a shopper can take many forms such that it can be cognitiveor emotional. There are several broad types of involvement related to the product, themessage, or the perceiver.

• Product involvement refers to a shopper’s level of interest in a certain product.Marketers use many sales promotions to increase consumer involvement in theproduct

• Advertising involvement refers to the shopper’s interest in processing theadvertisement messages. Television is generally viewed as low involvement mediumand shoppers process information in a passive manner. On the other hand, printmedia is a high involvement medium as the reader actively process information.

• Purchase situation involvement occurs while buying the same item in differentcontexts.

Nominal decision making

Nominal decision making is also referred as nominal problem solving, habitual decisionmaking or routine problem solving. In this type of decision making recognition of need islikely to lead directly to an intention to buy. Information processing is very limited or nonexistent. It usually involves low involvement, low priced and frequently purchased productswhich are consumed on an ongoing basis. As soon as the problem is recognized, shoppersinternal search from long-term memory leads to the preferred brand and no brand evaluationoccurs unless the brand fails to perform as expected. Some decisions are so nominal thatthe shoppers do not think of even the alternative brand. Nominal decision making is generallythe outcome of continued satisfaction with a brand which was initially chosen after an

High

Low

Level of

inolv-ement

Nominal Limited Extended

Types of decision making

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extended decision making process or the shopper does not attach much importance to thepurchase activity. The choices characterized by automatic behaviour are made with minimaleffort and without conscious control. The development of such routinized, habitual orrepetitive behaviour helps shoppers to minimize the time and effort devoted to mundanepurchase activities. For example the purchase of salt, sugar etc for household consumption.

Limited Decision making

Limited decision making is usually more straightforward and simple. It involves internaland limited external search, consideration of just few alternatives, simple decision rules ona few attributes and little post purchase evaluation. It lies between routinized and extendeddecision making. Shoppers are not very much motivated to search for information or evaluateeach attribute enthusiastically, but use cognitive shortcuts. When the level of involvement islowest, limited decision making may not be much different than the routinised decisionmaking. Sometimes emotional factors may influence limited decision making.

Extended decision making

Shoppers involved in extended decision making situation resemble to the traditionaldecision making perspective. Such decision involve extensive internal and external searchfor information followed by rigorous evaluation of several alternatives as the shopper doesnot possess much information about the product or service considered. The evaluationoften involves careful consideration of attributes of one brand at a time so as to identifyhow much each brand measure up to a set of desirable attributes. A shopper may beinvolved in such complex decision process in case of purchase of computer, cars, washingmachine, house et., Post purchase is more likely to be complex involving dissonancebehaviour.

The difference in the shoppers decision making process is highlighted below;

Low cost products

Limited decision making

Extended decision making Nominal

decision making

Low involvement

Frequent purchases

Familiar product/brand

Little search and time given to

purchase

More expensive products

Infrequent purchases

High involvement

Unfamiliar

product/brand

Extended search and time given to

purchase

NOTES



2.4.1 Stages in shopping decision process

The shopping decision process is viewed by different authors in different manner.Though different terminology is used by various authors, distilling their view leads to thefollowing stages in the shopping process for a extended problem solving situation;

The model depicted above provides a road map to understand the decision makingprocess. The model shows the seven steps undergone by a shopper when making decisions;need recognition, information search, pre purchase evaluation, purchase, consumption,post-consumption evaluation, and divestment. Understanding the stages will provide inputregarding why people buy or don’t buy and what can be done to attract and retain shoppers.Detailed discussion on the steps depicted follows;

I. PreshoppingAs depicted in the diagram pre shopping process has three steps viz., need/problemrecognition, information search and pre purchase evaluation of alternatives. A detaileddiscussion on each of the process follows;

2. Need/ Problem recognitionThe starting point for any purchase decision is need or problem recognition. Needrecognition occur when an individual senses a difference between the desired stateand the actual state of affairs. The ‘actual state’ refers to the way in which a need isalready being met and the ‘desired state’ is the way a person would like for the needto be satisfied. Need recognition depends on how much discrepancy exist betweenthe shopper current state and the desired state. When the difference exceeds a certainlevel of threshold, a need is recognized.

Need/problem recognition

Search for information

Pre purchase evaluation of alternatives

Purchase

Consumption

Post consumption evaluation

Pre shopping

Shopping

Post shopping

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Shopper must become aware of the problem or need through processing of informationinternally or externally. Then they become motivated. The process of problem recognitionmeans the consumer become aroused and activated to engage in purposeful purchasedecision activity. The motivation to resolve a particular problem or need depends on themagnitude of the discrepancy between the desired and actual states and the importance ofthe problem/need. At a point of time a shopper may have a number of problems/need butthe due to monetary or time constraint the individual may attempt to solve only the mostsignificant problems.

The recognized problem should also be sufficiently defined so as to proceed to furtherstages. Sufficient problem definition occurs when the shopper clearly understand the sameso as to act on it. For example a shopper faced with the problem of stock out for soap forhis personal consumption has a clearly definition of problem. But if the same individual ishaving a problem of expression of self image, though the problem is recognized it mayrequire clear definition of the same so as to enable him to identify the ways in which the selfimage could be projected in an appreciable manner.

Various types of problem recognition process can be arrived at on the basis ofimmediacy of required solution and whether or not the problem was expected. The matrixresults in various types of problems viz., routing, emergency, planning and evolving problemsituations as shown below;

Desired state Actual state

Below Threshold

At or above Threshold

No need Recognition

Need Recognition

Degree of discrepency

Immediacy of solution Expectancy of problem Immediate solution

required Immediate solution not required

Occurrence of problem expected

Routine Planning

Occurrence of problem unexpected

Emergency Evolving

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Routine problems are those in which the difference between actual and desired statesis expected to occur and an immediate solution is required. Convenience goods are typicallyassociated with such type of problem situation. For example purchase of grocery made byshoppers. Emergency problem are those that are unexpected in which immediate solutionsare necessary. Some retailers cater to shopper facing such problems for eg. In & Outstores in petrol stations. Planning problems occurs when the problem occurrence is expectedbut and immediate solution is not necessary. For example a consumer who wants to replacehis television will begin to look out for television, engage in information search etc. Planningproblems are of the type that can lead to purchase of ‘pre-need’ goods or services whichare bought in anticipation of being using in future, generally after a time lag. example of preneed services include insurance, pre-paid college fee etc. Evolving problem occurs whenthe problem is unexpected but no immediate solution is required. For eg fashion orientedpurchase.

Situations leading to problem recognition

A number of situations may lead to problem recognition. Some significant reasons areexplained below;

• Depleted or Inadequate stock situation is the most frequent reason giving raisingto the problem recognition stage. In case of depleted or out of stock situation theshopper has exhausted the goods and has to repurchase in order in order to satisfythe needs. Sometime the existing stock of goods may be inadequate leading topurchase requirement.

• Discontentment with existing products may lead to problem recognition. Thedissatisfaction may be faced by the individual himself or may also arise due to theresult of others decisions in the family. The shopper may sometimes simply searchfor something new and different in order to break the routine. The problem ismainly due to the variety seeking behaviour of the shopper involved.

Influencers Culture/subculture Social status Reference group Family Financial situations Earlier decisions Individual growth Emotions Motives Situation

Desired State

Evaluation Less than? Equal to? More than?

Actual state

Influencers Past decisions Normal depletion Brand/product performance Individual growth Emotions Govt/consumer group Product availability Situation

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• Changes encountered in the environment may lead to problem recognition. Forexample different life cycle stages may lead to need for different products. Theinfluence of reference group also leads to problem recognition leading to change inthe consumption pattern.

• The financial status of the consumer has a very important relationship to problemrecognition. The affordability of the shopper depends on the actual or anticipatedfinancial position which may trigger the problem recognition.

• The promotional activities of the marketers may lead a shopper to perceive adifference of sufficient magnitude between the desired state and the actual state.

• Once the shopper becomes aware of the problem two basic outcomes are possible.The shopper may decide not to pursue any further problem-solving behaviour.This might occur if the difference between the shopper’s desired and actual state isnot great enough to cause him to act on resolving the difference. Yet another situationwhich may not lead to further action is the presence or absence of environmentalelements like the family, finance, social class values etc. The second type of responsethat may occur from the problem recognition process is for the consumer to proceedinto further stages of decision making activity leading to information search andevaluation. The shopper may develop a conscious buying intention which is definedas ‘a disposition amounting to some resolve, to buy some particular product orbrand under certain specified conditions’. The conditions may relate to time, place,and circumstance of the purchase. Buying intention simply refers to a shopper’sstate of mind and personal commitment to buy at some time and place given certaincircumstances. A shopper’s intention of buying a particular product may not befulfilled because of change in mind set, forgetting of intention, or from being preventedfrom executing the intention. The process of shopping may lead shoppers to newbeliefs about product availability and attributes of various brands all of which maycause buying intentions not to be fulfilled. Since intentions are not necessarilysufficient to ensure purchase, the marketers can help shoppers move along theprocess through advertisement, point of purchase sales promotion activities etc.

Activating need/problem recognition

Understanding the need/problem recognition may reveal potential opportunities thata business may wish to exploit. It will lead to identifying market with unsatisfied desireswhich will provide marketers with new sales opportunities to be explored. The existenceof unsatisfied needs and desire will lead to new businesses and product innovations.

The shoppers’ need can be activated by changing their desired state. The shoppers’can be made to desire for products. Product innovation also causes need recognition.Many innovations have succeeded due to their ability to satisfy previously unfulfilled needs.The shopper’s perception about the adequacy of their actual state could be changed.Advertisements could play a major role in making the shoppers perceive that the existingstate of affairs is inadequate. Sometimes reminding the consumers of a need may be sufficientto activate the need recognition. A consumer browsing a retailer’s aisles may encounter a

NOTES



display that reminds him of a previously forgotten purchase need. Manufacturers havemodified their products in order to stimulate need recognition. For example in the case oftoothbrush although most tooth brushes wear out in three month, consumers replace themonce in a year. Oral-B has introduced a blue dye in the center bristles which graduallyfades during usage. The absence of blue dye indicated that the tooth brush is no longereffective and needs replacement.

There are two approaches to problem recognition viz., Generic and selective problemrecognition.

Generic problem recognition

General problem recognition focuses on helping shoppers to feel a discrepancy that anumber of brands within a product category can reduce. It attempts to stimulate primarydemand ie the demand for a product category. Companies seeking to grow the size of thetotal market for a product are attempting to elicit to generic need recognition. The shoppersusually perceive minimum difference between competitors products ie one brand tastespretty much the same as other. A marketer will generally use this approach when theproblem is either latent or of low importance and one of the following condition exists;

• Product is in the early stages of its life cycle

• The marketer has very high market share

• After problem recognition, consumer’s external search tends to be limited

• It is a situation of industry wide cooperative effort.

An increase in generic problem recognition generally leads to expansion of total marketfor the category. In certain cases, when a firm has the dominant market share in a productcategory, it may focus on generic problem recognition hoping that sales will probablycome to their brand.

Selective problem recognition

Selective need/problem recognition occurs withn the need for a specific brand withina product category (selective demand) is stimulated. Marketers try to persuade shoppersthat their need will be satisfied by a particular brand. They resort to comparative advertisingthat describes the advantages of one brand over the competitors’ brand.

Approaches to determine shoppers’ problems

A variety of approaches are used by marketers to identify the shoppers’ problems.Survey or focus groups are conducted to determine the problems faced. Both the methodsuse one of the following approaches;

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1. Activity analysis focuses on a particular activity like cleaning the house, travel etc.The survey or the focus group is conducted to determine the problems shopperface in the course of performing an activity

2. Product analysis focuses of examining the purchase and use of a particular product,service or brand. The shoppers are asked about problems encountered whileusing the product or consuming the service

3. Problem analysis starts with a list of problems and the respondents are asked toidentify the activities, products or brands they associate with the problems listed.

4. Human factor research is helpful in identifying the consumers’ functional problemswhich they themselves are not aware. It is employed to determine the effect oflighting, temperature, sound and product design on human capabilities such asvision, fatigue, response time and flexibility etc.

5. Emotional research focuses on the effect of emotions. The consumers emotionsassociated with a particular product are identified using focus group research,personal interview or projective techniques.

2. Information search

Once the shopper identifies the need or recognizes the problem and if there are noconstraints preventing further behaviour, they move on to the next stage in the decisionmaking process viz., the information search. Information can be considered as the knowledgeobtained about some fact or circumstance. The term search refers to the mental as well asthe physical information seeking and processing activities engaged in order to facilitate thedecision making. The search may be undertaken so as to identify information about product,price, retail store etc. Based on purpose of search it may be categorized as prepurchaseor ongoing and based on the source it can be categorized as internal or external.

• Prepurchase search is a typical form of search associated with the purchasingcontext. If the consumer has recognized a problem, he would engage in aprepurchase search.

• Ongoing search does not occur to solve a recognized and immediate purchaseproblem. It is a search activity independent of specific needs or decisions. If anindividual with an interest in a product but with no demand for the product , thesearch will be an ongoing search rather than the prepurchase. A summary of thesimilarities and differences between prepurchase and ongoing search is highlightedbelow;

Internal search

Internal search is the first stage to occur after the shopper recognizes the problem. Itis a mental process of recalling and reviewing information stored in memory that may relateto the purchase situation. The shopper relies on any attitudes, information or past experiencesthat have been stored in memory and can be recalled for solving the recognized problem.The recall may be immediate or may occur slowly as a conscious effort is made to bring

NOTES



the information to mind. The reliance on internal search may be vary important part ofshoppers strategies. Research findings have highlighted that most shoppers rely onexperiential information source in retail shopping trips. They decide where to shop basedon the previous experiences. Hence any negative experience may be difficult to overcomefor a retailer as the shopper would remove the retail outlet form his acceptable alternativesset. The outcome of internal search may be that a shopper ;

1. Makes a decision and proceed to engage in purchase behaviour

2. Has made a decision but is constrained by some environmental variables

3. Determines that insufficient or inadequate information exists in his memory to makea decision and indulge may indulge in external search.

External search

External search refers to the process of obtaining information from other sources inaddition to information obtained from the internal source. Information might be obtainedfrom advertisements, friends, salespeople, store display etc. Three general categories ofinformation are available from external environment;

1. Information about the existence and availability of various product and serviceofferings,

2. Information useful in forming evaluative criteria

3. Information on the properties and characteristics of alternatives

The type of information sought depends on extent of information known already tothe shopper. The shopper may derive information from direct experience of using theproduct themselves. In addition to this information can be gathered from three major areas

• Marketer-dominated sources refers to sales person, packaging and other sourcesunder the control of the marketer. This source is extensively used in the earlystages of product awareness and initial interest.

• Consumer sources include all the interpersonal communication not under the controlof the marketer. Personal sources are extensively used in the latter stages of thedecision process. It includes the opinions, beliefs, attitudes, behaviours and feelingsof relatives, friends, neighbours and strangers contacted on the internet

• Neutral sources include a portion of the mass media, government reports andpublications from independent product testing agencies. These groups are not underthe direct control of the marketer. Profession information contained in handouts,pamphlets, articles, magazines, journals, books, internet and by professionalcontacts also form part of neutral sources.

Majority of consumers actually engage in quite limited amount of external search. Theamount of external search that shoppers engage in varies considerably across individuals’and different purchase situations. The cost benefit associated with external search isundertaken to evaluate the viability of the same. External search will be undertaken andwill continue as long as the shopper perceives the benefits of search to be greater than thecosts involved. The potential benefits of search are

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1. More comfortable feeling about making an informed purchase

2. An increase in the actual chances of making a choice that leads to greater satisfaction.

3. The positive feelings derived from being generally knowledgeable about productand services

4. The pleasure derived from engaging in shopping activity and

5. The high potential monetary payoffs to search

Potential costs of external search include the commitment to time, foregoing otherpleasant activities, and the frustrations or tensions involved as well as any actual monetaryexpenditures such as fuel and parking fees. The costs and benefits are as perceived by theshoppers’, they may not match perfectly with reality. Many factors can influence the amountof external search either by directly affecting the shopper’s cost/benefit perceptions or byindirectly acting as constraint to the process. Some are explained below;

• Market conditions : The characteristics of the marketplace can significantly affect theexternal search behaviour. Availability of information, number of alternatives to considerand location of outlets are some factors. Various research studies lead to conclusionthat the external search is greater if

o prices are higher and price differences between brands are greater,

o Style and appearances are perceived to be quite important

o The shopper suspects that substantial differences may exist between productalternatives

o Buying strategies : shopper often adopt various strategies so as reduce the amountof external search. For example brand loyalty and store loyalty are developedthrough purchase experience.

o Individual factors: The shoppers own characteristics influence the degree of externalsearch activity. For example if the shopper has a greater market experience witha product then the individual will indulge in a lower degree of external search.Likewise open-mindness and self confidence may also affect the search activity.

o Situational factors: a number of situational factors may influence the external search.Search will be reduced when there is a urgency of a need or the amount of availableis limited. Like wise when the store is crowded or when special offers are providedthe search activity will be limited.

o Perceived risk: risk or uncertainty regarding the purchase decision or theconsequences of the decision significantly influences the amount of informationgathered by the shopper. The perceived risk may be financial, functional, physicalsocial or psychological risk.

3. Pre purchase evaluation process

The likelihood of a product being purchased depends on whether it is evaluatedfavorably by the shopper concerned. Evaluation involves those activities undertaken toappraise carefully on the basis of certain criteria, alternative solutions to the problem inhand. The search process determines what the alternatives are and in the evaluation process

NOTES



they are compared so that the shopper can make a decision. In deciding the product orbrand to buy and place of purchase etc. the consumers will rely heavily on their evaluationsof alternatives available for choice. Disliked alternatives are rejected quickly or ignoredcompletely and liked alternatives are considered and compared with the one receiving themost positive evaluation. Although search and evaluation are mentioned as separate stagesthey are undertaken together during decision making.

Before making the purchase decision, the shopper has to decide on various issueslike whether to consider all the brands in the market place or should consideration berestricted to a subset of brands? How should the alternatives be evaluated? Thesefundamental aspects of the evalution process are depicted below;

Determining choice alternatives

A shopper will have number of alternatives from which purchase decision can bemade. However not all alternatives available will be considered by the shopper. Instead asubset will only be taken into consideration. There are actually there subsets of brandswithin the awareness set of alternative viz consideration set, inept set and inert set. Thealternatives considered during decision making are known as consideration set or evokedset. The inert set consists of those choices that the shopper has failed to perceive anyadvantage in buying ie they are neither evaluated positively nor negatively. The inept set ismade up of choices that have been rejected fro purchase consideration by the shopperbecause of unpleasant experience or negative feedback from others.

The consideration set contains only a subset of the total number of alternatives availableto the shopper. Some individuals will have a larger consideration set while for some it willbe smaller. In order to gain entry into the consideration set, the marketers make changes inthe product, price, promotion and physical distribution. In some situations marketers findit beneficial to encourage shoppers to consider not only their brand but competitive brands

Framing consideration set

Evaluating alternatives

Rely on pre-existing evaluations

Construct evaluations

Categorical Process

Piecemeal Process

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as well. This is known as attraction effect. The attractiveness of a given alternative and thechance of it being chosen are enhanced when an inferior alternative is added to the set ofconsidered alternatives.

Framing /constructing the consideration set

Framing consideration set depends on the recall of choice alternatives from memory.However all the alternatives retrieved from memory will not receive consideration. Theshopper may screen the alternatives based on their liking and will generally limit theirconsideration to the alternatives towards which they are favourably predisposed. Theshoppers cannot construct a consideration set based on the internal search of memorywithout prior knowledge of atleast some alternatives. The shoppers may talk to others,search through the yellow pages, consider all brands available at the store and so on. Theretail environment has a greater ability to affect the consideration set of shoppers. Themanner in which the consideration set is framed ie whether based on internal memory orexternal search should be taken into account for designing the marketing strategy

Evaluating alternatives

Once the consideration set is framed the shopper must decide how the consideredalternatives will be evaluated. Two options are available viz., relying on pre-existing productevaluations stored in memory or construct new evaluations based on information acquiredthrough internal or external search.

Pre existing evaluations is based on the prior purchase and consumption experienceswith the product. It may also be based on secondhand experiences ie the impression offriends. The shoppers will be more confident in evaluations derived from actual productusage.

In many situations shopper may be unable to rely on their pre-existing evaluations formaking a choice or may elect not to use these evaluations. They may want to constructnew evaluations. Two basic process may be followed in constructing new evaluations iecategorization process and piecemeal process. According to categorization process,evaluation of a choice alternative depends on the particular category to which it is assigned.In contrast, under piecemeal process an evaluation is derived from consideration of thealternative’s advantages and disadvantages along important product dimensions.

Categorization process takes into account the mental categories existing in the mindof shoppers. The categories can be general or specific and the categories are associatedwith some degree of liking or disliking. If the product is assigned membership to a particularcategory it will receive an evaluation similar to that attached to the category. How a productis categorized can strongly influence the shoppers demand. Marketers use brand extensionto take advantage of categorization. Through brand extension well-known and respectedbrand name from one product category is extended into other product categories. Shoppers

NOTES



evaluation of brand extension depend on their likings of the core brand. The effectivenessof the strategy will be reduced if the product categories of the extension and the corebrand become more dissimilar.

Piece meal process involves constructing an evaluation of a choice alternative usingbits and pieces. First the shoppers must decide the particular criteria or product dimensionsto be used in evaluating choice alternatives. For example in the purchase of television –price, brand, country of origin may be considered. The next step is to evaluate the strengthor weakness of each considered alternative on the basis of particular criteria deemedimportant in making the choice. The shopper may rely on internal or external source ofinformation to make the choice. The shopper may also use cutoffs to make judgmentabout performance. A cutoff is simply a restriction or requirement for acceptableperformance. A shopper may have the upper limit for price of the television to be purchased.If the price exceeds the limit it may not be acceptable. The shoppers may also use certainsignals when judging the product performance. Signals are product attributes that are usedto infer other product attributes. Attributes such as brand name, price and warranty maybe interpreted as signals of product quality. The final step in piecemeal process involvesusing one’s judgment about the performance of the considered alternatives to form anoverall evaluation of each alternatives acceptability. The evaluation strategy may be mainlygrouped as compensatory or non compensatory. Noncompensatory evaluation strategy iswhere a product’s weakness on one attribute cannot be offset by its strong performanceon another attribute. For example the taste of a snack may be good but the calories intakemay be more. In the case of a compensatory evaluation strategy, perceived weakness ofone attribute may be offset or compensated for by the perceived strength of another attribute.For example high price of television would be compensated buy its performance.

The amount of evaluation that occurs depends on the urgency of need, significance ofthe product to the buyer and the degree of complexity of the alternatives involved. Theappraisal of information produced during search may result in several possible results,depending on the extent to which the buyer reconciles his desired and available alternatives.One outcome is that the shopper will stop the search for information as he has found anacceptable product that satisfies the recognized problem. A second possibility is that theshopper may discontinue the search because no product has been identified. A third possibleoutcome is for the shopper to continue searching even though no acceptable alternativehas been found.

The information evaluation process differs under low involvement conditions becauseit mainly occurs after the purchase and not before. The shopper has some expectationsabout the product’s performance and purchases the same based on brand name recognition.After the use of the same the shopper evaluates the brand and develops attitudes towards.If the attitude is favourable it which may lead to repurchase else brand switching occurs.

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II. Shopping

The shopping process involves the actual purchase of the product from a retail outletof the shoppers’ choice. The consumers shop for a variety of reasons. The most obviousreason is to purchase something, but this may not reflect the actual motivation in eachcircumstance. Research studies have found that both personal and social motives influenceconsumer shopping activities. The personal motives for indulging in shopping are;

• Role playing: shopping activities are learned behaviour and are expected or acceptedas part of one’s position or role such as that of a housewife.

• Diversion: shopping offers a diversion from the routing of daily life and is a form ofrecreation.

• Self gratification: shopping is performed not for the expected utility of consumingbut by the utility of the buying process itself.

• Learning about new trend: shopping provides information trends and movementsand product symbols reflecting attitudes and lifestyles.

• Physical activity : shopping can provide a considerable amount of exercise

• Sensory stimulation: shopping is performed for purpose of sensory benefits itprovides such as looking at and handling merchandise, listening to sounds, andsmelling the scents.

• The social motives which initiates shopping are

• It is viewed as a social experience outside the home. Shopping is done mainly forit provides opportunities for seeking new acquaintances, encounters with friendsor just ‘people watching’

• Shopping is performed as it enables communication with others having a similarinterest. It often provides opportunity to interact with customers or sales peoplehaving similar interests.

• Stores provide a meeting place where members of peer group can gather henceshopping is motivated by peer group attraction

• Shopping is motivated by the a feeling of status and power it provides as theshoppers are treated well and waited upon by the sales people

• Shopping may be done for the pure pleasure of bargaining. It is looked upon as anactivity which provides the enjoyment of gaining a lower price through bargaining,companion shopping or visiting special sales.

In this purchase decision process the shoppers decide:

• Whether to buy

• When to buy

• What to buy(product type and brand)

• Where to buy

• How to pay

NOTES



Whether to buy?

The shoppers always has the option of aborting the process for many reasons, includingchanged motivations and circumstances, new information, lack of information etc. Evenafter arriving at the decision to buy a shopper may change his choice in the last minute.

When to buy?

The decision to buy can lead to a fully planned purchase, partially planned or anunplanned purchase. In the case of fully planned purchase both product and brand arechosen in advance. In partially planned purchase situation intent to buy exist but brandchoice is deferred until shopping. In unplanned purchase both the product and brand arechosen at the point of sale.

Fully planned purchase: this type of purchase is encouraged by marketers throughpromotion of brand and store loyalty with advertising and other programs. The plannedpurchase is likely to occur when involvement with the product is high but can also occurwith low involvement purchases. The execution of planned purchase depends on variousin store factors such as the store layout and design, display, ambience, time pressures etc.The purchase may also be interrupted or diverted by the marketing tactics followed likefree samples, price reduction, coupons, point-of-purchase displays or other promotionalactivities.

Partially planned purchase: The shoppers may plan the products they intend topurchase but delay the choice of brand or specific styles or sizes of the product until theyvisit the store. This type of purchase occurs in the case of low involvement purchase. Thefinal brand decision may be influenced by price reductions or special display and packaging.

Unplanned purchase: Research studies indicate that more than 50 percent of itemspurchased by shoppers fall in the category of impulse purchase. The impulse purchase byshoppers are often don in whimsical manner and can be prompted by point of purchasedisplays, price offs etc. Four types of impulse buying may happen;

1. Pure impulse – a novelty or escape purchase which breaks a normal buying pattern

2. Suggestion impulse – a shopper having no previous knowledge of a product seesthe item for the first time and visualizes the need for it.

3. Reminder impulse - a shopper sees an item and is reminded that the stock at homeneeds to be replenished or recalls the previous decision to purchase

4. Planned impulse – a shopper enter the store with the expectation and intention ofmaking some purchase on the basis of price offers, coupons etc.

Five critical elements distinguish impulsive from non impulsive shopper behaviour.They are;

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• The shopper has a sudden and spontaneous desire to act, involving a markeddivergence from previous behaviour.

• The sudden desire to buy puts the shopper in a state of psychological disequilibriumwhere he feels temporarily out of control.

• The shopper may experience psychological conflict in weighing immediatesatisfaction against the long-term consequences of the purchase.

• Shoppers reduce the cognitive evaluation of product features.

• Shoppers buy without any regard for future consequences.

Several product, marketing and consumer characteristics influence the impulsepurchase behavior. Product characteristics like low price, shorter product life cycle, sizeand style etc., Marketing factors like advertising, POP material, store location etc divertsa shopper influencing him to indulge in impulse purchase. Consumer characteristics like thepersonality, demographic and socio economic characteristics are also related to the rate ofimpulse buying.

When a purchase occurs is also affected by the timing factor such as seasonality.Time also affects the price which in turn influences the likelihood of a purchase.

What to buy (product and brand)

The steps involved in arriving at the decision regarding the product or brand is explainedin detail in the previous section during the discussion regarding the pre purchase evaluationphase. The extent to which a shopper develops the repeat purchase pattern is explained inthis section. The marketers strives to have a steady group of unwavering shoppers for itsproduct or service. research reveals that improvement in brand loyalty leads to increase inthe market share. However developing loyal shoppers has become difficult due to severalreasons; similarity of products in terms of form, content and communication, pricecompetition from private and generic labels, sales promotion tactics, high inflation, growthof new products competing for the shelf space and mind space of the shoppers.

A study on repeat purchase behaviour reveals four type of brand loyalty patterns;

1. Undivided loyalty is exhibited when a shopper purchases a brand in a continuousmanner.

2. Divided loyalty is exhibited when shoppers shift between brands in a sequencelike

A B A B A B

3. Unstable loyalty is where the brands are purchased in the following sequence A A A BB B

4. No loyalty is where the shopper buys different brands following the sequence A B CD E F

NOTES



Research studies reveal that the majority of shoppers tend to purchase a favoritebrand or set of brands. The studies conclude that thought the degree of loyalty varies withthe product, the percentage of shoppers exhibiting some brand loyalty is high.

Where to buy

The choice of a retail outlet is made by the shopper at this phase. The detaileddiscussion regarding the various types of retail format available for a shopper to choosefrom was presented in the previous semester course material ‘Retail Management: Conceptsand Environment’. The factors which influence the choice of a retail outlet are listed below;

• Location has an impact on the store patronage. The closer the consumers are tothe store, the greater will be the likelihood of purchase from the store. A detaileddiscussion on the store location is presented in the Unit IV.

• Depth, breadth and quality of assortment are important determinants of store choice

• Store design and physical facility of the store

• Advertising and sales promotion measures undertaken by the retailer

• Employees of the retailer ie the behaviour and attitude of the store personnel

• The customer service offered by the retailer

• Type of shoppers who visit the store

• Pricing practice of the retail store

• Store image

• Store layout and atmospherics’

• Consumer logistic ie the speed and ease with which shoppers mover through theretail and the shopping process

The influence of the above listed factors differ depending on the variables such astype of products involved, the type of store and the type of shopper concerned.

How much to pay

In a purchase process shoppers spend money, time and attention when they buy theproducts. Therefore all the products can be viewed as the having economic, time andcognitive price to be paid by the shopper.

Money and time budgets

Economic theories state that if a person earns more, he spends more in the marketplace. However in present day situation every shopper is having a limit on the time availabilityand how they allocate the time between work and leisure depends on their timestyles.Leisure time is viewed as anything outside than work. Contemporary view of time hasdivided available time into three blocks consisting of paid time, obligated time anddiscretionary time. Discretionary time refers to the leisure time when individuals feel no

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sense of economic, legal, social or physical compulsion or obligation. Nondiscretionary orobligated time includes the time spent for physical obligations, social obligation and moralobligations. The amount of time the shoppers are willing to spend on shopping activitiesoften decreases with the increase in earning. The time available to involve in the complexdecision process reduces which makes brands as important part of buying process.

Shoppers mainly spend on either time saving goods or time using goods. Time usinggoods use the time of the shopper like the TV. Time saving foods can increase the leisuretime of shopper by decreasing the nondiscretionary time expenditure for eg washingmachines, microwave etc. In order to maximize the utilization of time the shopper mayinvolve in polychromic time usage instead of monochromic time usage. Polychromic useinvolves combining activities simultaneously like letting the car for service and using thewaiting time for completion of shopping etc.

Cognitive resources

Cognitive resources represent the mental capacity available for undertaking variousinformation processing activities. Marketers compete not only for the time and money ofshoppers but also for the cognitive resources or attention of shoppers. Attention consistsof two dimensions viz., direction and intensity. Direction refers to the focus of attention.Intensity refers to the amount of capacity focused in a particular direction. Shoppers arecontinuously bombarded with advertisements in TV, radio, print, bill boards and internetapart from point of purchase display – all focused to draw the attention of shoppers. Incase of low involvement products shoppers may act as ‘cognitive misers’ and may notdevote the cognitive resources. Providing too much of information leads to exceeding thecognitive capacity of the shoppers which will lead to confusion.

In addition to the payment to be made in terms of money, time and cognitive resources,the shopper also decides the mode of payment ie cash, credit card , having open accountor payment through internet.

III. Post shopping

This phase involves the activities involved in consumption and post consumptionevaluations.

1. Consumption

Consumption refers to shoppers’ usage of purchased product. Basically an individualcould be groups as either user or non user of the product or service. understanding thebehaviour of user as well as the nonuser is important for a marketer. Analyzing the non userbehaviour will enable to frames strategies for converting them to user which pronouncesthe potential market opportunity. The dimensions of consumption behaviour are depictedbelow;

NOTES



Many products are consumed as soon as the purchase is done. In some casespurchases are made without the knowledge of time of consumption. Understanding thetime when consumption is made would enable to segment eh market based on the whenthe consumption happen. Likewise it is useful to understand the place where consumptionis made. Some happen inside house some at the place of purchase itself. Knowledge onhow the products are consumed would provide impetus for building the marketing mixstrategies. Many shopper purchase the same product yet use the same in different manner.Shoppers may differ substantially in the amount of consumption. The differences inconsumption also provide opportunity for segmenting the user market called as usagevolume segmentation. It leads to three types of users viz., heavy, medium and light users.Understanding the usage pattern will provide input for enhancing the amount of consumption.

Consumption experiences

Consumption experiences refer to the particular feelings experienced duringconsumption. Feeling may be positive or negative. Sometimes they are overwhelming.Often consumption experiences are ordinary and experienced with little feeling. Someconsumption activity may evoke strong feeling when things go wrong. Negative feelingssuch as disappointment, anger and regret may arise when the consumption experiencedoes not measure up to the expectation. Marketers may position their products based onthe feeling experienced during consumption .

The consumption experience may be viewed as rewarding or punishing. It may providepositive reinforcement, negative reinforcement or punishment. A consumption experienceprovides positive reinforcement when the shopper receives some positive outcome fromproduct usage. Negative reinforcement occurs when consumption enables shoppers toavoid some negative outcome. For medication are taken to avoid pain. Sometimes bothpositive and negative reinforcement may happen during consumption. Punishment occurswhen consumption leads to negative outcomes. For example memebership in fitness center

Entire population

User Non user

When is it consumed?

Where is it consumed?

How much is consumed?

How is it consumed?

Proximity to purchase

Time of day Situation A Situation B

Usage 1 Usage 2

Heavy users Medium users

Light users

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may leave a person looking worse than before. A punishing consumption experience isunlikely to be tires again. Also shoppers are less likely to enjoy buying and using negativereinforcement products that positive reinforcement products.

2. Post consumption evaluation

Post consumption evaluation serves several functions. It broadens the shopper’s setof experiences stored in the memory. It also enables to evaluate how the shopper hasperformed in selecting the product, retail stores etc. The feedback the shopper receivesform this stage helps to make adjustments in future purchasing strategies.

Satisfaction is an important element in the evaluation stage. It refers to the buyer’sstate of being adequately rewarded for the sacrifice made. Adequacy of satisfaction is aresult of matching actual past purchase and consumption experience with the expectedreward in terms of its anticipated potential to satisfy the shopper’s motives. Shoppers formcertain expectations prior to the purchase. The expectations may be about

• The nature and performance of the product or service

• The cost and efforts to be expended

• The social benefits or costs accruing to shopper as a result of the purchase.

Advertisement has often an important role to play in forming the expectations. Theshoppers may have a variety of product performance expectations which include theshoppers hope regarding the ideal level of performance, expectations regarding the fairand equitable performance for the amount spend and what the consumer expects toactually occur.

The interaction between expectation and actual product performance produces eithersatisfaction or dissatisfaction. However there is no direct relationship between the level ofexpectations and the level of satisfaction. There exist a modifying variable known as‘disconfirmation of expectations’ which mediates the situation. When a shopper does notget what is expected, the situation leads to disconfirmation. Disconfirmation can be of twovarieties: a positive disconfirmation occurs when what is received is better than expectedand a negative disconfirmation occurs when things turn out worse than anticipated. If theshopper is satisfied with the usage of product or service it results in more favorable postpurchase attitudes, higher purchase intentions and brand loyalty. However, even if satisfieda shopper may not repeat the purchase for want of novelty or variety. Of the shopper isdissatisfied they are likely to exhibit less favourable post purchase attitudes, lower or nonexistent purchase intentions, brand switching, complaining behaviour and negative word ofmouth.

NOTES



Dissonance

Cognitive dissonance is a psychological state which results when a person perceivesthat two thoughts, both of which he believes to be true, do not ‘fit’ together ie inconsistent.The dissonance occur as a result of discrepancy between a consumer’s decision and theconsumer’s prior evaluation. A shopper who encounter some problems with the brandpurchased will be in a state of post purchase dissonance.

Dissonance occurs in the following situations

• When a shopper passes the minimum threshold of dissonance tolerance

• When the action is irrecoverable. For example after the purchase of a product, itcannot be returned and money cannot be refunded.

• Unselected alternative have desirable features.

• There are several desirable alternatives

• Available alternatives are dissimilar in their qualities

• The buyer is bound to his decision because of the psychological significance

• There is no pressure applied to the shopper to make a decision.

Dissonance will be strongest for the purchase of durables, though it can exist foralmost every purchase.

Dissonance reduction

A shopper tries to reduce dissonance through the following ways;

1. Changing product evaluations

The shoppers may try to reevaluate the product alternatives in order to reduce thedissonance. The shopper may enhance the attributes of the products selected whiledecreasing the importance of the unselected product’s attributes. The shopper may alsoreevaluate the products alternatives to view them as being more alike than was thought atthe purchase stage. In addition the shopper may resort to selective retention so as to forgetthe positive features of the unselected alternatives and negative features of the chosenproduct while remembering the negative attributes of the unchosen item along with thepositive features of the selected product.

2. Seeking new information

The shopper may try to reduce the dissonance by seeking additional information inorder to confirm the correctness of the product choice. The dissonance theory suggeststhat the dissonant individuals would actively avoid information that would tend to increasetheir dissonance and seek information supporting their decision.

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3. Changing attitude

The shopper may try to reduce the dissonance by changing the attitude so to makethem consonant with his behaviour. The shoppers resort to changing the attitude because itis easier than reversing the act of purchase. The shopper reevaluates the product andadopts positive attitude towards it so that consonance can be achieved.

2.5 DIFFUSION OF INNOVATIONS IN RETAIL CONTEXT

Innovation is an essential element for a retailer not only to sustain but to succeed in thecompetitive retail scenario. Innovations may happen in the type of products dealt, pricingstrategy followed, positioning methods, retail image built , distribution methods adopted,sales promotion offers to shoppers , display and layout of the retail store, sign boardsused, etc. In the present scenario, where more retailers are competing to capture the mindspace and pocket space of shoppers, the retailer has to be innovative in order to attractand retain the shoppers.

2.5.1 Diffusion process

The diffusion process is concerned with how innovations are spread. Diffusion can bedefined as the process by which the acceptance of innovation (new product, service, ornew practice) is spread by communication to the members of a social system (target market)over a period of time. Communication refers to mass media, sales people or informalcommunication. The concept of diffusion is closely related to adoption process. In thebroadest sense, diffusion is a macro process concerned with the spread of an innovationfrom its source to the consuming public. In contrast, adoption process is micro that focuseson the stages through which an individual consumer passes when deciding to accept orreject an innovation. A retailer intending to differentiate himself from the competitor shouldnecessarily innovate. The success or failure of a new product(Product here includes theservices or new ideas )depends on the process by which innovations spread. The retailer/marketer usually would like to secure the largest amount of adoption within the shortestperiod of time. A retailer needs to understand the diffusion process so that he can properlymanage the spread of new product.

As per the diffusion mentioned above, diffusion process involves four basis elements(1) innovation (2) the channel of communication (3) the social system and (4) time. Theelements are discussed below;

1. The Innovation

Various approaches have been taken to define new producer a new service; thesecan be classified as firm, product , market and consumer oriented definitions of innovations.

NOTES



Firm oriented definitions

A firm oriented approach treats the newness of a product from the perspective of thecompany producing or marketing it. When a product is ‘new’ to the retailer it is considerednew. The product may not actually be new in the marketplace either to the shopper or tothe competitor. This concept would be useful to examine the impact of new product/service/idea on the retailer.

Product oriented definitions

A product oriented approach focuses on the features inherent in the product itself andon the effects of these features on the shoppers established usage pattern. Three types ofproduct innovations are listed based on the degree of innovativeness.

• A continuous innovation has the least disruptive influence on the established pattern.It involves the introduction of a modified product rather than a totally new product.

• A dynamically continuous innovation is more disruptive than a continuous innovationbut still does not alter established beahviour patterns. It involves creation of a newproduct or modification of an existing product.

• A discontinuous innovation requires shoppers to adopt new behaviour patterns. Itis a product that is so new that the shoppers have never known anything like itbefore. The ipod, cell phone, microwave ovens etc have all been into this categoryat the time of introduction in the market place.

Market oriented definitions

A market oriented approach judges the newness of a product in terms of how muchexposure the shoppers have to the new product. Two definitions have been extensivelyused;

1. A product is considered new if it has been purchased by a relatively small percentageof potential market.

2. A product is considered new if it has been on the market for a relatively shortperiod of time.

Shopper oriented definitions

A’ new ‘ product is any product that a potential shopper judges to be new. Newnessis based on the shopper’s perception of the product, rather than on physical features ormarket realities. This approach is mostly used by the advertisers and marketers to buildtheir strategies.

In addition to the above, innovations can also be characterized on other ways;

• Functional innovations offer functional performance benefits over existingalternatives. Often functional innovations involve new technology that lets themperform better than existing alternatives. For example printer with scanner andphotocopying facilities

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• Aesthetic or hedonic innovations are new products, services or ideas that appealto our aesthetic, pleasure seeking and /or sensory needs. For example, performeddresses, new food varieties etc

• Symbolic innovations are products, services, attributes or ideas that have newsocial meaning. In some cases symbolic innovations involve a new offerings that isused exclusively by a particular group of shoppers.

Many products represent blends of these innovation types. The innovations may alsohave breadth. Breadth of innovation refers to the new and different uses to which a newproduct is put.

2 The channels of communication

The quickness with which an innovation spreads in the market depends to a greatextent on communications between the marketer and the shopper as well as thecommunication among the shoppers through word of mouth. Both the impersonal sourceslike advertisements and the interpersonal sources like the sales people and opinion leaderhave an influence on the communication. A variety of new channels of communicationshave developed in the recent years to inform the shoppers regarding the innovative productsand services. Interactive messages where the shopper can play an active role instead ofbeing passive to the message given, Internet communications in the form of chat, newgroups, blogs, consumer shows and exhibitions are also used for communicating informationregarding the innovations.

3. The Social system

The diffusion of innovations usually takes place in a social setting ie the market segmentor the target market at whom the innovation is aimed at. The social system is the physical,social or cultural environment to which people belong and within which they function. Thesocial system serves as the boundary within which the diffusion of new product happens.Every social system has its own norms or values which influences the acceptance or rejectionof the new products. When a social system is modern in orientation the acceptance ofinnovation is likely to be high. If it is traditional, then the innovation may take time foradoption or it may be rejected.

4. Time

Time is the crucial element in the diffusion process. The diffusion of innovation isbasically dependent on the time for understanding three different concepts viz., the amountof purchase time, the adopter categories and the rate of adoption. The purchase timerefers to the amount of time that elapses between the shopper’s initial awareness of theproduct or service and the point at which they purchase or reject it. purchase time isimportant because the average time a shopper takes to adopt a new product enables topredict the overall length of time it will take for the new product to achieve widespreadadoption. For example if the individual purchase time is short, the overall rate of diffusionwill be faster.

NOTES



The adopter categories is explained in the next section. Rate of adoption is concernedwith the time it takes a new product or service to be adopted by members of a socialsystem. It deals with how quickly it takes a new product to be accepted by those who willultimately adopt it. In general it is felt that the diffusion of products worldwide is becominga more rapid phenomenon. Retailers or marketers in general would like a rapid rate ofproduct adoption so as to penetrate the market and quickly establish market leadershipbefore the competitors capture the market. In some situations marketers might prefer toavoid rapid rate of adoption for a new product. In this situation they may follow a skimmingprice policy where the products are initially sold at a high price and then gradually the pricemay be reduced. In addition to time taken for adoption of a product, the extent of adoptionshould also be given equal importance.

2.5.2 The adoption process

Adoption is a major process in the diffusion of innovation. The adoption processrefers to the stages through which an individual shopper passes through while arriving at adecision to try or not to try or continue using or discontinue using a new product. Theacceptance and continued use of product or brand by an individual is referred to as‘adoption’. The adoption process is depicted below;

1. Awareness : At this stage the potential adopter finds out about the existence of aproduct but has only little information and no formed attitude about the product.

2. Comprehension: The shopper at this stage gather information and understand thedetails regarding the product and its functionality.

3. Attitude: the shopper develops favourable or unfavourable behaviourialpredispositions toward the product . If the shopper develops an unfavourableattitude towards the product it will lead to termination of the adoption process.

Adoption

Trail

Legitimationn

Attitude

Comprehension

Awareness

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4. Legitimation : in this stage the individual concerned is convinced about the productand decides to adopt the same. The shopper may use information already gatheredas well as additional information in order to reach the decision.

5. Trial : shopper may test or tries the product to determine its utility. Trial may takeplace cognitively, or use the same in a limited or total way depending on theinnovation’s nature. Cognitive trail refers to the vicarious use of the product in anhypothetical situation.

6. Adoption. At this stage the shopper determines whether or not to use the productin a full scale manner. Continued purchase and use of the time fulfills the adoptionprocess.

Adoption is thus viewed as a sequence of events through which individual pass overa period of time. Some shoppers pass through the stages mentioned above as soon as theproducts are introduced in the market ie in the early stages of product’s life while somemay do so much later. Shoppers may be grouped on the basis of time of adoption. This willenable the retailer to categorize individuals into groups which has the similar characteristics.The information may be used for segmenting the market based on the type of the adopterand frame suitable strategies. Five categories are identified view, innovator, early adopter,early majority, late majority and laggard. The characteristics of each of these groups asidentified from the research studies are summarized below.

1. Innovators

This group form only 2.5% of a market. They are first to adopt new products. Theyare quite venturesome and are eager to try new ideas. They have more risk capital and canafford to take calculated risk. Innovators are well-educated, come from well- establishedfamilies and are cosmopolitan, having friends outside the community. Their sources ofinformation also are not depended only on their local community.

2 Early adopter (13.5% of the market)

They are the second group to adopt an innovation. This group si more socially integratedlocally than the innovators and has the greatest degree of opinion leadership in most socialsystem. They are respected as good sources of information and advice about innovation.Hence they play an important role in diffusion process. They keep track of innovators andadopt the innovation which appears successful. They are ahead of average individual ininnovativeness and hence look upon by others as role model. They have less risk capitalthan the innovators.

They are younger than later adopters, higher in social status and above average ineducation. They read more than the later adopters and rely on the information provided bysale people. When early adopters begin buying something new, retailers watching the productmoving are likely to advertise it more heavily and display it prominently in stores.

NOTES



3. Early majority(34% of a market)

This is the next group to adopt an innovation and is the most deliberate of all adoptercategories. The individuals in this segment may consider an innovation for some time beforeadopting. Their adoption period is longer than that of the two previous groups. They areabove average in age and education and in social and economic status. They rely heavily ofthe informal sources of information that do the earlier adopters. They depend on theinformation from sales person , neighbours and friends of early adopters.

Late majority (34 % of a market)

This category of shoppers adopts an innovation just after the average consumer in themarket place. They are skeptical about new ideas and may yield only because of economicnecessity or increasing social pressures. Those in late majority are above average in ageand below average in education, social status and income. They rely heavily on informalsources of information and influence.

Laggards (16 % of a market)

They are the last group to adopt an innovation. They are traditional bound and dependon the decision made in the past. They are suspicious of innovations and the length of theadoption process for this group takes a long time. when they start adopting the productnew innovation is likely to be introduced in the market superseding the previous innovation.

The above categorization may be used by the retailer to frame strategies regardingpromotion, pricing etc.

2.5.3 Factors influencing adoption, resistance and diffusion

The rate of diffusion may range from several weeks to several decades. The successof a new product depends on how many shoppers in the market adopt the same and howquickly it is adopted. Hence the retailers need to understand the factors that lead to adoptionor resistance and diffusion. The adoption of a new product depends on the characteristicsof the innovation and the social system in which it is diffused. These aspects are discussedbelow;

Characteristics of innovation

There are six product characteristics that seem to influence the rate and extent ofadoption of an innovation ;

1. Relative advantage is the degree to which an innovation is perceived as superiorto the existing products in the market. It may be in terms of longer life, easiermaintenance, more funcationality etc. The products that have a strong relativeadvantage will be adopted more rapidly.

2. Compatibility is the degree to which an innovation is consistent with exiting valuesand past experiences of adopters. New product that is not compatible with theshopper’s norm will face difficulty in acceptance.

3. Complexity refers to how difficult the innovation is to understand and use. Complexitems will take a longer time to diffuse in the market.

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4. Trailability or divisibility is the extent to which an innovation may be tried on alimited basis. If a product cannot be used on trail in the form of samples on a lessexpensive scale, diffusion will be retarted

5. Observability or communicability refers to the conspicuousness on the innovation.If a new product is highly visible in social situations it will be communicated mostreadily to other shoppers.

6. Cost refers to the magnitude of the financial resources required to obtain andoperate the innovation. Innovations high in cost would generally diffuse more slowly.

Not all shoppers accept innovation. The disruption which they may have to undergowhile accepting the innovation may cause them to resist the same. The shoppers maysometime resist an innovation to maintain a status quo. The characteristics of the shopper,the innovation and the market factors have a direct effect on the adoption process.

2. Characteristics of the social system

The characteristic of social system in which the innovation is introduced also affectsthe resistance, adoption and diffusion. The kind of people who represent the target marketfor the innovation and the nature of relationships among the people in the social systemaffect the acceptance of innovation in the market.

• Modernity: Modern systems are those that have a positive attitude towards change.The extent of modernity of the target segment affects the resistance or adoption ofan innovation. The more modern the target segment is the more receptive theshoppers would be towards innovations.

• Homophily: homophily refers to the overall similarity among members in the socialsytem. The more similar the market is in terms of education , values, needs andincome , the faster will be the diffusion process. This is because similar peopletend to model each other. They also interact easily due to similar backgroundwhich will enhance the process of diffusion.

• Physical distance: It refers to the physical distance between the members of asocial system. When member of a social system are spread apart, diffusion tendsto be slower.

• Opinion leadership: They are the key influencers in the diffusion process. Theyspread positive or negative information to a great number of shoppers.

Characteristics that encourage rejection

The innovation or product characteristics which were listed in the previous sectioncould cause the shoppers to reject an innovation viz., lack of relative advantage,incompatibility with previous habits and experiences, complexity, lack of observability,high cost and inability to try the products. This factors can be groped as three majorbarriers to adopting an innovation; value barrier, usage barrier and risk barrier.

• Value barrier refers to product’s lacks of relative advantage compared with thesubstitute products. Retailers can overcome the value barriers by reducing theprice and by conveying information to convince the shippers regarding the productsvalue.

NOTES



• Usage barrier occurs when an item is not compatible wit the shoppers existinghabits or practices. The opinion leaders can play a mjor role in influencing andconvincing the shoppers to change their needs and habits then the commercials.

• Risk barrier represents shoppers’ physical, economic, performance or social riskof adopting an innovation. Technological improvement and consumer educationcan overcome the perceived risk. Offering trail is a most effective way ofovercoming the risk barrier.

Retailers should attempt to identify the non adopters of an innovation so that strategiescan be framed to convert them to adopters. The non adopters can be divided into severalgroups viz., passive shoppers, active rejectors and potential adopters. . Passive shoppersare those who have tried the product but are unlikely to provide much information toothers about the same. Active rejectors are those who have tried the product but are likelyto provide unfavourable WOM to others. Potential adopters are those who have not yettried the product but who may be influenced by active rejectors, active acceptors or themarketers. Potential adopters may not be adopting the product because of lack ofawareness. Advertising may enhance the chance of adoption. Product improvements maybe tried for active rejectors. Thus different strategies should be followed for different adoptergroups.

SUMMARY

This unit has provided an insight into the dimensions and approaches to the shoppingbehaviour. The various stages viz., shopping process viz. preshopping, shopping, postshopping were explained in detail. Four element in the diffusion process viz., the innovation,communication, social system and time were discussed. The steps involved in adoption ofan innovation were highlighted. The categorization of adopters viz., innovators, early adopter,early majority, late majority and laggards and their profile were dealt. The reason for nonadoption or resistance were also highlighted. This unit provides an insight into the shoppingprocess which acts as the platform to understand the internal influences on the shoppingbehaviour dealt in Unit 3.


• Discuss the various approaches to the study of shopping behaviour.

• Explain the various stages involved in the shopping decision process.

• What are the stages involved in the adoption of an innovation.

• Highlight the elements involved in the diffusion of an innovation.

• Explain with example the extended problem solving, limited problem solving andhabitual decision making situations.

• Explain the reason as to why a retailer should know the shopping decision process.

• A retailer finds that an innovative product introduced in his outlet is not purchasedby the shoppers. What strategies would you recommend him to make the shoppersadopt the product?

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NOTES



UNIT III

INTERNAL INFLUENCES ON SHOPPINGBEHAVIOUR

3.1 INTRODUCTION

The quality of retail strategy depends on how well a firm indentifies and understandsthe shoppers and forms its strategy mix to appeal to them. This requires a through knowledgeon the decision making process of a shopper and the various factors influencing theshoppers’. Unit II has provided the input regarding the preshopping, shopping and postshopping behaviour. With this background knowledge, the present unit aims to provideinput regarding the internal influences on the shopper behaviour. The internal factors canbe broadly categorized as personal and interpersonal influences. Personal influences dealswith : attitude, perceptions, learning, personality and self image and lifestyle. Interpersonalvariables include communications and persuasion, family , group and store employees.These personal and the interpersonal variables are explored in detail in this unit.


After reading this unit you will be able to understand;

• The nuances of attitude formation, theories on attitudes and strategies to changeattitude

• Role of perception in decision making process

• Learning theories

• Influence of personality and self image on the shopper behaviour

• Strategies for framing persuasive communication

• Stages in family life cycle and role of family in decision making

• Reference group influences on the shopper behaviour

• Functions of store employees and their influence on the shopper behaviour

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3.3 PERSONAL INFLUENCES

The influence of select personal variables on shopping behaviour is dealt under thissection. The personal variables dealt are: attitude, perceptions, learning, personality andself image and the lifestyle of the shoppers.

3.3.1 Attitude

Attitude plays a pertinent role in the shoppers’ behaviour. The consistency of purchasesmade by the individuals, recommendations to others regarding products, preferences forproducts or the retail store, their beliefs, the process of evaluations of alternatives andintentions are all related to attitudes. Attitude is a learned predisposition to behave in aconsistently favourable or unfavourable way with respect to a given object. The wordobject refers to product, brand, service, possessions, advertisement, cause and issues,cause, retailer, price etc. Attitude is generally learned. This means that attitudes relavant toshopping behaviour are formed as a result of direct experience with the product or situation, word-of-mouth, internet , advertisement, direct marketing etc. Attitudes are relativelyconsistent with the behaviour they reflect. However attitudes are not necessarily permanent,they can be changed. Attitude occurs within and is affected by the situation. Situationrefers to events or circumstances that influence the relationship between and attitude andbehaviour at a particular point of time.

Attitude can also be said as a relatively global and enduring evaluation of object,issue, person or action. Attitudes are overall evaluations that express how much an individuallike or dislike an object or an action. Shoppers’ frame attitude towards products, brands,advertisements, retailer stores etc and a retailer should understand the same in order tocreate a favourable attitude or to change an unfavourable attitude.

Attitudes are important because they serve several functions. These functions weredealt in the previous semester course material ‘Retail Management : Concepts andEnvironment’. Recalling the same reminds us four distinct function of attitude viz.,

• The adjustment function directs people towards pleasurable or rewarding objectsand away from unpleasant, undesirable ones. Attitude of an consumers depend toa large degree on their perception of what is need satisfying and what is punishing.

• Ego-defensive attitudes help to protect the ego or self-image from threats. Forexample a consumer who has made a poor decision may defend the decision ascorrect.

• Value expressive attitudes enable the expression of the person’s centrally heldvalues. Consumers adapt certain attitudes in an effort to translate their values intosomething more tangible and easily expressed. Marketers who understand thevalues which consumers want to express and design products and promotionalcampaigns to fulfill the same will be successful in their efforts.

NOTES



• Knowledge function - The need for understanding things around us develops theattitude towards acquiring knowledge. The need to know tends to be specific.Thus out of the need to know come attitudes about what we believe we need ordo not need to understand.

In simple words, attitude performs the following functions;

• Guide an individual’s thoughts called as cognitive function

• Influence the feeling called affective function

• Affects our behaviour called as connative function

Attitude influences the acquisition, consumption and disposition of an offering. Thusattitude play a major role in deciding what an individual does, what he consumes, how heconsumes, where he shops etc.

Characteristics of attitudes

Attitude can be described in terms of the following characteristics;

• Favourability – how much an individual likes or dislike an object

• Attitude accessibility – an accessible attitude is one that can be easily and readilyretrieved from memory

• Attitude confidence or strength refers to the extent to which a shopper holds theattitude in confidence. Sometimes attitudes are very strong and held with greatdeal of confidence. In other cases a shopper may not be very certain

• Persistence or endurance refers to time until when the attitude is held. Some mightlast for a extremely long time,while others may be short lived.

• Resistence to change refers to the ease with which the shopper’s attitude towardsproduct or brand can be changed. In general attitudes are difficult to change.

Forming and changing attitudes

Marketers need to understand how the shoppers’ attitude is formed so as to createor affect consumer attitudes towards his offerings. This knowledge provides usefulinformation about how attitudes about existing offerings or established shopping behaviourcan be changed. The following diagram conceptualizes the attitude formation and changeprocess;

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The kind of information used by shoppers to frame their attitudes forms the base forattitude formation and change. From the above diagram several basis of attitude formationcan be identified. Some views hold that attitudes are based on cognitions or beliefs ieattitudes are based on the thoughts about the information received. The information maybe received from external or internal source discussed in the previous unit. Attitudes canalso be based on emotions. A shopper may have a favourable attitude about an offering(clothes,music, product etc.,) simply because it feels good or seems to be right.

The next issue affecting the attitude formation and change is the amount of thinking orelaboration the shoppers put forth in forming and changing their attitudes. In some casesthe shoppers motivation, ability and opportunity(MAO) is high, in which case a lot of effortis devoted, along with mental energy and involvement in the act of forming or changingattitudes and making decisions. The term central route processing is used to describeattitude formation which is based on a careful and effortful analysis of the true merits orcentral issues contained within the message.

Attitudes are based on

Cognitions Affect

(thoughts) (feelings /emotions)

Cognitive

(thoughts)

Affect

(feelings/emotions)

High

Central-route

Processing

• The cognitive

response model

• The expectancy

value model

• Emotional

processing

• Attitude toward

the ad

Low

Peripheral-route

Processing

• Simple beliefs

• Simple inferences

• Attributions

• Heuristics

• Classical

conditioning

• The mere

exposure effect

• Mood

• Affect transfer

Shoppers’ Elaboration of a message (based on their motivation, ability and opportunity (MAO)

NOTES



When the motivation, ability and opportunity is low, the shoppers’ attitudes are basedon a more tangential or superficial analysis of the message, not on an effortful analysis of itstrue merits. The term peripheral-route processing is used describe the attitude formationand change processes that involve limited effort on the part of the shopper.

Further discussion regarding attitude formation and change are presented under twomain headings : (1) high effort (2) Low effort

I. Attitude formation and change : High effort

The shoppers devote a lot of effort to process information and make choices. Themarketers can influence their attitudes either

• Cognitively – influencing their thought or the beliefs

• Affectively – influencing the emotional experiences

The attitudes formed can be influenced by the marketers through the characteristicsof source used in a persuasive communication or through the type of message used orthorugh a combination of both. The attitude thus formed may play a powerful role ininfluencing the shoppers’ intention and their actual behaviour. The following diagram providesthe framework for further discussion;

Attitude formation and change : High Effort

Cognitive bases of attitudes • Cognitive response

model • Expectancy-value

model

Affective bases of attitudes • Emotional

processing • Attitude towards

advertisement

Influencing cognitively based attitudes • Source factors

Credibility Reputation

• Message factors - Argument quality

- One sided Vs two sided messages

-Comparative messages

Influencing affectively based attitudes • Source factors

- Similar sources

• Message factors

- Emotional appeals - Fear appeals

Attitudes and Intentions

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Cognitive (Thinking ) basis of attitude

A number of theories are proposed to explain the cognitive bases of attitudeswhen the shoppers are likely to put lot of effort to process information and make decisions.Two theories are highlighted below viz., (1) cognitive response model and (2) Expectancy-value model

1. Cognitive response model

The basic idea behind the cognitive response model is that the shoppers’ reactions tothe message affects their attitudes. Cognitive responses refer to the thoughts that arise inthe minds of a shopper when he is exposed to a communication. The thoughts can take theform of recognitions, elaborations, associations, images or ideas. The cognitive responsemodel predicts that the spontaneously generated response will determine the attitude. Threecategories of responses to communications have been identified through research studies;

- Counter arguments are thoughts that express disagreement with the communication

- Support arguments are thoughts that express agreement with the message

- Source derogations are thoughts that discount or attack the source of message.

According to the cognitive response model, the above responses will affect theshoppers’ attitudes. Counter arguments and source derogation will result in a less favourableinitial attitude or resistance to change attitude. It can be seen that according to cognitiveresponse model the shoppers exert a lot of effort in responding to the message by generatingthe above said responses.

2. The Expectancy- Value Model

The expectancy model is widely used to explain the formation and change in attitude.According to this model attitudes are based on

- Beliefs or knowledge of the shopper about an object or action

- Their evaluation of these particular belief

A variety of expectancy value model that differ in terms of components of attitudehave been proposed. The models vary as to whether they are examining the individual’sevaluation of an attribute or its importance and how these components are measured. Thetheory of reasoned actin(TORA) is one of the most widely used model for understandingattitudes. The model provides an expanded picture of how,when and why attitudes predictsbehaviour. The TORA model includes not only formation and change of attitude buy howpeople in the social environment influence the behaviour.

NOTES



Influencing cognitive based attitudes in case of High effort

The attitude can be formed or changed by influencing the source or the message orboth.

Influencing through the source

When information processing is done with high effort the shoppers whose attitudesare based on cognitions are likely to be influenced by believable information. The messagesshould generate support arguments, restrict counter arguments and source derogationsand increase the belief strength i.e. it must be credible. Spokes persons creditability andcompany reputation enhances the credibility of a message.

• Credible sources are thought to have the characteristics of trustworthiness, expertiseand status. Marketers generally use celebrity, an actor, a company representativeor a real shopper as spokes person to endorse the message. Credible sourceshave considerable impact on the shopper’s acceptance of the message particularlywhen their previous attitudes are negative or when the message deviates from theirprior beliefs and when the message is complex to understand.

• Many marketing communication do not feature an actual person. In these situations,shoppers’ judgments of credibility are formed from the reputation of the companythat is delivering the message.

Influencing through the message

The credibility of a message is evaluated through three factors mentioned below;

• Argument quality: Strong arguments increase the quality of the message. Argumentsare considered to be strong when they present the best features of an offering in aconvincing manner. If the message is weak, the shoppers may not be convinced tobuy the product/service.

• One versus two sided messages: Majority of marketing messages present onlypositive information which is called one-sided message. Two sided message arethose containing both positive and negative information about an offering. Twosided message will enhance the credibility of the marketing concern and also bemore appealing to intelligent shoppers who prefer more balanced and less biasedmessages.

• Comparative messages : comparative messages show how much a concern’soffering is better than that of the competitor’s. Indirect comparative message referto messages in which offering is compared with unnamed competitors. in case ofdirect comparative advertising, advertisers explicitly name a competitor set ofcompetitors against whose product the offering is positioned.

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Affective (Feelings) basis of attitude

Most of the research on attitude is focused on the cognitive model of attitude formation.However the shoppers exert a lot of mental energy in processing the message on anemotional basis. Emotional reactions serve as a powerful way of creating attitudes that arefavourable, enduring and resistant to change. This section discusses when and how attitudesthat can be changed through shoppers feelings when the processing efforts and MAO ishigh.

(1) Emotional processing

If the affective (feeling) involvement towards an object or decision is high, the shopperscan experience strong emotional reactions to stimulus such as anger, fear, joy etc and thesefeeling in turn influence attitudes. High involvement in an advertisement can be created byappealing to emotions of shopper. Negative emotions can sometimes have a positive effecton attitudinal change. For example showing the sufferings of a polio affected person in apolio vaccination campaign. It is important to note that cognition can still influence whetherexperienced feelings will influence the shopper’s attitudes. The shoppers must link the‘feelings’ to ‘thoughts’ so that the feelings will have a direct impact on the attitudes. Evenif an emotional advertisement is viewed it should be linked positively by thought to theoffering, then only it will have an impact on the attitude.

(2) Attitude towards ‘ad’ model

Attitude towards ad model tries to create an understanding regarding the impact ofadvertising or other promotional measures on consumer attitude toward product or brand.The model states that the consumers form various feelings and judgments as the result ofexposure to an advertisement. These feelings and judgments in turn affect the consumer’sattitude toward the advertisement and beliefs about the brand acquired from exposure tothe advertisement. Finally, the consumer’s attitude towards the ad and belief about thebrand influence his attitude toward the brand.

Influencing affectively based attitudes

When the attitudes are affectively based the characteristics of source and the messagecan be used to change the shopper’s attitudes by emotion.

Influencing through source

Perceived attractiveness is an important characteristic affecting the affectively basedattitude. Source can be perceived as attractive if they are made similar to the target segmentof shoppers, likable or familiar. Attractive sources evoke favourable attitude if they areappropriate for the product category. The attractive source enhances the attitudes, eitherby making the ad informative or by affecting the shoppers belief that the product must begood. When the source is attractive but not relevant it can distract the shopper away fromthe idea of the message. The relationship between attractiveness and attitude change appliesto selling encounters also. The shoppers are more attracted to and buy from sales peoplethey perceive similar to themselves and they are more likely to perceive physically attractivesale people as having more selling skills and they are more likely to yield to their request.

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Influencing attitudes through message

The characteristics of message that influence the formation and change in the attitudeare

• Emotional appeals: marketers try to influence the shopper attitudes by usingappeals that elicit emotions such as love, wanting, joy, hope, excitement, daring,fear, anger, shame or rejection. First five emotions can be used to attract shoppersto the offering whereas the last four would be used to create anxiety among theshoppers about what might happen if they do not use the offering.

• Fear appeals: Fear appeals attempt to elicit a specific kind of emotional responseof fear or anxiety by stressing the negative consequences of either engaging or notengaging in a particular behaviour. By arousing fear marketers hope that theshoppers will be motivated to think about the message and behave in the desiredmanner.

Predicting behaviour using attitudes

The marketers need to know whether, when and why attitudes predict behaviourapart form knowing how attitudes are formed and how they can be changed. The findingsof the research studies have thrown light on many factors that can affect the influence ofattitudes on the behaviour. They are listed below;

1. Level of involvement/elaboration: Attitude are more likely to predict behaviourwhen cognitive involvement is high. The shoppers have more actively processedinformation, the attitude is more likely to be based on strongly held beliefs, therebyresulting in stronger conviction.

2. Knowledge and experience: Research findings show that attitudes are morestrongly related to behaviour when the consumer is knowledgeable about orexperienced with the object.

3. Accessibility of attitudes: If an attitude is accessible or in the ‘top of the mind’and is easily remembered it will be strongly related to behaviour. Product usage ordirect experience generally increases attitude accessibility.

4. Attitude confidence: If the shopper is more certain about the evaluations theconfidence will be stronger and it will be related to the behaviour. Confidencetends to be stronger when the attitude is based on either a greater amount ofinformation or on more trustworthy information.

5. Specificity of attitude : Attitudes will be more related to behaviour when it ismeasured with respect to a specific beahaviour which is attempted to be predictedrather than being general.

6. Situational factors: Intervening situational factors can prevent a behaviour frombeing performed and can thus weaken the attitude-behaviour relationship

7. Personality variables: The personality of a shopper will have an impact on theattitude behaviour relationship.

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II. Attitude formation and change : Low effort

In contrast to the shoppers in high-effort situations, low-elaboration shoppers areeither not willing or not able to exert a lot of effort and emotional resources to process theinformation received from various communication sources. The shoppers are not motivatedto process the message because ti is not relevant to their needs, values and goals or itinvolves a decision about which the shoppers feel little risk. The shoppers may also exertlow effort due to

o Lack of sufficient knowledge to decipher the meaning

o Message is in a incompatible format

o They are not mature enough to process the message

The shoppers frame attitude not on the basis of detailed consideration of meassagebut on easily processed aspects of the message called peripheral cues and hence it iscalled as peripheral route to persuasion. As in the case of central route to persuasion whenthe effort is high, here also there are two peripheral routes to persuasion ie cognitive and anaffective route. The concept is depicted below;

Attitude formation and change : Low Effort

Cognitive bases of attitudes • Simple beliefs - Simple inferences - Attributions - Heuristics

Affective bases of attitudes • Mere exposure effect • Classical conditioning • Attitude towards ad • Mood

Influencing cognitively based attitudes • Source factors

Credible sources • Message factors - category and schema consistent information -large number of message arguments -simple messages -involving messages • Context factors -message repetition

Influencing affectively based attitudes • Source factors -Attractive sources -Likable sources -Celebrity sources • Message factors

- Pleasant pictures - Music, humor, - Emotionally involving

messages • Context factors

Message repetition Program or editorial context

Attitudes and Intentions

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Cognitive bases of attitude: Low effort

Simple belief affects the shopper’s attitude when the processing effort is low. Beliefsmay not be strong because the shopper might not have processed the message deeply.ince the beliefs are not very strong, marketers may change the same successfully.

Simple beliefs are formed by forming simple inferences which is based on easilyprocessed peripheral cues in the advertisement. Alternatively shopper may form simplebeliefs based on their attributions or explanations for an endorsement. If shoppers attributean endorsement to the endorser’s desire to earn a lot of money they will not perceive themessage as believable. The shoppers may use their prior knowledge to form heuristics i.e.simple rules of thumb that are easy to invoke and involve little cognitive effort. A specialtype of heuristic is the frequency heuristic where the shopper simply form a belief based onthe number of supporting arguments.

Influencing cognitively based attitudes

Marketers should consider several factors when trying to influence cognitively basedattitudes. Three major characteristics of a communication that can be used to influence theattitudes are the source, message and the context

(1) Source

Credible sources can serve as peripheral cues when the effort is low. Message relevantarguments are not actually processed as in the case when the processing effort is high. Thesource experitise is used as simple cue in making judgment about the credibility of themessage. Little cognitive effort is only involved in making judgment.

(2) Messages

Messages include the category and schema consistent information, large number ofmessage arguments, simple messages and involving messages.

Many elements of a communication may be used to affect the inferential beliefs thatshoppers form from a message. In designing ad marketers should place considerableattention on the immediate association the shoppers may have to easily processed visualand verbal information in a message. This is referred as the category and schema consistentinformation.

Instead of presenting lot of detailed information about the offerings, the marketersshould provide simple message that communicates one or two key pints because shoppersmay be easily overloaded with information.

Marketers include certain elements in the advertisements that focus on enhancing theshopper’s involvement in the message so that it will increase their likelihood of messageprocessing. Self referencing will enhance the involvement. It can be induced by asking the

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shopper’s to relate the message to their own experience or self image. Involving messagemay also use mystery ad in which the identity of the brand is not revealed until the end ofthe ad.

(3) Context factors

The context in which the message is delivered can influence the belief strength andsalience. Message repetition can have an impact on the shoppers cognitive processingability. The repeated message helps shoppers to acquire simple beliefs about importantfeatures or benefits and increase their salience or retrievability from the memory. The shoppersdo not try to actively process the information rather the constant repetition helps in bothlearning and recalling the information from memory through a process called incidentallearning. Repetition also increases the awareness and makes the brand familiar.

Affective basis of attitude: low effort

The study of low effort affective processes involves four major areas: the mere exposureeffect, classical conditioning, attitude towards the ad and mood.

According to the ‘mere exposure effect’ the shopper tends to prefer familiar objects tounfamiliar ones. The shoppers attitudes toward an object or behaviour will change overthe time as they become more and more familiar with it.

Classical conditioning states that there are certain unconditioned stimuli thatautomatically elicit an unconditioned emotional response such as joy or warmth. Byrepeatedly pairing the unconditioned stimulus with a neutral stimulus (conditioned) such asbrand name may evoke the same emotional response(conditioned response) to the brandname itself. For example the unconditional stimulus could be represented by happy scenesthat would generally evoke positive feelings. By repeatedly pairing the brand (the conditionedstimulus) with the unconditional stimulus it is hoped that the positive feeling will be producedby just their association with the brand name alone.

Attitude towards the ad refers to the situations where the attitudes towards one objectcan affect attitudes towards an object with which it is associated with. The shoppers maylike an advertisement a great deal. This may be due to the positive response or any otherreason. Because they like the advertisement so much, they eventually transfer their affectfrom the ad to the brand which is advertised.

Attitudes are affected by shopper’s moods. A stimulus can create a positive moodand this mood in turn affects the shopper’s reactions to any other stimulus that they happento evaluate. Thus the shopper may like something because he is in a good mood and maynot like the same due to his bad mood.

Influencing affectively based attitudes

Marketers can influence the affectively based attitudes by focusing the attention to thesource, message and the context in which the message is delivered.

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(1) Source

Two factors play a major role in determining whether or not the sources evokefavourable reactions; their physical attractiveness and their likability.

When the shoppers motivation to process a message is low, attractive source willenhance the favourability of consumers attitudes, regardless of whether the messagearguments are strong or weak. The shoppers rate the ads with physically attractive modelsas more appealing, attractive, eye catching, impressive and interesting than the ads withunattractive models.

The likability of the source can also influence affectively based attitudes. Likablesources may act as an unconditioned stimuli and create a positive mood that affects theshoppers evaluations of the ad, brand and make them feel more positive about the endorsedproducts. Physical attractiveness and likability explains as to why celebrities are used mostlyin advertisements.

(2) Message

Message characteristics include pleasant pictures, music, humor and emotional content.Pleasant pictures serve as conditioned stimulus and thus affect the shopper’s mood andmake the ad likable and interesting. Music has been shown to stimulate a variety of positiveeffect by many research studies. Marketers must use the right kind of music that producesthe desired affective responses. Humor is another technique used to enhance positiveaffect. The shoppers often rate humorous ads as most popular. Humor tends to work bestfor certain type of audiences liket for example the younger people.

Emotional message may take the form of transformational advertising. The goal of atransformational ad is to associate the experience of using the product with unique set ofpsychological characteristics.

(3) Context

Message repetition and program or editorial context is the key contextual factors.Message repetition focuses on creating brand familiarity. This is an important way of affectingshoppers’ attitudes when the effort is low. Shoppers’ may prefer the brand which is frequentlyrepeated as they are familiar with the same. The program or editorial context in which amessage appears affects how it is evaluated.

3.3.2 Perception

The market place is thronged with multitude of competition who offers similar productsand services. Yet some products, brands retail stores etc are perceived to be better thanthat of the similar products/services. The way the product or service is perceived is intricatelytied to the shoppers it attracts and the share of market it gains. Thus the brand image,

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pricing and risk avoidance are all aspects of shopper’s perception. Understandingperception and the factors determining how the shoppers view products and servicesprovides input to the marketers to successful strategies.

Perception is defined as the “ process by which individual selects, organizes andinterprets stimuli into a meaningful and coherent picture of the world “. Thus perception isthe way in which an individual gathers, processes and interprets information from theenvironment. Perception in marketing context can be viewed as the opinion a shopperforms about a product by seeing its packaging, colors used, symbols of the brand and thelogo associated with the brand.

3.3.2.1 Elements of perception

The elements of perception are sensation, absolute threshold, differential thresholdand subliminal perception. These elements are presented below;

1. Sensation

Sensation is the reaction to a stimulus. It is the immediate response of our sensoryreceptors (eyes, ears, nose mouth, fingers) to basic stimuli such as light, color, sound,odors and textures. Perception is the process by which these sensations are selected,organized and interpreted. Hence the study of perception focuses on the sensations. Whena person is exposed to any of the marketing stimuli, the first reflex that is initiated in him isknown as sensation. Thus the shoppers’ reaction to the stimulus received by any or thefive senses is called sensation. Perception influences the purchase decisions of the shoppershence the marketers try to provide shoppers with cues to perceive the product in such away that they will appeal to the shopper’s senses. The marketers also try to make theshopper’s perceive the product in a specific way.

2. Absolute threshold

The lowest degree of sensory inputs at which the shopper becomes aware of a sensationis called the absolute threshold. For example a shopper may not hear an jingle in a noisyroom. The jingle in the advertisement may escape his attention. The stimuli falls short of thethreshold of the human sensory system. The marketers job, therefore to develop thecommunications in such manner that it can be sensed ie it should be above the absolutethreshold.

3. Differential threshold

Differential threshold is the smallest detectable difference between two values of thesame stimulus. This is also referred as Just noticeable difference (JND). It is the minimumamount of change in a stimulus that can be consciously detected by a person. For exampleif the price of a popular brand of a popular is increased by Rs.1000 it might not lead to aprospective shopper changing his mind about buying the same, however if the price increaseis above Rs.5000 it will definitely be noticeable and the shopper would probably changehis choices.

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JND is the minimum amount by which the stimulus intensity must be changed in orderto produce a noticeable variation in the sensory experiences. Marketers use JND todetermine the degree of change to be made to secure the attention of the shopper. Thechange here refer to using JND to determine how much variation in price of a product canactually make a difference or in determining how the packaging of a product has to bealtered to secure the shopper’s attention. Marketers thus make use of JND to cope withcompetition, to attract consumers with a reduction in price or to attract shoppers withattractive and catchy packaging designs. These are called the positive uses of JND.

Sometimes marketers may try to incorporate a change that is just short of JND andhence can’t be perceived by the shoppers. They reduce the size or quantity of the productin such a way that the shopper is unaware of it and pays the same price.

4. Subliminal perception

Subliminal means subconscious. The subconscious mind of an individual storeseverything he experiences. Normally this process takes place without the actual awarenessof eh person because the threshold level for actual awareness is higher than that of actualperception. Messages that are not consciously registered in the memory is called as subliminalmessages. When the marketers try to stimulate the subconscious of the shopper towardtheir products, it is known as subliminal perception. Marketers use the sensory inputs in adegree lower than the minimum level required for them to reach the shoppers sensorythreshold. For example the concealed warning note to the shoppers, use of imperceptibleaudio messages, fleeting visual images, accelerated verbal communication and so on.

3.3.2.2 Process of perception

Perception plays an important role in the information processing activity of the shopper.The perceptual process as explained by Michael R.Soloman is depicted in the diagrambelow

The exposure, attention and interpretation stages are enumerated below;

Sights

Sounds

Smells

Taste

Textures

Eyes Ears Nose Mouth Skin

Exposure Attention Interpretation

Sensory stimuli Sensory receptors

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1. Exposure

Exposure occurs when the senses deduct any external cues from the various thingscontacted. Shoppers’ are exposed to various advertisements from variety of sources. Theexposure is the starting point of information processing. When perception takes place atthe point at which the shopper becomes aware of the various products available in themarket. When the shopper views the advertisement the senses get stimulated. Most of thetime, exposure to marketing messages happens unintentionally except when shopper activelysearches for information regarding specific product or service

Selective perception

The shoppers are being constantly bombarded with advertisements through all theavailable media at all times. Hence it becomes difficult to catch the attention of the shoppers’.It has to be understood that the shoppers face an information overload. In this situationthey involuntarily adopt a selective perception process. Using this process the shoppersperceives only those advertisements that he feels are relevant to him and ignores the rest.The process of selective perception has the following four steps;

i. Selective exposure : shoppers avoid ads or information that might contain unpleasantinformation or any other information that they consider undesirable. They normallylook for ads that are positive and look desirable

ii. Selective attention: shoppers will avoid information that might contain unpleasantinformation or any other information that they consider undesirable. They look forads that are positive and look desirable.

iii. Perceptual defense: shoppers may screen out certain stimuli they want to avoid.The past experience and the emotion state of the shopper play an important role inthis process.

iv. Perceptual blocking: the shoppers may sometimes perceive that the product is ofno use to them and so don’t bother about it or don’t make an effort to rememberthe same.

In order to overcome filtering based on the selective perception , the marketers useinnovative concept in their ads to catch the attention of the shoppers. They also resort togive their ads maximum media exposure so that the shopper comes across the samefrequently.

2. Attention

The shoppers normally recall only a part of all the information that has been receivedthrough various media. Exposure occurs when the information comes into contact with anyof the five senses of a person. Marketers follow innovative methods to capture the attentionof the shoppers. Getting the attention of the shoppers depend son the stimulus, individualfactors and situational factors.

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Stimulus

Anything that initiates an individual to take action is said to a stimulus. Marketers tryto stimulate shoppers to purchase their products through their advertisements. The stimuluswill receive the attention of an individual based on the following factors;

• Size and intensity: The larger the stimulus the greater will be the chance of beingnoticed. The number of times a shopper is exposed to an information has also animpact on the intensity of this response.

• Colour and movement: Eye catching and contrasting colours help marketers ingaining the attention of the shoppers.

• Position: Position of the object in the visual fields affects the response generated.Hence marketers try to position their products near the center of the visual field inorder to ensure that the shoppers notice the same easily.

• Isolation: Separating the object or isolating it also influences the intensity of thestimulus. For example placing a product on the big table which is otherwise emptywill capture the attention.

• Format or design of Ad: Different fonts, calligraphic text. Layout of the advertisementalso influences the stimulus.

• Contrast or Distinguish: The visual impact of messages in contrasting colours ishigher and shoppers invariably pay more attention to them.

• Information extent: Shoppers cannot process to much of information. Henceoverloading of information should be avoided. Providing precise informationgenerally works and acts as stimulus rather than providing too much of information.

Individual factors

The attention of the shopper depends on the following factors;

• Interest and need: Shoppers will pay more attention to the information when heperceives a need for the product and when he is interested in the informationpresented in the advertisements.

• Ability: Shoppers differ in their ability to understand the information and retain it.

• Involvement: A shopper who is more involved in a product spends considerabletime in collecting information about the same.

Situational factors

The setting in which the shopper is exposed to the stimuli also determines the extentof attention paid to the advertisement or the information received. The ambience,surroundings, other shoppers, the noise, temperature etc may influence the extent of attentionpaid to point of purchase display and other promotional measure inside the retail store.

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3. Interpretation

Interpretation refers to the meaning the shopper derives from the ad presented tohim. Shoppers understanding of the stimulus presented depend upon his personal views.Their learning, experience and expectations from a product influence their interpretation.Interpretations differ from significantly from one shopper to the other. The culturaldifferences, personality, extent of knowledge, experience, learning etc may cause thedifference in perception.

Semiotics is the process through which the shoppers correlate various symbols andsigns with certain beliefs, perceptions etc. understanding semiotics helps marketers tounderstand how shoppers interpret the symbol and colors used in the product andadvertisements. Shoppers buy products for a variety of reasons apart form the functionalbenefit it offer; for what it means to them rather what it actually is ,or to project a specificsocial image by conspicuous consumption of certain products or services.

The packaging of the product, the way in which it is advertised, price , promotionalactivities, packaging, the music or visual in advertisements etc plays an important role indetermining how the products are perceived or interpreted by the shoppers.

3.3.3 Learning

Learning is an important component of shopper behaviour. Learning can occurintentionally or unintentionally. It occur intentionally when a problem is recognized andinformation is acquired about products that might solve the problem. Unintentional learningcan also strongly influence the shopper behaviour. The learning mechanism enables theshoppers to adapt to the changing environment. Knowledge on the learning principle canuseful in understanding how shoppers want and motives are acquired and how their tastesare developed. This will enable the marketers to decide how advertisements or othertechniques can help in shopper’s learning regarding products and promotions.

Learning can be defined as a relatively permanent change in behaviour occurring as aresult of experience. Three points arise from the above definition. First, behaviour refers tonon observable cognitive activity as well as to overt actions. It is possible for learning tooccur without any change in the observable behaviour. Second, learning results in relativelypermanent change in behaviour. This excludes changes brought by fatigue and other short-lived influences. Third the definition of learning stresses experience.

3.3.3.1 Types of learned behaviour

All the behaviour exhibited by individuals is learned. Some specific types of learningare explained below;

• Physical behaviour: Individuals learn many physical beahviour pattern ie to walk,talk and interact with other. As shoppers, individual learn methods of responding

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to various situations. These may take the form of behaving like the role models inpurchase and use of products, reaction to the price etc.

• Symbolic learning and problem solving : People learn symbolic meanings thatenable highly efficient communication through the development of languages. Themarketer use these symbol for eg brand names, logo, signs, etc to connote positiveimages to the shoppers. Problem solving learning occurs by employing the processof thinking and insight.

• Affective learning : Individuals learn to value certain elements in the environmentand dislike others. This means the shoppers learn many of their wants, goals,motives as well as the products that satisfy these needs. Learning also influencesthe development of favourable or unfavourable attitude towards the marketersand their products which will in turn affect the tendency to purchase

Learning by shoppers’ occurs by direct experience of product or service. Thesedirect experience can be influenced by marketers. To understand the same, learning theoriesand the elements of learning should be understood.

3.3.3.2 Principle elements of learning

Shoppers’ learn in several basic ways. Four elements are fundamental for learning totake place viz; motive, cue, response, and reinforcement. These components influenceexact nature and strength of these components influence what will be learned, how well itbe learned and the rate at which the learning will occur.

1. Motivation

Motives arouse individuals and thereby increase the readiness to respond. It providesthe energy need to engage in the learning activity. It is the driving force that impels individualsto action and is the result of unfulfilled needs. If an individual has strong motivation to learnsomething, there is increased likelihood that learning will take place. The degree ofinvolvement in the goal object will influence an individual’s degree of motivation to acquireinformation or knowledge about product or service.

2. Cues

Cues are relatively weak stimuli, not strong enough to arouse shoppers but have thepotential of providing direction to motivated activity. The shoppers are exposed to variouscues almost everyday such as advertising, display, packaging and prices. These cues serveto help shoppers satisfy their needs by purchasing certain brands.

3. Response

The way an individual reacts to a cue or stimulus is the response and could be physicalor mental in nature, leading to learning. The shopper’s are exposed to many cues providingdirection at the same time and each cue competes for attention. The responses to particularcues or stimuli may be significantly affected by earlier learning as a result of response-reinforcement.

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4. Reinforcement

The probability that a given response will be repeated in the future can be termed asreinforcement. Reinforcement of a specific response increases the likelihood for the responseto reoccur. Reinforcement can be anything that both increases the strength of response andtends to induce repetitions of the behaviour that preceded the reinforcement. Marketersalways try to y reinforce the response of the shoppers. If a shopper is rewarded for aparticular response, he is most likely to repeat the beahviour. On the other hand negativereinforcement makes the shopper avoid such a response. Therefore it is extremely importantthat the companies try to positively reinforce their product or services

3.3.3.3 Behavioral learning theories

According to behavioral learning theories learning takes place as a response to externalstimuli; when an individual reacts to a known situation in a predictablemanner. Behavioralscientist do not give importance to the internal thought process, instead stimulus inputs andthe resultant behaviour are focused. Two important behavioral theories of learning are:classical conditioning and instrumental conditioning.

1. Classical conditioning

Proponents of classical conditioning are of the view that human beings and animalscan be taught to behave in a particular manner by conditioning. Conditioning can be definedas “a learning process in which an organism’s behaviour becomes dependent on theoccurrence of a stimulus in its environment.” Classical conditioning is said to occur whena response to a particular stimuli is combined with another stimulus that brings the sameresponse. Marketers consistently highlight their products positive aspects throughadvertisement. For example in case of Tata Steel’s advertisement, it highlights the steelsstrength and quality. So the moment the shopper thinks of quality and strength(unconditionedresponse) of steel for construction of house , they think Tata steel(conditioned response)

The three most important aspect of classical conditioning are repetition, stimulusgeneralization and stimulus discrimination.

Repetition: In order to create favourable attitudes toward the products, marketers increasethe number of times people are exposed to their advertisement. If the association betweenthe conditional and unconditional stimulus is consistently repeated, it increases the stimulusresponse association and individuals will not easily forget such associations. This is one ofreasons as to why the marketers are repeatedly advertising their products or services.

Stimulus generalization : Learning is based on the individuals ability to generalize things.Stimulus generalization happens where individuals respond similarly to mildly different stimuli.Stimulus generalization is the reason why most imitation and fake products succeed in themarket. People producing fake products that look almost like the original brands will

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successfully sell their products in the market taking advantage of the stimulus generalizationof the shoppers’.

Stimulus discrimination: This is opposite to stimulus generalization. This is a processwhere a specific stimulus is selected from a group of similar stimuli. Marketers try toconvince their shoppers to differentiate their brands from imitations and urge them not topurchase such products. Marketers develop product and brand positioning strategies tohelp shoppers identify their brands distinctively.

2. Instrumental Conditioning

Like classical conditioning, instrumental conditioning needs an association betweenstimulus and response. However the stimulus that provides the most rewarding responsewill be learned. Instrumental conditioning is also known as operant conditioning. Unlikethe classical conditioning the response to stimuli is active, where individuals seem to activelyrespond to stimuli, provided it is positive. If a response to stimuli is positive and satisfying,only then the individual is more likely to repeat the behaviour in the future. On the otherhand, if the response is less than satisfying or negative, the individual is likely to avoidrepeating the behaviour.

3.3.3.4 Cognitive learning theories

Cognitive learning theories highlight the importance of learning thorough mentalprocessing. Individuals try to solve the complex issues they face using information available.They seek information from external environment and use it to resolve the problems facedfrom time to time. Such learning which occurs from using human mind is called cognitivelearning.

Behaviorist approach might be more relevant when shoppers’ cognitive activity isminimal as in the case of low involvement purchase situations. For example the shoppermay be inclined to buying the same product purchased earlier as long as the results aresatisfactory.

Cognitive learning theory is relevant in understanding the shopper’s decision processin situations of high-involvement purchases. In case of extensive problem solving, theconsumer becomes aware of a need, indulges in information search and evaluates alternativesavailable to satisfy the need, buy a product or service that is believed to satisfy the needand make post purchase evaluation to ascertain the degree of satisfaction.

3.3.4 Personality and self image

Personality and self image are two psychologival aspects that have been used forstudying the shopper behaviour. The purpose of studying these variables is to determinetheir usefulness in understanding shopper’s basic orientations and their brand and storepreferences, media usage patterns, preference for promotional efforts and other facets of

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shopper behaviour. This knowledge would allow the marketers to understand the underlyingpattern reflected in their product choices and other behaviour.

3.3.4.1 Personality

There exist no precise definition for the concept of personality. It has viewed bydifferent people in different contexts. However there are certian major aspects of similarityamong the various definitions which is brought to focus by David Loundon and Della Betta

• Personality is viewed as ‘unique characteristics that account for differences betweenindividuals rather than on how people are alike”.

• Personality refers to the “consistency of the individuals dispositions rather than thechanges in his or her actual behaviour across different situations.

Hence Personality can be understood as “an individual’s response tendencies acrosssituations and over time”. understanding the relationship between personality of the shopperand his purchase behaviour will enable marketers to target and promote their productseffectively. Psychologist use two common approaches in the study of personality: the sateapproach and the trait approach.

State approach to personality

The state approach to personality aims at understanding the individual in the contextof whole. It is the study of personality that enables to predict what a person will do in agiven situation. This approach to the study of personality is a holistic process where thefocus is on understanding the individual as a whole. Psychologists’ use a variety ofmeasurement techniques to uncover an individual’s response tendencies. This approachtakes into account external influences such as family, groups, culture and so on. The limitationof this state approach for marketers is that it examines individuals, not groups or marketsegments. The focus is on one person at a point of time.

Trait approach to personality

Understanding the personality traits in terms of “consistent tendencies to respond to agiven situation in a certain ways” is more useful to marketers. The fundamental assumptionof the trait approach to personality is that individuals share the same traits but they areexpressed at different levels, resulting in different personalities. Market segmentation canbe done on the basis of extent of influence of specific personality traits or combination oftraits on the behaviour of shoppers. When targeting segments that display a particularpersonality trait, marketers can develop promotional campaigns that effectively communicatethe benefits of their products and help to overcome the resistance of shoppers who sharethis trait.

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Influence of General Personality Traits on Shopper behaviour

A general personality trait is one that invariably affects an individual across a range ofsituations, both those that are consumption relation and those that are not. Self confidence,shyness, and aggressiveness are all general personality traits. The influence of the generalpersonality traits on the shopper behaviour is presented below;

Compliance, aggressiveness and Detachment

Individuals deal with anxiety through one of the three responses tendencies: compliance,aggressiveness and detachment. Compliance refers to the personality traits describing atendency to deal with anxiety by moving towards people and complying with their wishes.Marketers of products and services related to helping people create and or maintain socialrelationships should target and appeal to shoppers with complaint personalities.Aggressiveness describes a tendency to deal with anxiety by moving against people andoffending them. Marketers of achievement, status and power related products and servicesshould target and appeal to shoppers with aggressive personalities. Detachment describesthe tendency to deal with anxiety by moving away from people and asserting one’sindependence. Marketers of product related tot helping people achieve independenceshould target and appeal to shoppers with detached personalities for eg financial investmentinstruments

Generalized self confidence

A shopper with generalized self confidence is one who is comfortable in makingdecisions. Generally shoppers low in self confidence is more inclined to choose brandsfrom popular and highly visible manufacturers than from less known companies. Similarlyshoppers’ with self confidence will be more willing to be adopt new products introduced inthe market. Marketers of new stores and outlets should target and appeal to shopperswith high self-confidence. Conversely marketers of stores with well established reputationsshould attempt to retail their store patrons by targeting and appealing to those who havelow self-confidence.

Self-consciousness

Self confidence is a tendency of being keenly aware of oneself in many situations.Those characterized as being self-conscious are very sensitive to the image theycommunicate to others. This heightened awareness of self makes them use products toproject their self image. If marketers are targeting this segment of shoppers they shouldconsider offering accessories or benefits that are likely to reduce social anxiety.

Self-monitoring

Self monitoring refers to the ease with which people adapt to different situations andmanage the impressions they make on others. High self-monitors are adept at managingsuch impressions, are attuned to the demands of different situations, and adapt their

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behaviour accordingly. In contrast, people characterized as low self monitors tend to expresstheir opinion and beliefs about things irrespective of others. If marketers know the extentto which their target shoppers tend to score high or low on self-monitoring, they candevelop more effective marketing programs. For example marketers should not providemuch technical information about their product or service to high self monitors as they aremore sensitive to information that affects their image.

Self-Esteem

Self esteem describes the extent to which the actual self is congruent with the idealself. Individuals whose actual self fall very short of their ideal self are characterized as lowin self esteem. Conversely individuals whose actual self is close to their ideal self arecharacterized as high in self-esteem. People with high self-esteem feel generally positiveabout themselves, while those with low self esteem don’t. Low self-esteem shoppers tendto use different products and services to deal with stress and anxiety.

Dogmatism

Dogmatism is a personality trait describing a tendency to be close-minded, seeing lifein terms of black and white. A nod dogmatic is more open-minded, appreciating complexityin life and seeing many shades of gray. The dogmatic person has one view of reality and fitsexperiences and situation to that reality. Researchers have found that highly dogmatic peopleare generally less receptive to new or unfamiliar stimuli, such as new design, new productetc.

Rigidity

Rigidity describes the tendency to be inflexible in tastes and preferences. Rigiditygenerally correlates negatively with risk-taking behaviour or innovativeness. The marketersdealing with technological innovation, should target their products are services to shopperswho are less rigid. Less rigid shoppers are likely to express less resistance to the use ofproducts and services that involve high risk activities.

Tolerance to ambiguity

Tolerance to ambiguity refers to the personality trait that describes the tendency notto feel bothered by situation in which the person lacks information to guide action. Tolerantpeople tend to engage more in exploratory behaviours, they gather information by shoppingaround. Shoppers’ who are tolerant of ambiguity are more likely to search for informationas the choice task becomes more complex and as the products become more novel.Marketers who are targeting on the shoppers with high degree of ambiguity shoulddisseminate as much information as possible about their product and services.

Optimum stimulation level(OSL)

OSL refers to the desire to explore the environment and seek stimulation. Somepeople have a greater desire to explore the environment and seek stimulation than others.

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Research studies have shown that a shopper’s optimum level is related to variety seekingand risk taking. The shopper’s whose OSL is high were found to generate more cognitiveresponses to advertising, sought more information , make riskier decision and gambledmore than the shopper’s with low OSL.

State Vs Action Orientation

Some individuals are action-oriented ie they can more easily transform their intentionsinto actual behaviour that other state-oriented people. An action oriented shopper is likelyto be more decisive than a state-oriented shopper, is likely to take less time shoppingaround and is quick to take action. When the marketers are targeting on the action-orientedshoppers they should develop campaigns to meet product trail objectives.

Separateness-Connectedness

Some people perceive themselves as individuals separated from others, while sometend to see themselves as highly connected with others. The former is said to have a strongsense of separateness while the latter is viewed to have a strong sense of connectedness.This personality trait is important in studying shopper behaviour because people reactdifferently to advertisements having separated versus connected themes.

Impulsiveness

Impulsiveness describes the tendency to act on the spur of the moment withoutconsidering the consequences of one’s action. Shoppers scoring high on impulsiveness aremost likely to indicate willingness to buy things they did not need but like that those scoringlow on impulsiveness. They will also willing to pay more. Point of purchase display wouldbe attractive to these shoppers.

Extraversion and Neuroticism

Extrovert is likely to be quite sociable and active. In contrast introverts are loners andthey like to be left alone. Research studies show that extroverts tend to experience morepositive feelings than negative feelings in response to advertising. Neuroticism is the tendencyto experience negative affect. Neurotic consumers tend to experience more negative feelingsthan positive one.

Need for cognition

Some shoppers tend to think through the purchase decision more thoroughly thanothers. The tendency is referred to as the need for cognition. The shoppers who have highneed for cognition tend to be persuaded by advertising with quality arguments, whereasshoppers with low need for cognitions will be influenced by endorser attractiveness.

Influence of Consumption -Specific Personality Traits on Shopper behaviour

A consumption specific personality trait affects the shopper only in situations relatedto consumption and does not extend its influence into non consumption situations. The

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influence of certain consumption specific personality traits on shopper’s bevhaviour ispresented below;

The Market Maven type

The market maven shopper is a kind of shopper who has information about manykinds of products, places to shop and other aspects of market place. The shopper initiatesdiscussion with and respond to others who request product and store information. Researchfindings shows that these type of shoppers influential in the way they make purchase decisionsand are found to be usually aware of new products. They tend to participate in variousmarket activities like the use of coupons in purchases. They enjoy shopping and use browsingto collect information about the products

Innovativeness

Shopper’s innovativeness refers to the tendency on the part of the shopper to beamong the first to purchase new products within specific categories. This personality traitis very important for marketers of technological innovations. Marketers of new productscan gain more market share by targeting on the shoppers who are considered to be high oninnovative trait

Opinion leadership

Opinion leadership is a product-specific personality trait related to product expertise.Opinion leader is a person who is well versed in a product category. This expert ischaracterized as being motivated to “spread the word” about the product in ways thatreflect his or her opinion (positive or negative). He is different form the market maven inthe sense that the opinion leader’s expertise is restricted to a particular product class onlywhereas market maven collects information about many products

Product specific self-confidence

Product specific self confidence refers to the extent to which certain shoppers’ feelconfident about making decisions with regard to a product category. Marketers of specialtyproducts sold in specialty stores should target self-confident shoppers’, self-confident inrelation to the product in question.

Product specific self-efficacy

Shopper’s self-efficacy represents the shopper’s belief in his or her own performancecapability or competence in relation to a product category. Marketers of technologicalinnovations should target shoppers considered high on self efficacy directly related to theproduct in question.

Coupon Proneness, Value Consciousness and Deal Proneness

Coupon proneness is the tendency to redeem coupons by purchasing the advertisedproduct or service. Value consciousness is defined as the amount of concern the shoppers

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has for need-satisfying properties of the product or service in relation to the price of thatproduct or service. Deal proneness refers to the use of various sales promotion incentivessuch as trading stamps, sales etc. Marketers should design strategies based on the type ofsales promotion devices that is attractive to the shoppers

Product specific involvement

Shopper may feel a great deal of product specific involvement- emotional involvementin a particular product class or category. Shoppers’ who are emotionally involved with aparticular product class or category are likely to have a belief structure about the productthat is more complex and integrated than those who are not involved with the product.Measuring product involvement will enable marketers to segment the market into thosewho are more and less emotionally involved with the product and accordingly frame pricing,advertising and related strategies.

3.3.4.2 Self-image

The shopper’s self image (self concept) plays a significant role in predicting andexplaining behaviour. Studying shopping behaviour using self image enables to get adescription of shoppers by themselves, instead of personality tests that fit the individual’sresponses into pre determined categories or traits. This distinction is significant becausethe way a shopper perceives himself or herself might differ substantially from the way inwhich the researcher sees or categorizes the same shopper.

Shoppers have multiple selves, reflecting the many roles they play in their daily lives.These roles are refereed to as identities. For e.g. a women may play different role at herhouse and the place of work. Each identity is different and gives raise to a different set ofpurchase needs and motivations. Role identities thus can have an enormous impact on theshopping behaviour. Self image is more complex than role identity. It encompasses not jutsthe roles in which the shopper see themselves but extends to how shoppers’ feels they areviewed by others in each of these roles. Shoppers’ figure out how they will be viewed inthe eyes of others and create a social self- an image of how they believe others see them.

Forms of self image

Self image is a configuration of beliefs related to self. Self image can be defined interms of the relationship between the shoppers and products. There are four major typesof self image that play a part in the shopper behaviour; actual self, ideal self, social self,ideal social self.

• Actual self image is a part of what psychologists refer to as the private self. Theprivate self involves those images that one has of oneself about which one feelsprotective. Actual self image is how the shopper sees himself. People are motivatedto protect their personal identities. They feel uncomfortable if they engagethemselves in doing things that do not reflect their true selves. This is called as theself-consistency motive. It drives people to act in ways that are in line with theiractual self-images.

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• Ideal self image as shown in the above diagram is also a part of the private self.Ideal self image is how shoppers would like to be. A person may see himself aslacking in self confidence (actual self image), yet he may want to be self assured(ideal self image). There is often a discrepancy between actual and ideal self. Theideal self motivates behavior through the self esteem motive. In order to realize theideal self , the shopper may acquire goods or services so as to boost their selfesteem.

• Social self image is linked to the public self ie how we believe people think of usand how we like people to think of us. Social self image reflects how individual’sbelieve others see them. A person may believe that other see him as introvert. Thissocial self image may be consistent or inconsistent with the actual and ideal self.Social self-image influences behaviour through the social consistency motive. Peopleare motivated to maintain an image others have of them

• Ideal social self reflects how shoppers would like others to see them. The idealsocial self image affects shopper’s behaviour through the social approval motive.The shoppers are motivated to do things that cause other to think highly of them.

Self image congruence

Self image congruence occurs when the shopper’s self image matches with the branduser image. This match or mismatch may occur with any one of the four types of self image: actual, ideal, social and ideal social. A match of the brand user image with the shopper’sactual self image is referred to as actual self –congruity, with ideal self image as ideal selfcongruity , with social self image as social self –congruity and with ideal social self image asideal social self congruity.

Shopper’s self image

Private self image Public self image

Actual self image Ideal self image

Self consistency motive

Self Esteem motive

Social self image Ideal social self image

Social consistency motive

Social Approval motive

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• Actual self congruity means the brand user image is matching with the shopper’sactual self image. For example if a particular brand of cell phone is advertised andprojected the image of being tech savvy and if the shopper views himself as techsavvy person , there is a self congruity. Marketers can persuade the shoppers toadopt a product or service through promotional messages designed to induceactual self-congrutiy.

• Ideal self congruity results when the brand user image is matches with the shopper’sideal self image. Marketers create ‘fantasy advertising’ designed to encourageshoppers to buy products. Fantasy advertising motivates shoppers to adopt theproduct because the user image of product meets their ideal self images.

• Social self-congruity is the degree of match between the shopper’s social selfimage and the brand user image. The shopper’s are motivated by the need forsocial self consistency and hence buy products and services than reinforce theirsocial images.

• Ideal social self congruity is the degree of match between the shopper’s idealsocial self image and the brand user image. The need for social approval motivatesshopper’s to do things that have user image consistent with the ideal social self.

Self image is a powerful concept which has implications and applications in the fieldof shopper behaviour. The concept has been used in market segmentation, advertising,packaging, personal selling, product development and retailing. The self image conceptcould serve as a blueprint for marketers to design marketing programs. Research studieshave suggested that self image can be an important predictor of shopper’s brand preferences.However there are other constraining factors such as price and other individual orenvironmental influences that can modify the brand preferences.

3.3.5 Lifestyle

The concept of lifestyles is highly related to shoppers’ value and personality. Valuesand personality represent internal states or characteristics. Lifestyles are manifestations oractual patterns of behaviour. Life style can be viewed as a unique pattern of living whichinfluences and is reflected by one’s consumption behaviour. It is determines by our pastexperiences, innate characteristics and current situations. The products that individual’sconsume are related lifestyle. The purpose of exploring lifestyles is to obtain more precisepictures of how shoppers think an act. Life style marketing establishes a relationship betweenthe product offered in the market and the targeted lifestyle groups. Lifestyles segmentationis based on the activities, interest and opinions of groups. These are psychographicsegmentation and lifestyles are derived form psychographics. Activities can be describedas how one spends time on work, hobbies, social events, vacation, entertainment etc.interest are a person’s priorities and preferences regarding family, job, food, media,achievements etc. Opinions refer to how one feels about a wide variety of events includingpolitics, business, society, products,etc.

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3.3.5.1 Characteristics of lifestyle

Lifestyle can be described using the following characteristics;

• Lifestyle is a group phenomenon: An individual’s lifestyle is influenced by a varietyof factors including participation in social groups and relationships with others.

• Lifestyle influences many aspects of behaviour. A persons lifestyle commits thatindividual to a certain consistency in behaviour.

• Lifestyle implies a central life interest. A distinct lifestyle may be identifies whensome activity or interest influences other.

• Lifestyles vary according to sociologically relevant variables: The rate of socialchange, age, gender, ethnicity etc are determinants of lifestyle

3.3.5.2 Market segmentation

Psychographics studies are used to develop an in-depth understanding of marketsegments and sometimes to define segments. In order to identify the significant lifestyletrends, researchers measure AIO (Activities, Interest and Opinions) statements using aLikert Scale. Psychographic analysis enables marketers to understand the shoppers’lifestyles better and develop packaging and communication programs that position productsto their various lifestyle attributes.

A widely uses approach to lifestyle marketing is the Values and Lifestyle System(VALS). VALS2 can be used to measure the shoppers’ attitudes and values by measuringthe degree of agreeability to statements depicting lifestyles. Three type of self-orientationscan be arrived at;

• Principle oriented: the shoppers make purchase decisions based on their beliefsand principles rather than what others think.

• Status oriented : the shoppers are heavily influenced by the beliefs, opinions andviews of others.

• Action oriented: these individuals buy products to affect their environment andseek activity, variety and risk taking.

In addition to the self-orientations, the other dimension of the VALS2 typology isresources which refer to the physical, psychological, material and demographic resourcesthe shoppers have to pursue their self orientations. VALS2 defines eight categories oflifestyles which can be used by marketers to help in advertising and positioning of products.The eight categories are discussed below;

Actualisers

They have abundant resources and are sophisticated in their tastes and habits. Theyare active and have high self esteem. They develop, explore and express themselves in avariety of ways. They are the leaders in business and in government. They have wideinterst and are concerned with social issues and are open to change.

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Fulfilled

As the name suggests they are satisfied and mature people who are well educated.Theyare practical shoppers and conservative. They look for products which are durable , havevalue and function properly. They are well informed about the world and are ready toincrease their knowledge. They prefer leisure at home.

Achievers

They are placed high in Maslow’s hierarchy of needs and are career and work oriented.They make their dreams come true. They like to work. Work provides them with a senseof duty, material rewards and prestige. They live conventional lives, authority and image isimportant to them. They also favour established products and show their success around.

Experiencers

They are action oriented, young, vital, enthusiastic and rebellious. They have enoughresources and experiment in new ventures. They indulge in exercise, sports, outdoorrecreation and social activities. They are avid shoppers and spend much on entertainment,clothing, food, music, videos, movies etc. their behaviour pattern is subject to change asthey are enthusiastic to new ideas.

Believers

Believers are conservative, conventional people with their needs, strong faiths andbeliefs. They have modest resources sufficient to meet their needs. They are conservativeand predictable. They use established brands.

Strivers

They are status oriented, but have a low income as they are striving to find a secureplace in life. They are low in economic, social and psychological resources. They areconcerned about the opinion of others. They see success with money. They like to bestylish. They wish to be upwardly mobile and strive for more.

Makers

Makers have construction skills and value self efficiency. They experience the workby working on it. They are people who work with their hands. They are politicallyconservative, suspicious of new ideas, they buy products that will help them in achievingtheir purpose.

Strugglers

These are poor people, struggling for existence. Their educational qualification is low,they are also low skilled and are without strong social bonds. They are despairing andhave low status in the society. Their chief concern is to fulfill the primary needs of physiologicalsecurity and safety. They are loyal to their favorite brands.

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Life style marketing is being used extensively nowadays for developing and positioningnew products. Life style research finding will enable marketers to frame suitable strategiesto improve retail performance.

3.4 INTERPERSONAL

In addition to the personal influences on the shopper beahviour, a number ofinterpersonal factors also exist. The following section provides an account of select interpersonal influences viz., communication and persuasion, family, group and store employees.

3.4.1 Communication and persuasion

Communication is a unique tool that marketers use to persuade shoppers’ to act in adesired way. Communication may take many form; verbal, visual or a combination ofboth. It can also be symbolic where the marketers use price, logo, packaging etc to conveythe meaning. Communication can encourage shoppers to purchase the products by providingthem the needed information and by putting them in a receptive state of mind.Communication is the bridge between marketers and shoppers and between shoppersand their socio cultural environments.

3.4.1.1 Components of communication

Communication involves transmission of message from sender to the receiver through amedium of transmission. In addition to the sender, receiver, medium and message, feedbackplays a vital role in communication. It enables to understand whether the receiver hasunderstood the message in the same sense in which it is communicated. The basiccommunication model is explained below;

The Sender

The sender is the initiator of the communication. The communication can be fromformal or informal source. A formal communication source is likely to represent eithea forprofit or a not-for-profit organization. Informal source can take the form of parent orfriend who provides the product information or advice. Shoppers’ rely on the informalcommunication source for making purchase decision. This is because shoppers’ perceivethat the informal sources have nothing to gain from the receivers subsequent actions andhence more importance is given to word of mouth communication.

Sender (Source)

Receiver (Shopper)

Message Channel (Medium)

Feedback

Basic communication model

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The receiver

The receiver of the communication is likely to the members of the target market.Intermediary and unintended audiences are also likely to receive marketers’ communication.Intermediary audiences include wholesalers, retailers. Unintended receivers of marketingcommunication include pubic that are important to the marketer such as the shareholders,creditors, suppliers, employees, bankers etc. while framing communication strategy themarketers should understand that the audience is composed of individual receivers each ofwhom interprets the message according to their own personal perceptions and experiences.

The medium

The medium or otherwise communication channel can be impersonal or interpersonal.Impersonal communication refers to the mass medium, interpersonal communication includesa formal conversation between a salesperson and a customer or informal communicationbetween two or more people that takes place face to face or by telephone, mail etc. Massmedia are generally classified as print (newspapers, magazines, billboards), broadcast (radio, television), or electronic(internet, mobile). Innovations like interactive advertisementenable the audience to provide an immediate feedback. Marketers also practice directmarketing which is made possible by capturing the shoppers’ information in the database.

The message

The message may be verbal or non verbal or a combination of both. A verbal messageusually provides more product specific information than the nonverbal communication.However combining verbal message with the nonverbal message enables effective andattractive delivery of information rather than using it individually.

Feed back

Feedback is an essential component of both interpersonal and impersonalcommunications. Prompt feedback permits the sender to reinforce, to change or to modifythe message to ensure that it has reached the audience. Feedback can be understood fromthe “body language” of the receiver ie from the facial expression, body movement ect.However it is easier to obtain feedback from interpersonal communications than impersonalcommunications.

3.4.1.2 The communication process

Communication process should be designed to make the shopper aware of theproduct, create a positive attitude towards the product, induce purchase or commitmentand show how the product can meet the shopper’s need. The communication processinvolving, the initiator, the receiver and the feedback are explained below;

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The initiator

The message is usually send by the organization which needs to communicate to thetarget audience about the product or service. The communication is done in order toinform, persuade and influence the choice of the shopper. The message initiator shouldtake utmost care to see that the message is encoded in a manner which is understandableby the target audience. The message may be communicated verbally or visually or by acombination of both. The marketer may choose the print, television or radio or electronicmedia or all the media as a channel to communicate the information.

The credibility of the source affects the decoding of the message. The perceivedhonesty and objectivity of the source which initiates the communication has an enormousinfluence on how the communication is accepted by the receiver. Creditability of the sourceis based on number of factors including the intention of the source. Some salient points are

• The credibility of the informal sources is generally higher than that of the formalsources. Friends, neighbors, relatives have a strong influence on the receiver’sbeahviour as they are perceived to gain nothing form the product transaction theyrecommend. The receivers treates the information from the person who owns theproduct as totally objective and as it is received from actual experience. Howeverthe credibility is questionable in situations where the individuals who experiencepost purchase dissonance often try to reduce their uncertainty by convincing othersto make a similar purchase.

• In case of formal sources, the credibility of the ‘not for profit’ sources are assumedto be generally higher than the credibility of the commercial sources.

• The shoppers’ sometime view the spokesperson who gives the product messageas the initiator of the message. This is the reason for use of celebrities inadvertisements. However in order to enhance the credibility, the celebrities shouldgive testimonials or endorse products with specific wordings that lies within hisrecognized competence of the spokesperson.

• In interpersonal communication, the shoppers are more likely to be persuaded bysalesperson who gives the impression of honesty and integrity. The reputation ofretailer who sells the product has a major influence on the message credibility. Thereputation of the medium that carries the advertisement also enhances the credibilityof the advertiser.

• The shopper’s previous experience with the product or retailer has a major impacton the credibility of the message. Satisfying product experience increases thecredibility of the further messages of the advertiser. If the shopper is not satisfiedwith the product the credibility of the future message tend to reduce.

• Even if high credibility sources are used in communication, the persuasive effectsof the same reduce over time. This phenomenon is termed as the sleeper effect.Hence the marketers must repeat the same series of communications or ads inorder to maintain the high level of persuasiveness of the spokesperson.

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The target audience

The message received will be decoded by the receiver on the basis of their personalexperience and personal characteristics. The meaning derived from the message dependson the following aspects

• The personal characteristics of the individual’s influence the accuracy with whichan individual decodes a message. A person’s demographics - age, gender, maritalstatus, educational qualification, social cultural membership, lifestyle and the otheraspects discussed in the preliminary part of this unit viz., attitude, perception,learning, self image and personality influences the message interpretation. Aperson’s level of involvement also plays a key role in determining the attention paidby him in decoding the message.

• The shopper’s mood affect the way in which an advertisement is perceived, recalledand acted upon. Research findings indicates that the shoppers mood is ofteninfluenced by the context in which the advertising message appears and the contentof the ad itself. Positive feeling induced by advertisements that depicts positiveoutcomes may enhance the likelihood of purchase of the advertised products.

Various barriers to communication may affect the accuracy with which shoppersinterpret the messages. These include selective perception and psychological noise. Selectiveperception refers to the shopper’s tendency to selectively view advertisements and ignorethe ads which has not special relevance or interest to them. Psychological noise refers toinability to receive the message due to various factors i.e., competing advertising messageor distracting thoughts. In order to avoid ‘noise’ the message is repeated many times.

Feedback

The ultimate success of marketing communication lies in the ability to persuade thetarget audience to act in the desired manner. Obtaining feedback ensures the initiator thatthe message has been received in the same sense in which it was proposed. In case ofinterpersonal communication the feedback can be obtained immediately through verbal ornonverbal cues. Because of the high cost of advertising space and time in mass media it isimportant to obtain a proper feed back in case of impersonal communication also. Howeverin case of the impersonal communication the feedback cannot be obtained directly, insteadit can only be inferred from the resulting action.

3.4.1.3 Designing persuasive communications

An effective and persuasive communication strategy involves four activities; settingup an communication objective, selecting the appropriate target audience, encoding themessage and selecting the appropriate media through which the message is to be transmitted.

1.Communication objectives

The communication objective of a marketer could be to transmit message regardingbrand positioning, product launch, additional features, promotional schemes , increasegoodwill, create positive brand image etc.

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2. The target audience

Identifying the target audience is an important factor in developing an effectivecommunication strategy. The target audience consist of the shoppers’ segment that themarketer want to target. The segment should be properly selected as one message cannotbe targeted at all different segment of shoppers. The target audience should be homogeneousin the sense it can consist of

• Shopper who have a positive view about the brand

• Shopper who view the product negatively

• Non users of the product who view the brand positively

• Non users of the product who view the brand negatively

• Brand switcher

• Bargain hunters

• Shoppers who view shopping as an enjoyable activity

• Shoppers who view shopping an activity to be completed etc

3. The message

Message is the thought, idea, attitude, image or other information that the senderwishes to convey to the intended audience. In order to design an effective message;

• The objective should be understood ie what the communication is expected toaccomplish.

• The target audience personal characteristics in terms of education, interests, needsetc should be considered

A right mix of verbal and nonverbal stimuli should be used to attract the target audience.Research studies have found that the use of simple sentence structure in advertisementsenables greater level of recall than the advertisements using more complex sentence structure.It is also found through research that rhetorical speech is most effective with unmotivatedshoppers. The shoppers liking for the advertisement, brand attitudes and recall can beimproved by manipulating the resonance in the ad. Resonance is defined as wordplay usedin combination with relevant picture.

Advertising for high involvement product should project strong, well-documented,issue – relevant arguments that encourage the cognitive processing. When the involvementis low, visual and symbolic material such as the background scenery, music or celebrityspokes person can be used.

While designing the message the marketers should make decisions regarding thefollowing aspects;

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Message framing: The marketer should take decision regarding the positive or negativemessage framing. Positive message framing happens when the advertisement stresses thebenefits to be gained by using the specific product. Negatives message framing stresses onthe benefits to be lost by not using the product. The message framing strategy depends onthe target audience involvement with the product category

One-sided vs two-sided messages: One sided message stresses only the favourableinformation. It is used in situations where the audience is friendly. If is the audience iscritical or unfriendly, likely to hear opposing claims, educated then two sided message canbe used. Two sided advertising messages acknowledge that the advertised brand hasshortcomings. Such messaged will be more effective in personal selling situations.

Comparative advertising: In case of comparative advertising, the marketers claim productsuperiority for its brand over one or more of the competitors’ products. Comparativeadvertising is used for product positioning, target market selection and for brand positioningstrategies. Research studies highlight that the comparative ads elicited higher levels ofcognitive processing and had better recall and were perceived to be more relevant thannon comparative ads.

Order effects: Order deals with the decision regarding whether to present the ads first orin the last and whether the positive effect should be highlighted or negative effect in thebeginning. Research findings suggest that the order of presentation is more likely to affectthe recall of audio messages than visual messages. In case of presenting the benefits of theproduct, the most important point should be made first , if the audience interest is low.

Reputation: Repetition ie the frequency of ad affects the persuasion, ad recall, brandname recall and brand references. It also increases the chance of the brand inclusion in theconsideration set.

4. The media

Media planning is an essential component of communication design and is directlydependent on the type of product, the target audience, and the message. Generally marketersadopt multiple media to communicate to the target audience. The main campaign wascommunicated through one primary medium, while the other media are used to support theprimary media.

Marketers are using precision targeting techniques like the selective binding and directmarketing to target a very specific potential shopper segment. Selective binding is generallyfacilitated by print media like magazines and newspapers. In this technique, a very specificset of subscribers to the media get their print copies with some extra pages bound withtheir copy. News paper inserts by local marketers in a particular geographical areas isbased on this strategy. In case of direct marketing various media like mail order catalogs,phone, email etc are used to reach very specific set of potential shoppers.

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3.4.2 Family

Family is defined as two or more persons related by blood, marriage or adoptionwho reside together. The individuals who constitute a family might be described as membersof the basic group who live together and interact to satisfy their personal and mutual needs.With changing time, the family structures have also changed to a great extent. There arethree different types of family structures – married couple, nuclear family and extendedfamily.

A married couple is the smallest family unit, which represents newly weds/ and or oldcouples living alone. Nuclear family generally comprises a married couple with one ormore unmarried children living together. A family comprising a married couple with childrenand one or both grandparents is called an extended family. In Indian context, there isanother family structure known as joint family. A joint family structure consists of two ormore siblings with their families living together.

3.4.2.1 Role of family

The family performs certain essential functions – imparts consumer socialization ,looksafter the economic well being, offers emotional support and maintains a family lifestyle

Consumer socialization

The socialization of family members, ranging from young children to adults is a centralfamily function. in the case of young children, the process includes imparting to children thebasic values and modes of behaviour consistent with the culture. It include moral andreligious belief, interpersonal skills, grooming ets. The aspect of childhoold socializationthat is particularly relevant to the study of consumer behaviour is consumer socialization.Consumer socialization is defined as the process by which children acquire the skills,knowledge and attitudes necessary to function as consumers. Research studies show thatmany preadolescent children acquire their consumer behaviour norms through observationof their parents and older siblings who function as their role models. Shopping with parentsie the shared shopping experience also give children the opportunity to acquire in-storeshopping skills.

The socialization process is not only confined to childhood rather it is an ongoingprocess. The socialization begins in early childhood and extends throughout a personsentire life. It is also quite common for selected product loyalty or brand preferences to betransferred from one generation to another called as intergeneration brand transfer. Somebrands may be transferred for even three or four generations within the same family.

Economic well being

Providing financial means to its dependents is a basic family function. However theway in which the family divides the responsibilities fro providing economic well-being haschanged considerably during the last two decades. It is no longer true to say that men are

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the only bread winners of the family. Women also share the responsibility of earning for theeconomic well being of the family. Likewise the household responsibilities are shared bymen too.

Emotional support

The provision of emotional nourishment i.e. the love, affection and intimacy to itsmembers is an important core function of the family. In fulfilling this function the familyprovides support and encouragement and assists its member in decision making concernedwith social and personal problems.

Family lifestyles

The importance place of education or career, reading, television viewing, on learningcomputer skills, frequency of eating out, selection entertainment and recreational activitiesetc depends on the lifestyle of the family in which an individual is brought up. Family lifestyle commitments influence the consumption pattern to a greater extent.

3.4.2.2 Family life cycle (FLC)

Family life cycle is a useful marketing tool to predict the shopper behaviour. It enablesto segment the target market in terms of a series of stages spanning the life time of a familyunit. A family life cycle describes the various stages of a family. FLC provides an estimateof time and money available to a family at each stage. The stages in the FLC is arrivedtaking into account the marital status, size of the family, age of family members andemployment status of the head of the household. The family requirements changes withtimes, as does the disposable income of a household. Hence understanding the FLC willenable to frame strategies suitable to the various stages in FLC.

The traditional FLC model and the non traditional model are presented below;

I. Traditional FLC

The traditional FLC is a progression of stages through which families pass. it is viewedto have five basic stages; bachelorhood, honeymooners, parenthood, post parenthoodand dissolution. The stages are explored in detail.

Stage 1: Bachelorhood

This is the first stage of the traditional family life cycle. It consists of people who haveestablished separate households apart from parents. Such a stage cannot be witnessedmuch in India, however it is coming up with children moving outside their family for jobrelated reasons. In India a large majority of the children live with the parents even whileworking. the majority of this stage consists of young , single, employed adults, but it mayalso consist of college students who live on their own. The salary earned is treated likepocket money and it is mostly spend on food, clothing, entertainment and recreationalactivities.

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Stage II: Honeymooners

This stage starts immediately after marriage and continues until the arrival of couple’sfirst child. This stage serves as a period of adjustment to married life. The husband andwife may be employed and the combined income enables them to enjoy a lifestyle thatprovides with the opportunity to purchase more. It also allows them to save or invest theextra income. They spent mostly in setting up house. They spent most of the income onfurniture, necessary home appliances, automobiles etc. the expenses may be met bythemselves or in most cases in India is paid by the parents. They spend a lot in dining out,entertaining and other leisure activities.

Stage III: Parenthood

Families enter the parenthood stage with the arrival of first child. This stage is quitelong and lasts till the children become economically independent. This stage can be furtherdivided into – pre school phase, elementary school phase, high school phase and collegephase. In the preschool phase a considerable amount is spent on product like baby food,toys etc. in the later stages the money is spent on education and related products.

Stage IV: Post parenthood

At this stage of the traditional FLC, children establish their own household and theoriginal couple are called empty nesters. Empty nesters are generally believed to haveincreased expense on travel and medical needs. Members of a financially stable householdat this stage find an increase in their disposable income and use this time and money toindulge in hobbies and other interests. They also spend money on homes, automobiles,furniture and vacations and thus form a good market for marketers of luxury products. ItIndia empty nesters stage was not very common in India where the grand parents, parentsand children live together. However old couples in India are living alone or are beinglooked after by old age homes, catering specifically to the needs of well-to-do emptynesters.

Stage V: Dissolution

Dissolution of basic family unit occurs with the death of one spouse. When the survivingspouse is in good health, is working and have adequate savings, and has supportive familyand friends, the adjustment would be easier. The surviving spouse often follows an economiclifestyle.

II .Non traditional FLC

With changing demographics and family structures, the non traditional FLC is evolved.These nontraditional stages not only include family households but also nonfamilyhouseholds. The non family households consist of a single individual and those consistingof two or more unrelated individuals. In order to accommodate the non traditionalhouseholds the following stages are proposed by Schiffman and Kanuk in the non traditionalFLC;

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Family households

Non Family households

3.4.2.2 Family decision making

Inputs regarding Family lifecycle would enable markers to further explore the familydecision making process. Schiffman and Kanuk propose eight distinct roles in the familydecision making process. These roles provide insight into the way in which families interactin the various consumption-related roles.

Childless couples Married couples may elect not to have children due to delayed marriages or the women being more career-oriented.

Couples who marry later in life (in late 30s or later)

More career oriented men and women and greater occurrence of couples living together. Likely to have fewer or even no children.

Couples who have first child later in life (in their late 30s or later)

Likely to have fewer children

Single parents I High divorce rates contribute to a portion of single-parent households.

Single parents II Young man or woman who has one or more children out of wedlock

Single parents III A single person who adopts one or more children Extended family Young single-adult children who return home to

avoid the expenses of living alone while establishing careers. Divorced daughter or son and grandchildren return home to parents Elderly parents who move in with children Newlyweds living with in-laws

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The identities of the family members who fill these roles vary from family to family andfrom product to product. A single family member may also assume a number of roles or insome cases these roles may not be required.

3.4.3 Group influences

A group may be defined as two or more individual’s who interact in order to accomplisheither individual or group goals. Group can be classified on the basis of the member shipstatus also. Membership group in one to which an individual belongs to or would qualify tobecome member. Symbolic groups are those in which an individual is not likely to receivemembership, despite acting like a member by adopting the group’s values, attitudes andbehaviour.

In the context of shopper behaviour, reference group is an extremely important andpowerful idea. A reference group is any person or group that serves a point of comparisonfor an individual in forming either general or specific values, attitudes or specific guide forbehaviour. From the marketing perspective reference groups are groups that serve asframes of reference for individuals in their purchase or consumption decisions. Referencegroups that influence the general or broadly defined values or behaviour are called normativereference groups. Normative reference group influences the development of a basic codeof beahviour. Groups that serve as benchmarks for specific or narrowly defined attitudesor behaviour are called comparative reference groups. A comparative reference groupmay constitute neighbouring families whose lifestyle is admired. Comparative referencegroups influence the expression of the specific attitude and behavior of the shopper.

Originally reference group was used to include only those groups with which anindividual interacted on a direct basis which include family and close friends. The concepthas broadened to include both direct and indirect individual and group influences. Indirect

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reference groups consist of those individuals or groups with whom a person does not havea face to face contact such as TV personalities, sports stars, cinema stars etc. The majorsocietal groupings that influence shopper behaviour are in order: family, friends, socialclass, selected subcultures, one’s own culture and other cultures.

3.4.3.1 Factors affecting the reference group influence

The degree of influence that a reference group exerts on the shopper’s behaviourdepends on the nature of the individual, the product and the specific social factors. Apartfrom these factors, some additional factors are highlighted below;

Information and experience

An individual who has experience with the product or can have access to informationwill be less dependent or influenced by the reference group. On the other hand if a shopperdoes not have access to objective information or if the firsthand experience with the productis not available then the influence of reference group will be more.

Credibility, attractiveness and power of the reference group

A reference group that is perceived as credible, attractive or powerful can induce theshopper’s attitude and influence their behaviour. Shoppers will be influenced by theinformation they obtain from people whom they consider to be trustworthy andknowledgeable. Power groups are not expected to change the attitude as in case of referencegroup which is considered as attractive or credible. Individuals may conform to the behaviourof powerful person or group but are not likely to express a change in their own attitudes.

Conspicuousness of the product

The extent to which a product is visible may affect the degree of influence of thereference group. The visually conspicuous product is one that will be noticed by othersand hence the influence of reference group will be more. In case of privately consumedproducts that are less conspicuous are less likely to be purchased with a reference groupin mind.

3.4.3.2 Types of reference groups

The shoppers are potentially influenced by a number of people they come in contactwith or observe. Some of them are highlighted below;

Friendship groups

Friendship groups are most likely to influence the shopper’s behaviour next to thefamily members. Friendship groups are highly informal as they are usually unstructured andlack specific authority levels. Friendship group provides companionship, and ability todiscuss problems that cannot be discussed with the family members. Hence the opinionsand preferences of friends influence the products or brands a shopper ultimately selectsespecially in the category of food, beverages, clothing etc.

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Shopping groups

Two or more people who shop together for food, clothing or simply to pass time arecalled as shopping group. Such groups are consists of normally family or friends and sothey are called purchase pals. The motivation for shopping with purchase pals is to have agood social time and to reduce the risk when making an important purchase decision.

Work groups

People spend most of their time at work and hence the group formed at work placeplays a major role on the Shopping behaviour of the members. Both formal work groupand the informal friendship work group can influence the shopping behaviour. The formalwork group consist of members who work together as a team. The informal group consistsof members who work for the same institution but may not be working together as a team.

Virtual group or communities

Internet has enables new type of group viz virtual group or communities. Communitywas originally thought as ‘people who live in the same place’. This has undergone a changewith the internet community, which is defined as “set of social relations among people”.The internet communities provide access to a wide range of information and the anonymityof the net gives its users the freedom to express whatever they wish.

Consumer action groups

Consumer action groups have been formed as response to consumerist movement.They are very large in number and are dedicated to providing shoppers with assistance inmaking the right purchase decisions, consume the products and services in a healthy andresponsible manner.

3.4.3.3 Celebrities and other reference group appeals

Celebrities include movie stars, TV personalities, popular entertainers, sports iconetc. celebrities can be powerful force in creating interest or actions with regard to purchasingor using select goods and services. Advertisers spend enormous sums of money to havecelebrities promote their products. Celebrities may be used to give testimonial, to giveendorsement, as an actor in a commercial, or as a company spokesperson. Testimonialrefers to a celebrity attesting the quality of the product or service based on the personalusage. In case of endorsement a celebrity lends his name and appears on behalf of theproduct or service with which he may be an expert. In case of an actor, the celebritypresents a product as a part of a character endorsement. As a spokes person the celebrityrepresents the brand or company over an extended period of time. The celebrity contributesto the fame, talent, credibility, charisma etc to the advertising program. The other appealsare presented below;

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• The expert: An expert is a person who because of his or her occupation, specialtraining, experience is in a unique position to help the prospective shopper evaluatethe product or service that the advertisement deals with. This appeal may be usedby marketers to convince the shoppers.

• The “Common man”: The common man appeal uses the testimonial of a satisfiedshopper. It demonstrates to the prospective shopper that someone like him haveused the product and is satisfied.

• The executive and employee spokesperson: Increasing number of firms usestheir top executives as spokes person. The executives who are admired by generalpopulation due to their achievements and status have an influence on the potentialshoppers.

3.4.4 Store’s employees

Employees play an important role in retaining the shopper and making them a regularcustomer. Advertising and other promotional offers may attract a shopper to visit a retailoutlet, but the store employee is the one who comes in direct contact with the shopperwhen he enters a retail outlet. The employee by his attitude, action and behaviour canmake a casual visitor into a regular shopper.

The employees in a retail store help the shoppers’ by performing a variety of function.Some of which are highlighted below;

• The employee provides information to the shopper regarding the new products,the usage of the same, instruction to be followed in using the same etc.

• A retail stores has a number of product categories and a great variety of assortment.Inspite of the sign boards and other information, a shopper may have difficulty inidentifying the products he needs. The employees can help the shoppers to identifythe product and thereby reduce their search time.

• Employees may provide expert advice to shoppers who are facing difficulty inchoosing among alternatives.

• They promote the product or brands by providing insight into the salient featuresand function in comparison to the competing products in the market

• The employees handle the objection and queries raised by the shopper in theconvincing manner.

• They persuading the shopper to purchase by stressing on the salient features orbenefits of the product dealt, the reduced price, quality etc

• They help shoppers to close the sale by negotiating the price, getting price reductionand ultimately they collect the bill and the purchased products

• In case of high involvement products, the post purchase dissonance is also handledby the employees.

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• In case of complaining shoppers, they handle the grievance to the satisfaction ofthe shopper as well the employer.

• They satisfy the ego of the shopper by waiting upon them and thereby create themood to do shopping.

• Employees can provide feedback on the various aspect of a retail store and theproduct dealt. They can provide information on the shopper’s grievance and canalso suggest alternative solutions for the same. As employees come into directcontact with the shoppers they are better informed about the shopper’s needs andexpectations.

The store employees can influence the shopper’s behaviour positively or negativelythrough the performance or non performance of the above listed functions. In order toperform the above listed functions in a satisfactory manner a store employee should havesome qualities.

• They should have through knowledge about the categories of products dealt in theretail store

• Communication skills is a must as they come into direct contact with shoppers

• Patience is required virtue to deal with any time of shopper, particularly acomplaining shopper or one who lacks confidence in decision making

• The employee should have empathy and be willing to listen to the shopper and hisunspoken needs

• They should be social and put the shoppers’ at ease

• Employee should have the presence of mind to be proactive and reactive to theshoppers needs and queries

• They should be flexible to deal with different types of shoppers’ with an array ofever changing needs

• They should have the ability to perform consistently under pressure. Stress toleranceis an important quality of a retail employee

It may not be possible for a retailer to get the employees with all the necessary skills.They may have to recruit people and train them in the required skill set. Many trainingmethods are available; lecture, demonstrations, films, programmed instructions, conference,sensitivity training, case studies, role playing, behaviour modeling and competency basedinstructions. Conducive environment should be created so as to ensure the success of thetraining progamme. The training programme should also be regularly evaluated.

Many research studies state that a satisfied employee can lead to satisfied customerswhich will in turn lead to profits for an organization. In order to satisfy the retail employees,they have to be compensated fairly apart from providing a satisfactory and motivatingwork environment. The compensation could be paid in the form of straight salary or onsalary plus commission basis.

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SUMMARY

Understanding the variable influencing shopper behaviour provides the retailer withpertinent inputs to frame strategies. This unit dealt in detail the various personal andinterpersonal variables influencing the shopper behaviour. The personal variables viz attitude,perception, learning, personality and self image were discussed. The inter personal variables;communication and persuasion, family, group and store employees were presented in detail.

Equipped with the understanding of the internal influences on the shopper behaviour,the next unit provides a detailed discussion on the external influences on the shopperbehaviour.

HAVE YOU UNDERSTOOD

• How are attitudes towards products or retail outlets formed? Can you change theattitudes of the shopper? Elucidate.

• How does perception influence the retail shopper behaviour?

• How does learning happen? How can the knowledge of learning help the retailers?

• A retail outlet wants to position itself as a store which caters to the lifestyle need ofthe shopper. Suggest strategies for the same.

• Explain how persuasive messages can be created and communicated to shoppers.

• Elucidate the various stages in the FLC. Explain how segmentation based on FLCcan be practiced by a retailer.

• Discuss the different types of reference groups and appeals that can be used byretailer to influence the shopper’s decision making.

• Highlight the role of store employee in attracting and retain shoppers.

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UNIT IV

EXTERNAL INFLUENCES ON SHOPPERBEHAVIOUR

4.1 INTRODUCTION

A Retailer invests huge sum in selecting ideal location for the retail store, designing theexterior and interior of a store so as to attract and retain the shopper. However the retailstore location should reachable by the shopper. It should be viewed in a positive perspectiveby the shopper. A shopper takes into account a number of factors in the selection of aretail outlet. These aspects are highlighted in the chapter. Likewise the social class to whicha shopper belongs to or perceives to belong to shapes the choice of the retail store and theproducts consumed by him. In addition the culture has a greater influence on the spendingand consumption pattern of a shopper. Thanks to the development in communication andtechnology, culture is evolving in different dimensions leading to a change in the lifestyle ofthe shoppers and the behaviourial pattern. Understanding the same is imperative for aretailer to design successful strategies. In tune with this, an overview on the various aspectsof cultural influences is presented.

The consumers today are more tech savvy, time rich and money poor. They are morewilling to depend on technology so as save time and enjoy increased convenience. In thisrespect online retailing is gaining momentum. Though the penetration level is low, e-tail isevolving and shoppers’ depend on the same to a greater extent for obtaining information.An attempt has been made in this unit, so as to highlight the salient aspects of onlineretailing. Segmentation of online shoppers is also attempted so as to gain insight into shoppingbehaviour.

Technological invasion has upgraded the retail sector by enriching the customer’sexperience and making shopping as a more enjoyable task. The technological influence onthe shopper’s behaviour needs to be understood so as to assess the impact of introducingof the same in a retail store. Hence a discussion on the type of technology that is introducedin retail stores is presented.

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After reading this unit you will be able to understand;

• Various factors taken into consideration by a shopper in selecting a retail location

• Elements of shop atmospherics

• Influence of social class on the shopper behaviour

• Cultural and inter cultural influences on the shopper behaviour

• Issues in On-line retailing

• The influence of technology on the shoppers’ behaviour

4.3 EXTERNAL INFLUENCES

Shopper’s behaviour is influenced by external factors apart from the internal variablesdealt in the previous unit. The external factors viz., store location, shop atmospherics,social influences, cultural and cross cultural influences are dealt in this section.

4.3.1 Store Location

Among other things, location plays a major role in a shopper’s selection of retailstore. Even though a store has an attractive exterior, interior, ambience, offers qualityproduct at less price, provides good customer care etc a shopper may not purchase, if thelocation is not reachable or preferred. A shopper may many times compromise on issueslike price, variety, and quality due to the nearness of a store outlet. Thus store locationplays a crucial role in selection of a store and in developing loyalty towards a particularstore.

A Shopper can choose the a retail store from any of the three broad locations viz.,isolated store, unplanned business district and planned shopping center.

• An isolate store is a free standing retail outlet located either on a highway or astreet. There are no adjacent retailers with whom the stores share the shoppers’traffic. In an isolated store the shoppers’ enjoys flexibility in terms of space, parkinglots, less crowd etc. However the variety seeking shoppers may not find itrewarding, economical or convenient to travel to shop in one store only.

• An unplanned business district is a type of retail location where two or more storesare situated together in such a way that the total arrangement or mix of stores is notdue to prior long range planning. Stores are located in close proximity due to theadvantages they can reap. There are four types of unplanned business districts vizcentral business district, secondary business district, neighbourhood business districtand string. A detailed discussion of these locations was presented in ‘Retailmanagement: concepts and environment.’ A brief recapsulation is provided here;

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i. Central Business District - A Central Business District (CBD) is the hub ofretailing in a city.CBD draws large number of shoppers due to the followingattractions; access to public transportation, excellent goods and servicesassortments, wider range of prices, a variety of store types and customer services,a high level of pedestrian traffic and proximity to commercial and social facilities.However it suffers from the drawbacks like inadequate parking, traffic, congestion,high rents and taxes, more travel time etc.

ii. Secondary Business District- A secondary business (SBD) district is anunplanned shopping area that is located on service roads at the intersection of twomajor streets in a city. The SBD sell a higher proportion of convenience orienteditems. The SBD enjoys the benefits like good product assortment, access tothroughfares and public transportation and more personal service. The majorweakness of secondary business districts are discontinuity of offerings, parkingdifficulties and fewer outlets than in CBDs.

iii. Neighbourhood business district - A neighbourhood business district (NBD) isan unplanned shopping area that appeals to the convenience shopping and serviceneeds of a single residential area. An NBD contains several small stores, such asthe dry cleaners, stationary shop, personal care centers, restaurants and the like.The major advantages offered by NBD’s are convenient location, longer hours,good parking and a relaxed atmosphere. The drawback is that they offer a limitedselection of goods and services and prices are generally higher because thecompetition is lesser than in the case of CBD or SBD.

iv. String- A String is an unplanned shopping area comprising a group of retail storesoften with similar or compatible product lines, located along a street or highway.The retailers situated in the string include the restaurants, gift shops and musicstores and the like. The string location enjoys the advantages of an isolated storesuch more flexibility, better road accessibility, parking facilities and lower operatingcosts. However it suffers from less control over prices, lower store loyalty andlimited product variety.

• A planned shopping center consists of a group of architecturally unified commercialestablishments on a site that is centrally owned or managed, designed and operatedas a unit.A planned shopping centre enjoys a number of benefits like cooperativeplanning and sharing of costs which enables to sell at a lesser price, assortments ofgoods and services, unified shopping center images, maximum pedestrian trafficand access to highways and parking lots.

The various locational factors that may influence the shopper’s decision are briefedbelow;

1. Traffic

Traffic refers to both pedestrian and vehicular traffic. The pedestrian traffic refers tothe number and type of people passing by. The shopper’s choice of a store depends onhow crowded the areas appears. The time is also taken into account by the shopper toidentify the peak and slag hours. Likewise in taking the vehicular traffic counts, the shoppertaken into account the extent and timing of congestion.

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2. Transportation

Nearness to the transportation facility is important for people who do not have theirown vehicle. The availability of buses, taxis, subways, trains and other kinds of publictransport is into account in selecting the retail . The nearness to the major roads, drivingtime, transportation network etc should be rated before selecting the location. A relatedfactor is the road condition which includes the age, number of lands, number of stoplights,congestion, state of the repair and maintenance work etc. For eg a site in old, narrow,congested road which needs to be repaired is not a good selection.

3. Parking facilities

Availability of parking facility is assuming an important role in the shoppers’ choice ofa store. Increase in the vehicle population, has made it difficult to get a parking slot. Thesafety consideration and cost of parking is also questionable. The ingress/egress- the easeof entering and exiting the sites parking also limits the accessibility. The number and qualityof parking spots, their distance from store should all be evaluated. The extent of parkingfacilities required depends on the store’s trading area, type of the store, the proportion ofshoppers using a car, the existence of other parking lot and time spend in a shopping trip (itdetermines the turnover of spaces), the flow of shoppers and parking made by the nonshoppers.

4. Visibility

Visibility refers to shopper’s ability to see the store and enter the parking lot safely.Good visibility is important for stores in order to attract and retain loyal shoppers. A storewhich is not visible may not communicate its existence to shopper and has a high chance ofnot being chosen by the shopper.

5. Amenities available

The availability of other services like restaurants, banks, ATMs, petrol bunks isconsidered by a shopper in the selection process.

6. Store composition

A market with a large number of stores usually has more shoppers’ visiting the areathan locations where one or two stores exist. The type of stores that exist in the area is alsoequally important. If the store in a given location complements, blends and cooperate withone another, and benefits from others’ presence, affinity exists. When the affinity is strong,the sale of each store will increase due to higher customer traffic. The compatibility can bemeasured with the degree with which the stores exchange customers.

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7. Type of Product

The kind of product to be purchased by the shopper affects the choice of location. Afood and grocery retailer may be located near or in a residential area. Locating thesupermarket in a purely business district may not be an easy task. Similarly a boutiquedealing with highly priced, designer collection is situated in the area where the residentscould afford the same ie upmarket area which suits the image of the boutique.

8. Competition and Neighbors

Other businesses in the prospective location are also taken into consideration by ashopper while selecting a retail store. The image of other stores, types of shoppers visitingthe same, extent of crowd, type of product sold by the neighbours can actually induce oraffect the choice of the retail shop.

9. Other factors

Shoppers’ may also chose the retail store by taking into account the placement in thelocation, size and shape of the building, condition and age of the lot and building. Placementrefers to the site’s relative position in the district or center. ‘Corner influence’ can be enjoyedif the retail store is situated in a corner where two streets intersect. It attracts greater footfall as it is visited by pedestrians from both the streets. The site is normally expensive inview of the inherent benefits.

4.3.2 Shop Atmospherics

Among other things the choice of a retail store to a greater extend depends on theshop atmospherics. Atmospherics refers to the psychological feeling a shopper gets whenvisiting the retail shop. It is personality of the retail shop. In case of a store based retailingatmospherics refers to the store’s physical characteristics that projects an image and drawsthe shoppers. The sights in the retail store, sounds, smells and other physical attributes allcontribute to the shopper’s perception. Apart from influencing the selection of the retailshop, atmospherics also influences the time spent by the shopper insider the store, amountof money spend ie the tendency to spend more than the originally planned amount and thelikelihood of visiting the retail shop again.

A retailer should engage in visual merchandising by taking proactive, integratedatmospherics approach to create a certain ‘look’ by properly displaying products, stimulatingshopping behaviour and enhancing the physical environment. In order to attract the shopperthe retailer has to concentrate on the following aspects of the retail environment.

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4.3.2.1 Exterior

The storefront and entrance of a retail shop will create a first impression and issubjected to critical evaluation by the shopper. The exterior gives an impression regardingwhat a shop has to offer. The aim of the exterior is to attract the shopper and communicatethat the store fits into the image the shopper envisages. If the store exterior is not managedproperly or if it creates a poor image, even if the merchandise dealt are of good quality, itmay turn the shoppers’ away from the retail store. On the other hand if the exterior is goodand the merchandise dealt is not upto the expectations of the shopper, then also it maydrive the shoppers away from the store. Lack of cohesion between the exterior and interioris likely to create dissonance.

Facades

The exterior is communicates messages through many elements: the windowswindow display, the nature of entrance, view to the interior, sights and the materials withwhich the entrance is constructed. Each of the elements needs to be consistent andharmonious with others. Various alternatives are available in planning a storefront;

• A modular structure is a one piece rectangle or square that may attach severalstore,

• Prefabricated structure – a frame built in a factory and assembled at the site,

• A prototype store – used by franchisors and chains to foster a consistentatmosphere.

• A recessed storefront attracts people by being recessed from the level of otherstores. A shopper has to walk in a few feet to examine the storefront. A recessedstore front offers protection from environment and acts as funnel drawing shoppersto the store.

• A projecting storefront intrudes into the street or complex, thus announcing thepresence of the shop to the shoppers.

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The choice depends on necessity to differentiate a store front from the surroundings.In addition to the store front the trees, fountains and benches in front of the store mayattract and create a positive impression about the store by creating a relaxed environment.

Entrance

The façade is a prelude to the entrance itself. The entrance provides a sense of transitionfrom the world outside to the world of the retailer inside. Number of entrances in the retailshop may be an indication of managing the crowd in an elegant manner. More number ofentrances and exit attracts the vehicles and pedestrians. The type of entrance is alsoimportant. The kind of door that is used affects the shopper’s perception about the store.The function of the store is much more that of providing security to the store. The doorwaycan be revolving, electric, self –opening, regular, push-pull, sliding etc. while designing thedoor, the type and positioning of the door handle or door push should be thoughtfullyconsidered, keeping in mind the armful of shopping bags.

Walkways should also be given due importance as it affects the shoppers perception.A wide, lavish walkway creates a different atmosphere and mood rather than a narrowone. The shoppers would be happy if sufficient space exists for comfortable entry into thestore.

Display windows

Display windows are an ideal way to attract new and existing shoppers. They enablethe shoppers to identify the store’s offerings and induces people to enter. It creates themood for the shopper by showing the representative merchandise offering. They are usedfor selling promotions, image building, seasonal changes, new arrivals and to showcasehigh demand items. a retailer should properly plan in order to develop a good windowdisplay. The number, size, shape, colour and themes of display and frequency of changesshould be planned. Window display needs to be changed often so that they do not becomestale. The frequency of changing window displays depends on seasons, type of merchandise,promotional intensity and festivals and occasions.

Material for storefronts

The choice of material for the storefront communicates and convinces the shoppersto enter the shop. It provides a clear indication about the cutlrue,values and interiors of thestore. For example the storefront created with marbles, stone, granite suggest a solid andenduring quality of the store. Stainless steel offers the image of contemporary merchandise.More expensive metals such as bronze, brass etc conveys an image of good quality.

Building height

The building height can be disguised or nondisguised. In case of the disguised buildingheight part of the store is beneath the ground level. Such building will be attractive toshoppers who don’t like a large intimidating structure. Non disguised building is where theentire building or store can be seen.

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Visibility

In order to make its presence known a retail store should be visible. The pedestrianand / or vehicular traffic must be clearly able to see the store fronts or marquees. Billboards are used to make the shoppers feel the presence of the retail shop.

Exterior signage

The shopper can get an impression about the store form the exterior signage. It workslike an advertisement for the store by communicating the name and the character of thestore. a good signage should be distinctive and yet merge with the surroundings. Theytypography should be decided keeping in mind the clarity and store personality. Highlyreflective surfaces that distort the visibility of the sign should be avoided. The external signsare normally illuminated from within using external lanterns, tubes or spotlights.

The retailer should keep in mind the surrounding stores and the surrounding areawhile planning the exterior.

4.3.2.2 General interior

Once the shopper is inside the store, numerous elements affect their perception. Someof these elements are discussed below;

Floors

Floor finishes can create different atmospheres, zones, walkways and departments.Larger stores use a wide range of floors to differentiate various sections and departments.The flooring is chosen in such a way that it suits the overall design of the store and the typeof the merchandise dealt. Carpets, wood and tiles, cement etc can be used for flooring.Carpet and wood can create exclusive environments. However materials such as marble,terrazzo, mosaic, granite and ceramic tiles are used as they are durable and easy to clean.

Interior walls

A number of finishes and material are available for walls. Paint is the least expensiveand most flexible finish, however it can be easily soiled. Repainting walls in regular frequencyis a must for maintaining the image of the store. Plaster finish or a combination of paintingand plaster can be used. A combination of plaster with fiberglass, glass, concrete, wood,plastic, laminate, mirror, fabric, paper and other materials can be used to create an attractiveenvironment.

Ceilings

The ceiling is one of the most complex parts of a store, usually carrying and concealingmany vital services such as lighting electrical wiring, air conditioning, security equipmentetc. they can be dominating visual, distracting the shoppers from the merchandise. Theceilings can be suspended or false. It can be of made of same material as that of the walls.

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Music

Music can be used in the store to create a positive environment that influences shoppingbehaviour. Sales have been found to be affected by the kind of music being played in thestore. A research study conducted in music store revealed that the sales increased by 38%when a supermarket play a slower music compared to when it played fast music. Shoppershave been found to spend more time in stores that play soft music as compared to storesthat play loud music. Music makes shoppers’ spend more time in the store and changestheir pace, which can be utilize to build sales or repeated visit by influencing the mood ofthe shoppers. Stores should ensure that appropriate and continuous music is always playedso as to enhance the shopping experience.

Lighting

Research studies have shown that proper lighting can increase the sales by 20%.Lighting performs the essential function of illuminating the store and the merchandise. Italso influences the store’s atmosphere. Lighting can enhance the effect of even a mediocreinterior design. Theatrically lit or ambient-lit atmosphere can be created depending on theneeds of the retailer. An ambient lit store is used in supermarkets, drug stores, etc where anoverall illumination is made. Theatrically lit light is used in fashion stores or jewelers tohighlight particular merchandise or an array of merchandise. Lighting decisions should alsobe made in combination with the floor plan and the type of merchandise dealt.

Lighting can influence of effect of color hence the decision on type of lighting should bemade cautiously. Light can also create a sense of space within a store. The stores shouldensure that the cheaper bulbs are not used as they create a shabby image. A bright storefrontis more attractive, hence the storefront should be properly lighted so as to make the storemore appealing.

Interior signage

Interior signage is used to perform specific roles like selling merchandise, givinginformation and providing direction inside the store. Different signage can be used to performdifferent task. The signs which provide direction should be simple and quicklycomprehensible. Signs that help to enhance the sales process are more complex. In generala sign should be kept simple and should not convey too many things which might confusethe shopper. It should be kept in a visible height and a legible font should be used. The sizeof the signage should also be proportionately increased to the area it needs to point out.

Colours

Colours can create or change the mood of the shopper. Effect of colour should beconsidered in combination with the lighting used in the shop. Bright, vibrant colours contributeto a different atmosphere than light pastels or white colours. Research studies show that in

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case of fashion oriented stores, blue interiors are associated with more favourableevaluations, marginally greater excitement, higher store patronage intentions and higherpurchase intentions than orange interiors.

Fixtures

Retailers may use custom designed fixtures and off the rack or stock fixtures. Customdesigned fixtures lend uniqueness to the store and are better suited for merchandise. Specialfixtures may add to the image of the store, however it may be costly. Care should be takento see that the fixture design are kept as simple as possible.

The other factors to be considered in order to create a proper atmosphere inside thestore are highlighted below;

• Scent and sounds influence the shoppers’ needs. For example in case of restaurantsfood aroma can be used to increase the appetite. A cosmetic store may use perfumesto enhance its appeal to the shoppers.

• The store’s temperature affects the time spend by shoppers’ in the store. a retailstore which in not air conditioned may not be preferred by a shopper in hot summer.

• Wide uncrowded aisle creates a positive image rather than a crowed or narrowone. Shoppers may find it more comfortable, easy and less irritated if they are notpushed, pulled or touched while they walk on the aisle.

• Presence of escalators, elevators and or stairs might influence the shopper’s choiceof store and the departments visited in a store. Escalators provide a quiet view ofthe entire store. Stairs are important for discount and smaller stores.

• Dead areas in a store can also be used to appeal to the senses of the shopper. Thedead area refers to the awkward spaces where normal displays cannot be set up.Light fixtures, doors, rest rooms, dressing rooms and vertical transportation cancause dead areas.

• A retail store depends on the salesmen for communicating, message, creatingcustomer. etc. In this context a retailer should educate and train the employees tocreate positive atmosphere so as to enhance the attractiveness. Positive, wellgroomed, un informed employee can create a negative effect on the shopper

• A store which has a state of art technology impresses people with its operationalefficiency and speed. If the technology is outdated or slow it might lead to impatientshoppers.

• The presence of trail room may be an important factor influencing the choice of atextile retail store. A fashion store can have a carpeted dressing room or an averagequality room depends on the type of shopper it caters to.

• The cleanliness of the store matters a lot in projecting a positive image among theshoppers. It can add value to the efforts taken by the retailer in creating a positiveand attractive exterior and interior

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4.3.2.3 Store layout

A detailed discussion about store layout was dealt in the previous semester coursematerial -‘Retail Management: Concepts and Environment’. With the indepth understanding,some salient features are refreshed here.

In order to design a layout which is attractive to the shopper, equal importance shouldbe given to selling space, merchandise space, and the shopper’s space. Selling space isused for display of merchandise, interaction between sales people and customers,demonstrations and so on. Merchandise space is used to stock non displayed items.shopper’s space influences the shopping mood. It includes the lounge, benches, chairs,dressing rooms, rest rooms, restaurant, parking, wide aisles etc.

Depending on the expectation and needs of the shopper the merchandise can bearranged following functional product groupings, purchase motivation product groupings,market segment product groupings and storability product groupings. Functional productgrouping is based on the end use of the merchandise. Purchase motivation grouping appealsto the shopper’s urge to buy product s and the amount of time they are willing to spend onshopping. Market segment offerings focuses on displaying items that appeal to a giventarget. Storability product groupings can be used for products requiring special care inhandling.

The shoppers should be enticed to move inside the store by following race tracklayout. The department locations should be properly planned and the shelves displayingproducts should also be given due consideration. The shelf should be easily reachable bythe shopper. The space between the shelves should also be properly planned so as toavoid the butt-brush effect. The personal space needed by a person to mover aroundfreely should be kept in mind else it may be create an image of being crowded and unpleasant.The individual products display on the rack should also be made in an inducing and convenientmanner for the shopper.

4.3.2.4 Interior displays

Interior display plays a major role in influencing the shoppers’ towards impulse buying.The shoppers may be attracted by the ‘point of purchase’ display which might induce themto get more information about the product. The display can also persuade the shopper tobuy the products. Research studies quote that majority of the purchase decisions aremade by the shoppers inside the retail shop. Against this back POP display acts as a silentsalesperson. Signs and instore media educate and draw attention to the product availableand its attributes.

The interior display should be changed so as to attract the attention of shopper and tobreak the monotony. In should also be kept in mind that some shopper’s may be confusedif the display is change and be frustrated in identifying his product requirements. A finebalance should be achieved to demonstrate variety and still keep the shopper’s at ease.

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In the case of retail store which follows an assortment display, shoppers’ may beencouraged to feel, look around and try the products. Shoppers’ will find it convenient tobuy food products, apparels, greeting cards etc in the open assortment display. A themesetting display which depicts the product offering in a thematic manner can set a specificmood for the shoppers’. Each special theme seeks to attract attention and make shoppingmore fun. An ensemble display which focuses on presenting the complete product bundlerather than displaying merchandise in separate category may make it easy for a shopper tochoose the merchandise. Shoppers will be encouraged by the ease of purchase and will beattracted by envisioning the entire product bundle.

In case of apparel stores a shopper may prefer a rack display where the dresses areneatly hung. However a cluttered display will tend to confuse the shoppers. The shoppermay choose the products in ‘case display’, ‘cut case display’ and ‘dump bin’ only if theyneed it. The display by itself will not attract the shoppers to purchase. Case display exhibitsheavier, bulkier items than rack holds. In cut case display, the merchandise is left in originalcarton. In a dump bin a case holds pile of sale clothing or other products. These displaysmay stimulate shoppers to purchase by creating an image of reduced price by ensuring thatno frills are attached

Electronic display can also be used to make the POP more interactive, exciting andtailored to the requirement of shoppers’. It demonstrates the products and answersshoppers’ queries. It can also be made more attractive using multi media capabilities.

4.3.3 Social Influences

Social class is defined as the division of members of a society into a hierarchy ofdistinct status classes, so that members of each class have relatively the same status andmembers of all other classes have either more or less status. Social class is a group consistingof a number of people who have approximately equal positions in the society. Societieshave been divided into various strata based on the multitude of factors like economic andpolitical power, cultural values and beliefs, family background, education and income.Social class is thus primarily based on income, wealth and occupation.

4.3.3.1 Nature of social class

Six basis characteristics of social class is discussed below;

• Social classes exhibit status: Social status is different from social class in thesense that it has more to do with lifestyle and prestige. However social class andstatus have an important relationship.

• Social classes are multidimensional: Social classes are based on a number ofcomponents. They are not equivalent to or determined solely by occupation orincome or any one criterion. According to some theories housing is also consideredas key social class ingredient. Housing refers to the place where a person lives

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• Social classes are hierarchical: Social classes have a vertical order to them rangingfrom high status to low status. Individuals may be placed within a class on thishierarchy, based on status criteria.

• Social classes are homogeneous: People within the social classes are similar inattitudes, activities, interests and other behaviour patterns. This homogeneity allowsthe marketers to effectively segment the market by social class and to developappropriate marketing mixes.

• Social classes restrict behaviour: Interaction between social classes is limitedbecause most individuals are comfortable in dealing with people belonging to theirclass as they have similar attitudes, values, behavioral pattern etc. This factor limitsthe interaction between different classes about advertising, products and othermarketing element.

• Social classes are dynamic: Social mobility depends on the type of system ie openor closed systems. In open systems people have social mobility ie they haveopportunity for upward or downward movement in the social strata. People inclosed systems have inherited or ascribed status. They are born in one social leveland cannot leave it.

4.3.3.2 Social class measurement

Three broad approaches are available to measure social class – subjective approach,reputational approach and objective approach.

Subjective approach

In subjective approach individuals are asked to estimate their own social class positions.Individuals are asked to rank themselves in the social class hierarchy. However since mostpeople may be reluctant to categorize themselves as either lower class or upper class willend up in ranking themselves as middle class.

Reputational method

According to this approach members of the community are asked to rank each otherin the status system. This approach requires individual to know each other in order torank, and hence it is limited to small communities and therefore cannot be widely used bymarketers.

The objective method

Objective measures involve measures of demographic or socio-economic factors ofindividual using questionnaires. The questionnaires may focus on collection of informationregarding the individuals, their families, place of residence etc. The variables like income,occupation, education may also be considered. The data regarding the geo demographicmaybe considered. The data includes the zip code and the residence - neighbourhoodinformation details.

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Objective measures of social class may fall into two basic categories viz., single-variable index and composite variable indexes. Single variable index uses one socioeconomicvariable to evaluate the social-class membership which may be income, education oroccupation. The other variables which might be considered are quality of neighborhoodand the monetary value of the residence. These data can be used to support and verify thesocial class membership assigned on the basis of occupational status or income. Possessionsie the furniture, telephone, general atmosphere in room etc are also used as index of socialclass. This scale which is bases on possessions is called Chapin’s Social Status Scale.

The composite variable index, as the name suggests combine a number ofsocioeconomic factors to index the social class. Such index is considered to reflect thecomplexity of the social class better than a single variable index. ‘Index of statuscharacteristics (ISC)’ and ‘Socioeconomic Status score’ are the two important compositeindexes used to measure social class. ISC is a weighted measure of socioeconomic variables;occupation, source of income, house type and quality of neighborhood ie dwelling area.The socio economic status score combines three socio economic variables viz occupation,income and educational attainment.

4.3.3.3 Social stratification

The social classes differ in their values, attitudes and behaviour. Social class stratificationprovides a clear understanding of the shoppers on the basis of which segmentation couldbe practiced to serve the needs in a better manner. The Coleman-Rainwater classificationof American society’s social class is highlighted below;

• Upper-upper class: This group is composed of old, locally prominent families. Itis the smallest group having international residence and friends. They are orientedtowards living graciously, upholding family reputation and displaying a sense ofcommunity responsibility.

• Lower-upper class: The class constitutes of people who have recentlyaccumulated wealth and are not quite accepted by the upper-uppers. They arefounders of large businesses, wealthy doctors and lawyers. They have the highestincome of all the classes and their goal is to live graciously as well as to succeed intheir ventures.

• Upper-Middle class: The class constitute of moderately successful professionalmen and women, such as doctors, lawyers, professors, owners of medium sizedbusiness and men at managerial level. It also includes younger men and womenwho are expected to reach the occupational status level within few years. Thisgroup is motivated towards achieving success in their careers, reaching a higherincome level, and achieving social advancement for themselves and children.

• Middle class: This class is the top of the ‘common man’ level in the society. Themembers constitute the non managerial workers, small business owners and highlypaid blue collars. The key motivation for this segment is ‘respectability’ and ‘striving.’

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• Working class: These are ‘poor but honest’ and ‘family folks’ constitute thelargest of all the classes. It is composed of skilled and semiskilled workers andsmall business trade people. These class members earn good income but don’tuse it to become ‘respectable’ as in the case of middle class group. They areoriented towards living well and enjoying life from day to day rather than saving forfuture or being concerned by others opinion.

• Upper-lower class: This class is the working poor who have belong to the labourmakert. Although above poverty level, they don’t have steady employment as theyhave only less education and are unskilled

• Lower-lower class: This class of people lives below poverty line. Their income isgenerated from illegal activities. They have bad reputation among high classedwho view them as lazy, shiftless, against work and immoral.

India had only two distinct classes at the time of independence ie the upper class andthe lower lass. However in the last few decades the middle class has emerged. The middleclass segment can be further stratified as upper middle, middle middle, and lower middleclass. The factors which have contributed to the increase in middle class are raising rate ofliteracy among women and their increasing participation in the workforce.

A survey by AC Nielson on attitudes among youth, categorized Indian youth into thefollowing types;

• Balancing lot - consist of upper an upper-middle class males and females, whobelieve in self-expression and freedom, but value family.

• Money matters- social class consists of middle and lower-middle class males,who believe that money is the only way to success.

• Desi youth – consist of mostly middle and lower-middle class males and females,who have strong value systems at home, and thus are apprehensive of westernculture and values.

• Cool guys – males and females belonging to affluent class, who have completelyadopted western culture and brands

• Repressed souls – mostly middle and lower middle class females who have tenserelationship with parents and are frustrated with life due to parental restrictions.

4.3.3.4 Social class and shopper behaviour

The influence of social class on the shopping behaviour in terms of products they buy,the places they shop and the responses to promotions and prices are explored in thissection;

Products and services consumed

Products and services consumed differ among the social classes. Apart form between-class purchasing differences, within the class also variations occur. Sometimes it might be

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difficult to distinguish class differences in purchase patterns of products which are boughtby a wide variety of shoppers for example the generic products. However research findingsshows that social class differences could be witnessed in case of purchase of certain brandsof products, store choice and restaurants.

The consumption pattern of upper-uppers are quite different from other social classesin the sense they do not purchase to impress others. Lower uppers are oriented stronglytowards conspicuous consumption and their purchase decisions are geared towardsdemonstrating wealth and status through expensive cars, jewelry etc. The upper-middlespurchase greater number of products than any other class. Since they are successful intheir respective field, their purchase decision reflect strong social implications. Socialacceptability is an important guideline in the consumption activity of middle class. They aremore interested in products which will enable them to gain social acceptance than thefunctionality of the same. Working class are more concerned with purchase providingthem immediate gratification. However they avoid spending money in ways that areconsidered ‘out of the place’. Their expense on services is much less than the spending ondurables. The lower-lower class are likely to spend more of immediate gratification andthey have a tendency to do impulse buying.

Shopping behaviour

Shopping behaviour varies with the social class. Research findings show that thestore choice and social class membership are very closely related. All shoppers do not buyat glamorous, high status stores. Instead people select a retail store which matches theirvalues and expectations. Same products and brands may be purchased in different outletby members of different social classes.

Research on social class and information searching under different levels of perceivedrisk show that in case of high risk purchases no social-class pattern existed for informationsearch using friends, relative, newspaper, magazine, TV/radio and sales people. In middlelevel purchases friends and relatives are more likely to be used as information sources associal class decreases.

Research findings on shopping behaviour of women show that in case of upper andupper middles; women organize shopping more purposefully and efficiently. They havemore information on where, when and to shop and the information is collected prior topurchase by reading brochures, newspapers etc. Store environment is important for them.The stores should be clean, orderly ,reflect good taste and staffed with employees who arewell aware of the product and the shopper’s status. Women belonging to middle classwork more at their shopping. Shopping for non food items is though as a demanding andtedious process filled with uncertainty. They are value conscious and seek to get maximumvalue for the money paid.

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The working class women prefer to shop at known places suggested by friends etcwhere they feel comfortable. They buy with less prepurchase deliberations than the middleand upper classes. They are more likely to use in-store information sources such as displayand sales people and purchase mostly from discount houses. Lower class group mostlybuys on impulse. They often purchase from local shops who cater tailor made products oncredit terms.

Promotion

Social classes differ in the media choice and usage patterns. They also differ in theirperceptions and response to advertising and other promotional messages including thewords used. The media patterns reveals that the upper classed tend to buy and read morenewspapers, magazines and watch less television than other classes. The media choice ofupper middles reveals FM radio an newspapers as the preference. They spend significanttime in watching programmes of their taste. The middle class group ted to read morningnewpapers and magazines and have a pragmatic approach to advertising. Though they areattracted by discounts they are cautious in their purchases and ensure that the incentive isworth the effort. The working class listen to radio and spend more time in watchingtelevision. They are more receptive towards sales promotional offers and are attractedtowards the same. Lower class media habits are the same as working class except thatthey have even lower readership of magazines and newspapers.

Price related behaviour

Research studies reveal that lower classes are poorly informed about price and productalternatives. They are more likely to buy products on discount offers/ on ‘sale.’ Priceperceptions of middle and working classes show that working class believes more on theprice/quality relationship. They believe that high priced product are of high quality.

Saving, spending and credit

Saving, spending and credit usage are all related to social class stratification. It isfound that upper class shoppers are more future oriented and confident of their financialacumen. The lower class are found to be more inclined towards gratification of theirimmediate needs. They are more concerned with the safety and security of their savings.The lower class purchasers use credit card to pay for things they may not be able to affordwhereas the upper class use it as a substitute for cash.

4.3.4 Cultural And Cross Cultural Influences

Culture reflects the personality of a society. It influences all activities of individualincluding the purchase of goods or services. Shoppers perceive that the goods or servicespurchased and consumed by them transmit cultural meaning. Advertising and otherpromotional strategies should carry the values, norms or beliefs that model the culture ofthe target segment. Understanding the culture of the shoppers will enable the marketers tointerpret their reaction to the marketing strategies.

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Culture is defined as “that complex whole that includes knowledge, belief, art, morals,law, custom and other capabilities and habits acquired by man as a member of society.” Itis also defined as “patterns of values, beliefs and learned behaviour that are held in commonand transmitted by member of any given society.”

In order to understand the influence of culture on shopper behaviour, culture can bedefined as the “sum total of learned beliefs, values and customs that serve to direct theshopping behaviour of members of a particular society.” Belief refers to the accumulatedfeelings and priorities that individuals have about ‘things’ and possessions. It consists oflarge number of verbal and non verbal statements that reflects a shopper’s knowledge andassessment of another person, a retail store or a brand etc. Values are also beliefs, howeverthey differ from belief in the sense that they are few in number, difficult to change, not tiedto specific situation or objects and are widely accepted by members of society. Valuesserve as a guide for culturally appropriate behaviour. Customs are explicit modes ofbehaviour that constitute culturally approved or acceptable ways of behaving in specificsituations. Beliefs and values are guides for behaviour whereas customs are usual andacceptable ways of behaving.

4.3.4.1 Components of culture

Different culture differs in what each expects from its members, however all cultureexists to meet the common needs of the people. The culture has components which isevolved to protect the people. They are;

• Norms: The rules of behaviour are called norms which provide guidelines onacceptable and unacceptable behaviour. Norms can be classified as enacted andcrescive norms. Enacted norms are explicit rules easily recognized by people insideand outside of the social unit. Crescive norms are learned and practiced by membersof a social unit but may not be easily recognized by nonmembers.

• Customs: Customs are behaviours that have lasted over time and are often passeddown in the family setting.

• Mores: It is a set of standards for values and behaviours that are considered‘morally right’. The members of a culture set the standards for what is ‘morallyright’ and expect compliance.

• Conventions: Those practices tied to the conduct of everyday life in various settingsin a culture is called conventions for eg the appropriate clothes to be worn, food tobe served in a certain settings etc.

• Sanctions: Sanctions are negative actions on the part of the members of the culture.When members of a culture do not confirm to the norms, customs, mores orconventions of the society, they may be ‘sanctioned.’ It may take the form ofavoidance, shunning or banning where individuals are not allowed to participate invarious activities.

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• Values: The enduring beliefs that specific modes of conduct or end-states ofexistence are preferred to other specific modes of conduct or end states. Modesof conduct in order to obtain certain end-states are called instrumental values andthe end-states towards which a person is moving are called terminal values.

• Beliefs in culture: Cultural beliefs are based on religion and myth. Cultures areshaped by the underlying religious philosophies of the people. A myth is a story orfable that reflects important values shared by members of a culture and this used toteach one or more of these values.

• Rituals : It is a pattern of behaviour tied to an event that is considered important toour lives. Rituals involve the use of goods and services. Those objects needed inorder for rituals to be carried out successfully are called ritual artifacts. Marketersneed to understand the rituals in order to position the product or services.

4.3.4.2 Characteristics of culture

The concept of culture is difficult to understand .The characteristics of culture explainedbelow may clarify the meaning.

• Culture is invented: People invent culture and this invention consists of threeindependent systems or elements;(1) an ideological system consisting of ideas,beliefs, values and way of defining acceptable and unacceptable actions (2) atechnological system that consists of skills, crafts and arts that enable humans toproduce material goods derived form the natural environment (3) an organizationalsystem such as family that makes it possible to coordinate their behaviour effectivelywith the actions of others.

• Culture is learned: Culture in not instinctive, but learned beginning early in lifeand is charged with a good deal of emotion. It is handed over from generation togeneration

• Culture is socially shared: Culture is a group phenomenon, shared by humanbeings living in organized societies and kept relatively uniform by social pressure.The group involved could be the society at large or the family.

• Cultures are similar but different: Different cultures may exhibit similarity incertain aspects yet they may be different in many respects which makes the shopperbehave in a different manner.

• Culture is gratifying and persistent: Culture satisfies basic biological needs aswell as learned needs. It consists of habits that will be manipulated and reinforcedas long as those who practice them are gratified. This gratification makes the cultureto be handed over from one generation to another.

• Culture is adaptive: Culture is gradually and continuously changing. Somesocieties are quite static , with a very low rate of change while others are moredynamic with very rapid changes takes place

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• Culture is organized and integrated: Culture has various parts that is fit together.Each culture has some inconsistent elements however it tends to form a consistentand integrated whole.

• Culture is prescriptive: Members of culture have a common understanding ofright and proper way of doing things. The culture has ideal standards which makepeople in the society to act in a consistent and acceptable manner. Norms alsoenables to adhere to the guidelines.

4.3.4.3 Measurement of culture

Number of measurement techniques can be used to study culture. Some of thetechniques are explained;

Projective techniques

Projective techniques are used to reveal the underlying motives of individuals despitetheir efforts to conceal the same or due to unconscious rationalizations. A variety of disguised‘tests’ such as incomplete sentences, untitled pictures or cartoons, ink blots, wordassociation test etc can be used. It is often used during indepth interviews. The theorybehind projective test is that the respondents inner feeling influence how they perceive thestimuli. Their responses are expected to reveal their underlying needs, wants, fears andmotive whether or not the respondents are fully aware of them.

Content analysis

The content of messages revels the cultural aspects of a society. Cultural analysisfocuses on the content of verbal, written and pictorial communications. It can be used asan objective means of determining the social and cultural changes that have occurred in asociety.

Fieldwork

In fieldwork a small sample of people are selected and their beahviour are carefullyobserved. The observation leads to conclusion regarding the values, beliefs and customsof the society under investigation. The field observation focuses on the observation of theshopper behaviour, it takes place in a natural environment and it can be performed with orwithout the shopper’s awareness regarding the test. It focuses mostly on the in-storeshopping behaviour and less frequently on consumption. In some cases the researcherwho is conducting the field study may also become active member of the environment inwhich the study is conducted.

Value measurement survey instruments

Values can be measured by means of questionnaire or value instruments to ascertainthe responses of shoppers towards personal and social concepts as freedom, comfort,

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natural security and peace. The value instruments like the Rokeach Value Survey, the Listof Values and the Values and Lifestyles –VALS can be used.

4.3.4.4 Languages of Culture

‘Languages’ beyond words must be considered while taking into account differentcultures. The meaning of the words and the translation of product descriptions, brands,taglines and the like should carefully considered. Marketers is planning to sell the productor services in other culture, should give importance to the ‘languages’ in positioning andcommunicating the products, services or messages. Some languages are explored below;

• Words: Words mean different things in different language which should be takeninto account while giving brand name. For example, the coca-cola sounded like‘kou-ke-kou-la”in Chinese which was interpreted to mean ‘a thirsty mouth and amouth of candle wax. The changes the phonetic translation to ‘ke-kou-ke-la”which means ‘a joyful taste and happiness.’

• Colours : Colours means different things in different culture. Red is positive colorin Argentina and Denmark and in China it means good luck. However it is a negativecolour in Nigeria and Germany. Red is considered as a feminine colour in chinaand masculine colour in France and Britain.

• Time: Members of different culture view and interact with time in different ways.Self time is spend on memories, perceptions and future expectations of theireveryday life. Interaction time occurs in informal settings such as in the householdor other social setting. Institutional time happens in highly structured settings suchas organizations, schools and the workplace.

• Space, distance and gestures: The typical distance between individuals in varioussettings is not the same in all cultures. In Germany, Austria, Sweeden or theNetherlands the acceptable distances between individuals in a business or personalconversation are greater than in the United States or Australia. Gestures, posturesor body positions also vary in meaning.

• Symbols: Symbols carry connotative meanings that are subject to interpretation.Symbols can persuade the shopper that the product can bestow some special,culturally desirable advantage.

• Friendship and Agreements: The meaning of friendship varies across cultures.The shoppers may be attracted to certain outlets and to select particular servicesuppliers based on friendship. Agreements are the result of accepted practicesand customs in business and other arena among the members of the society.

• Understanding the broad variety of languages within a culture helps marketers to ;

• Design, produce and deliver and position products and services that will beacceptable to culture members.

• Produce more effective and culturally acceptable messages, presentations andcampaigns.

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• Analyze and find ways to work within the time perceptions, procedures andconstraints of the society.

• Understand the importance of friendships and the mechanics of putting togetheragreements with trading partners in different cultures.

4.3.4.5 Cross cultural influences

Marketers today operate in the globalized economy. Global thinking and sensitivityare key aspects which will contribute to the success of marketing strategies. Marketershave to understand and base their strategies on the cultural inputs of people which differ indifferent country. It is imperative for marketers to acknowledge the cultural differences inorder to attract and retail shoppers. Cultural differences in terms of norms, customs, mores,conventions, sanctions, values, belief etc should be understood to exist in the global market.

Culture: The shoppers perspective

Individuals have a natural tendency to belief that their own culture is better than oreven superior to others. This is called as ethnocentrism. Ethnocentric people see theirculture as the center of everything and judge other’s culture with their standards. Consumer/shopper ethnocentricity is and economic form of ethnocentrism. It arises out of shopperslove and concern for his own country and the harmful economic impact of importing goodsfrom other nations. The shoppers who are strong ethno centrists view buying foreign goodsas not only ethnocentric issue but as a moral issue also. Such shoppers will prefer to buyinferior goods made in their own country rather than buying foreign goods.

The shopper may also have ‘cultural animosity’. This refers to a situation where thepeople in one nation have a very strong aversion to people of another country. This may bedue to negative historical experiences. Cultural relativism is where a person views or judgesany behaviour, value or norms within its own social and cultural settings. Marketers haveto frame their strategies relating to advertising, promotion, etc based on the cultural standardsof the shoppers rather that what the marketers think as the best.

Cultural comparison

Hofestede approach to cross cultural value measurement is used extensively. Theapproach is based on the following dimensions of cultural values;

Individualism Versus Collectivism cultures

Individualistic culture refers to the society where the members of a culture put theirown advancement and welfare ahead of the same factors for the groups, institutions andtheir culture as a whole. In such culture people are focused more on themselves and givepriority to their interests and goals more than that of the group. Equality, freedom, theuniqueness of the individual and the personal enjoyment are considered to be more importantand competition to become the best is and being ahead of others is encouraged. Australia,

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England, Denmark, France and United States are examples of countries where theindividualistic culture prevails. In individualistic culture, the shoppers are less likely to beinfluenced by others. The product will be chosen on the basis of their self image andpersonal pleasure and the choice is made to express themselves freely. Products which willimprove the shopper’s skill and knowledge and profession advancement will be demanded.Promotion should also be focused on the individual benefit.

In collective culture people put the good of others, the group which they belong toand the society as a whole above their own. The development of ‘collective self ‘ is fostered.In this culture, self discipline is important and competition on a group basis is accepted butnot encourages. People in collective culture have less need for equality and freedom.Countries such as Thailand, Hongkong, Indonesia, Greece, Egypt are higher on Collectivism.In a collective society ‘belongingness’ matters most. The influence of reference group ishigher. The focus of the offerings should be on the basis of the pleasure, skill developmentand knowledge acquisition in a group setting. Promotion should be based in the context ofshopper being part of various groups.

Masculinity versus Femininity Cultures

Culture may also be compared on how the role of men and women are differentiatedand how publicly or privately segregated the two genders are from each other. Roledifferentiation within the home as well as within the culture at large can be assessed. If malerole are considered superior to those of female, the societies are called masculine and iffemale roles are considered superior it is called ‘feminine.’

In a masculine culture, high value is place on things such as monetary gain, materialpossessions, completion, being successful, assertive and aggressive. The feminine cultureare set on nurturing the family, quality of life, social responsibility, environmental quality andthe like. The shoppers role also varies according to gender in differ culture. The role ofmen and women in certain culture has become blurred and as such men are also involvedin shopping for groceries, cooking, taking care of children. Like wise women are alsoworking, take part in decisions etc. Women are becoming more educated and are beginningto move in the business world. However some countries culture view women as inferior tomen.

This role difference will have an impact on the male and female goods and servicesdemands and also on how the shoppers function in the marketplace.

High versus Low power Distance cultures

Power distance refers to the level of social inequality that exists in a society. It alsorefers to how willing the members are to accept authority at all level. High power distancerefers to high social inequality refers. Authority acceptance at the family level, in socialsettings, at work, form government agencies are all taken into account. In case of culture

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with very high power distance , the difference in power between the most and least powerfulindividuals or groups is great. Great gulfs exist in wealth, land education, income, access tohealth care, job opportunities, political relationships etc. in this system the subordinates areexpected to maintain appropriate distance from superiors in conversation and manners.People are after power or involved in activities leading to increasing their power so as togain satisfaction.

In low power distance culture equality exists among all people and authority is shared.Countries with high power distance include Egypt, India, Malaysia, Philippines etc. Lowerpower distance exist in countries Australia, New Zealand, England, Germany, United Statesetc. The segmentation of market will be more diverse in case of low power culture. Demandfor high-quality goods will be widespread. In high power distance society large marketsfor necessities and basic housing and foodstuffs will be found among the lower segment ofpeople. Status or social brand images will sell well to shoppers in the higher social ladderas they are highly motivated by affiliation and status norms.

High versus Low uncertainty Avoidance Culture

Level of ambiguity which a culture is willing to accept indicates its uncertainty avoidance.It refers to the willingness of the members of a society to accept ambiguity and uncertainty.High uncertainty avoidance otherwise a ‘certainty culture’ is found in societies that haveroutinized behaviour patterns, many rules and regulations, low tolerance for new ideas andnew ways of doing things. Shoppers’ in such society tend to go their families and othersimportant to them to get advice, security, guidance and comfort. They are more prone tostress, emotions and anxiety. They may be aggressive and hard working.

Low uncertainty avoidance exists in culture where people are willing to take risk.They don’t have a strong desire to control their destiny. They are relieved, confident,rational and retired. As shoppers their behaviour is more flexible and they are reactive.New ideas are easily accepted. Selling goods and services to shoppers in certainty culturesrequires highly reliable offerings with guarantees. Brands having the image tied to riskaversion, problem solving and prevention will be attractive to the shoppers.’

Abstract Versus Associative Thinking Cultures

Abstract thinking culture is where the members are logical thinkers who are interestedin the principle of cause and effect. Products and services which deliver benefits are valuedhigh. Face to face communication is prefered and members of such societies are willingand eager to make changes and to try new products and services.

In associative thinking cultures, the culture’s connections or associations with people,celebrities and events impact on the importance of things. The products ties to such valueare preferred. Communication through the mass media is acceptable rather than face toface communication. Conclusions about people, product, services etc are not arrived in a

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logical thinking manner. Hence promotions based on logic may not be persuasive. Thecontext in which the product is offered or the message is delivered is given importance.People in this culture resist change and do not easily adopt product or service innovation.

Cultural and International marketing decisions

Marketing decision should be based on culture of the societies where the marketerwishes to place his product or services. Some decisions are discussed below;

Market segments

As in the case of domestic market, in the international market also the marketershould identify the market segments and develop product or services to suit the needs ofthe shoppers. Marketers may identify the segments globally as well as within individualcountries or regions. A study conducted in 14 countries identified five distinct global segmentsthat share attitudes, values and actual purchasing patterns which are uniform across nationalboundaries and different cultures;

• Strivers consist of people whose median age is 31 and who lead active lives. Theyprefer products and services that leads to instant gratification. They are understress most of the time.

• Achievers are of the same age as strivers, but have already succeeded in life. Theyare affluent, assertive and are style leaders. They value status and quality in thebrands they buy and are largely responsible for setting trends

• Pressureds are women in every age group who find it difficult to manage all theproblems in their lives. They have little time for enjoyment.

• Adapters are older people who live comfortably. They are content with themselvesand their lives and they recognize and respect new ideas without losing sight oftheir own values. They are willing to try new products which adds value to theirlife.

• Traditionals embody the oldest values of their countries and cultures. They areresistant to change and they are content with the familiar products.

• Apart from the above segmentation, countrywise segementation based on theindividual culture may be practiced by marketers.

Product considerations

The type of product consumed varies in each culture as each country has a differentmix of consumption. A product considered for marketing in a foreign country should beevaluated regarding the suitability with the country’s value system. Products can becategorized and ranked on a most to least culturally bound continuum as highlighted below;

• The consumer products are culture bound to the maximum extent whereas industrialproducts are the least.

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• Established product categories are most culture bound and new product categoriesare the least bound.

• Simplex technology is highly culture bound compared to the complex technology.

• Kitchen based item are most culture bound followed by items like bath and bedroom,living room, garden, garage and items for use away from home.

The product which succeed in one country may miserable fail in another country if itfails to adopt to the culture of the society. Simple elements as package, design, colourwhich is not suitable to a culture may be detrimental to the marketer. B

Promotional consideration

Promotional strategies should be based on a country’s culture. Promotional failurehave occurred abroad because of lack of understanding of foreign culture. Marketershave failed miserably in many cases by following the same brand name and advertisingstrategies across different countries. An example of coca colo was mentioned in the previouspages. The promotional strategies may fail if cultural barriers are not given due consideration.

Distribution channel considerations

The culture of a foreign nation should be understood in making the channel decisions.for example the cultural influence on retailing. Supermarkets in Britain are small comparedto the same in U.S. this is because the British housewives lack cars and shop on foot intheir neighbourhood. Also they value social relationship with the shoppers and they haveschedules for their purchases so that they buy different food products on different day.Understanding this is imperative for arriving at decisions regarding the channel management.

Pricing considerations

Pricing decisions are affected by the foreign culture as the shoppers perception ofprice varies from country to country. For example in developing countries American productmay be perceived as superior and should be prices at a sufficiently high level, because theshoppers may perceive quality based on the price. If the product is priced less the shoppers’may perceive it to be of low quality. In developed countries the product may be perceivedas equivalent to domestic products and hence it should be similarly priced else the marketersmay loose the market share.

4.4 ONLINE RETAIL SHOPPERS’ BEHAVIOUR

Thanks to the increase number of telephone - broadband connection and increase inthe number of tech savvy shoppers, online retailing is gaining momentum in India. Accordingto a statistical report (www.internetworldstats.com) the internet penetration in India has apenetration rate of 3.7%. The e-tailing, e-retailing or online retailing is now considered asa viable model, which coexists and competes for the share of the shopper’s mind spaceand pocket space. Online retailing is the sale of consumer goods and services via an

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interactive electronic communications network. Electronic communication networkalternative includes personal computers, interactive television and web enabled mobiletelephones. Internet has revolutionized the relationship between manufacturers and retailersand retailers and shoppers.

Amazon.com is one of the earliest virtual retailer which sells the products via theinternet and do not have physical stores. However the number of virtual retailers is steadilyincreasing owing to the benefits enjoyed by them over the store based retailers.

• Unlike the store based retailers, virtual retailers do not carry physical inventory.The internet acts as on order placing and transacting mechanism and once thetransaction is complete the product is delivered directly to the shoppers whichreduce the cost of the products.

• The cost of delivery is generally passed on to the shopper increasing the retailers’profit.

• The cost of running a website is much lesser than the cost of running a brick andmortar store or catalogue retailing.

• The assortments of products that can be dealt is more as there is no physical spacelimit as in the case of store based retailing.

• It can function any time any day throughout the year and there are no physicalboundaries.

Business models

There are two general approaches to marketing on the web viz., virtual business andthe supplement approach.

♦ Virtual Business.

Virtual Business exist only on the net, rather than having physical business with tangiblestore-fronts, inventories and product. Successful virtual business opportunities can berealised by creating a web site with following features:

Creating a retail presence larger than any physical store.

Providing extra information in a form competitor can’t imitate.

Selling a speciality product or collectable worldwide.

Providing extra benefits and convenience to customer, like extremely low cost oftransaction.

Providing a sense of community that competitors cannot match like ‘chat roomsand bulletin boards’. Amazon’s founder Jeffrey Bezoz describes community as ‘the secret weapon of electronic merchant’.

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♦ The Supplement Approach.

In Supplement Approach web marketing is used as another promotional tool in additionto the traditional advertising, personal selling and sales promotion. This approach has numberof advantages as promotional tool, as it enables large quantities of information to consumersquickly and at a negligible variable cost. It enables to reach consumers anytime, anywhereand there is little ‘wasted coverage’-people exposed to the advertisement who are not intarget market. The promotional track can be used as follows:

The web can be used to build brand awareness and image.

Web is a cost-effective way to augment the core product with related informationand services.

Cost saving from automating routine customer service function like enquiries.

Building customer database.

Many web sites in India are supplementary in nature. Not all companies will be satisfiedwith using web as advertising tool to build awareness or providing information. Manycompanies operate for a set target return on investment.

The following are some money-making models that marketers can use to make revenueson the web:

• The Retail Model.

An electronic storefront is set up on the web and it makes money by selling productdirectly to shoppers. The store offers a wide range of products bought from the manufacturerat wholesale and sells them at 30 to 60 percent gross profit margin.

A number of retail formats exist in case of store based retailing which was dealt indetail in the previous semester course material “Retail Management: concepts andenvironment”. Likewise the virtual retailers may engage in online retailing in a number offormats. They can sell the products only through electronic network or they can do businessboth in the store based retail format and the e-tailing format. The latter is mostly practicedby the retailers. In a broader sense the internet can be used by the retailers for disseminatinginformation or as transaction sites. Information only site where the shopper’s can getinformation regarding the various products or services offered. This type of site functionsessentially as a source of information about the marketer and the products dealt. It is apublic relations tool designed to create awareness and to support retail brand. Transactionsites are two way communication systems which allow shoppers’ to place orders andretailers to communicate with shoppers. Transaction websites involves more cost in termsof building and maintaining the site, delivery systems and secure online credit paymentsystem.

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• The Mall Model.

A web location is developed and web retailer are charged fee for using the same. Aweb retailer can have his own server or rent space from someone’s else server, which islike renting a space in a mall. The shoppers enjoy the benefit of visiting one site for all theirshopping needs.

• The Broker Model.

It enables the meeting of buyer and seller on the web, for a charge. Electronic brokersintroduce suppliers who deal with the items that the shoppers’ are looking for. Eg. onlinetrading.

• The Broadcast Model.

It provides attractive free content to shopper and charge advertisers to appear withthe content. Like television network and print media, the revenue is accumulated byselling advertisement on their site.

• The Subscriber Model.

The shoppers are charged to view the content. The model provide free informationfor a trial period and after that begin charging fee for accessing their site. The drawback isthat once content provider begin charging subscription fees, visitors drop off .Most generallybusiness already accustomed to subscribing to research service may be a better targetthan consumer for this model.

Strategies to capture and retain online shoppers’

Capturing and retaining shoppers’ in virtual market requires a different approach thanthe store based retailing strateties. Conversion of marketing activities to online front requiresstructural changes in the approach towards 4 P’s in marketing mix. The 4 P’s should beconverted to 5 C’s viz, benefit to shopper (product), cost to the shopper (price), convenienceto the shopper (place), communication (promotion) and customization.

After sale service, customer relationship management and atmopsherics in the cyberspacealso play a major role in enhancing the customerbase.

• Product

Products offered through web should be suitable for e-shopping. Online marketingnot only offers physical goods, but also digital goods. It is also possible to customizeproducts to suit the requirement of shoppers’. Greater emphasis should be placed onviability, quality, reliability, dependability and integrity. Products which have high virtualappeal and lower physical appeal are more suitable for online marketing. The productswhich are already used by shoppers’ and have brand reputation can be easily offered for

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sale on web. The product should also be highly digitisable. There are certain productswhich the shoppers’ will prefer to touch, smell etc before buying. In case of these products,the marketer should provide real time experience to cross the habitual boundaries of theshoppers’.

A shopper has the choice of buying almost all products in the internet. Howevercertain products are more amenable for e-tailing are; CD’s, books, videos, gifts, computerhardware and software, travel tickets, hotel reservation, movie tickets etc. shoppers preferto buy products which are; standard, catering to convenience need, low involvement,repeat, single gift purchases. Hence the books, music, video’s and gift items fall into thiscategory. Differentiated high involvement, new task, jointly purchased, self consumptionitems are not shopped much thorough the cyberspace. High convenience, perishable,immediate consumption products are also less likely to be purchased through the internetbecause of inherent delay in delivery.

Offering unique merchandise enables a virtual retailer to differentiate himself from thatof the competitors, build loyalty and enables price differentiation. This can be done byoffering private label products , but it is very difficult for new entrants in online retailing asthe shoppers will have be knowledgeable about the retailers. Virtural retailers could offerunique bundling of merchandise which could be purchased individually from other e-tailers.The bundling should offer more convenience for potential shoppers or offer better value.

Price

In case of traditional marketing, price is mostly fixed, whereas online marketing offersdynamic, customized and group pricing. Price is used as a means to encourage shoppers’to purchase through web. Various strategies like frequent purchase plan to reinforce customerloyalty and to encourage repeat purchase are followed. Web-only specials are also usedto lure shopper to purchase through web. Online auction allows purchaser to bid the price.Pricing in online marketing can also take the form of asking the shopper to offer a price thatthey would be willing to pay for a product or service.

Online retailing also enables shopper to pay for the goods or services through the net.However the question of security makes the customer still wary in using the credit card.The encryption technology, use of digital cash and digital signature will help shopper andmarketer overcome these hurdles.

Place

Traditional market place has many physical constraints like geographical boundariesto reach the shoppers’ and deliver the products. E-marketing provides unlimited marketspace, prompt and timely delivery of goods to shoppers’ is also made possible. For digitalproducts internet itself is a delivery channel where software packages and application canbe ordered online and downloaded directly to customer PC. This new distribution channelis cheap, fast and effective.

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Promotion and brand building

In comparison to the store based retailers, virtual retailers encounter more intensecompetition as shoppers’ has access to a number of retailers on the internet. Hence astrong brand image is very important as it assures the trustworthiness of a retailer, qualityof the products, reliability of delivery, after sale service.

In order to provide information about the products or services to the target marketand to build brand awareness and equity the following online marketing strategies can beexploited in place of traditional promotional tools practiced:

1. Permission marketing strategies:

E-mail messages to potential shoppers’ is an effective way of announcing new productor services or sales of existing product. It is much cheaper than any other media used forpromotion. However unsolicited mail is often considered as spam. The practice of sendingemail message to people who have requested information is called opt-in e-mail and is apart of marketing strategy called permission-marketing. To induce potential shoppers’ toaccept or opt in to advertising information through e-mail messages, the seller must providesome incentives.

2. Brand-leveraging Strategies

The leveraging approach works well for a firm that already has web sites that dominatea particular market. Well-established web site can extend their dominant position to otherproduct and services.

3. Affliate-marketing Strategies

In this strategy the product promotion is done through the affiliate firm’s web sitewhich provide description, review, rating and other information about a product, the affiliatefirm’s web site is linked to the retailers sites, the affiliate site receives commission.

4. Viral-marketing Strategies.

Viral-marketing relies on existing shoppers to inform other prospective shoppers aboutthe product they are using. It uses individual shopper’s to spread word about the retailer.The number of shoppers’ increases much as virus multiply and hence the name.

Personalization.

The fifth ‘P’ in online marketing is personalization. Using artificial intelligence, theshoppers’ are provided with personalized information. After the first visit, the home pagegreets the shopper in person, automatically provides all the information which he is interestedin. Personalization crosses promotion and product and enhances both in the process.

Apart from concentrating on the above said factors, strategies should also be built byretailers to ensure good service to the shoppers’. A number of things can go wrong inmaking a online purchase. Most of the orders not delivered in and also there is high rate of

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return due to inconsistency with the order. Hence, good after sale service is essential.Customer relationship management should also be practiced through emails.

The e-tail atmospherics

The e-tail atmospherics includes the same components like the brick and mortarretailing viz., the storefront, general interior, store layout, displays and checkout counters.These aspects are dealt;

Storefront

The homepage resembles the storefront in e-tailing. The home page should have thefollowing features;

• It should be attractive and encourage shoppers to explore further

• The retail stores brand should be displayed prominently indicating its positioningstrategy

• The navigation should be made easier

• Graphics should be chosen carefully keeping in mind the downloading time. mostof the e-shoppers pay for time on the web, hence downloading should take lesstime.

• The site should have a distinct look and feel from that of the competitors

• The entire array of product line carried should be listed

• The retailers e-mail address, phone number and mailing address should be displayed

• Help menu should included to make the e-shopping easier

• It should be connected with many search engines so that the site will be moreaccessible to the potential shopper

• The colour choice, font style , the design should made attractive as well as visibleand legible to the shoppers.

General interior

The general interior set the shopping mood by using colour, audio visual effects etc.some guidelines are mentioned below;

• The web sit should be simple and uncluttered. Too much of pictures and text mightdistract, overwhelm and create a shabby picture.

• It should carry details about the retail concern

• The product icon should be suitably designed

• Attractive and relevant news could be published

• Shopping carts to be designed properly for placing orders

• The search engine should be displayed

• Details regarding the location of physical store should be displayed

• Separate login for shoppers for loyalty programs should be designed

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Store layout

In e-tail environment store layout means the layout of webpage and the links from onepage to another. An inefficient e-store layout which consumes lot of time would frustratethe shoppers. A store directory with the product categories will enable the shopper tocarry out the e-shopping in an easier manner. Some guidelines are mentioned below;

• Interactive search engines should be included as it enables empowered search forproducts and services. The e-shopper will be taken to the concerned websitesfrom the search engine in a jiffy which will enhance the shopping experience.

• Popular brands and products could be displayed in distinctive places which areattractive to the shoppers.

• More space can also be allocated to the fast moving products.

• If a webpage has scroll bars, then the best selling items are displayed in the top ofthe page.

• The ‘submit’ button finalizing the completion of a transaction should be placedplace in a prominent position near the last column of entry. The graphics and thetext should not be separated.

• If the graphics takes a long time to get downloaded, the text should be downloadedfirst which will engage the shoppers instead of keeping them idle.

Display

The e-tailer can display full product information or display the group of assortments ina selective manner. The display decision affects the appearance of the site, as well as thelevel of choice and clarity level of a shopper with respect to the information presented.Ensembles can be displayed so that the shoppers’ can create their own choice in an interactivemanner. 3D’s, animations and video graphs could be used to enrich the display quality. Thecompatibility for various versions/browsers should be kept in mind while designing thepages.

Checkout Counter

The checkout counter is all the more important for the e-shopper than an onlineshopper due to the following reasons; security and privacy issues, different steps andprocedure to be followed for completing online transactions, the presence of shipping andhandling costs are not revealed until the last stage. The e-shopper should take utmost carein filling up the details regarding the model number, quantity, delivery address, phone numberetc. The ease of transaction completion is an important factor which ensures shoppers’patronage.

Problems and prospects for an e-shopper

E-tailing enables a shopper to enjoy the following benefits ;

• Customization of websites to the individual requirement of the shoppers’ is possiblein online shopping.

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• The website can be updated more frequently without incurring high cost. Theshopper can get current information quickly

• Unlimited space to present product assortments, display and information enablesa shopper to have a good shopping experience

• Enables to complete shopping within few minutes

• The shopper however has to encounter the following drawbacks;

• The ambience cannot be felt by a shopper as in the case of a brick and mortarstore.

• Shopping is many times viewed by individuals as social activity or enjoyment. Theemotional shopping experience which is enjoyed in store front cannot be experiencedin the e-tail format.

• A shopper cannot hold, smell, feel or try the products as in real time. Thoughvirtual experiences can be provided it may not be matching the real time.

• e-shoppers are not ensured with the safety of transaction using credit cards and assuch they are not willing to part with their credit card details on the net, fearing themisuse of the same.

• Shoppers in India are used to personalized services and are pampered by saleperson which is lacking in e-tail.

• One of the biggest barriers in e-marketing is personal computer penetration. InIndia computer is still a luxury to many people. Even though computers are availableat low price, the internet connection is slow and unreliable. The users have to paythe telephone charges as well as the ISP charges for internet access. Likewise theproducts are delivered through postal service which has questionable reliability.

Segmenting e-shoppers

While segmenting the e-market the retailer should take into consideration the followingaspects;

• The marketer should attempt the best segmentation method which maximizes theopportunity for present as well as future profits.

• Potential buyers within a segment should be similar in terms of benefits sought, orin terms of reaction to price or promotion methods.

• There should be diversity among the different segments. If the needs of differentsegments are not different then the segments should be combined suitably.

• It should be feasible to reach the target segment through the marketing action.

• The cost involved in identifying the characteristics of target market and assigningthem to different segment should not be excessive.

Basis of segmentation:

Segmenting online customers needs a different approach than that is followed in offlinemarket. The abysmal performance of targeted banner ad’s on internet portal sites, whereclick through rates are very much lesser underscores the failures of the conventional mode.Hence e-tailers, advertisement agencies, research firms etc are constantly searching for

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new segmentation schemes as applicable to the e-world which utilizes the web’s uniquestrength. Some basis for segmenting the online consumers is presented;

• Extent of adoption - Technology is not embraced by all customers in an equalmanner. On the basis of the extent of adoption of e-market the customers can becategorized as;

• Avoiders - consist of consumers who consciously avoid the e-market and keepon justifying their action.

• Aspirants - consists of consumers who desire to adopt the e-marketing. Thebenefits of e-market are known to them and they aspire to use the same.

• Addicts - consists of consumers who have a very strong positive attitude towardscyber marketing. Given the choice they prefer online market to offline market.

• Adjusters - experience ‘FUD’ (Fear, Uncertainty, Doubt). They will go for onlinebuying provided they have enough reasons to convince themselves.

• Application skills - Segmentation of e-consumers on the basis of the ability tobrowse the web leads to the following;

Naïve users lack basic knowledge and skills to use online service effectively. They requiretraining to get acquainted with the ‘webmosphere’. Providing additional information, phonecalls and other supporting information may be followed.

Learners have the desire to use the e-market and the willingness to invest time and effortto learn the system. They are much likely to try the cyber market provided they are educatedabout the same. The web site should be designed in a user friendly manner and it shoulddirect the customers in a step by step manner.

Experience users are familiar with the technology and aware of where the information isstored and organized. They are versatile with the technology and know the ways andmeans to optimize the use of technology to their advantage. Strategies for these tech beesshould focus on providing technology updates and sophisticated web sites to hold theirattention.

Extent of Stickiness

The extent of loyalty exhibited towards a particular website leads to the followinggroupings;

Happy stayers are satisfied with the content of the page and the information provided.They are much likely to send information and suggestion to the online site and tolerateoccasional bugs and annoyances.

Wanderers are always on the look out for ‘something more’. They will often react quicklyand negatively to any delay or problem faced by them in using the web page. Rather thantake the time to make suggestion, they will ‘click and be gone’. It takes more effort tokeep them with the company.

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Hostages are the consumers who are staying with the company inspite of the dissatisfactionin the use of technology. They remain loyal to the concern inspite of their sufferings. Howeverit is not a good symptom and so the company should find the reasons for the dissatisfactionand initiate steps to remove the same.

Place of Usage

Based on the place where the consumer browse they are segmented as below;

Users at Office - The consumers may not be spending must time in looking around forinformation at the work place. He may spend a few minutes in making the purchase or insearch of information accordingly the page may be designed to present facts in a nut shellwithout much pictures and video.

Users at Home - The surfer may be at leisure, have time at his disposal and look aroundfor information. More information may be provided and audio, visual aids may be used toattract attention.

Users at Net cafe - The consumer here pay for the utilizing the net services. The consumermay be willing to spend time on a page provided he thinks that he will get value for thesame. Additional information and added services may provide the needed attraction.

Type of Buyer

The online buyer may be an individual or the industrial buyer.

Individual buyer - The consumer here is more influenced by his own needs, psychologicalmake up, attitude etc. The web site should cater to his needs and decision making processwhich may not always be rational. The website may be informal and personalized. Theindividual may again be categorized as

- Technical enthusiast - who is more concerned about the newness of thetechnology and more the sophistication more the attraction.

- Hobbyist - who is browsing merely for passing time and may be willing to spendmore time if things capture his interest

- Non technical user - who is not well versed in technology but involves himself inthe task of visiting webpage for some purpose

- Domestic user who uses it for making household purchases or for the family.

Industrial buyer- The purchase here is more rationalized and decision is also made notby an individual but usually a group of people. The web page should be more professionaland provide information on a rationale basis.

Security freakiness

The online consumers are much bothered about the security of their payment and thedata provided by them. Following categories emerge out of the importance given to security

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Believers - the online consumers believe that the company would have taken care of thepayment security and need only little convincing regarding the same. They would havealready involved themselves in such situation and have not come across any negativeexperiences.

Wary consumers - They are on guard always and are very cautious in making decision.They can be convinced with some effort. The targeted group should be informed in detailabout the various security measures and should be guaranteed that the data and paymentmade will be safe from hackers. They can be provided with the option of making paymentas suitable to them.

Skeptics - They are very much doubtful about the security issues. Given the chance theywill quit making online purchase. They have to be educated about the systems safety andshould be communicated about the encryption and fire wall protection enabled by theconcern. They need much convincing and online as well as offline channels should beexplored to attract them.

Type of use

The following segmentation is proposed on the basis of type of use the customerwants to make of the net

Global villagers - use net primarily for communication purpose. They use email,newsgroups, chat rooms and forums for exchange of information. Primary focus is onnetworking and information sharing. Pop up ads, banner ads and emails may be used todisseminate information.

Global beach combers - use net to search. They are looking for ‘something for nothing’.If their search ends with something for value, they may stick to it. They will buy online onlywhen they are sure that they are getting a best deal. They need to be convinced.

Global workers - use net as a part of performing their work. They are affluent but haveonly less time at their disposal. They are attracted by site which provides information toenhance their knowledge base and provide the leading edge.

Extent of involvement

The e- involvement score can be calculated and the customers can be segmented asfollows;

Less involved - ‘light’ users of internet and are not much attracted by online purchase ore-tailers. They are infrequent visitors of the site and don’t indulge much in online activities.They have rarely purchased anything in cyber market. Strategies should be aimed atconverting them to ‘more involved’ customers.

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More involved - ‘medium’ users of internet and are attracted to e-world. They repeatedlyvisit the site and find it convenient to buy online. Web site should be designed in a dynamicmanner to keep them involved.

Super involved - ‘heavy’ user of internet and regular visitors of the web site. They shouldbe rewarded for repeated visit and encouraged to stay with the company with value addedoffers.

Motivation propelling online shopping

The need behind the online shopping is the basis for arriving at the following segments,

Newbie - consist of consumers who are new to the concept of online purchase. They usenet to get information about various options available and ultimately make a small purchasewhich does not require much amount. The website should be simple and enable the customerto ‘quit’ anytime they want. 3D of the pictures and provision of email id’s of other satisfiedshoppers may yield results.

Reluctant shoppers - are much bothered about security and privacy issues. They needlot of convincing and online customer support and discussions to pacify them.

Bargain shoppers - they take pride in making purchase for lowest price. They areconstantly involved in comparison. ‘Price off ‘ products are always attractive to them.

Surgical shoppers - they are very confident about the products to be purchased andwhere to look out for information. They have their own criteria and will buy form the e-tailer whose offer matches with the criteria set by them.

Power shoppers - the purchase is for need fulfillment. They are sure about what theywant and don’t want. They do not waste time in looking around. Experts’ opinion andcustomer services may be attractive to them. They should be provided with instant accessto relevant information.

Enthusiast shoppers - shopping is a enjoyable experience. The website should cater totheir ‘easy go’ nature and provide more fun.

Occasionalization

Booz-Allen & Hamilton and Nielsen//NetRatings Inc., have grouped the onlinecustomers into seven segments based on the user session characteristics. The user sessioncharacteristics takes into account the length of the time the user stayed online, time spendin each webpage, familiarity with the web page and the category to which the websitevisited belongs to. The seven segments are briefed below:

Quickies - they spent very short time (1 minute) and visit only few sites. They spend veryless seconds on each page. They will not notice any information and log off the session assoon as their business is over.

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Just the facts - they look out for specific information and spent 9 minutes but views thepage rapidly. They have low propensity to buy.

Single mission - they want to complete a task for which they gather information and leavethe internet. They may spent 10 minutes and search in unfamiliar sites but look into siteswhich fall in the same category. They can be attracted only be information related to thepurpose of session.

Do it again - the user had visited the site already and he may spent 14 min for a session.Users may be willing to click through banner advertisement which are of interest to themand may react to the same.

Loitering - they spent 33 minutes in a session. They leisurely visit to the familiar sites andare more likely to react to marketing message.

Information please - the sessions last for 37 minutes. The purpose is to gain knowledgeon a particular aspect. They visit familiar sites, but are willing to visit cross categories andspend more time on a page that attracts their interest.

Surfing -70 minutes on an average is spent. They do wider but not deeper explorations.They spent time on pages with lots of content. The marketers make use this to build brandawareness as the users are exposed for a longer duration of time.

The segmentation methods discussed above could be clubbed with the other usualsegmentation basis applicable to offline market viz., demographic basis, Psychograpics,Personality traits etc., and thereby differing matrix of segmentation can be arrived at tocapture a share in the e-tail. Developing e-segmentation strategies is a must to ride the nextwave of value through the net.

4.5 TECHNOLOGY INFLUENCE ON SHOPPER BEHAVIOUR

Information technology is deployed by retailers to enhance the shopping experience.In order to serve the shoppers’ in a better way IT is used by retailers for item identification,improvement of internal and external communication, and information processing andanalysis. Select IT enabled services which enriches the shopping experiences are highlightedbelow;

Electronic kiosks

A kiosk is a small physical structure which including a computer and a display screen.It displays information for people walking by. Interactive kiosks are self-containedcomputing terminals that provide access to on-demand information and transactions.Interactive kiosks are computers with touch-screen displays. It provides information accessvia electronic methods. In a retail setting the interactive kiosks displays various productsavailable for sale by a single touch on the screen. The shoppers can use a retail kiosk as a

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pre-sales assistant by scanning an item’s Universal Product Code (UPC) to learn aboutdetails, specifications, guidance, rebates and coupons. Through video kiosks the shopperscan identify the location of the product without moving around the store. This reduces theshopping time and frustration. With the kiosks to help the shoppers are less dependent onthe sales assistants. It reduces the movement around the shop which will be beneficial forboth the retailers and the shoppers.

An modification of interactive kiosks is the frequent shopper kiosks. These are locatednear the entrance of the retail stores. The regular shoppers are provided with the frequentshopper card. On using the card the kiosks displays the customized set of products whichare frequently purchased and the appropriate promotional strategy designed on the basisof the shopper’s past purchases.

Shoppers’ can order their merchandise through the kiosks and can collect it aftersome time. Information regarding product advertisements, store specials and promotionscan be obtained by the shoppers through the kiosk by using it as a scrolling billboard orvideo player. In the case of music store chains, the kiosk can be used to help a shoppersample the CD by hearing the song before purchasing the same. The kiosks can be linkedto the retailer’s online store so that the shopper’s can order the merchandise and have itdelivered at home. It also provides information regarding the products that the branchdoes not stock but can be ordered for the shopper.

Kiosks enable a shopper to enjoy self service and freedom to the maximum extent. Iteliminate the waiting time to be spent for a salesmen assistance and enhances the flexibilityenjoyed by a retailer.

Virtual Display Case

The virtual display case is a large-screen with rear-projection, video display andcomputer graphics system which shows realistic, three-dimensional images of shelvesstocked with products. It is usually located near a store’s entrance and so as to enable theshopper to view and purchase a wider selection of items than could be carried in the storewithout moving around. The shoppers can see the three dimensional view of the productusing a pair of 3-D glasses, available in a bin on the side of the display, to view the stereoimages. The device has a hand-held controller and joystick that allows consumers to selectbetween different product categories, zoom in on shelf displays and pick up products andexamine them from any angle. When products are selected from the virtual shelf, theyappear to float in space. To select a product for purchase, the consumers have to simplydrop it into a simulated shopping basket.

Body Scanning

This technology is mostly used in apparel industry. The three dimensional technologyhelps shoppers in textiles to identify the dress which will fit them, try them on virtually and

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alter the same to suit their requirements or customize the outfit from the chosen dressmaterial. This system uses video cameras that are attached to computer. The bodymeasurements are taken from several angles and a three dimensional model of the shopperis created. Through ‘virtual try on’ the shopper can select the dress which he wishes topurchases and the computer shows the image of the shopper wearing the selected outfit.The measurements of the shopper can be used again by way of embedding the same in‘smart card’. Thus body scanning technology enables to enrich the shoppers experience inreal in time stores or e-tail stores.

Handi scan

Handiscan or Self scanners are provided in certain retail stores which add to theshopper’s experience. A handheld device can be used by shoppers’ which enables them toscan the items selected by them. After the shopping is done, they can pay the bill withoutunloading the products from the shopping cart. This will reduce the time wasted in unloadingthe cart and preparing the bill again.

Self checkout system

In conventional supermarkets, product selection is performed by the shoppers, andproduct checkout is performed by cashiers. Typically, a shopper will walk up and downthe aisles selecting products to buy and placing the selected products in the shoppingbasket. Once the shopper has finished selecting products, the basket is taken over to acheckout counter. The shopper then unloads the selected products from the basket andplaces them on the checkout counter. Each item is then checked out by a cashier, typicallyusing a barcode scanning system. Finally, each item is bagged, either by the customer, thecashier, or by another supermarket employee.

In this conventional shopping approach, the product selection process and the checkoutprocess are performed one after the other. As a result, the total time required to completea shopping trip is the sum of the product selection time and the checkout time. Even underoptimum conditions, when there are no queues at the checkout counters and the cashieroperates quickly and efficiently, the checkout process can contribute a few minutes to thetotal shopping time. And when conditions are sub-optimum, (e.g., when there are longcheckout queues, when a cashier is slow, and/or when a preceding customer has a problem)the checkout process can significantly extend the total shopping time.

A self checkout system includes a portable terminal with a data reader, such as abarcode scanner, and a self-checkout station with an automated payment-acceptingsubsystem. Both can be self operated by the shoppers. A self-checkout station reducesthe checkout queue times without requiring additional manpower. It enables customers toidentify and log selected products by themselves using a portable reading terminal, scantheir selected products, and then pay for their purchase by themselves using either an

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automatic cash-receiving system or a magnetic credit/debit card reader. Self checkoutsystem motivates the shopper to purchase products or enjoy services in the less possibletime.

Electronic shelf edge label

Electronic shelf edge label uses a liquid crystal display (LCD) to display informationregarding the price and other details regarding the product in the shelf. The electronic shelfdisplay is directly connected to the EPOS system ensuring that the price charged at thecheckout is the same as that displayed on the shelf. Any changes made by the retailer in theprices of the product is immediately displayed thus ensuring that the information reachingthe customer in less time. This system is provides dynamic and updated informative to theparticularly in the case of perishable products where the product prices may be high in themorning and less in the evenings.

Electronic Point of Sale Systems (EPOS)

An EPOS system consists of a laser scanner capable of reading a universal productcode attached to the computer that can recognize the products, records the sale anddisplay the price for the shopper to check and produces the itemized receipt for the shopperat the end of transaction. The EPOS enables the shopper to enjoy reduced checkout time.Shoppers need not waste time in queue. They can also check out the receipts printed indetail. Stockout situations are avoided which reduces the number of shopping trips to berepeated due to non availability of stocks.

Electronic Fund Transfer at Point of Sale (EFTPOS)

An EFTPOS system connects the computer to the banks and credit card companiesapart from connecting to the retailer’s central computer. It facilitates cashless payment byshoppers. The system enables the shoppers to pay using credit and debit cards swipedthrough a scanner on the till. The details of the transaction are transmitted immediately tothe shopper’s bank or credit card company which checks to the availability of the cash orcredit limit and authorizes the retailer to proceed with the transaction and debits the shopper’saccount. The retailers account is credited simultaneously.

Relationship management packages

Relationship management is ahead of the transactional exchange and facilitates themarketer to understand the shopper’s sentiments and buying habits so that the they can beprovided with products and services before it is demanded. This is possible through theintegration of four important components i.e. people, process, technology and data.

It costs five times more to acquire a new customer than to retain one. In traditionalretail environment, it was easy to retain customers as the retailers knew all their customerspersonally. They knew their preferences and what was happening in their lives. Armedwith this knowledge, retailers were able to react quickly and market to each customer

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individually. They were able to build friendships interacting with their customers. Along theway of growing chains and building malls and promoting self-service, many retailers losttouch with their customers. Recognizing the value in customer loyalty, retailers are nowseeking to reclaim personal relationships with their customers. Information technology aidsretailers to keep track of customers.

Data warehousing and data mining

Data related to shoppers’ is collected using the computers. The demographic profileof the consumers, their purchases in terms of volume and value, purchase frequency,preferences etc., can be assimilated. Data mining provides insights and knowledge aboutthe valuable shoppers who provide maximum sales. The information obtained would enablethe retailers to identify the most profitable shoppers’ and design customized marketingstrategies to retain them. Special offers, sales letters informing the choices available in theirpreferred product/category and other retail loyalty programs can be planned based on theavailable data. In case of credit card purchases relevant data as required by the credit cardorganization could be passed on to them. The life time value of shopper can be obtainedbased on which customized promotion can be offered.

The Data warehousing and data mining tools enables to profiling shoppers and itprovides the information needed to best understand patterns in the shopper behavior inmultiple dimensions. It enables focused delivery and support based on shopper’s segment.Information technology aids in budgeting and forecasting revenues/volume of sales forsegmented customers and design strategic solutions for enhancing effectiveness ofpromotional programs. Designing, delivering and accounting of E-coupon can be done inless time. By analyzing coupon usage and spending trends customized mails can also begenerated for each shopper. All this will lead to enhanced shopping experience.

Electronic loyalty schemes

Electronic loyalty schemes can be practiced by developing smart cards that couldregister customer transaction either by swiping them or bar code scanning them or keyingthe card number. The loyalty scheme is administered by collecting the personal informationabout the shopper’s viz., name, address, occupation, marital status, income, productpreferences etc. The shoppers are provided with personalized electronically readablemagnetic card. Every transaction made by the shopper is recorded by scanning the card.Based on the purchases made, a shopper can accumulate the loyalty points which is addedto the account and printed on the receipt. The points collected can be redeemed in the nextshopping bill or in the form of gifts and offers.

The technologies discussed above enables the retail shopper to do shopping in reducedtime and with less effort apart from having an enriching shopping experience. The shopperwill be able to compare the products, features, prices and other benefits by having all the

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information. Technology enhances the convenience provided to the shopper and caters tothe needs by providing customized services.

SUMMARY

This chapter dealt in detail the external factors influencing the shoppers’ behaviour.Various type of location a shopper may choose and the factors taken into consideration forthe selection of a location were highlighted. Shop atmospherics depicts the personality ofa store and thereby plays a major role in influencing the shopping behaviour. The elementsof shop atmospherics viz., the exterior, general interior, interior display and store layout arediscussed. The influence of social class, culture and intercultural role are highlighted. Thevarious e-tail models, issues on online retailing and strategies for capturing the e-shopperswere presented. Discussion on the shop atmospherics in a virtual store is also included. Abrief outline on the different type of technology used in retail store to enrich the shoppingexperience is provided. The next unit provides inputs to design the CRM strategies andpractice the same on the basis of customer’s life time value.


• What factors influence a shopper in the selection of a retail location?

• Discuss the role of shop atmospherics in attracting, retaining and enhancing theshopper’s loyalty.

• How does the social class influence the shopper’s behaviour?

• What cultural aspects should be considered by a retailer in deciding a marketingmix?

• Design the salient feature on e-tailing.

• Highlight the essential features of an online retail store.

• Explain the influence of technology in enhancing the shopping experience.

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UNIT V

ADDITIONAL DIMENSIONS

5.1 INTRODUCTION

Equipped with the understanding of retail shopper behaviour and the various internaland external factors influencing them, the present unit provides the impetus needed for theretailers to arrive at sustainable competitive advantage.

Customer relationship management focuses on the need for maintaining a sustainingrelationship with the existing shoppers. Many research studies have pointed out that thecost of adding a new customer is higher than the cost of retaining an existing customer. Inthis context this unit highlights the various steps involved in developing an effective CRMprogramme.

Maintaining the relationship with customers also requires a good complaint managementsystem, as complaints provide the way for a retailer to improve the services rendered tothe shoppers. It has to seen by a retailer as an opportunity to serve customer in a bettermanner than treating it as something to be ignored. This chapter provides a detailed accountof the need and importance of evolving a complaint management system in a retail setting.

The discussions on Shoppers life time value would enable to arrive at the value ofshoppers which would provide the basic framework on deriving the Customer relationshipstrategies.



• The process involved in building CRM programme

• The need and importance of evolving a complaint management system in the retailsetting

• The basic framework for arriving at the shoppers life time value

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5.3 CUSTOMER RELATIONSHIP MANAGEMENT & RETAIL SHOPPER’SBEHAVIOUR

In the competitive scenario, it is difficult to differentiate a retailer from that of theother. The offering of retailers in terms of product or services is replicable, hence a retailerhas to evolve at strategies to increase the market share and also take steps to retain thesame. Research studies reveal that the cost of attracting new customer is much more thanthe cost of retaining an existing customer. Studies also reveal that studies have shown thata small proportion of the customer base (20% or less) accounts for more than 70-80% offirm’s revenues and profits. In order to enhance the profit of a retail store and to ensure anenhanced market share it is essential retain the existing shoppers in addition to attractingnew customers. In order to retain existing customers it is essential for a retail organizationto follow Customer relationship management practices. This approach of retail businessaims at building, and maintaining one-to-one life-long relationship with their large numberof customers.

CRM can be viewed as a comprehensive strategy and process of acquiring, retaining,and partnering with selective customers to create superior value for the company and thecustomer.” It is a process or methodology used to learn more about customers’ needs andbehaviors in order to develop stronger relationships with them. Levy and Weitz defineCRM as, “A business philosophy and set of strategies, programs, and systems that focuseson identifying and building loyalty with a retailer’s profitable customers.” It is based on thebusiness philosophy that all customers are not profitable in the same way and retailers’ canincrease their profitability by building relationships with their better customers. The goal isto develop a base of loyal customers who patronize the retailer frequently.

CRM is quite a new phenomenon in retailing industry. Only big retailers have installedCRM systems to identify and track customer purchases and take appropriate managementdecisions, especially on managing customer relationships. Organized retailers like BigBazaar, Westside, Shoppers’ Stop, etc., are concentrating on providing more value totheir valuable customers using targeted promotions and services to increase their share ofwallet, i.e., the percentage of the customers’ purchases made from these retailers withthese customers. Almost all of them have started Loyalty Programs, i.e., frequent shoppersprogram in order to reward the existing customers. These programs help the retailers inincreasing the number of footfalls as well as enhancing their sales revenues and profits. Forexample, Shoppers’ Stop, one of the leading apparel retailer in India, had net sales of Rs.1.6 Billion, increasing net profits by 96% with the company’s loyalty program, First CitizenClub (a CRM program) accounting for 63% of the sales.

The organized retailing in India is progressing towards a tough competitive environmentwhere only those retailers would survive who can understand their customers and developa strong bond with them by developing and implementing appropriate CRM strategies andprograms effectively.CRM is can enable a retailer to enhance the overall performance.

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CRM would enable a retailer to know;

• Which type of customers creates maximum profits?

• How to attract and maintain this kind of customers?

• How to make other customers fall into this category?

CRM Process

CRM is an iterative process that turns customer data into customer loyalty throughfour sequential activities shown in the CRM Model

First step in CRM involves attracting customers to apply for membership willingly.This can be performed using enquiries, application and relevant service at the shop counters,call centre and company website). This will enable collection of relevant customer information,including family, work and personal information. The shoppers should be encouraged touse their membership cards when they are purchasing through POS. The POS sales datacan be uploaded to CRM’s business intelligence for data modeling and relevant analysis.After different categories of customer groups are created, their behaviour patterns can bemapped and corresponding product strategies, as well as different sales and marketingactivities according to the characteristics of different customer groups. After theimplementation of sales and marketing activities, the results should be assessed fromcustomers’ reaction through CRM’s business intelligence. The CRM process is discussedin detail below;

I. Collecting Customer data

A retailer should develop one or more methods for gathering data about customers,their buying patterns, demographic profiles, their likes and dislikes about the products orservices. This information can be used to offer the products or services that meet theconsumer’s needs. Meeting a need is the first step towards creating customer loyalty. Forsome small businesses, gathering data can be challenging. Customers may interact with theretailer in various ways, such as visiting the website, visiting the retail store, throughcatalogues, telemarketing etc. Data about customers should be gathered in a consistent

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fashion, at every point of interaction. In addition, the data gathered should be integratedinto one central location which will provide the broadest possible perspective on thecustomers ie a Customer data warehouse can be maintained by a retailer which providesthe basic foundation for subsequent CRM activities.

The amount of data to be stored about a customer in a data warehouse should begiven a careful consideration. Normally the practice is to consider “more is better”. Howeverit may not be feasible as the retailers may not have an IT budget that can support the kindof systems required to store and process multiple years of detailed information. The databasemay contain the following information;

• Customer’s demographic details including, name, age, sex, education, income etcand the psychographic data collected would enable the retailer to segment thecustomers.

• Customer preference details such as the frequently purchased product, brands,assortments; favorite colour, fabrics and sizes in case of apparel retailer wouldprovide valuable information which can be used to initiate future sales.

• Transactional details highlighting the date of purchases, price paid, the productspurchased and whether the promotional offers have induced purchase, mode ofpayment etc.,

• Customer contact details including the direct interaction with the customers,interactions through websites, kiosks, and telephone calls can be tracked. It canalso include details about the contacts initiated by retailer such as catalogs, directmail etc.

• The customer responsiveness to marketing activities of the retailer can be recordedso as to identify the effective promotional measures

Constructing the database based on the above data is easy for catalog and internetshoppers using retailers credit card for purchasing the merchandise. The shoppers whobuy in a non store environment need to provide the relevant details to ensure the deliveryof the products. Hence the information can be easily collected and linked to the transaction.Majority of the shoppers’ in India purchase in the store setting rather than the virtualenvironment. However collection of data from such shoppers’ is a difficult task as thecustomer pay cash or uses credit cards issued by banks. Against this setting the retailer cancollect data by the following methods;

• Requesting for information: retailers may request for information from the customerand thereby built the database. However the customer may be reluctant to giveinformation due to the fear of violation of privacy issues.

• Membership cards may be provided by the retailer, during the process data canbe collected from them. The customers are offered incentives either in the form ofreduced price or free gifts on using the loyalty or membership card. Points may beprovided for each purchase made by the customers. The points can be later

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redeemed for selected products in the catalogue. Whenever the card is used, therelevant data is recorded in the database, thereby data can be accumulated.

• Sometimes retailer may discreetly collect information about the customer by linkingthe transaction through the credit cards used. Enough information can be obtainedby retailer from the credit card and check account numbers used by a customer tolink the transaction to the individual customer.

• Some options available to collect the data are highlighted below;

• Hosted CRM systems—Hosted CRM systems enable salespeople, customerservice reps and other employees to input information about a customer gatheredduring an interaction. The information is then automatically available to others inthe company for use in subsequent interactions with that customer, or for analysisand marketing purposes. With a hosted CRM system, the provider maintains allthe hardware and software necessary to deliver the CRM tools. Because thesesystems are often accessed through the web browser, all that a retailer needs in aninternet-connected computer. Some hosted CRM solutions, particularly those aimedat retailers, also provide tools for creating customer loyalty programs.

• CRM software—Another option is to license CRM software for one or multipleusers. CRM software provides many of the tools that hosted web solutions offer.But CRM software can be accessed without an internet connection. In some cases,CRM software data can be synchronized and carried on handheld devices, suchas a PDA or smart phone, which could be convenient when visiting customers onsite.

• Customer surveys—One of the best ways to gather relevant data about customersis to ask questions in a brief survey. The overall goal is to find out how satisfied thecustomers are and whether they would recommend the retailer to others. Thisinformation can be obtained by various means, such as a paper form, a websitesurvey or an e-mail. The survey questions should be minimized so as to get thebest possible participation. Incentive can also be provided for customers foranswering a survey. A plan should be developed to aggregate the data collected soit can be sliced and diced in various ways and integrated into the customer database.

• Spreadsheets— the computer spreadsheet programs enables to enter data andoffers data analysis tools, too. This might provide the most valuable data to theretailer.

It should be remembered by the retailer that the data collected will only be a proportionof the total foot traffic of the store including regular customers who are not willing to getinvolved in any data collecting devices. While collecting data, the focus should be not tojust collect customer details but to gather profile data on;

• What products and services they are interested in?

• What products they have purchased in the past?

• When the purchase is made?

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There is a need to extract transactional data for customers using credit/loyalty cards& input this on to a marketing database (as an overnight routine) so that customer purchasescan be categorized for analysis & future selection. Frequency & value of purchase alsoneed to be analyzed to establish the most loyal and most valuable customers

II. Analyzing data and identifying target customers

After the collection of data, the retailer has to focus on analyzing the data so as toobtain information for developing loyalty programs. Data mining is one application usedfor this purpose. Data mining is a technique used to identify patterns in data that is notrevealed prior to searching through the data. The customer interactions with the companyare becoming very complex and the volume of data that is being generated is also increasingday by day. Data mining techniques enables to gain valuable insight into the consumer’sdata. It enables to perform profitability analysis to identify the profitable customers, customerchurn analysis to identify the customers who are likely to leave, customer segmentationand customer propensity analysis which indicates the chances of the customer buying agiven product offered by the company. Data mining will be helpful in all the stages ofcustomer life cycle ie acquiring new customers, increasing the value of the customers andretaining the customers by using information about the customers.

Market basket analysis is a specific type of data analysis that focuses on thecomposition of the basket or bundle of products purchased by a household during a singleshopping occasion. It is a modeling technique based upon the theory that if a customerbuys a certain group of items, then it is more (or less) likely that for the customer to buyanother group of items. The set of items a customer buys is referred to as an itemset, andmarket basket analysis seeks to find relationships between purchases. In retailing, mostpurchases are bought on impulse. Market basket analysis gives clues as to what a customermight have bought if the idea had occurred to them. As a first step, market basket analysiscan be used in deciding the location and promotion of goods inside a store. If, as has beenobserved, purchasers of Barbie dolls have are more likely to buy candy, then high-margincandy can be placed near to the Barbie doll display. Customers who would have boughtcandy with their Barbie dolls had they thought of it will now be suitably tempted. Marketbasket analysis enables to arrive at advanced analytics such as:

• Item affinity: Defines the likelihood of two (or more) items being purchased together.

• Identification of driver items: Enables the identification of the items that drive peopleto the store that always need to be in stock.

• Trip classification: Analyzes the content of the basket and classifies the shoppingtrip into a category: weekly grocery trip, special occasion, etc.

• Store-to-store comparison: It enables to create a convenient and easy way tocompare stores with different characteristics (units sold per customer, revenue pertransaction, number of items per basket, etc.).

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Identify market segments

Market segments enables to identify group of customers who have similar needs,purchase similar merchandise and respond in a similar manner to marketing activities. Aftercompiling and analyzing relevant customer data, segmenting can be done so as to understandtheir future behavior. This will help to develop targeted loyalty programs for one or moregroups. A mix of the following four types of customers can be identified;

• Truly loyal—These customers buy products or services frequently and highlyrecommend the same to others. This customer base needs to be maintained andexpanded, as they will be the backbone of the retailer’s future business. Retailersshould try to understand what makes them happy and provide them the most valuethrough the loyalty programs.

• Accessible—These customers like the retailer’s products or services, but factorssuch as a better competitive offer may cause them to stray. Goal should be todetermine what prevents these customers from being completely satisfied and fixthe situation before they leave.

• Trapped—These people remain as retailer’s customers because the cost ofswitching is too high. These customers aren’t happy about doing business with theretailer, and they’re likely to jump ship at some point. They can be converted toloyal customers if effort is made to find out what they need or what you couldimprove. These customers could easily turn into truly loyal customers with the rightattention.

• High-risk—This group of customers often purchases on the basis of price alone.If the customers find a better price, they’ll leave. These customers aren’t worthspending the limited marketing budget as the price-conscious customers rarelyturn into loyal customers. In creating loyalty programs, it’s important to rewardonly the customers’ who need to be retained. However, some of the customersmay be truly dissatisfied for good reasons. In that case, the retailer has to identifyand resolve the issues before it’s too late.

Identifying best customers

Best customers can be identified using analysis such as life time value, RFM ( recency,frequency and monetary) analysis etc. Life time value analysis is dealt in detail in the nextsection. A brief note on RFM follows;

Recency frequency monetary value tools is a technique designed to help businessesdetermine who their best customers are. This is based on customers’ recency (how recenttheir last order was), frequency (how often they buy from you), and monetary value (howmuch they spend). RFM analysis is basically a method of estimating the life time value of acustomer using recency, frequency and monetary value of past purchases. Customers whohave made infrequent, small purchases recently are considered to be the first –timecustomers. CRM strategies may be designed to convert them into early repeat customers

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and eventually high-value customers. In the case of the customers belonging to the highfrequency, recency and monetary value, the CRM strategies should aim at maintaining theloyalty of customers and gaining a greater share of wallet by selling more merchandise tothem. The retailer may pay less attention to customers who have not purchased recently orwhose life time value is less or those who are committed to other retailers as it may bedifficult to recapture them.

II. Developing CRM programs

Once the customers are identified based on their future potential, the next step is todevelop CRM programs for the different customer segments. Three types of programscan be identified; for retaining their best customers, converting good customers into high-LTV customers and getting rid of unprofitable customers.

I. Customer retention

In the present competitive scenario, the focus of the organization is on customerretention than merely on customer acquisition. Customer retention is the process of keepingthe current customers in the customer inventory for an unending period of time by meetingtheir needs and exceeding their expectations. As already mentioned in the beginning of thissection, customer retention would cost less than acquiring a new customer. Research studiesalso reveal that there is a close interaction between customer retention and customer loyalty.Customer retention would also enable a retailer to sell more to the existing customers bygiving special promotions thereby increasing the sales. A retained customer will also spreada positive image of the organization by word of mouth. This will enable to attract newcustomers. Retained customers may also be less price sensitive than a new customer.Hence on account of all the benefits discussed above a retailer has to design strategies toretain the existing customers. Four approaches can be practiced; frequent shopperprograms, special customer service, personalization and community.

1. Frequent shopper programme

Frequent shopper programs are used to build a customer database by identifyingcustomers with transactions and to encourage repeat purchase behaviour. Retailers provideincentives for encouraging customers to enroll in the program and use the card. The incentivesmay be in the form of discount on purchases made or accumulation of points on the purchasesmade. The frequent shopping program has the following drawbacks;

• The programs are expensive from the point of view of both launching cost andmaintenance cost

• It is difficult to make changes in the program when the problems arise. The changesshould be informed to customers as it forms part of the shopping experience. Themore successful the program is , the customer will react negatively to the changesmade in the program which will reduce the loyalty and trust.

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• There is no assurance that the frequent shopper program will increase the consumerspending behaviour and loyalty towards the retailer.

• The programs are easily replicated by the competitors and hence it does not enablethe retailer to gain competitive advantage.

In order to avoid the duplication of the offers, the retailers are resorting to offer amore personalized service to the best customer base on their requirements which will beinvisible to the competitors.

2. Special customer services

Customer services can be designed based on the profitability of the customers. In thecase of highly profitable customers, a retailer can provide a high quality customer serviceto build and maintain the loyalty.

3. Personalization

Equipped with customer data and analysis tools, retailers can economically offer uniquebenefits and target messages to individual customers. The retailers can identify the profitablecustomers and develop programs for the individual customers which are referred to as oneto one retailing. Internet offers the greatest potential to practice one to one marketing in aneffective manner. Most of the messages can be automated and personalized. Thepersonalized rewards or benefits the customers receive are based on unique informationpossessed by the retailer and the sales people.

4. Community

Community programs aims at retaining the customers by developing a sense ofbelongingness among the members. The internet channel offers an opportunity for exchanginginformation and develops more personal relationship with each other and the retailer.Customers are made to feel like a family and thereby they may feel reluctant to leave thecommunity. The retailer may post information which are of interest to the community andwhich may be beneficial to them.

II. Converting good customers into Best customers

Good customers can be identified by a retailer and by offering them more productsand services the share of wallet from these customers can be increased. Customers databasemaintained by the retailer can be used for identifying the prospects for cross selling andadd on selling. Cross selling focuses on selling a complementary product or service in aspecific transaction. For example an apparel store may sell accessories like cosmetics,bags along with an outfit. Add on selling is selling additional new products and services toexisting customers.

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III. Dealing with unprofitable customers

Retailers may have a group of customers on whom he incurs more cost than thereturns received out of the sales made to them. The unprofitable customers drain on theresources that could be better applied to the profitable customers. In order to deal withthese customers a retailer may offer less costly services for satisfying the needs or cancharge the customers for the services rendered. A retailer instead of eliminating anunprofitable customer may try to reduce the number of offers made to them. Sometimecustomers may be unprofitable due to the retailers fault. An upscale retailer lost salesbecause its changing rooms were dirty and in bad repair. Women who had taken up aconsiderable amount of salesperson’s time were declining to change in those rooms, anddeclining to buy thereby adding up to unprofitable customers. Hence while identifying theunprofitable customers the retailer should exercise caution in identifying the reason for thesame.

5.4 COMPLAINT MANAGEMENT SYSTEM

It is essential to have an efficient complaint management system designed and executedso that a retailer can retain the shoppers beyond the time limit. Complaints are expressionof dissatisfaction associated with the product / service purchased or any other aspectsassociated with the delivery system, in total.

Why complaint handling is important ?

• Complaints are effective form of communication, that provide an opportunity togain feed back about the services/product offered. Internal efficiency can beimproved by effective resource utilization.

• Complaints enable to initiate corrective actions and improve upon the total deliverysystem that is in alliance to the shoppers’ requirements.

• Retailers can learn from angry / frustrated shoppers and recognize the significantpoints of service mismatch with shoppers’ expectations.

• Complaints at time will contain constructive ideas towards improving retail businessproductivity.

• Recognizing and fairly responding to shoppers’ complaints might result intogeneration of loyal shoppers in large numbers. Loyal shoppers in turn will becomehard core loyalists.

• Listening and reacting to shoppers’ complaints will help retailers to reach theirprimary goal of shoppers’ satisfaction which in turn will leads to augment the retentionrate of shoppers.

• Effective complaint handling might prevent retail shop switchover.

• A critical analysis of complaints received might lead to corrective actions amonginternal customers which in turn will transform an organization as a high performingorganization.

NOTES



• Complaints give opportunities for long-range product innovation, service qualityimprovements, pro active measures for prevention of problems.

• If a complaint is properly resolved the shopper in turn will emerge as a satisfiedshopper and will become the store ambassador.

Only a fraction of dissatisfied shoppers complaints to retailers. Rest of them leavethe organization and negatively contribute towards the image of the retail shop. The factthat a complaint is received is an indicator that, behind every complaints registered thereare large number of shoppers who are skeptical about the willingness or ability of retailersto resolve complaints. Hence, they don’t prefer to complaint. But they will simply withdrawtheir patronage. To over come this situation each complaint is to be dealt with utmost care.

Evolving a customer complaint management system

Evolving an effective complaint management system has the following steps to befollowed. Zingerman has proposed five steps to handle customer complaints. They are :

1. Acknowledge the complaint

2. Sincerely apologize

3. Make it right

4. Thank the customer for letting us know about the problem

5. Document the complaints

It is essential to acknowledge the complaint as and when it is received. Shoppers willbe generally pleased with a prompt response. The acknowledgement might also contain aword of apology “clearly it seems we did not deliver the experience you were expectingand what we expect ourselves to deliver”. Further, the retailer make all attempts to setright things at the earliest possible. If such action will take a little longer time means, sendan interim reply with an explanation, of what you have done, are doing or will do to makethings right.

While making such attempts make it customize to each shopper. Also provideopportunity to the shopper to express himself with his point of view on the matter. Havingsettled the issue, it is the duty of the retailer to thank the shopper for giving the opportunity.If possible provide him a surprise gift, also. It is very essential to document the wholeprocess of complaint, as a guideline for future course of actions.

Extension of the above complaint management steps provides more insight andthat extended steps are dealt below.

1. Acknowledge the complaints – As far as possible personalize suchacknowledgements. Talk to the shopper if possible.

2. Investigate and analyse the complaints – Retailers are expected to be fair, and tryto look at it from both sides view point

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3. Resolve the problem in a manner consistent with company policy and procedure

4. Follow up the matter – in such a way the shopper is really satisfied with the resolution.Otherwise refer to a third party and cooperate with the third party to arrive at anamicable solution.

5. Designate an employee or group of employees to receive, acknowledge track andmonitor complaints and to have continuous interaction with the shoppers whohave complained, so as to maintain a long lasting relationship with them.

6. Designing a perfect system of record keeping to enable recording details pertainingto complaints – its nature, solution provided, cost involved, shoppers’ reaction tocomplaint resolution and so on.

Retailers’ policy perspectives on complaint management system

The retailers are expected to commit themselves for complaint solving. Suchcommitment should be there in the entire ladder of retail organization. Written policies andprocedure for speedy and mutually satisfiable complaint solving should be framed,communicated and implemented.

The retailers have to periodically conduct review meetings and understand the typesand nature of complaints received, the extent of the solution provided and the like.

Total employee involvement is a must towards complaint solving. Employees are tobe motivated and proper incentive schemes may be introduced, encouraging employees toactively associate themselves with solving complaints. This certainly require employeeempowerment and appropriate training to handle complaints. Retailers may even think ofhaving a dedicated team of employees allocated for receiving and solving complaints.

The vital qualities needed for complaint handling employees are patience, empathy,articulate, simulate shoppers’ problem and able to balance fairly between the interest ofthe retail shop and the shoppers concerned. Also such employees must be capable ofcoming out with alternate solutions to keep the shoppers delighted on the one hand and onthe other hand keep the cost minimum to the retailers.

The major focuses of offering complaint solution are two. They are viz. the costinvolved to retailers should be minimum, and at the same time the return on such complaintsolution should be the maximum, mainly from the view point of shoppers retentions.

There may be occasions where a complaint be solved with the intervention of thirdparty, which involves, conciliation, mediation, and arbitration. Such third party includes,consumer courts, government regulatory agencies and so on. Some time it may beadvantages to retailers as it leads to a fair complaint resolution, which is expeditious andeconomical.

NOTES



The practice of complaint management must be visible and accessible to all concerned.There must be a system to communicate the complaints resolved on periodical basis.Posters, in-house journals, newsletters, employee meeting etc. are commonly availableforums to communicate the complaint resolution.

5.5 LIFETIME VALUE OF RETAIL SHOPPERS –EMERGING TRENDS

Shoppers’ life time value is a powerful and straight forward measure that synthesizesshopper profitability and attrition risk at individual shopper level. The concept of life timevalue of a shopper is well established in the practice of data base marketing.

The life time value of shopper is a measure of the value of the shopper to the retailbusiness. It is the potential contribution of the shopper to the business. It is vital to understandthe return on retail investment from the prospective of shopper life time value.

Shopper life time value represents a metric of a shopper value to retail organizationover the entire span of their relationship. This approach helps the retailers to understand.

• How much is the worth of the shoppers?

• How much of the present active shopper will continue to be active in future?

• How much is the worth of a shopper segment?

• Is it worth while to retain such segment?

It is always preferable to develop an ongoing relationship with existing shoppers,rather than depending costly promotions to attract fresh shoppers.

The life time value of a shopper is further defined as the expected present value of netcash flows from the firm’s relationship with the shopper over his life time. The shopper lifetime value is often used as an upper limit on spending to acquire the shopper. From aretailer perspective, shopper life time value can help to develop strategies to attract, retainand develop, the right shoppers.

Of late, the loyalty levels of shoppers are measured taking into account of the life timevalue, through their contribution. Where the contribution is more they are the hard coreloyalist and where there is no contribution or the contribution is minimum the shopper istreated as defector or prone to churn.

Maximization of shopper life time value would lead to maximization of shopper equity.Shopper equity has traditionally been seen as the discounted sum of the life time earningsfrom all current and future shoppers. There are specially designed softwares available tocalculate shopper life time value. For example “Marketing Engineering for Excel” is aMicrosoft Excel add-in software which runs from within Microsoft excel and only withdata contained in an Excel spread sheet.

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Models and Methods

There are different methods and models available to calculate shopper life time value.For example, Markov Chain Model, CART Model (Classification Regression Tree), RFMModel (Recency Frequency and Monetary), Probability Models, Econometric Models,Persistence Models, GAM (Generalized Additive) Models, MARS (Multivariate AdaptiveRegression Splines) Models, diffusion/growth Models and so on.

Irrespective of the models and methods to calculate shopper life time value, the twokey components are associated with such calculations.

(a) Shopper monthly margin and

(b) Shopper survival probability.

The survival probability is the probability of survival of a shopper beyond a specifiedtime period. It varies from industry to industry. For survival probability understanding,prospective observation plan is normally used.

A sample model to measure shopper life time value in a telecommunication retailindustry as given by Junxiang Lu is reproduced below:

LTV = MM * T i=1

(pi / (1 + r/12) i-1)

Where MM is the monthly margin for the last three months for existing shoppers, orthe last month’s monthly margin for newly acquired shopper.

• MM is either calculated from accounting models or estimated through a set ofregression models.

• T is the number of months in consideration to calculate shopper’s life time value; itcould be 24, 36 or some other number that makes the most business sense.

• r is the discount rate.

• P i is the series of shopper survival probabilities (Shopper survival curve) frommonth 1through month T,

Where P 1 = 1. P i is estimated through shopper survival model.

Data sources: The data sources for calculating shopper life time value are generally fourviz

(a) Macro marketing data

(b) Financial information

(c) Shopper demographics

(d) Shopper contact data

NOTES



Shopper life time value calculation Model as presented by Gupta et.al (2004) is shownbelow.

AC)i1(

r)Ctp(

0t

T

LTVt

tt −+−

=Σ=

Where

LTV = Life time value

pT = price paid by a consumer at time t,

ct = direct cost of servicing the shopper at time t,

i = discount rate or cost of capital for the firm,

rt= probability of shopper repeat buying or being “alive” at time t,

AC = acquisition cost, and

T= time horizon for estimating Shopper Life time value

In spite of this simple formulation, researchers have used different variations in modelingand estimating Shopper Life time value. Some researchers have used an arbitrary timehorizon or expected shopper life time (Reinartz and Kumar 2000; Thomas 2001), whereasothers have used an infinite time horizon (eg Fader, Hardie, and Lee 2005; Gupta, Lehman,and Stuart 2004). Gupta and Lehman (2005) showed that using an expected shopper lifetime generally overestimates the life time value, some times quite substantially.

Most models to calculate shopper life time value apply to the contractual or shopperretention situation. These models make several simplifying assumptions. Life time value isthe present value of future cash flows, directly attributable to the firm’s relationship withshoppers.

The shopper life time value approach is appropriate for managing non replaceableshoppers.

Useful Terminologies

Understanding of following terms is vital to understand shopper’s life time value

• Churn Rate: The percentage of shopper’s who end their relationship with acompany in a given period. One minus the churn rate is the retention rate. Mostmodels can be written using either churn rate or retention rate. If the model usesonly one churn rate, the assumption is that the churn rate is constant across the lifeof the shopper’s relationship.

• Discount Rate: The cost of capital used to discount future revenue from a shopper.Discounting is an advance topic that is frequently ignored in shopper lifetime valuecalculations. The current interest rate is sometimes used as a simple (but incorrect)proxy for discount rate.

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• Retention Cost: The amount of money a company has to spend in a given periodto retain an existing shopper. Retention costs include shopper support, billing,promotional incentives etc.

• Period: The unit of time into which a shopper relationship is divided for analysis. Ayear is the most commonly used period. Shopper lifetime value is a multi-periodcalculation, usually stretching 3-7 years into the future. In practice, analysis beyondthis point is viewed as too speculative to be reliable. The number of periods usedin the calculation is sometimes referred to as the model horizon.

• Periodic Revenue: The amount of revenue collected from a shopper in the period.

• Profit Margin: Profit as a percentage of revenue. Depending on circumstancesthis may be reflected as a percentage of gross or net profit. For incremental marketingthat does not incur any incremental overhead that would be allocated against profit,gross profit margins are acceptable.

Illustration of Shopper lifetime value calculation:

For easy understanding of shopper lifetime value calculations a worked out sample asdealt by Arthur Middleton Hughes, (Vice President, Knowledge Base Marketing, andwww.kbm1.com) is presented below.

To understand Life Time Value (LTV), let’s begin with a typical Life Time Value table:

Acquisition Year Second Y ear Third Y ear

Shoppers 100,000 60,000 42,000

R etention Rate 60% 70% 80%

O rders per Y ear 1.8 2 .5 3

A vg O rder Size $ 90 $ 95 $100

T otal R evenue $16,200,000 $14 ,250,000 $12 ,600,000

C osts 70% 65% 65%

C osts of Sales $11,340,000 $9,262,500 $8,190 ,000

A cquisition / M kt. Cost $55 $20 $20

M arketing C osts $5,500 ,000 $1,200,000 $840,000

T otal C osts $16,840,000 $10 ,462,500 $9,030 ,000

G ross Profit ($640,000) $3,787,500 $3,570 ,000

D iscount Rate 1 1 .16 1 .35

N et Present Value ($640,000) $3,265,086 $2,644 ,444

C u m ulative N PV P rofit ($640,000) $2,625,086 $5,269 ,531

Shopper LT V ($6) $26 $53

NOTES



In this table, 100,000 shoppers are acquired originally. We are following their purchasehistory for the next three years. The first thing you will notice is that 40% of them disappearafter the first year. The retention rate is only 60%. In future years the retention rate grows.The royalty of retained shoppers is higher than that of newly acquired shoppers. As shoppersstay with you, their number of orders per year and their average order size tends to increase.

We are assuming a 70% cost of sales. The actual number may be different accordingto the situation taken for the calculation. The cost typically goes down after the first year.The cost of shopper service to existing shoppers is usually lower than that to new shoppers.It costs you $55 to acquire a new shopper. This is computed by taking all your advertisingand sales costs and dividing this by the 100,000 shoppers acquired. It is assumed that$20 per shopper is spend per year on subsequent marketing, including the cost of thedatabase that provides the information needed for this table, and is used to provide thepersonal communications needed to improve the retention rate.

The Gross Profit is simply the revenue minus costs. This has to be divided by adiscount rate to get the Net Present Value of the expected profits. The discount rate (basedon interest rates) is needed because future profits are not worth as much in today’s moneyas present profits. The formula for the discount rate is:

D = (1+ (i × rf)) n

Where D = Discount rate, i = interest rate, rf = the risk factor, and n = number ofyears that you have to wait. With a risk factor of 2 and an interest rate of 8 %, the discountrate in the third year (two years from now) is

D = (1 + (.08 × 2)) 2 or D = (1.16) 2 =1.35

The lifetime value is calculated by dividing the cumulative Life Time Value by originallyacquired 100,000 shoppers. The Life Time Value in the third year is $53. That means thatthe Life Time Value of the average newly acquired shopper is $53 in the third year. In thisone number we have encapsulated the retention rate, the spending rate, the acquisition,marketing and goods cost and the discount rate.

From this table, we can learn quite a lot. We can see, acquiring new shoppers is nota profitable activity. Shoppers, in this case, become profitable only in the second and thirdyears. This is typical. It is why money spent on increased retention has a higher payoff thanmoney spent on acquisition.

In the above example the average Life Time Value for a group of 100,000 shoppersis calculated. In a similar manner the Life Time Value of each individual shopper can bearrive at. This is done by creating shopper segments. Developing shopper segments is anart. It depends on our shopper base and marketing program. Segments might be by age(Senior Citizen, College Students, etc.) or by spending habits (Gold, Silver, and Bronze)

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or by product type (Deluxe, Regular, and Economy), etc. The Life Time Value table can becalculated to create a Life Time Value for each segment.

Janet, one of the shoppers, may be a Deluxe shopper, who spends about $300 peryear. The Life Time Value of the Deluxe shoppers for example, may be $100 in the thirdyear. They may spend an average of $200 per year. So Janets third year Life Time Valueis $150 ((300/200)*100)). We can set up a program to compute this number for everyshopper and put that number into our shopper database.

Life Time Value can thus be a valuable tool in the marketing arsenal. The shopperswith high Life Time Value (High Expected Future Profits) can be treated differently fromthose with low Life Time Value. More amount can be spend to retain them. Some shoppersmay even have negative Life Time Value. Why spend a lot of money trying to retain theselosers?

The Life Time Value table can be used to evaluate the expected results of new marketingprograms before we have spent millions of them. When we come up with a new initiative,estimate what it will do to the retention rate and the spending rate (orders and averageorder size). Some marketing programs will fail this test. Their benefits will be lower thantheir costs. They may cause Life Time Value to drop rather than to rise. In such situationthe funding can be stopped. Life Time Value is thus a wonderful marketing tool which costsvery little to calculate, and can return rich rewards in terms of improved marketing strategy.

Determining the value of retail shoppers: Discounted shoppers profitability method

Discounted shopper profitability requires lot of assumptions, estimates and judgments.By careful consideration of the components of shopper profitability, the retailer can developa more intricate understanding of where the shopper profit opportunity resides.

NOTES



Annual sales

Gross Income

Cost of Sales

Expected length shoppers relationship profit (NCP)

Discounted shopper profitability

(The total sales for the financial year)

(Annual Net sales after discounts – (Cost of product + over heads))

(Cost of selling, distribution, stock holding customization etc.)

Net Shopper Profit (NCP) (Gross income- cost of sales)

(How long the shopper be loyal?)

(NCP * expected length relationship)

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The annual sales of a retail organization are drawn from its books of accounts. Grossincome is arrived by deducting the cost of product and overhead charges from the Annualnet sales. Further, the cost of sales which include selling and distribution cost, storage costcustomization cost etc are to be reduced from the Gross income that would lead to arriveat net shoppers profit. The net shopper profit so arrived is to be multiplied with expectedlength of shopper relationship, which will give discounted shopper profitability. The futureprofitability should be discounted by the retail organizations internal cost of capital (i.e.profit in three years time is not worth) as much profit today).

More over shoppers profit is expected to change significantly over the course of therelationship. Also the discounted shopper profitability is likely to change from shoppersegment to segment.

Enhancing shopper life time value: Retail organization perspectives

Retail organizations should attempt to maximize the shopper’s life time value byboosting the number, scope and duration of value creating shopper relationships andminimizing the value destroying ones.

Viewing a retail organization as a portfolio of current and future shopper relationshipscan provide many insightful perspectives, to enhance shopper life time value. On this accountthe shopper base may be segmented into categories of different business models like;

(a) Low – cost to serve model:

Under this category it will take only minimum cost to serve the shoppers but therevenue generated out of such service will be maximum.

(b) Medium cost to serve model:

Under this category the average cost of serving to shoppers will be more or lessequal to the revenue generated out of such service.

(c) High cost to serve model:

Under this category it will take the maximum cast to serve the shoppers but therevenue generated out of such services will be minimum or at times it will negative also.

Retailers have to play attention in all the three segments at a time and strategicallyconvert the “High” cost to serve shoppers into “Low” cost to serve shoppers.

The above strategic approach need appropriate changes in the retail organizationsstructure, style of operations, system, staff, supply chain process and so on. Focus shouldbe made on shopper information management with greater visibility and control on inflowand outflow of information within each strategic decision points of the retail organization.

NOTES



Strategic Actions

The following strategic actions are advocated to retailers to look in profitableshoppers and induce them to claim further in the profitability ladder

• Achieve and surpass shoppers’ expectations

• Always elevate positive relationship

• Actively prepare to meet future needs of shoppers.

• Associate with shoppers who are in decline phase of loyalty

• Arrange for reward for loyalty

• Ascertain the fact that loyal shoppers are not always profitable shoppers

• Act towards satisfied shoppers

Once satisfied does not mean satisfied forever, so the retailer has to be beware ofsatisfied shoppers’ as equal to that of dissatisfied shoppers.

Shopper Profitability

As far as a retailer is concerned, the possibility of enhancing shopper profitabilitythroughout their life time can be looked from different routes.

Increase of Shopper Profitability

Increase of Sales

Reduce Cost of Sales

1. Existing product to existing shoppers

Improve Margin

2. New product to Existing shoppers 3. New product to New shoppers

1. Storage

2. Advertising

3. Distribution

1. Reconstructive Pricing Terms

2. Improved Negotiation

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Increase of shopper profitability could be done either by increase of sales or byimproving of sales margin. Increase of sales is possible by offering existing product/serviceto existing shoppers or new product/ services to existing shoppers or new products/servicesto new shoppers.

A reduction of costs of sales also would help to earn more profit from shoppers. Suchreduction will take place in three forms generally viz. Reduction of storage costs, reductionof advertising expenses, Reduction of distribution costs. Shopper profitability can alsoimprove by means of restructuring pricing terms or by improved negotiation. The abovestrategic routes applied in isolation or combined together would contribute towardsenhancement of shopper profitability across their life time.

Emerging issues in Shopper Lifetime Value:

As claimed by Sunil Gupta et.al, the shopper lifetime value will have to take intoaccount the following emerging issues:

• Key drivers of shopper lifetime value will include cost other than the productionand transaction cost.

• The lifetime cost analysis might include a portfolio of shoppers and not singleshoppers.

• Reconciling from Top-Down approach versus Bottom-Up approach, as there ismismatch between the macro models of demand estimation and shopper behaviorvis-a- vis the micro models.

• Different system of accounting is needed to track and monitor cost allocation, costto be allocated not per function basis but per shopper basis.

• There is a definite need to understand and appreciate the limits of theoretical shopperlifetime value models. The models have to incorporate rare events and recognizethe threats.

SUMMARY

This unit has aimed at providing the retailers with requisite inputs to frame strategiesto retain and enhance the shoppers base. The unit has started with a detailed account ofthe need for Customer relationship management and the process involved in building aCRM programme. The steps involved viz., collecting the data, analyzing the same anddeveloping CRM programme is dealt in detail. The need and importance of developing aneffective complaint management system is explained. The basic framework for calculatingthe shoppers’ life time value is also explained.

NOTES




• Discuss the need and importance of developing a CRM programme.

• A retailer running an apparel store for the past ten years is faced with the problemof shoppers’ attrition. Suggest him a suitable CRM programme to retain theshoppers.

• Discuss the need for compliant management system and evolve a mechanism forthe same.

• What is the need for calculating Shopper Life time value. Discuss the process ofcalculating the same.

• Explain how the calculation of shoppers’ lifetime value would contribute to buildingan effective CRM programme.

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Documents

Retail Shopper Behaviour