A

Project report

on

“To Study Consumer Behaviour in Retail Sector”

for

in partial fulfilment of the requirements of

Master of Management Studies

conducted by

University of Mumbai

through

Rizvi Institute of Management Studies & Research

under the guidance of

Prof. Pradeep Gogte

Submitted by

Aayesha Rafeeq Shaikh

MMS

Batch: 2018 – 2020.

 CERTIFICATE OF COMPLETION

This is to certify that Ms. Aayesha Sheikh, a student of Rizvi Institute of Management
Studies and Research, of MMS IV bearing Roll No. 006 and specializing in Human
Resource has successfully completed the project titled

“To Study Consumer Behavior in Retail Sector”

under the guidance of Prof. Pradeep Gogte in partial fulfillment of the requirement of
Master of Management Studies by University of Mumbai for the academic year 2018–
20.

Prof. Pradeep Gogte Prof. Umar Farooq Dr. Kalim Khan

(Project Guide) (Course Coordinator) (Director)
 ACKNOWLEDGEMENT

I wish to take this opportunity to express my sincere gratitude to all those who helped me
in some way or the other in the completion of my project.

I would like to thank my project guide Prof. Pradeep Gogte for his constant support,
encouragement and guidance without whom the successful completion of this project
would have been impossible.

I would like to specially thank Dr. Kalim Khan for always being supportive and inspiring
me throughout the completion of my project.

It gives me immense pleasure in expressing my sincere gratitude towards Rizvi Institute

of Management Studies and Research for providing me with the valuable and necessary
infrastructure to carry my project work.

I would like to thank “University of Mumbai” for giving me an opportunity to present my

skills in the form of this project which will not only prove to be useful for my academic
profile but will also prove to be fruitful for my future for attaining jobs and also will help
me to face the growing competition in the corporate level.

Name: Aayesha Sheikh

Roll No: M2018006

Class: MMS (2018-20)

Place: Mumbai
 DECLARATION

I declare, that this project under the title called “To Study Consumer Behaviour in
Retail Sector” is submitted in a partial fulfilment of the requirements for the degree of
Master of Management Studies (MMS) by coursework as prescribed by Rizvi
Institute of Management Studies and Research and Mumbai University under the
guidance of Prof. Pradeep Gogte.

All sources, references and literature used or excerpted during elaboration of this work
are properly cited and listed in complete reference to the due source.

Name: Aayesha Sheikh

Roll No: M2018006

Class: MMS (2018-20)

Place: Mumbai
 EXECUTIVE SUMMARY

Marketing is an organizational function and a set of processes for creating,

communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization. It is an integrated process through
which companies build strong customer relationships and create value for their customers
and for themselves. On the other hand, Consumer behaviour is the study of when, why,
how, and where people do.

It blends elements from psychology, sociology, social anthropology and economics

It attempts to understand the buyer decision making process, both individually and in
groups. Customer behaviour study is based on consumer buying behaviour, with the
customer playing the three distinct roles of user, payer and buyer.

Its studies characteristics of individual consumers such as demographics and behavioural

variables to understand people's wants. It also tries to assess influences on the consumer
from groups such as family, friends, reference groups, and society in general. So,
understanding consumer behaviour and knowing customers is never simple.

Retail has become a continuous chain-reaction of movements, events, experiences and

motives. Shopping has become relative – relative to context, person and place and has
moulded into four dimensions of space and time.

In my study I have tried to understand what factors influences the affective part of the
attitude of the consumers. And according to that we tried to recommend some strategies
for the company. I have also tried to understand the cognitive part of the attitude of the
consumer.
 TABLE OF CONTENTS

Chapter Title Page

No. No.

1 Company Overview 1

2 Introduction to Consumer Behaviour 5

3 Importance of Consumer Behaviour 10

4 What affects Consumer Behaviour 18

5 Consumer Behaviour Pattern 31

6 Purchase Behaviour at Retail Customers 37

7 Purchase Decision Influencer 46

8 Stages of Buying Process 57

9 Types of Buying Decision Behaviour 70

10 Understanding Retail Customer 72

11 Market Segmentation 74

12 Consumer Decision Making Process 41

13 Steps to choose right retail Location 45

14 Conclusion 47

15 Bibiliography 48
1. Company Overview
Introduction

Reliance Retail Limited is a subsidiary company of Reliance Industries Limited. Founded

in 2006, it is the largest retailer in India in terms of revenue. V Subramaniam is the CEO
of the Venture. Its retail outlets offer foods, groceries, apparel and footwear, lifestyle and
home improvement products, electronic goods, and farm implement and inputs. The
company’s outlets also provide vegetables, fruits, and flowers. It focuses on consumer
goods, consumer durables, travel services, energy, entertainment and leisure, and health
and well-being products, as well as on educational products and services. It had a total of
3,837 stores in April 2018 in India with an area of over 17.7 million square feet across
750 cities, with yearly revenue of over ₹690 billion ($10 bn US).

Financial Position

It had a turnover of ₹337 billion in the financial year 2016-17. Reliance Retail has
announced revenues of ₹450 billion for the nine months ended December 2017 for
financial year 2017-18, showing of over 90% jump from the corresponding previous
period. The company also reported a profit of ₹7 billion for the period

Reliance Res-Q

Reliance Digital, India’s largest electronics retailer, offers a wide range of products, and
a service through ResQ that is unmatchable - you need not go anywhere else.

Repairs

No matter what the problem, we’ll fix it. Our ResQ engineers examine, restore and repair
your favourite electronics so that you can get the most out of them.

Maintenance

ResQ ensures that you get uninterrupted service from all your devices and appliances
with maintenance services and electronics online repairs that keep your electronics as
good as new.

Smart Services

Our resQ engineers will give you a product demo, help you experience convergence and
share tips that enable you to do more with your electronics.

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365-Day Availability

Always at your service, with no days off. resQ services are available all year round,
including Sundays and public holidays.

10 AM – 10 PM

Your convenience is our priority. resQ operates with extended working hours so that you
can reach out to us anytime.

ISO 9001 CERTIFIED

Your trust in us is certified. resQ is India’s only ISO certified electronics service brand.

Multi-Product, Multi-Brand

Servicing products bought on our online store just got easier. Any brand, any kind of
product, resQ will take care of all your electronics – whether bought in stores or on
www.reliancedigital.in.

Free Pick-Up and Drop

No more hassles looking for a service centre to address problems with products bought at
any of our stores (online or offline).

When it comes to caring for your electronics, we go the distance. rest provides free pick-
up and drop of your electronics from home to the service centre and back.

Stand-By Unit Support

We’ve always got your back. resQ provides stand-by units for select electronics under
repairs.

Periodical Product Health Check-Up

resQ’s periodical preventive maintenance check-up ensures that your electronics remain
healthy and life remains hassle-free.

Resq Care Plan

1. Mobile Phones

Plan includes:

 Theft and Accidental Damage & Liquid Damage**

 Extended warranty plans up to 4 years

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  Free Pick up and drop
 Stand by unit support

2. Laptops

Plan includes:

 Theft and Accidental Damage & Liquid Damage**

 Extended warranty plans up to 4 years
 Free Pick up and drop
 Stand by unit support

3. Electronics and Home Appliances

 LED TVs | Plasma TVs | Home Theatres | Tablets | Cameras | Desktops | ACs |
Washing Machines Refrigerators | Microwave Ovens | Water Purifiers | Geysers |
Inverters
 Preventive maintenance services
 Free Pick up and drop
 Stand by unit support
 Cost of consumables used (ACs and refrigerators only)
 Reimbursement of the depreciated value of the product if unrepairable or parts are
unavailable
 Extended warranty

3
2. Introduction to Consumer Behaviour
Consumers can either be subjective or objective, testing the persuasiveness of brand
names. Retail stores selling the products also play an important role in swaying the
decisions of consumers. The whole package or visual appeal of the retail outlet can
determine sales, or the service of the sales ladies or the clerks ( Aaker, D. J. &
Joachimsthaler, E ,2000).

Furthermore, consumers may choose particular products/brands not only because these
products provide the functional or performance benefits expected, but also because
products can be used to express consumers‘ personality, social status or affiliation
(symbolic purposes) or to fulfil their internal psychological needs, such as the need for
change or newness.

Consumer behaviour refers to the mental and emotional process and the observable
behaviour of consumers during searching, purchasing and post consumption of a
productor service. Consumer behaviour involves study of how people buy, what they
buy, when they buy and why they buy it blends the elements from Psychology,
Sociology, Sociopsychology, Anthropology and Economics (Bhattacharya, C.B. & Sen,
S., 2003)2 . It also tries to assess the influence on the consumer from groups such as
family, friends, reference groups and society in general.

Meaning:

Consumer behaviour is the study of how individual customers, groups or organizations

select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It
refers to the actions of the consumers in the marketplace and the underlying motives for
those actions.

Marketers expect that by understanding what causes the consumers to buy goods and
services, they will be able to determine—which products are needed in the marketplace,
which are obsolete, and how best to present the goods to the consumers.

Definition:

The study of consumer behaviour assumes that the consumers are actors in the
marketplace. The perspective of role theory assumes that consumers play various roles in
the marketplace. Starting from the information provider, from the user to the payer and to
the disposer, consumers play these roles in the decision process.

4
The roles also vary in different consumption situations; for example, a mother plays the
role of an influencer in a child ‘s purchase process, whereas she plays the role of a
disposer for the products consumed by the family.

Some selected definitions of consumer behaviour are as follows:

 According to Engel, Blackwell, and Mansard, consumer behaviour is the actions

and decision processes of people who purchase goods and services for personal
consumption ‘.
 According to Louden and Bitter, consumer behaviour is the decision process and
physical activity, which individuals engage in when evaluating, acquiring, using
or disposing of goods and services.

Nature of Consumer Behaviour:

Influenced by various factors:

The various factors that influence the consumer behaviour are as follows:

 Marketing factors such as product design, price, promotion, packaging,

positioning and distribution.
 Personal factors such as age, gender, education and income level.
 Psychological factors such as buying motives, perception of the product and
attitudes towards the product.
 Situational factors such as physical surroundings at the time of purchase, social
surroundings and time factor.
 Social factors such as social status, reference groups and family.
 Cultural factors, such as religion, social class—caste and sub-castes.

Undergoes a constant change:

Consumer behaviour is not static. It undergoes a change over a period depending on the
nature of products. For example, kids prefer colourful and fancy footwear, but as they
grow up as teenagers and young adults, they prefer trendy footwear, and as middle-aged
and senior citizens they prefer more sober footwear. The change in buying behaviour
may take place due to several other factors such as increase in income level, education
level and marketing factors.

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Varies from consumer to consumer:

All consumers do not behave in the same manner. Different consumers behave
differently. The differences in consumer behaviour are due to individual factors such as
the nature of the consumers, lifestyle and culture. For example, some consumers are
technoholics. They go on a shopping and spend beyond their means.

They borrow money from friends, relatives, banks, and at times even adopt unethical
means to spend on shopping of advance technologies. But there are other consumers
who, despite having surplus money, do not go even for the regular purchases and avoid
use and purchase of advance technologies.

Varies from region to region and country to county:

The consumer behaviour varies across states, regions and countries. For example, the
behaviour of the urban consumers is different from that of the rural consumers. A good
number of rural consumers are conservative in their buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having enough
funds, whereas the urban consumers may even take bank loans to buy luxury items such
as cars and household appliances. The consumer behaviour may also vary across the
states, regions and countries. It may differ depending on the upbringing, lifestyles and
level of development.

Information on consumer behaviour is important to the marketers:

Marketers need to have a good knowledge of the consumer behaviour. They need to
study the various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour enables them to take appropriate marketing

decisions in respect of the following factors:

a. Product design/model

b. Pricing of the product

c. Promotion of the product

d. Packaging

e. Positioning

f. Place of distribution

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Leads to purchase decision:

A positive consumer behaviour leads to a purchase decision. A consumer may take the
decision of buying a product based on different buying motives. The purchase decision
leads to higher demand, and the sales of the marketers increase. Therefore, marketers
need to influence consumer behaviour to increase their purchases.

Varies from product to product:

Consumer behaviour is different for different products. There are some consumers who
may buy more quantity of certain items and very low or no quantity of other items. For
example, teenagers may spend heavily on products such as cell phones and branded
wears for snob appeal but may not spend on general and academic reading. A middle-
aged person may spend less on clothing, but may invest money in savings, insurance
schemes, pension schemes, and so on.

Improves standard of living:

The buying behaviour of the consumers may lead to higher standard of living. The more
a person buys the goods and services, the higher is the standard of living. But if a person
spends less on goods and services, despite having a good income, they deprive
themselves of higher standard of living.

Reflects status:

The consumer behaviour is not only influenced by the status of a consumer, but it also
reflects it. The consumers who own luxury cars, watches and other items are considered
belonging to a higher status. The luxury items also give a sense of pride to the owners.

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3. Importance of Consumer Behaviour
Studying consumer behaviour is important because this way marketers can understand
what influences consumers ‘buying decisions. By understanding how consumers decide
on a product they can fill in the gap in the market and identify the products that are
needed and the products that are obsolete. Studying consumer behaviour also helps
marketers decide how to present their products in a way that generates maximum impact
on consumers. Understanding consumer buying behaviour is the key secret to reaching
and engaging your clients and convert them to purchase from you.

A consumer behaviour analysis should reveal:

 What consumers think and how they feel about various alternatives (brands,
products, etc)
 What influences consumers to choose between various option
 Consumers behaviour while researching and shopping
 How consumers ‘environment (friends, family, media, etc.) influences their
behaviour

Consumer behaviour is often influenced by different factors. Marketers should study

consumer purchase patterns and figure out buyer trends. In most cases, brands influence
consumer behaviour only with the things they can control; like how IKEA seems to
compel you to spend more than what you intended to every time you walk into the store.

So, what are the factors that influence consumers to say yes?

There are three categories of factors that influence consumer behaviour:

Personal factors: An individual’s interests and opinions that can be influenced by

demographics (age, gender, culture, etc.).

Psychological factors: An individual’s response to a marketing message will depend on

their perceptions and attitudes.

Social factors: family, friends, education level, social media, income, they all influence
consumers behaviour.

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4. What Affects Consumer Behaviour
Many things can affect consumer behaviour, but the most frequent factors influencing
consumer behaviour are:

1. Marketing Campaigns

Marketing campaigns influence purchasing decisions a lot. If done right and regularly,
with the right marketing message, they can even persuade consumers to change brands or
opt for more expensive alternatives. Marketing campaigns can even be used as reminders
for products/services that need to be bought regularly but are not necessarily on
customers ‘top of mind (like insurance for example). A good marketing message can
influence impulse purchases.

2. Economic conditions

For expensive products especially (like houses or cars) economic conditions play a big
part. A positive economic environment is known to make consumers more confident and
willing to indulge in purchases irrespective of their personal financial liabilities.
Consumers make decisions in a longer time period for expensive purchases and the
buying process can be influenced by more personal factors at the same time.

3. Personal preferences

Consumer behaviour can also be influenced by personal factors, likes, dislikes, priorities,
morals, and values. In industries like fashion or food personal opinions are especially
powerful. Advertisement can, of course, help but at the end of the day consumers
‘choices are greatly influenced by their preferences. If you ‘re vegan, it doesn ‘t matter
how many burger joint ads you see, you ‘re probably not going start eating meat because
of that.

4. Group influence

Peer pressure also influences consumer behaviour. What our family members,
classmates, immediate relatives, neighbours, and acquaintances think or do can play a
significant role in our decisions. Social psychology impacts consumer behaviour.
Choosing fast food over home-cooked meals, for example, is just one of such situations.
Education levels and social factors can have an impact.

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5. Purchasing power

Finally, our purchasing power plays a significant role in influencing our behaviour.
Unless you are a billionaire, you will take your budget into consideration before making
a purchase decision. The product may be excellent, the marketing could be on point, but
if you don ‘t has the money for it, you won ‘t buys it. Segmenting consumers based on
their buying capacity will help marketers determine eligible consumers and achieve
better results.

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5. Customer Behaviour Pattern
Buying behaviour patterns are not synonymous with buying habits. Habits are developed
as tendencies towards an action and they become spontaneous over time, while patterns
show a predictable mental design. Each customer has his unique buying habits, while
buying behaviour patterns are collective and offer marketers a unique characterization.
Customer behaviour patterns can be grouped into:

1. Place of purchase

Most of the time customers will divide their purchases in several stores even if all items
are available in the same store. Think of your favourite hypermarket: although you can
find clothes and shoes there as well, you ‘re probably buying those from actual clothing
brands.

When a customer has the capability and the access to purchase the same products in
different stores, they are not permanently loyal to any store, unless that ‘s the only store
they have access to.

2. Items purchased

Things to consider: the items that were purchased and how much of each item was
purchased. Necessity items can be bought in bulk while luxury items are more likely to
be purchased less frequently and in small quantities. The amount of each item purchased
is influenced by the perishability of the item, the purchasing power of the buyer, unit of
sale, price, number of consumers for whom the item is intended, etc. Analysing a
shopping cart can give marketers lots of consumer insights.

3. Time and frequency of purchase

Customers will go shopping according to their feasibility and will expect service even
during the oddest hours; especially now in the era of e-commerce where everything is
only a few clicks away. It ‘s the shop ‘s responsibility to meet these demands by
identifying a purchase pattern and match its service according to the time and frequency
of purchases. One thing to keep in mind: seasonal variations and regional differences
must also be accounted for.

4. Time and frequency of purchase

11
Customers will go shopping according to their feasibility and will expect service even
during the oddest hours; especially now in the era of e-commerce where everything is
only a few clicks away. It ‘s the shop ‘s responsibility to meet these demands by
identifying a purchase pattern and match its service according to the time and frequency
of purchases. One thing to keep in mind: seasonal variations and regional differences
must also be accounted for.

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6. Purchase Behaviour of Retail Customers
Profits from customer relationship are the major aspect of all businesses. So, the basic
objective of any business is profit maximisation through customer satisfaction. But it is
always difficult to get customer satisfaction

Despite such diversities among customers, there are many similarities among them. To
find these, the study of target customers wants, perceptions and buying behaviour will be
helpful as it will provide the information necessary for developing new products, prices,
channels of communication and other retail marketing elements.

In most markets, however, buyers differ enormously in terms of their buying dynamics.
The task faced by the retail marketing strategist in coming to terms with these differences
is complex. In shopper markets, for instance, not solely do patrons usually take issue in
terms of their age, income, instructional levels and geographic location, however, a lot of
basically in terms of their temperament, their lifestyles and their expectations.

In other words, the total retail marketing effort must be so designed that the customer
perceives its various features as providing an answer to his perceived problems and felt
needs.

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7. Purchase Decision Influencers
Psychological Factors

Motivation:

Abraham Maslow ‘s model explains the assorted desires as shown below.

The human issue perpetually moves towards satisfying bound basic desires as explained
by Maslow. Therefore, a study of why and the way a client is motivated to shop for
bound product and services, helps in understanding the patron behaviour.

Example:

During the survey, it is found that when the respondents at the various malls and
organized retail outlets were questioned regarding their choice of making most of their
purchases from the organized retail stores, most of them responded that their lower level
needs are already fulfilled and so, they have an urge for getting recognition and status
which is fulfilled by the products, apparels and other similar things that they get from this
sector.

Fig. 2.1 Maslow’s need hierarchy

Perception:

Perception could be a method through which a person views and understand the world
and events around him. In other words, receiving the information and making sense out

14
of it to create a meaningful picture is termed as perception. Different people can perceive
the same object differently.

Example:

One person may have a strong focus and eventually strong retention of an ad even if
exposed to the ad once whereas, the other person may not remember the ad even if he is
exposed to it several times. This occurs because people remember things which are of
interest to them. Like, if you are looking to purchase a car, then the car advertisements
will attract you and you will remember them whereas one who is not in a need for the car
may not remember the ad even after seeing many times.

Different associations have different effects on consumer behaviour

The marketers have to spend a large amount of money to frame ads and get a positive
attention of the customers for their products which is a very challenging task as there is
stiff competition in the market with similar products ads and that is why creativity and
innovativeness are required by the marketers to deliver their message to the consumers.
Also, the ad created must capture a positive attention of the consumers which is again not
enough. Continuous monitoring is necessary to check whether the positiveness of the ad
is maintained, and it is not distorted by competitive activity. Finally, seeing that the
consumer interprets positive meaning of the message retained is a tough job.

Fig. 2.4 Sources of Knowledge

Learning:

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Learning is closely related to knowledge, skill and intention three basic behavioural
characteristics. It appears that knowledge and intention are acquired through experience
and that skill comes from practice. Learning is not directly observed, but rather is
inferred from a change in performance. This indicates that learning and performance are
related, but distinct concepts with respect to behaviour.

Example:

It is observed during the survey that many people are showing brand loyalty. A few of
them when questioned, replied that for certain things they resort to a brand only because
of the satisfaction from the previous purchase(learning).

Learning enables the marketers to construct demand for a product by relating it to strong
drives, employing the cues that are motivating and providing positive enforcement. All
this can lead to brand loyalty and win customers to a specific product.

Beliefs & Attitude:

Beliefs, like values, are deep rooted in a person as they are developed from the very
childhood. An attitude is a tendency to respond to a given

Example:

During the survey, it is found that certain people are of the belief that they get a thing at
its best on a store or an area only and they are very firm with this belief. Like, for the
bandha and lehariya sarees, it is a strong belief in people that they are the best in Jaipur.

Attitude towards a product assist in the purchase decision. Like, it is seen that some
people had a negative attitude towards the purchase of jewellery from the traditional
retailers. Their attitude is favourable towards the organized players in the market. The
marketers should identify the consumers who have a negative attitude for their products
and then make efforts to change the attitudes by adjusting their marketing decisions
accordingly. For it, the companies should closely monitor the loyal customers of the
competitors in the market and pick the points why the customers are loyal to these
competitors and then try to defeat the competitors on these issues. Alternatively, a
company can locate the customers who are not liking the competitors’ products and try to
gain the

The Relationships between Consumer Beliefs, Consumer Feelings, Consumer Attitudes,

Consumer Intentions and Consumer Behaviour

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17
Knowledge:

Knowledge means the aggregate of all information that one has irrespective of the fact
that on which topic. Whatever a person knows, is a part of his knowledge world and this
totally depends upon what kind of information an individual is exposed to and how he
filters and sense the information.

Marketers need to know that how much knowledge one has about their product and it is
found that most of the factors that influence consumer behaviour are related to the
knowledge regarding the product. So, efforts should be made (like, incentives given) by
the marketers to encourage the consumers to have more information about the product
which will affect the other factors simultaneously.

Personal Factors

Personality and Self- concept:

Personality refers to a person ‘s consistent way of responding to a wide range of

situations. Marketeers are interested in a personality to target consumers. In consumer
studies, personality is defined as consistent responses to environment stimuli. A
consumer naturally buys goods and services that fits his self- concept (or self-image). All
carry around a complex mental picture of themselves. Some purchases and possessions
such as clothing, cars, furniture and houses, are more central to self- concept than others.
Marketers of products that contribute strongly to self- image (hair- styling, shoes,
perfume, jewellery, eyeglasses) need to assess their customers ‘self- concepts.

Example:

Consumers often choose and use those things or products that match with their
personalities consistent with their own self

concept although in certain cases, the match may be based on the prejudice that what
picture one wants to portray of himself. During the survey, it is found that the Rajput
ladies of Rajasthan preferred to buy pashas as they call for each occasion stating that it
matches their personality.

Marketers should keep in mind that the purchases made by consumers are to support their
self- concept and so the focus should be to identify the self- concept of consumers and
satisfy them. For example, at times it happens that we provide products to consumers on

18
the basis of demographic variables (age, sex etc.) but when we explore it deeply it may
give totally different results as an old person may be interested in buying things that
make him feel and look young as that persons self concept towards himself may be
different.

Occupation:

The occupation a person is in has a large influence on his purchase behaviour. The job
profile has a direct influence on purchases made.

Example:

Out of the respondents surveyed, it is found that people who are at higher positions in the
companies and are in good services made most of their purchases from the organized
retail outlet whereas who are lower level or shop level workers are more inclined towards
the unorganized retail outlets.

Lifestyle:

The way one lives in shapes his lifestyle. It is actually how one spends time and energy
that gives a picture of one ‘s lifestyle. Lifestyles are usually shaped by the fact that
people are money constrained or time constrained. Money constrained people are more
prone to buying low cost products whereas the latter will prefer those products that are
actually

convenient and time saving.

Example:

It is noticed that most of the working women prefer to make roti’s in the roti maker, wash
clothes in the machines as against those traditional belief ladies who make roti’s on their
own and prefer hand- washed clothes.

The marketers should closely observe the target audience way of living and accordingly
provide the products and services with various promotions and offers. This activity will
actually help them to launch successful market strategies.

Age and life-cycle stage:

People buy various goods and services over a lifetime and that is affected by the age of a
person and the family life cycle stage one is in. The purchase behaviour of an old age
person is bound to differ from the purchase behaviour of a young person. Similarly, the

19
purchases of a bachelor may not be similar with the purchases of a couple with a
newborn baby.

20
Example:

It is observed that the elderly people while making purchases for footwear looked for
comfort and low heels whereas, the younger people demanded style and girls preferred
heels. Similarly, the spectacles that the old people looked for are simple and the younger
people look for stylish frames.

The bachelor ‘s purchases were mostly made for himself and consisted of the trendy
clothes, footwear ‘s etc. whereas the couple with a newborn baby spent on baby ‘s
requirements mainly.

Economic Situation/Income:

The income of a person largely affects the purchase behaviour of a person. A person with
high income tends to spend much on costly and branded things as against the one with
lower income who must make maximum purchases from the unorganized retail sector.

Example:

It is observed that high income people groups land in malls and make most of their
purchases from there carrying big shopping bags when they land out of the mall. On the
other hand, people in the low income group class just added to the footfalls in the mall.
They could hardly purchase things from there and their purchases are mostly from the
unorganized retail stores. In Jaipur, maximum people of this category said that they visit
bapu bazaar, johari bazaar and the purohit ji ka katla at badi chaupar for their purchases.

Cultural Factors:

Culture refers to a set of values, ideas, artifacts and other meaningful symbols that help
individuals communicate, interpret, and evaluate as members of the society. Culture has
been described as the blueprint of human activity, determining the co-ordinates of social
action and productive activity.

While studying buying behaviour of consumers in any society, one must recognize
products not only as materially produced by the culture, but also as the culmination of
abstract values, attitudes and related symbolism associated with this behaviour. Some
Indian Cultural Values and Consumer Behaviour‘s:

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Tolerance:

India is a secular democratic nation today, very much as a result of this cultural values. In
fact, tolerance has been a hallmark of the Indian way of life.

Individuality:

The value of individualism is quite well enshrined in our traditional concept the self.

Equality:

The concept of equality is strongly ingrained in the Indian Constitution and, in many
ways, pervades and influences all retail marketing and consumption activities.

Activity:

This is an Indian Cultural value deeply rooted in the Indian philosophy of karma. It is
taken from what Lord Krishna tells Arjuna, the proverbial seeker of knowledge in
the Gita.

Example:

The purchase decision of individuals is affected by the cultural values.The typical

Rajasthani culture during festivals like teej is to purchase and enjoy eating ghevar( a
rajasthani sweet). Womens are seen in lehariya during this time. So, automatically the
purchases that an individual is making are affected by their culture and they end up
buying things that are in their culture.

Marketers use the tactic of cultural influence to convince the customers for the purchase
of their products. They design the ads that reflect the culture of the customers and often
use this point in their promotional appeals. In this way the customers are attracted
towards the ads and eventually towards the marketers products

Sub-Culture:

Each culture contains sub-cultures groups of people with share values. Sub-cultures can
include nationalities, religions, racial groups, or groups of people sharing the same
geographical location. Sometimes, a sub-culture will create a substantial and distinctive
market segment of its own. For example, the youth culture or club culture has quite
distinct values and buying characteristics from the much older grey generation.

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Social Class:

Every society possesses some type of people that are vital to the marketers because of the
similarity in the shopping behaviour they have and so the selling activities may be
tailored according to the different social categories. Here, one must always note, that
people‘s purchasing behaviour is not solely determined by financial gain, however, there
are numerous different factors moreover such as: wealth, education, occupation etc.

Social class differ in their speech, dress, recreational patterns etc. and an individual can
move up or down the ladder of the social class in life.

Example:

The rich people are mostly seen in luxury and expensive cars and one can hardly find
them in low cost cars.

Social Factors

Reference Groups

Groups having a direct or indirect influence on one‘s behaviour form the reference group.
They are mostly the family members, friends and the co-workers. These parties in some
way or the other influence the purchases.

At times, the customer actually behaves in a manner in which his other group members
behave and so they affect his purchase decisions. Usually these teams contain the
Opinion Leaders or others who have a major influence on what the client purchases. The
person makes the purchases keeping in mind the purchases of the opinion leaders .13

Example:

During the period of survey, many females admitted the fact that their purchases are
largely influenced by the purchases of their kitty friends and club friends. If their friend
buys something from the big organized retail outlets, they also get influenced and buy the
same even when at times it is not required.

The marketers task is to identify such groups and specially the opinion leaders in the
group as once the opinion leaders are convinced, they will automatically convince the
other people in the group as the people usually see and follow the opinion leaders.

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Role & Status:

When in a group, how we feel our position is or how others perceive our position is what
we term as role. Role may be having certain responsibilities associated with it at certain
times. When consumers make a purchase, the role that they are fitting in influences a lot.

Example:

As an employee if one has to purchase snacks for a office party which even the boss is
going to attend, higher quality snacks would be purchased as against those when the
same have to be purchased for home. The role of the person differs in both situations and
so his purchases also differ. Similarly, the Company presidents drive luxury cars, wear
expensive suits that match the status they are holding.

Advertisers often show how the benefits of their products help the consumers while
performing certain roles and so the underlying message of this promotional approach is
to suggest that the consumers should use the advertiser‘s products as it will raise their
status.

Family:

Family has a strong influence on purchases made by an individual. It is also to be taken

into consideration that purchases are largely determined by the decision taker in the
family. If the decision taker is the wife, the purchase pattern will differ against if
purchase decisions are taken by the male. Also, many a times, purchases are influenced
by the children in the family.

Example:

The family also has a large influence on purchases made. Like, if a decision is to be taken
regarding the purchase of a refrigerator, the family opinion regarding which size, which
brand, which colour etc. has an effect on purchases made.

Other Factors

Location of the outlet:

The location of the outlet at times act as a purchase decision influencer. People usually
prefer to purchase from the outlets that are at convenient locations.

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Range of products available:

The variety available in stores often influences one‘s purchase from an organized or
unorganized outlet. It is found mostly that organized retail stores have much variety than
the unorganized retail stores.

Convenience while shopping:

The convenience felt while making purchases often acts as a decision influencer
regarding where to make the purchases from. Some people are more comfortable with the
unorganized retail while some are comfortable with the organized retail in this aspect.

Store image:

At times , the image of the store compels a customer to make purchases from there. The
attractive image of the store, the beautifully displayed articles etc. gains the attention of
many and the people end up making purchases.

Packing of products:

The beautiful and attractive packing often act as an influencer for the customers to make
purchases. The customers get attracted towards the packages and at times make
purchases just because of it. The attractive packing is mostly offered by the organized
retail stores.

Parking facility:

Parking has become a big problem today as the no. of vehicles owned per family has
increased. Whenever one goes for shopping, the first idea that comes in mind is regarding
parking facility available in the shopping area. So, the parking facility available is a
purchase.

Decision Influencer

Entertainment:

Some people prefer to have an entertaining experience while shopping. Besides

shopping, they prefer air- conditioned ambience, food courts, game zones where they can
leave their children and shop in the meanwhile, food courts , movie shows etc. and these
kind of facilities available often stimulate people to make purchases from a particular
kind of store.

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Time saving:

Often people look for the place where the purchases can be made quickly without
wastage of time and so the formats which offer this facility attract the customers. So, it
can be inferred that time saving while shopping can be a purchase decision influencer.

Behaviour of employees:

People of today are very much cautious regarding the manner in which the other people
treat them and so the behaviour of the employees in the stores towards the customers acts
as a purchase decision influencer.

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8. Stages of Buying Process
Far too often, retailers think that consumer buying is randomized. That certain products
appeal to certain customers and that a purchase either happens or it doesn’t. They
approach product and service marketing in the same way, based on trial and error. What
if there were a distinctive set of steps that most consumers went through before deciding
whether to make a purchase or not? What if there was a scientific method for determining
what goes into the buying process that could make marketing to a target audience more
than a shot in the dark?

The good news? It does exist. The actual purchase is just one step. In fact, there are six
stages to the consumer buying process, and as a marketer, you can market to them
effectively.

1. Problem Recognition

Put simply, before a purchase can ever take place, the customer must have a reason to
believe that what they want, where they want to be or how they perceive themselves or a
situation is different from where they actually are. The desire is different from the reality
– this presents a problem for the customer.

However, for the marketer, this creates an opportunity. By taking the time to “create a
problem” for the customer, whether they recognize that it exists already or not, you’re
starting the buying process. To do this, start with content marketing. Share facts and
testimonials of what your product or service can provide. Ask questions to pull the
potential customer into the buying process. Doing this helps a potential customer realize
that they have a need that should be solved.

2. Information Search

Once a problem is recognized, the customer search process begins. They know there is an
issue and they’re looking for a solution. If it’s a new makeup foundation, they look for
foundation; if it’s a new refrigerator with all the newest technology thrown in, they start
looking at refrigerators – it’s fairly straight forward.

As a marketer, the best way to market to this need is to establish your brand or the brand
of your clients as an industry leader or expert in a specific field. Methods to consider
include becoming a Google Trusted Store or by advertising partnerships and sponsors
prominently on all web materials and collaterals.

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Becoming a Google Trusted Store, like CJ Pony Parts – a leading dealer of Ford Mustang
parts – allows you to increase search rankings and to provide a sense of customer security
by displaying your status on your website.

Increasing your credibility markets to the information search process by keeps you in
front of the customer and ahead of the competition.

3. Evaluation of Alternatives

Just because you stand out among the competition doesn’t mean a customer will
absolutely purchase your product or service. In fact, now more than ever, customers want
to be sure they’ve done thorough research prior to making a purchase. Because of this,
even though they may be sure of what they want, they’ll still want to compare other
options to ensure their decision is the right one.

Marketing to this couldn’t be easier. Keep them on your site for the evaluation of
alternatives stage. Leading insurance provider Geico allows customers to compare rates
with other insurance providers all under their own website – even if the competition can
offer a cheaper price. This not only simplifies the process, it establishes a trusting
customer relationship, especially during the evaluation of alternatives stage.

4. Purchase Decision

Somewhat surprisingly, the purchase decision falls near the middle of the six stages of
the consumer buying process. At this point, the customer has explored multiple options,
they understand pricing and payment options and they are deciding whether to move
forward with the purchase or not. That’s right, at this point they could still decide to walk
away.

This means it’s time to step up the game in the marketing process by providing a sense of
security while reminding customers of why they wanted to make the purchase in the first
time. At this stage, giving as much information relating to the need that was created in
step one along with why your brand, is the best provider to fulfill this need is essential.

If a customer walks away from the purchase, this is the time to bring them back.
Retargeting or simple email reminders that speak to the need for the product in question
can enforce the purchase decision, even if the opportunity seems lost. Step four is by far
the most important one in the consumer buying process. This is where profits are either
made or lost.

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5. Purchase

A need has been created, research has been completed and the customer has decided to
make a purchase. All the stages that lead to a conversion have been finished. However,
this doesn’t mean it’s a sure thing. A consumer could still be lost. Marketing is just as
important during this stage as during the previous.

Marketing to this stage is straightforward: keep it simple. Test your brand’s purchase
process online. Is it complicated? Are there too many steps? Is the load time too slow?
Can a purchase be completed just as simply on a mobile device as on a desktop
computer? Ask these critical questions and make adjustments. If the purchase process is
too difficult, customers, and therefore revenue, can be easily lost.

6. Post-Purchase Evaluation

Just because a purchase has been made, the process has not ended. In fact, revenues and
customer loyalty can be easily lost. After a purchase is made, it’s inevitable that the
customer must decide whether they are satisfied with the decision that was made or not.
They evaluate, if a customer feels as though an incorrect decision was made, a return
could take place. This can be mitigated by identifying the source of dissonance, and
offering an exchange that is simple and straightforward. However, even if the customer is
satisfied with his or her decision to make the purchase, whether a future purchase is made
from your brand is still in question. Because of this, sending follow-up surveys and
emails that thank the customer for making a purchase are critical.

Take the time to understand the six stages of the consumer buying process. Doing this
ensures that your marketing strategy addresses each stage and leads to higher conversions
and long-term customer loyalty.

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9. Types of Buying Decision Behaviour
Understanding consumer buying behaviour is crucial for successful marketing. Consumer
buying behaviour is defined as the buying behaviour of final consumers, individuals and
households who purchase goods and services for personal consumption (Kotler, Brown,
Adam and Armstrong, 2001: 858). Consumer buying behaviour can be classified into
four groups: complex, variety-seeking, dissonance-reducing and habitual buying
behaviour. These buying decision behaviours vary in terms of the involvement levels and
the perceived differences between brands (Lawson, Tidwell, Rainbird, Louden and Bitta,
1997: 523). According to Mitchell (2002: 71), one of the core functions of marketing is
to connect buyers and sellers as efficiently and effectively as possible. Therefore, it is
imperative for marketers to acquire a profound and comprehensive understanding of
consumer buying behaviours.

The relationship between different types of consumer buying behaviour with the level of
consumer involvement and the degrees of differences between brands. The level of
involvement in a purchasing a product is related to the importance of the purchase, the
risks involved and the type of cognitive processing that is generated.

Complex buying behaviour

Complex buying behaviour is personalised by high levels of consumer involvement in a

purchase and significant perceived differences among brands (Kotler, et al., 2001: 211).
Consumers usually apply complex buying behaviour when the intended purchases are
expensive, infrequent and risky (Rowley, 1997: 88). Purchase decisions are more
intricate compared to other products that are less costly (Chao and Gupta, 1995: 48).
According to Adcock (1993: 54), buyers undertaking complex buying behaviour are
likely to go through each stage of the decision making process. They will usually spend
time inquiring about the product, evaluating alternative brands and comparing options
before finally making the purchase. For example, a person who wishes to buy a car
would be very involved in deciding what car to purchase. He or she will engage in an
extensive information search, such as by visiting different car dealers, surfing the Internet
and so on, to evaluate and compare the numerous types of models available in the market
and also to scout for the best deals. They may take weeks or months to make a decision.
A car is an expensive asset and will usually be used for a long time. As a result,

32
consumers undergo complex buying decision behaviour to ensure that they will not regret
their investment in future.

Dissonance-reducing buying behaviour

Dissonance-reducing buying behaviour encompasses high involvement in purchase

decisions but little dissimilarity between brands (Adcock, 1993: 57). Purchases are
usually expensive, infrequent and risky (Kotler, et al., 2001: 211). The buying decision is
often made from only a small range of products. Considering the product’s brand name is
not the main priority in the purchase decision, consumers will make their choice by
evaluating and comparing the products based on their price, quality, performance and the
consumer’s individual preferences ( Kennedy and Kiel, 2000: 84). For example, when
purchasing a lawn mower, consumers may face a high involvement decision because a
lawn mower is rather costly. However, the lawn mower brand names will not be of much
concern to consumers. Buyers will still look around and compare different lawn mowers
based on their extrinsic features, and purchases are normally made within a shorter
period of time as opposed to complex buying behaviour (Kotler, et al., 2001: 212). After
making a purchase, the consumer may encounter post purchase dissonance, also known
as after-sales discomfort, resulting from discrepancies between the consumer’s decision
and the consumer’s prior evaluation (Lawson, et al.,1997: 447). For instance, the buyer
may discover undesirable traits or hear negative comments about the lawn mower and
thus regret his or her purchase. To minimise such dissonance, marketers have introduced
certain features to satisfy customers, such as warranties and after-sales services (Lawson,
et al.,1997: 637).

Variety-seeking buying behaviour

Variety-seeking buying behaviour can be defined as consumer buying behaviour in

situations concerning low consumer involvement but with significant perceived
differences in brands (Kotler, et al., 2001: 212). These purchases are made simply
because the of the consumer’s desire for novelty (Lawson, et al., 1997: 525). In other
words, consumer may deviate from their normal brand purchase because they feel like
trying something different for a change. Consumers who practice variety-seeking buying
behaviour buy for the sake of diversifying and not as a result of dissatisfaction with the
product (Adcock, 1993: 57). To further illustrate the point, a consumer who regularly
buys Kellog’s Corn Flakes, whom one day opts to purchase Nestle’s Honey Stars for a

33
change, is engaging in variety-seeking buying behaviour. The consumer may be just
bored of Kellog’s Corn Flakes for a while after consuming them every morning and
would like to try out a different cereal, not because he or she is discontented with
Kellog’s Corn Flakes. Marketers have developed strategies to reduce this consumer
behaviour, which will be discussed in the later sections of this report.

Habitual buying behaviour

Consumers perform habitual buying behaviour when buying frequently purchased

products that are relatively of low cost and that involves very little risk and decision
effort (Kennedy and Kiel, 2000: 84). There is low consumer involvement and few
differences between brands in this buying behaviour (Rowley, 1997: 89). These products
are purchased almost automatically out of habit rather than brand loyalty by consumers.
This normally applies to grocery products. For instance, people do not generally spend
much time or mental effort selecting a packet of sugar or a bar of soap. They do not
really pay attention to the brand names of these products. Unlike complex buying
behaviour, consumers who purchase the same product regularly, do not go through all the
steps in the decision making process (Kotler, et al., 2001: 212). They need not undertake
an information search or evaluate and compare the different products in the market.
Instead, they receive information through repetitive advertisements on the television or
newspapers and this forms brand familiarity. Consumers are not inclined to a product,
rather, they select the particular brand out of familiarity (Kotler, et al., 2001: 212). They
would just recognise their need and immediately make a purchase decision. They may
not even bother to make a post purchase evaluation (Rowley, 1997: 89).

The importance of understanding consumer buying behaviours

Develop a more effective and efficient marketing strategy:

Consumer buying behaviour is an integral part of marketing. Attaining a deeper

comprehension of the different types of consumer buying behaviour would be a boon for
marketers as it would assist them in developing a more sophisticated marketing strategy,
thus allowing the organisation to compete more efficiently and effectively than it’s
competitors (Mitchell, 2002: 74). By analysing the type of buying behaviour that relates
to the organisation’s products, marketers are able perform effective segmentation, which
may lead to a more efficient targeting of resources (Rowley, 1997: 89). For example, for
products that are susceptible to complex buying behaviours such as automobiles and

34
computers, marketers tend to concentrate on promoting them on the basis of the features
and the benefits a consumer may gain from the products (Adcock, 1993: 56).

Most car catalogues will show pictures of the engine and highlight the details of the
technical features of the vehicle. For products that are more prone to dissonance-reducing
and habitual buying behaviours, marketers will advertise substantially to ensure that their
products will be considered by as many people as possible (Adcock, 1993: 57) and also
to familiarise consumers with their products (East, 1997: 19). Providing another example,
marketers will try to encourage habitual buying behaviour for products that are more
inclined to variety-seeking buying behaviours among consumers by extensive advertising
and dominating shelf space. In contrast, marketers may also try to encourage variety-
seeking buying behaviour by offering promotions and free samples (Kotler, et al., 2001:
212). They do so to induce new customers to purchase their products. To summarise the
point, a clear understanding of the types of buying behaviours can help marketers to
construct relevant marketing strategies to market the particular product so as to increase
the product’s sales.

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10. Understanding Retail Customer
Understanding retail consumer deals with understanding their buying behavior in retail
stores. Understanding the consumer is important to know who buys what, when, and
how. It is also important to know how to evaluate consumer’s response to sales
promotion. It is very vital to understand the consumer in the retail sector for the survival
and prosperity of the business.

Consumer versus Customer

A consumer is a user of a product or a service whereas a customer is a buyer of the

product or service. The customer decides what to buy and executes the deal of purchasing
by paying and availing the product or service. The consumer uses the product or service
for oneself.

For example, the customer of a pet food is not the consumer of the same. Also, if a
mother in a supermarket is buying Nestlé Milo for her toddler son then she is a customer
and her son is a consumer.

Identifying a Customer

It is sometimes difficult to understand who is actually a decision maker while purchasing

when a customer enters the shop accompanying someone else. Thus everyone who enters
the shop is considered as a customer. Still, it is necessary to identify composition and
origin of the customers.

Composition of Customers − It includes customers of various gender, age, economic and

educational status, religion, nationality, and occupation.

Origin of Customer − From where the customer comes to shop, how much the customer
travels to reach the shop, and which type of area the customer lives in.

Objective of Customer − Shopping or Buying? Shopping is visiting the shops with the
intention of looking for new products and may or may not necessarily include buying.
Buying means actually purchasing a product. What does the customer’s body language
depict.

Customer’s Buying Behavior Patterns

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The needs, tastes, and preferences of the consumer for whom the products are purchased
drives the buying behavior of the customer. The pattern of customer’s buying behavior
can be categorized as

Place of Purchase

Customers divide their place of purchase. Even if all the products they want are available
at a shop, they prefer to visit various shops and compare them in terms of prices. When
the customers have a choice of which shop to buy from, their loyalty does not remain
permanent to a single shop.

Study of customer’s place of purchase is important for selection of location, keeping

appropriate merchandise, and selecting a distributor in close proximity.

Product Purchased

It pertains to what items and how many units of items the customer purchases. The
customer purchases a product depending upon the following −

 Availability/Shortage of product
 Requirement/Choice of product
 Perishability of product
 Storage requirements
 Purchasing power of oneself

This category is important for producers, distributors, and retailers. Say, soaps,
toothbrushes, potatoes, and apples are purchased by a large group of customers
irrespective of their demographics but live lobsters, French grapes, avocadoes, baked
beans, or beef are purchased by only a small number of customers with strong regional
demarcation.

Similarly, the customers rarely purchase a single potato or a banana, like more than two
watermelons at a time.

Time and Frequency of Purchase

Retailers need to keep their working time tuned with customer’s availability. The time of
purchase is influenced by

 Weather
 Season

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  Location of customer

The frequency of purchase mainly depends on the following factors

 Type of commodity
 Degree of necessity involved
 Lifestyle of customers
 Festivals and customs
 Influence of the person accompanying the customer.

For example, Indian family man from intermediate income group would purchase a car
not more than two times in his lifetime whereas a same-class customer from US may buy
it more frequently. A tennis player would buy required stuff more frequently than a
student learning tennis at a school.

Method of Purchase

It is the way a customer purchases. It involves factors such as −

 Is the customer purchasing alone or is accompanied by someone?

 How does the customer pay: by cash or by credit?
 What is the mode of travel for the customer?

Response to Sales Promotion Methods

The more the customer visits a retail shop, the more (s)he is exposed to the sales
promotion methods. The use of sales promotional devices increases the number of shop
visitors-turned-impulsive buyers.

The promotional methods include −

 Displays − Consumer products are packaged and displayed with aesthetics while
on display. Shape, size, color, and decoration create appeal.
 Demonstrations − Consumers are influenced by giving away sample product or by
showing how to use the product and its benefits.
 Special pricing − Unit’s special price under some scheme or during festive season,
coupons, contests, prizes, etc.
 Sales talks − It is verbal or printed advertisement conducted by the salesperson in
the shop.

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An urban customer, due to fast paced life would select easy-to-cook or ready-to-eat food
over raw food material as compared to rural counterpart who comes from laid-back
lifestyle and self-sufficiency in food items grown on farm.

It is found that the couples buy more items in a single transaction than a man or a woman
shopping alone. Customers devote time for analysing alternative products or services.
Customers purchase required and perishable products quickly but when it comes to
investing in consumer durables, (s)he tries to gather more information about the product.

Factors Influencing Retail Consumer

Understanding consumer behavior is critical for a retail business in order to create and
develop effective marketing strategies and employ four P’s of marketing mix (Product,
Price, Place, and Promotion) to generate high revenue in the long run.

Here are some factors which directly influence consumer buying behavior –

Market Conditions/Recession

In a well-performing market, customers don’t mind spending on comfort and luxuries. In

contrast, during an economic crisis they tend to prioritize their requirements from basic
needs to luxuries, in that order and focus only on what is absolutely essential to survive.

Cultural Background

Every child (a would-be-customer) acquires a personality, thought process, and attitude

while growing up by learning, observing, and forming opinions, likes, and dislikes from
its surrounding. Buying behavior differs in people depending on the various cultures they
are brought up in and different demographics they come from.

Social Status

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Social status is nothing but a position of the customer in the society. Generally, people
form groups while interacting with each other for the satisfaction of their social needs.

These groups have prominent effects on the buying behavior. When customers buy with
family members or friends, the chances are more that their choice is altered or biased
under peer pressure for the purpose of trying something new. Dominating people in the
family can alter the choice or decision making of a submissive customer.

Income Levels

Consumers with high income has high self-respect and expects everything best when it
comes to buying products or availing services. Consumers of this class don’t generally
think twice on cost if he is buying a good quality product.

On the other hand, low-income group consumers would prefer a low-cost substitute of
the same product. For example, a professional earning handsome pay package would not
hesitate to buy an iPhone6 but a taxi driver in India would buy a low-cost mobile.

Personal Elements

Here is how the personal elements change buying behavior −

 Gender − Men and women differ in their perspective, objective, and habits while
deciding what to buy and actually buying it. Researchers at Wharton’s Jay H.
Baker Retail Initiative and the Verde Group, studied men and women on
shopping and found that men buy, while women shop. Women have an emotional
attachment to shopping and for men it is a mission. Hence, men shop fast and
women stay in the shop for a longer time. Men make faster decisions, women
prefer to look for better deals even if they have decided on buying a particular
product.

Wise retail managers set their marketing policies such that the four Ps are
appealing to both the genders.

 Age − People belonging to different ages or stages of life cycles make different
purchase decisions.

 Occupation − The occupational status changes the requirement of the products or

services. For example, a person working as a small-scale farmer may not require a
high-priced electronic gadget but an IT professional would need it.

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 Lifestyle − Customers of different lifestyles choose different products within the
same culture.

 Nature − Customers with high personal awareness, confidence, adaptability, and

dominance are too choosy and take time while selecting a product but are quick in
making a buying decision.

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Psychological Elements

Psychological factors are a major influence in customer’s buying behavior. Some of

them are –

 Motivation − Customers often make purchase decisions by particular motives

such as natural force of hunger, thirst, need of safety, to name a few.

 Perception − Customers form different perceptions about various products or

services of the same category after using it. Hence perceptions of customer leads
to biased buying decisions.

 Learning − Customers learn about new products or services in the market from
various resources such as peers, advertisements, and Internet. Hence, learning
largely affects their buying decisions. For example, today’s IT-age customer finds
out the difference between two products’ specifications, costs, durability,
expected life, looks, etc., and then decides which one to buy.

 Beliefs and Attitudes − Beliefs and attitudes are important drivers of customer’s
buying decision.

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11. What is Market Segmentation
It is a process by which the customers are divided into identifiable groups based on their
product or service requirements. Market segmentation is very useful for the marketing
force of the retail organization to create a custom marketing mix for specific groups

For example, Venus is in the business of retailing organic vegetables. She would prefer
to invest her money for advertising to reach out to working and health conscious people
who have monthly income of more than say, $10,000.

Market segmentation can also be conducted based on customer’s gender, age, religion,
nationality, culture, profession, and preferences.

TYPES OF RETAIL MARKETS

There are two types of retails − Organized Retail and Unorganized Retail.

Organized Retail

Organized Retailing is a large retail chain of shops run with up-to-date technology,
accounting transparency, supply chain management, and distribution systems.

Unorganized Retail

Unorganized Retailing is nothing but a small retail business conducted by an owner or a

caretaker of the shop with no technological and accounting aids.

The following table highlights the points that differentiate organized retail from
unorganized retail –

What is Retail Strategy?

It is a plan designed by a retail organization on how the business intends to offer its
products and services to the customers. There can be various strategies such as
merchandise strategy, own-brand strategy, promotion strategy, to name a few.

A retail strategy includes identification of the following −

The retailer’s target market. Retail format the retailer works out to satisfy the target
market’s needs sustainable competitive advantage.

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Strategies for Effective Market Segmentation:

For effective market segmentation, the following two strategies are used by the
marketing force of the organization −

1. Concentration (Niche) Strategy

Under this strategy, an organization focuses going after large share of only one or very
few segment(s). This strategy provides a differential advantage over competing
organizations which are not solely concentrating on one segment.

For example, Toyota employs this strategy by offering various models under hybrid
vehicles market.

2. Multi-segment Strategy

Under this strategy, an organization focuses its marketing efforts on two or more distinct
market segments. For example, Johnson and Johnson offers healthcare products in the
range of baby care, skin care, nutritionals, and vision care products segmented for the
customers of all ages.

Strategies for Market Penetration

Market penetration strategies include the following −

1. Price Penetration

It is setting the price of the product or service lesser than that of the competitor’s product
or service. Due to decreased cost, volume may increase which can help to maintain a
decent level of profit.

2. Aggressive Promotion

Increasing product or service promotion on TV, print media, radio channels, e-mails,
pulls the customers and drives them to view and avail the product or service. By offering
discounts, various buying schemes along with the added benefits can be useful in high
market penetration.

3. High Product Distribution

By distributing the product or service up to the level of saturation helps penetration of

market in a better way. For example, Coca Cola has a very high distribution and is
available everywhere from small shops to hypermarkets.

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Growth Strategies:

If a retail organization conducts SWOT Analysis (Strength, Weakness, Opportunity,

Threat) before considering growth strategies, it is helpful for analyzing the organization’s
current strategy and planning the growth strategy.

1. Ansoff’s Matrix

An American planning expert named Igor Ansoff developed a strategic planning tool that
presents four alternative growth strategies. On one dimension there are products and on
the other is markets.

This matrix provides strategies for market growth. Here is the sequence of these
strategies,

 Market Penetration − Company focuses on selling the existing products or

services in the existing market for higher market share.

 Market Development − Company focuses on selling existing products or

services to new markets or market segments.

 Product Development − Company works on innovations in existing products or

developing new products for the existing market.

 Diversification − Company works on developing new products or services for

new market.

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12. Consumer Decision Making Process
A customer goes through a number of stages as shown in the following figure before
actually deciding to buy the product.

However, customers get to know about a product from each other. Smart retail managers
therefore insist on recording customers’ feedback upon using the product. They can use
this information while interacting with the manufacturer on how to upgrade the product.

 Identifying one’s need is the stimulating factor in buying decision. Here, the
customer recognizes his need of buying a product. As far as satisfying a basic
need such as hunger, thirst goes, the customer tends to decide quickly. But this
step is important when the customer is buying consumer durables.

 In the next step, the customer tries to find out as much information as he can about
the product.

 Further, the customer tries to seek the alternative products.

 Then, the customer selects the best product available as per choice and budget,
and decides to buy the same.

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Before visiting a mall or a shop, the first question that arises in consumers’ mind is,
“How far do I have to walk/drive?”

In populous cities such as Mumbai, Delhi, Tokyo, and Shanghai to name a few,
consumers face rush-hour traffic jams or jams because of road structure. In such cases, to
access a retail outlet to procure day-to-day needs becomes very difficult. It is very
important for the consumers to have retail stores near where they stay.

Importance of Location in Retail Business

Retail store location is also an important factor for the marketing team to consider while
setting retail marketing strategy. Here are some reasons −

 Business location is a unique factor which the competitors cannot imitate. Hence,
it can give a strong competitive advantage.

 Selection of retail location is a long-term decision.

 It requires long-term capital investment.

 Good location is the key element for attracting customers to the outlet.

 A well-located store makes supply and distribution easier.

 Locations can help to change customers buying habits.

Trade Area: Types of Business Locations

A trade area is an area where the retailer attracts customers. It is also called catchment
area. There are three basic types of trade areas −

Solitary Sites

These are single, free standing shops/outlets, which are isolated from other retailers.
They are positioned on roads or near other retailers or shopping centers. They are mainly
used for food and non-food retailing, or as convenience shops. For example, kiosks,
mom-and pop stores (similar to kirana stores in India).

Advantages:

 Less occupancy cost, away from competition, less operation restrictions.

Disadvantages:

 No pedestrian traffic, low visibility.

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Unplanned Shopping Areas

These are retail locations that have evolved over time and have multiple outlets in close
proximity. They are further divided as −

 Central business districts such as traditional “downtown” areas in cities/towns.

 Secondary business districts in larger cities and main street or high street
locations.
 Neighbourhood districts.
 Locations along a street or motorway (Strip locations).

Advantages:

 High pedestrian traffic during business hours, high resident traffic, nearby
transport hub.

Disadvantages:

 High security required, threat of shoplifting, Poor parking facilities.

Planned Shopping Areas

These are retail locations that are architecturally well-planned to provide a number of
outlets preferably under a theme. These sites have large, key retail brand stores (also
called “anchor stores”) and a few small stores to add diversity and elevate customers’

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interest. There are various types of planned shopping centers such as neighborhood or
strip/community centers, malls, lifestyle centers, specialty centers, outlet centers.

Advantages:

 High visibility, high customer traffic, excellent parking facilities.

Disadvantages:

 High security required, high cost of occupancy.

Factors Determining Retail Locations

The marketing team must analyze retail location with respect to the following issues:

 Size of Catchment Area − Primary (with 60 to 80% customers), Secondary (15 to

25% customers), and Tertiary (with remaining customers who shop occasionally).

 Occupancy Costs − Costs of lease/owning are different in different areas, property

taxes, location maintenance costs.

 Customer Traffic − Number of customers visiting the location, number of private

vehicles passing through the location, number of pedestrians visiting the location.

 Restrictions Placed on Store Operations − Restrictions on working hours, noise

intensity during media promotion events.

 Location Convenience − Proximity to residential areas, proximity to public

transport facility.

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13. Steps to Choose the Right Retail Location
A retail company needs to follow the given steps for choosing the right location

Step 1 - Analyze the market in terms of industry, product, and competitors − How
old is the company in this business? How many similar businesses are there in this
location? What the new location is supposed to provide: new products or new market?
How far is the competitor’s location from the company’s prospective location?

Step 2 – Understand the Demographics − Literacy of customers in the prospective

location, age groups, profession, income groups, lifestyles, religion.

Step 3 – Evaluate the Market Potential − Density of population in the prospective

location, anticipation of competition impact, estimation of product demand, knowledge
of laws and regulations in operations.

Step 4 - Identify Alternative Locations − Is there any other potential location? What is
its cost of occupancy? Which factors can be compromised if there is a better location
around?

Step 5 – Finalize the best and most suitable Location for the retail outlet.

Measuring the Success of Location

Once the retail outlet is opened at the selected location, it is important to keep track of
how feasible was the choice of the location. To understand this, the retail company
carries out two types of location assessments −

Macro Location Evaluation

It is conducted at a national level when the company wants to start a retail business
internationally. Under this assessment, the following steps are carried out −

Detailed external audit of the market by analyzing locations as macro environment such
as political, social, economic, and technical.

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Most important factors are listed such as customer’s level of spending, degree of
competition, Personal Disposable Income (PDI), availability of locations, etc., and
minimum acceptable level for each factor is defined and the countries are ranked.

The same factors listed above are considered for local regions within the selected
countries to find a reliable location.

Micro Location Evaluation

At this level of evaluation, the location is assessed against four factors namely −

 Population − Desirable number of suitable customers who will shop.

 Infrastructure − The degree to which the store is accessible to the potential
customers.
 Store Outlet − Identifying the level of competing stores (those which the decrease
attractiveness of a location) as well as complementary stores (which increase
attractiveness of a location).
 Cost − Costs of development and operation. High startup and ongoing costs affect
the performance of retail business.

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14. Conclusion
Online sales continue to grow in importance, as shown by our compilation of
ecommerce growth trends. But for many businesses, the days of double-digit,
year-on-year growth in online sales are over. We are now in the era of
ecommerce optimization where, to maintain growth, businesses are having to
innovate their growth strategy, for making their online experiences engaging
and persuasive.

As the world of digital continues to transform, with different generational

segments of the population adapting to technology at their own distinct pace,
marketers keep a close eye on retail ecommerce trends and developments. With
artificial intelligence being hot topic for the future of marketing, trends like
conversational commerce, using chatbots and voice search have been closely
associated to widely-adopted online shopping habits amongst millennials as
well as other population segments. More and more stores are moving online
and constantly taking measures to improve their online shopping experience
and multichannel approach.

Much like the world of digital, consumer shopping behaviour continues to

evolve , as consumers discover new opportunities, both online and offline. In
fact, a recent retail trends survey, commissioned by a leading London-based
international brand experience consultancy, has revealed that almost three-
quarters of millennials still prefer stores to online shopping. Who would have
thought? In this world of digital, millennials, often regarded as an immensely
digital-savvy generation, still prefers to shop in a physical store. The survey was
conducted among 2000 18 to 35 year-olds living in a number of UK cities.

The Retail sector report has some key highlights:

74% still prefer physical stores compared to just 26% preferring online
shopping, with 36% preferring shopping malls.

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80% of people went shopping as a day trip in the last month, with 50% of
those going in the last week.

51% would love to navigate, get information and pay using their phone in-
store, which is an example of omnichannel retail, read more here.

46% think staff hinder the shopping experience, but 48% still value help.

70% prefer staff but maybe just at the pay point, while 28% would happily shop
without staff.

71% want store staff to be more knowledgeable.

45% would revisit stores that offered workshops and tutorials, while 23% just
want to shop.

77% of people are open to the idea of handing over data in exchange for discounts.

56% would like their click and collect point to offer them a space to try on clothes
and facilitate their returns and refunds.

73% of people prefer home delivery over click and collect.

49% say the most loved element of the in-store experience is touching and
trying things out.

69% of store card holders believe they are valuable and encourage them to
shop at the same store.

Both online and offline, people prefer multi-brand stores over mono-brand ones.
Retail has undergone a seismic change in the last decade. Though this has been
largely driven by technology, our consumer attitudes to what shopping is and
does has sifted dramatically and our needs, platforms and spaces have
converged. We no longer shop in specific bursts, rather shopping hums along at
our pace of life.

―Retail has become a continuous chain-reaction of movements, events,

experiences and motives. Shopping has become relative – relative to context,
person and place and has moulded into four dimensions of space and time.
Shopping is no longer about the what and where, but how and when.

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In today ‘s fast-paced, technology-oriented world, consumers are
overwhelmed with content. Be it through ads, offers, emails, texts, social
media and everything else, the industry has reached a point of ―content shock
where consumers cannot consume much more content than they already are‖.
Hence, the way brands devise their digital marketing strategy, to capture their
audience ‘s attention, needs to change. Brands need to focus on the micro-
moments of their customers ‘behaviors.

Think with Google outlines micro-moments marketing as, ―What used to be our
predictable, daily sessions online have been replaced by many fragmented
interactions that now occur instantaneously. There are hundreds of these
moments everyday checking the time, texting a spouse, chatting with friends on
social media. But then there are the other moments—the I want-to-know
moments, I want-to-go moments, I want-to-do moments, and I want-to-buy
moments—that really matter. We call these micro-moments, and they're game
changers for both consumers and brands.

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15. Bibliography
1. Wikipedia on Consumer Behaviour

2. Articles : https://www.iresearchservices.com/5-common-factors-influencing-
consumer-behavior/

3. https://www.omniconvert.com/blog/consumer-behavior-in-marketing-patterns-types-
segmentation.html

4. https://www.academia.edu/23601001/CONSUMER_BEHAVIOR-NOTES

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