School of Management

Blekinge Institute of Technology

Factors Influencing Customer Loyalty and

Choice of Retailer
While Buying Fast Moving Consumer Goods

By:
Poornima Pugazhenthi

Supervisor:
Jan Svanberg

FE2413 - 2010 Master’s Thesis in Business Administration

1
 ABSTRACT
Before several decades a retail store was only a small shop in the locality
from where the consumers living nearby would buy groceries and other products
that they use on a daily basis and was happy and content with it. This is not the
case anymore. From small departmental stores to hypermarkets, there has been
massive growth in the retail industry. Now, every retail store tries to attract
customers by trying to satisfy the customer’s needs both by making the right
product available for its customers and by making it easy for the customer to make
the buying decision. One main reason for the same is that the retail industry has a
lot of competitors and in order to be successful, any retail store should make sure
that they have an edge over the others.

The main aim of this study is to find the factors influencing a customer to
choose a retail store when buying Fast Moving Consumer Goods. By understanding
the same retailers can try and improvise on these factors and thereby increase their
chances of making the customers come back again and again to their store to buy
these goods. Fast Moving Consumer Goods are food and non-food everyday
consumer products that are sold quickly and at relatively low cost. The Fast Moving
Consumer Goods can be classified as Highly Perishable and Others.
The specific objectives of this research are to find the factors influencing a
customer in choosing a retail store for Highly Perishable Fast Moving Consumer
Goods and Other Fast Moving Consumer Goods. Three categories under each of
these classifications are chosen and customer’s choice of retail store for each of
these categories will be assessed. Based on the results after analysing the
responses of several people obtained using a questionnaire, the top factors are
determined.
No matter what the background of the customer, Price, Product Quality and
Availability of all brand and products are the three main factors that determine the
same. Analysis of all the hypotheses shows that there is either no difference or
minimal difference only in the choice of factors by customers of different
demographics such as age, gender, income level, marital status etc.

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TABLE OF CONTENTS

I. Chapter 1....................................................................4
1.1. Introduction
1.2. Purpose and Research Focus

II. Chapter 2....................................................................7

2.1. Literature Review

III. Chapter 3.....................................................................10

3.1. Research Methodology
3.2. Hypothesis
3.3. Information Gathering
3.3.1. Preliminary Questionnaire
3.3.2. Final Questionnaire

IV. Chapter 4.....................................................................13

4.1. Data Collection

IV. Chapter 5.....................................................................15

5.1. Data Analysis
5.2. Problems Encountered
5.3. Limitations

V. Chapter 6.....................................................................42
6.1. Conclusion
6.2. Future Work
VI. References..................................................................44
VII. Appendices..................................................................46
7.1. Preliminary Questionnaire
7.2. Final Questionnaire

3
1. CHAPTER 1

1.1. INTRODUCTION

Retailing includes every business that sells goods to customers. These

establishments are usually referred to as shops or stores. The various formats of
retails stores are: Departmental stores, Supermarkets, Hypermarkets, Discount
stores, General merchandise stores, Warehouse stores, Variety store or "dollar
store", Boutiques, Convenience stores, Automated Retail stores like Kiosks, Grocery
stores and e-Retails.

A few decades ago a retail store was only a small shop in the locality from
where the consumers living nearby would buy groceries and other products that
they use on a daily basis and was happy and content with it. This is not the case
anymore. From small departmental stores to hypermarkets, there has been
massive growth in the retail industry. Now, every retail store tries to attract
customers by trying to satisfy the customer’s needs both by making the right
product available for its customers and by making it easy for the customer to make
the buying decision. One main reason for the same is that the retail industry has a
lot of competitors and in order to be successful, any retail store should make sure
that they have an edge over the others.

Research on various retail phenomenons such as retail pricing, distribution

system, transfer mechanisms or delivery, sales techniques, customer service,
buying behaviour etc has been happenning over several decades. Researches on
how a customer chooses his products that is, buying decision have also been done.
Out of all the products sold in a retail store, Fast Moving Consumer Goods
(referred as FMCG henceforth) have a higher percentage of volume and are those
that customers buy often. For example, an average customer would be buying not
more than 10 tv sets throughout his/her lifetime. But any customer would buy a
soap or a tooth paste everymonth or once in two months. This is why FMCG are a
vital part of a retail store and studying them becomes very essential.

4
 This thesis is a research on one of the phenomenons of retail, which is the
determination of factors that determine the customer’s choice of retail store and
loyalty towards the store, when buying FMCG.
FMCG includes products which are too numerous to count and hence a study
on a few categories of FMCG which will be a good reflection of the whole range of
products becomes necessary. Therefore six categories are chosen and studied.
Perishable categories such as vegetables and fruits, dairy products and bakery
items are the basic perishable FMCG that customers buy almost everyday. Among
the non perishable ones, personal care, cleaning products and and confectionaries
are chosen because these products are used by men, women and children – that is,
everyone in a family are included in the study.
So far, though there has been several studies on retail, none had
concentrated on FMCG alone and this study is unique by concentrating on FMCG,
because the FMCG makes a customer to visit a retail store on a routine basis.

1.2. PURPOSE AND RESEARCH FOCUS

This thesis contributes to a growing literature on shopping behavior and in

specific, factors that lead to the choice of store and loyalty by customers for
FMCG.

The specific focus is on the following six categories of FMCG, these being
everyday items and being used by both genders, adults as well as children:

a. Highly Perishable Fast Moving Consumer Goods:

i. Vegetables & Fruits
ii. Dairy Products
iii. Bakery Items

b. Other Fast Moving Consumer Goods:

i. Personal Care Products

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 ii. Cleaning Products
iii. Confectionaries

Factors arrived upon using the preliminary questionnaire include Price, Product
Quality, Ambience, Parking Space, Display, Fast Billing and Quicker Shopping,
Customer Service, Location, Discounts / Offers / Benefits and Availability of all
brands / products etc.

A ranking of the above factors by customers shows the most important and least
important factors that influence the choice and loyalty by the customers while
buying FMCG.

6
2. CHAPTER 2

2.1. LITERATURE REVIEW

Several studies on the retail industry have been undertaken- those that talk
about how to attract customers and make them buy at a retail store. Several such
studies are being cited and referred to. One such research on consumer loyalty to
food stores was done by Huddleston, Whipple, and VanAuken (2004) and the
result showed that advertisement, location, product assortment, service and
conveniences such as 24-hour-a-day service and quick checkout – all these
promoted loyalty. Messinger and Narasimhan (1997) have shown that as
shopper’s opportunity cost of time increases larger assortments become more
important.

There are various researches that examine the relationship between

shopper characteristics and shopping behavior.

Shoppers were classified as “routine” - who have higher opportunity cost

and “random” - who face low opportunity cost of time and search more widely
across stores within larger stores for the best price by Kim and Park (1997).
Ackerman and Tellis (2001) studied cross-cultural differences between Chinese
and Americans in terms of shopping behavior. Kim and Jin (2001) studied the
profiles of Korean shoppers of multinationals versus Korean discount stores and
found that a higher percentage of the shoppers who have full-time jobs tend to
patronize the multinational discount stores. However, there are no significant
differences between the two groups with respect to age, family size, education
level, and income. The studies are generally restricted to comparisons of
behavior within the same store format, that is, they are limited to only
supermarkets or to only discount stores.

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 A few researchers have examined the shopper’s choice across retail
formats. Bhatnagar and Ratchford (2004) have studied competition for non-
durable goods sales among supermarkets, convenience stores, and food
warehouses. They assume that consumers choose the retail format that
provides the most attractive combination of price, assortment of products, and
travel cost. They conclude that convenience stores charge a higher price but
minimize travel time, supermarkets attract those shoppers who prefer larger
product assortments, and food warehouses are preferred by the heavy users,
such as consumers with larger families. Fox, Montgomery, and Lodish (2004)
study consumer shopping choices among supermarket retailers, mass
merchandisers, and drug stores, and find that consumers respond to variations
in product assortments and promotions more than prices.

Two studies, look at how changes in the availability of supermarkets

and supercenters affect choice among retail format in general. D’Haese and van
Huylenbroeck (2005) provide a case study of the shifting purchasing patterns of
two villages in rural South Africa. The majority of households in their study now
buy their main food items from supermarkets rather than from local shops and
farmers. Seiders, Simonides, and Tigert (2000) study the effects of supercenter
market entry on local traditional food retailers. They find that consumers choose
traditional supermarkets primarily for convenience, quality, and service, and
choose supercenters primarily for price and assortment. Carlson, Kinsey and
Nadav (2002) use cluster analysis to group consumers based on where they
obtained their food and found that half were “Home Cookers”–purchasing 93
percent of their food from grocery stores.

The studies discussed above have been done for all types of products
in general or on specific goods like the non-durable goods and not on the FMCG
which is one of the fastest growing industries which can never reach a
saturation level. There are a lot of innovations happening in these goods and
hence studying the same becomes inevitable. This thesis also differs from other

8
researches discussed above on choice of retail store across formats and by
concentrating on FMCG. It also differs from the previous researches by
examining the effects of personal demographic characteristics such as gender,
age, income, marital status etc on the choice. Based on whether there are
differences in the factors, certain conclusions are arrived upon and
recommendations are given for retailers as well as FMCG manufacturers.

9
3. CHAPTER 3

3.1. RESEARCH METHODOLOGY

The factors that a customer would consider when choosing a retail store are
derived from the customers which are then ranked based on the responses from
the customers. A list of factors are arrived from the customers just by asking them
so that it would give the customers to express their views without inhibitions. Also
this made customers come up with factors that are very practical. From the replies,
about ten factors are chosen. Based on the ten factors a final questionnaire is
developed. The top ranking factors based on which a shopper chooses a retail store
are determined using the final questionnaire. Also the various
characteristics/demographics of the respondeds are recorded. This is to find out
whether people with different demographics have different choices.

3.2. INFORMATION GATHERING

3.2.1. Preliminary questionnaire:

The factors based on which customers choose retail stores to buy FMCG
products is gathered using interviews, questionnaires and online survey and a list
of factors are gathered. Based on this the final questionnaire is formulated for
futher study.

3.2.2. Final questionnaire:

Based on the list of factors gathered, a questionnaire is drafted and

customers are asked to rank the factors that they think are important for a retail
store to possess to attract customers to buy FMCG.
The most important factors, the top three, will be identified from among a set of
ten factors for each product category given below and respondents are asked to
rank the factors based on their choice.

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There are six product categories that are chosen:

Highly Perishable Fast Moving Consumer Goods:

Vegetables & Fruits
Dairy Products
Bakery Items

Other Fast Moving Consumer Goods:

Personal Care Products
Cleaning Products
Confectionaries

The results obtained from the questionnaire are analysed. The ranks are cumulated
and the top three factors are determined by finding an average of the ranks. For
this purpose MS Excel is used.

3.2. HYPOTHESES

In one of the studies, Kim and Jin (2001) studied the profiles of Korean
shoppers of multinationals versus Korean discount stores and found that a
higher percentage of the shoppers who have full-time jobs tend to patronize the
multinational discount stores. However, there are no significant differences
between the two groups with respect to age, family size, education level, and
income.
The same demographics such as age, family size, income have been taken
along with gender and the occupation of the female respondents for this study.

11
The following hypotheses are tested,

Hypothesis 1 – Is there a difference in the factors based on which male and female
customers choose a retail store for buying FMCG?

Hypothesis 2 – Is there a difference in the factors based on which customers of

different age groups choose a retail store for buying FMCG?

Hypothesis 3 – Is there a difference in the factors based on which working women

and housewives choose a retail store for buying FMCG?

Hypothesis 4 – Is there a difference in the factors based on which customers who

are singles, married and married with kids choose a retail store for buying FMCG?

Hypothesis 5 –Is there a difference in the factors based on which customers of

different income groups choose a retail store for buying FMCG?

For the above analysis, MS Excel is used for the quantitative work.

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4. Chapter 4

4.1. DATA COLLECTION

Data collection is a very time consuming process that requires patience and there
are various methods of data collection such as personal interviewing, telephone,
mail and the Internet. For the Preliminary questionnaire data was collected by all
the above methods. Personal interviews were conducted among customers at retail
stores, by telephone & email data were collected from professionals in the retail
industry. The data were collected as an open ended question in order to make the
respondents answer from their own experiences.

For the final questionnaire, emails were sent to different respondents and their
responses were recorded.
The preliminary and final questionnaires can be found in the appendix section of
this report.

4.1.1. Profile of the respondents

The final questionnaire was printed and distributed to several people. Also it was
distributed by email. Out of the 100 respondents, responses were received from 50
people and a database of the respondents’ profile (with demographic details and
ranking of the ten factors) is created.
The following are illustrations of the respondent’s profile:

Gender of the Respondents:

13
Age group of the Respondents:

Marital Status of Respondents:

Income level of Respondents:

14
5. CHAPTER 5

5.1. DATA ANALYSIS

The information gathered from the 50 respondents are entered into an excel sheet
after segregating them based on the age, gender, marital status etc. Please find the
same in the appendix section.

Based on the ranking given by all the respondents, the top factors that contribute
to the choice of a retail store while buying FMCG are arrived at for each of the
product category. This is done using Microsoft Excel, by finding out the average of
all the ranks for each factor for each product type. This is done for each product
type and for proving all the five hypotheses.
The same is described below:

Vegetables & Fruits

Factor
S.No. 1 F2 F3 F4 F5 F6 F7 F8 F9 F10
1 3 1 8 10 9 4 5 7 6 2
2 2 1 3 10 4 9 5 6 8 7
3 3 10 7 9 8 9 8 9 7 9
4 3 1 7 6 10 4 5 1 9 8
5 3 2 4 9 10 6 8 1 7 5
6 2 1 5 10 8 3 9 4 7 8
7 2 1 8 5 10 6 9 7 4 3
8 2 1 10 9 8 7 6 5 3 4
9 2 1 6 7 10 9 8 4 5 3
10 2 3 8 4 6 9 7 1 5 10
11 2 1 3 10 9 4 5 6 7 8
12 4 1 3 10 6 8 7 9 5 2
13 2 1 7 8 6 5 9 4 3 10
14 2 1 4 7 3 5 10 6 9 8
15 3 1 8 7 9 4 6 5 10 2
16 4 1 5 3 6 8 7 9 10 2
17 6 9 6 8 7 4 9 9 7 9
18 1 1 4 8 5 3 5 2 3 6
19 1 8 10 7 6 5 2 9 3 4

15
 20 2 1 9 10 8 6 7 5 4 3
21 1 2 5 9 6 4 8 3 7 2
22 2 1 0 10 6 6 6 4 4 5
23 2 1 5 7 8 3 4 6 9 10
24 2 1 5 10 7 3 6 8 9 4
25 7 1 6 10 8 4 5 2 9 3
26 2 1 3 9 7 5 8 4 10 6
27 2 1 6 10 8 9 6 5 4 3
28 4 3 7 6 1 9 8 2 10 5
29 8 10 3 7 1 2 6 9 5 4
30 4 1 7 6 8 5 3 9 10 2
31 2 1 7 10 9 8 3 6 5 4
32 2 1 7 10 6 9 5 3 4 8
33 8 10 3 1 7 4 5 6 2 9
34 3 1 6 8 7 9 4 5 10 2
35 1 3 8 3 2 6 1 4 5 1
36 3 2 8 10 9 7 4 1 5 6
37 6 1 8 3 7 5 4 2 9 10
38 1 1 8 9 10 5 3 7 6 4
39 2 1 5 8 7 3 6 9 10 4
40 3 1 0 0 0 0 0 0 4 2
41 3 4 6 2 5 9 7 8 10 1
42 1 2 3 6 5 6 2 3 8 3
43 4 1 2 6 7 8 3 5 10 9
44 1 1 5 5 3 2 1 1 6 2
45 10 1 1 10 1 1 1 1 10 1
46 3 1 4 10 5 9 8 6 7 2
47 1 2 9 7 10 6 8 5 4 3
48 2 1 6 8 9 10 7 3 5 4
49 5 1 2 6 3 10 9 7 8 4
50 9 10 1 3 2 8 6 4 5 7
Average
Rank 3.10 2.30 5.42 7.32 6.44 5.86 5.68 4.94 6.64 4.86

The ranks are rounded to the nearest whole number and given against each factor
as the final average rank as follows:

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5.1.1. Vegetables & Fruits:
The following are the ranks given to each of the factors:

Price 3
Product Quality 2
Ambience 5
Parking Space 7
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 5
Discounts / Offers / Benefits 7
Availability of all brands / products 5

The top 3 factors that customers consider as important while buying vegetables &
fruits are:
Product Quality, Price followed by Availability of all brands/products,
Location and Ambience

5.1.2. Dairy Products:

The following are the ranks given to each of the factors:

Price 3
Product Quality 2
Ambience 6
Parking Space 7
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 5

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 Discounts / Offers / Benefits 7
Availability of all brands / products 5

The top 3 factors that customers consider as important while buying dairy products
are:
Product Quality, Price, Availability of all brands/products, Location

5.1.3. Bakery Items:

The following are the ranks given to each of the factors:

Price 3
Product Quality 2
Ambience 5
Parking Space 9
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 5
Discounts / Offers / Benefits 7
Availability of all brands / products 5

The top 3 factors that customers consider as important while buying bakery items
are:
Product Quality, Price, Ambience, Availability of all brands/products,
Location

5.1.4. Personal Care Products:

The following are the ranks given to each of the factors:

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 Price 3
Product Quality 3
Ambience 6
Parking Space 8
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 6
Discounts / Offers / Benefits 6
Availability of all brands / products 4

The top 3 factors that customers consider as important while buying personal care
products are:
Product Quality, Price, Availability of all brands/products

5.1.5. Cleaning Products:

The following are the ranks given to each of the factors:

Price 3
Product Quality 3
Ambience 7
Parking Space 7
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 6
Discounts / Offers / Benefits 6
Availability of all brands / products 4

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The top 3 factors that customers consider as important while buying cleaning
products are:
Product Quality, Price, Availability of all brands/products

5.1.6. Confectionaries:
The following are the ranks given to each of the factors:

Price 3
Product Quality 3
Ambience 6
Parking Space 8
Display 6
Fast Billing and Quicker Shopping 6
Customer Service 6
Location 6
Discounts / Offers / Benefits 6
Availability of all brands / products 4

The top 3 factors that customers consider as important while buying confectionaries
are:
Product Quality, Price, Availability of all brands/products

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5.1.7. TESTING THE HYPOTHESES:

Each hypothesis is being tested, analysed and proved:

5.1.7.1. Hypothesis 1 – Is there a difference in the factors based on which

male and female customers choose a retail store for buying
FMCG?
The respondents are classified based on their gender and this hypothesis is tested.
The average ranking found using Microsoft Excel, of the male and female
respondents respectively are compared below:
Vegetables & Fruits:

Factors Male Female

Price 3 3
Product Quality 2 3
Ambience 5 6
Parking Space 7 8
Display 6 8
Fast Billing and Quicker Shopping 6 6
Customer Service 6 6
Location 5 5
Discounts / Offers / Benefits 7 6
Availability of all brands / products 4 6

Dairy Products:

Factors Male Female

Price 3 3
Product Quality 2 3
Ambience 5 6

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Parking Space 7 8
Display 6 7
Fast Billing and Quicker Shopping 6 7
Customer Service 6 7
Location 5 5
Discounts / Offers / Benefits 7 6
Availability of all brands / products 5 5

Bakery Items:

Factors Male Female

Price 3 4
Product Quality 2 3
Ambience 5 6
Parking Space 7 8
Display 6 6
Fast Billing and Quicker Shopping 6 7
Customer Service 6 6
Location 5 6
Discounts / Offers / Benefits 7 6
Availability of all brands / products 5 6

Personal Care Products:

Factors Male Female

Price 3 3
Product Quality 3 4

22
Ambience 5 7
Parking Space 7 8
Display 5 6
Fast Billing and Quicker Shopping 6 6
Customer Service 6 7
Location 6 7
Discounts / Offers / Benefits 6 5
Availability of all brands / products 5 4

Cleaning Products:

Factors Male Female

Price 3 3
Product Quality 3 3
Ambience 6 7
Parking Space 7 8
Display 6 7
Fast Billing and Quicker Shopping 6 6
Customer Service 6 6
Location 6 6
Discounts / Offers / Benefits 6 5
Availability of all brands / products 4 4

Confectionaries:

Factors Male Female

Price 3 4

23
 Product Quality 3 3
Ambience 6 6
Parking Space 7 8
Display 6 6
Fast Billing and Quicker Shopping 6 6
Customer Service 6 7
Location 6 7
Discounts / Offers / Benefits 6 5
Availability of all brands / products 4 4

Yes, there is difference in the factors that male and female customers prefer in a
retail outlet while they shop for FMCG, but a very negligible difference.
Both men and women prefer a good price and product quality as their most
preferred factors, the third important factor is the preference for availability of all
brands/products in almost all the six categories of FMCG products under study. The
other facts that can be noticed are that:
1. Women prefer location of the store as an important factor while buying
vegetables & fruits
2. Men prefer ambience, location and availability while women donot consider
ambience but take into account all other factors while buying dairy products.
3. Women prefer all the factors except parking space as important criteria while
buying bakery items.
4. Men prefer ambience and display as important while buying personal care
products.

5.1.7.2. Hypothesis 2 – Is there a difference in the factors based on which

customers of different age groups choose a retail store for buying
FMCG?

Vegetables & Fruits:

24
 Factors Less than More
30 than 30
Price 3 4
Product Quality 2 3
Ambience 6 5
Parking Space 8 6
Display 7 6
Fast Billing and Quicker Shopping 6 6
Customer Service 7 4
Location 5 5
Discounts / Offers / Benefits 7 7
Availability of all brands / products 6 4

Dairy Products:

Factors Less than More

30 than 30
Price 3 4
Product Quality 2 2
Ambience 6 5
Parking Space 8 6
Display 7 6
Fast Billing and Quicker Shopping 6 6
Customer Service 7 5
Location 5 5
Discounts / Offers / Benefits 7 7
Availability of all brands / products 5 4

25
 Bakery Items:

Factors Less than More than

30 30
Price 3 3
Product Quality 2 2
Ambience 6 5
Parking Space 9 6
Display 6 5
Fast Billing and Quicker Shopping 7 6
Customer Service 7 5
Location 6 5
Discounts / Offers / Benefits 7 6
Availability of all brands / products 6 5

Personal Care Products:

Factors Less than More than

30 30
Price 3 3
Product Quality 3 3
Ambience 6 5
Parking Space 9 6
Display 6 5
Fast Billing and Quicker Shopping 7 6
Customer Service 7 5
Location 6 6

26
Discounts / Offers / Benefits 5 6
Availability of all brands / products 4 5

Cleaning Products:

Factors Less than More than

30 30
Price 2 3
Product Quality 3 3
Ambience 7 6
Parking Space 9 6
Display 7 5
Fast Billing and Quicker Shopping 6 6
Customer Service 7 5
Location 6 5
Discounts / Offers / Benefits 5 6
Availability of all brands / products 4 4

Confectionaries:

Factors Less than More than

30 30
Price 3 3
Product Quality 3 3
Ambience 6 6
Parking Space 9 6
Display 6 5
Fast Billing and Quicker Shopping 7 6
Customer Service 8 5

27
 Location 6 6
Discounts / Offers / Benefits 6 6
Availability of all brands / products 4 4

There is very very minimal difference in the factors considered by the less than 30
years age group and the more than 30 years age group. The following facts have
ben observed:
1. Apart from price & quality, the less than 30 years olds prefer location of the
retail store while the more than 30 years olds prefer customer service and
availability of the products while buying vegetables and fruits.
2. The less than 30 years olds prefer location and availability as important while
the more than 30 years prefer only availability as important while buying
dairy products.
3. The more than 30 year old people expect more customer service while
buying bakery items and personal care products.

5.1.7.3. Hypothesis 3 – Is there a difference in the factors based on which

working women and housewives choose a retail store for buying
FMCG?

Vegetables & Fruits:

Factors Working House

Women Wives
Price 4 2
Product Quality 3 1
Ambience 5 7
Parking Space 7 8
Display 7 9
Fast Billing and Quicker Shopping 5 6

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Customer Service 6 8
Location 5 5
Discounts / Offers / Benefits 6 5
Availability of all brands / products 6 5

Dairy Products:

Factors Working House

Women Wives
Price 4 2
Product Quality 3 1
Ambience 6 7
Parking Space 7 7
Display 7 9
Fast Billing and Quicker Shopping 6 6
Customer Service 7 8
Location 4 7
Discounts / Offers / Benefits 6 5
Availability of all brands / products 5 4

Bakery Items:

Factors Working House

Women Wives
Price 5 3
Product Quality 3 1
Ambience 7 6
Parking Space 7 7
Display 6 5

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Fast Billing and Quicker Shopping 5 8
Customer Service 6 7
Location 5 7
Discounts / Offers / Benefits 6 7
Availability of all brands / products 6 4

Personal Care Products:

Factors Working House

Women Wives
Price 4 3
Product Quality 4 2
Ambience 6 9
Parking Space 7 9
Display 6 6
Fast Billing and Quicker Shopping 6 5
Customer Service 6 9
Location 6 7
Discounts / Offers / Benefits 6 3
Availability of all brands / products 3 3

Cleaning Products:

Factors Working House

Women Wives
Price 4 2
Product Quality 4 2

30
 Ambience 7 9
Parking Space 7 9
Display 6 7
Fast Billing and Quicker Shopping 6 5
Customer Service 6 7
Location 6 7
Discounts / Offers / Benefits 5 4
Availability of all brands / products 4 4

Confectionaries:

Factors Working House

Women Wives
Price 5 2
Product Quality 4 2
Ambience 7 6
Parking Space 8 8
Display 6 6
Fast Billing and Quicker Shopping 5 7
Customer Service 7 9
Location 6 7
Discounts / Offers / Benefits 6 5
Availability of all brands / products 3 4

When comparing the preferences of working women and house wives, the following
are noted:
1. Working women fast billing and quicker shopping while buying vegetables &
fruits and bakery items.

31
 2. Working women consider location as very important while buying dairy
products.
3. While house wives expect discounts on personal care products and cleaning
products from retail stores.

5.1.7.4. Hypothesis 4 – Is there a difference in the factors based on which

customers who are singles, married and married with kids choose
a retail store for buying FMCG?

Vegetables & Fruits:

Factors Single Married Married

with Kids
Price 3 4 3
Product Quality 2 3 2
Ambience 6 7 5
Parking Space 8 8 7
Display 6 8 6
Fast Billing and Quicker Shopping 6 6 6
Customer Service 5 7 5
Location 5 5 5
Discounts / Offers / Benefits 7 8 6
Availability of all brands / products 4 7 5

Dairy Products:

Factors Single Married Married

with Kids
Price 3 3 3

32
Product Quality 2 4 2
Ambience 5 7 5
Parking Space 9 8 7
Display 5 8 7
Fast Billing and Quicker Shopping 5 7 6
Customer Service 6 8 6
Location 5 6 5
Discounts / Offers / Benefits 7 7 6
Availability of all brands / products 4 6 4

Bakery Items:

Factors Single Married Married

with Kids
Price 3 4 3
Product Quality 2 3 2
Ambience 5 7 5
Parking Space 9 8 7
Display 5 8 7
Fast Billing and Quicker Shopping 5 7 6
Customer Service 6 8 6
Location 5 6 5
Discounts / Offers / Benefits 7 7 6
Availability of all brands / products 4 6 4

Personal Care Products:

Factors Single Married Married

33
 with Kids
Price 3 5 3
Product Quality 3 4 3
Ambience 5 7 5
Parking Space 9 8 7
Display 5 7 5
Fast Billing and Quicker Shopping 6 7 6
Customer Service 5 8 6
Location 5 6 6
Discounts / Offers / Benefits 6 6 5
Availability of all brands / products 4 6 4

Cleaning Products:

Factors Single Married Married

with Kids
Price 3 4 3
Product Quality 3 5 2
Ambience 6 7 6
Parking Space 9 8 7
Display 6 7 6
Fast Billing and Quicker 6 7 6
Shopping
Customer Service 5 8 6
Location 5 7 6
Discounts / Offers / Benefits 6 7 5
Availability of all brands / 4 5 4
products

34
 Confectionaries:

Factors Single Married Married

with Kids
Price 3 4 3
Product Quality 3 5 2
Ambience 5 7 6
Parking Space 8 8 7
Display 5 7 5
Fast Billing and Quicker Shopping 6 7 6
Customer Service 6 9 6
Location 6 7 7
Discounts / Offers / Benefits 7 6 6
Availability of all brands / products 4 5 3

When considering the difference in the prefences of single and married people and
married with kids, it can be seen that the preferences are almost similarly. It is
quite interesting to note that married people with kids prefer a retail store with
good ambience as against the ones without good ambience.
5.1.7.5. Hypothesis 5 – Is there a difference in the factors based on which
customers customers of different income levels choose a retail
store for buying FMCG?

Vegetables & Fruits:

Factors No Less 301- 501- 1001- 3001- 5001-

Income than 500 1000 3000 5000 10000
300

35
 Price 2 2 3 2 4 2 5
Product Quality 2 1 1 3 3 2 3
Ambience 8 6 6 6 5 6 5
Parking Space 8 10 9 8 8 6 6
Display 8 6 7 8 6 7 6
Fast Billing and 6 7 8 7 5 5 8
Quicker
Shopping
Customer 7 7 5 6 5 6 6
Service
Location 6 3 5 6 5 5 5
Discounts / 4 5 7 7 7 7 7
Offers /
Benefits
Availability of 4 4 4 6 5 5 5
all brands /
products

Dairy Products:

Factors No Less 301- 501- 1001- 3001- 5001-

Income than 500 1000 3000 5000 10000
300
Price 2 3 6 2 4 2 5
Product Quality 1 2 2 3 2 2 3
Ambience 7 6 5 6 5 6 5
Parking Space 8 10 9 8 7 7 6

36
 Display 8 7 4 7 6 6 6
Fast Billing and 5 7 6 7 6 5 9
Quicker
Shopping
Customer 7 8 8 6 6 6 6
Service
Location 6 3 3 6 5 5 4
Discounts / 5 5 8 7 7 7 7
Offers /
Benefits
Availability of 5 3 5 6 4 5 6
all brands /
products

Bakery Items:
Factors No Less 301- 501- 1001- 3001- 5001-
Income than 500 1000 3000 5000 10000
300
Price 3 2 3 3 3 3 5
Product Quality 1 1 1 3 2 2 3
Ambience 7 5 6 6 5 6 5
Parking Space 8 8 9 9 8 7 6
Display 6 4 4 7 5 5 6
Fast Billing and 7 6 8 7 6 6 9
Quicker
Shopping
Customer 6 7 6 7 6 5 6
Service
Location 6 6 5 6 5 5 4

37
 Discounts / 6 5 8 6 7 7 7
Offers /
Benefits
Availability of 5 6 5 5 5 5 6
all brands /
products

Personal Care Products:

Factors No Less 301- 501- 1001- 3001- 5001-
Income than 500 1000 3000 5000 10000
300
Price 2 2 5 2 3 3 5
Product Quality 2 2 3 3 3 4 3
Ambience 9 5 6 6 5 5 5
Parking Space 9 10 9 9 8 6 6
Display 6 6 5 7 5 5 6
Fast Billing and 6 6 7 6 6 6 9
Quicker
Shopping
Customer 8 8 6 6 6 6 6
Service
Location 6 6 8 6 6 6 4
Discounts / 4 6 6 7 5 6 7
Offers /
Benefits
Availability of 4 2 4 5 4 3 6
all brands /
products

38
Cleaning Products:
Factors No Less 301- 501- 1001- 3001- 5001-
Income than 500 1000 3000 5000 10000
3070
Price 2 2 4 2 3 2 4
Product Quality 2 1 3 3 3 4 3
Ambience 9 6 5 7 6 6 6
Parking Space 9 7 9 9 8 6 5
Display 7 7 5 7 5 6 6
Fast Billing and 6 7 8 7 6 6 9
Quicker
Shopping
Customer 8 7 6 6 5 6 6
Service
Location 6 4 7 6 6 6 4
Discounts / 4 5 7 6 5 7 6
Offers /
Benefits
Availability of 4 4 4 4 4 3 6
all brands /
products

Confectionaries:
Factors No Less 301- 501- 1001- 3001- 5001-
Inco than 500 1000 3000 5000 10000

39
 me 300
Price 2 2 5 3 3 3 4
Product Quality 2 1 2 3 3 4 3
Ambience 7 6 5 6 6 6 6
Parking Space 8 10 9 9 8 6 6
Display 6 5 4 6 5 6 5

Fast Billing and 7 6 8 6 6 5 9

Quicker Shopping
Customer Service 8 6 7 7 6 6 6
Location 7 6 5 6 7 7 5
Discounts / Offers 4 5 7 7 6 7 7
/ Benefits
Availability of all 4 2 3 4 4 3 6
brands / products

There is no great difference in the factors that the different income level –
respondents considered while choosing a retail store for FMCG. The most important
factors are price, product quality and availability. It is interesting to note that the
income groups ’501-1000 US $’, ’501-1000 US $’ and ’5001-10000’ expect a good
ambience when buying vegetables and fruits. Location and availability are
considered as important by almost all the income groups. For personal care
products the income levels above 501 US$ expect a good ambience.

40
5.2. PROBLEMS ENCOUNTERED

The problems faced during the thesis work are:

1. The distribution and emailing of the questionnaire was a very tedious work
and even more tough was getting back the response. Eventhough it would
take just a few minutes to fill up the questionnaire.
2. Some respondents had not completely filled up the questionnaire and hence
these responses had to be discarded.

5.3. LIMITATIONS

Though the thesis work has been done with atmost sincerity and worked with in
detail, due to time limits, the number of responses received has been less than
expected. Out of the 100 questionnaires distributed as prints and via email, only 50
responses were received. Though the 50 responses received are good enough to
find the basic factors, if there had been more responses, many other facts could’ve
been understood regarding retailing FMCG.

41
6. CHAPTER 6

6.1. CONCLUSION
This research on the factors that the respondents consider as important while
choosing a retailer and being a loyal customer to the same retailer has revealed
that no matter what the background of the customer, Price, Product Quality and
Availability of all brand and products are the three main factors that determine the
same.
Analysis of all the hypotheses shows that there is either no difference or minimal
difference only in the choice of factors by customers of different demographics such
as age, gender, income level, marital status etc.
The anaysis of the demographics of the customers has revealed the following facts:
1.Women prefer location of the store as an important factor while buying
vegetables & fruits.
2.Men prefer ambience, location and availability while women donot consider
ambience but take into account all other factors while buying dairy products.
3.Women prefer all the factors except parking space as important criteria while
buying bakery items.
4. Men prefer ambience and display as important while buying personal care
products.
5.Apart from price & quality, the less than 30 years olds prefer location of the retail
store while the more than 30 years olds prefer customer service and availability of
the products while buying vegetables and fruits.
6.The less than 30 years olds prefer location and availability as important while the
more than 30 years prefer only availability as important while buying dairy
products.

42
7.The more than 30 year old people expect more customer service while buying
bakery items and personal care products.
8.Working women prefer fast billing and quicker shopping while buying vegetables
& fruits and bakery items.
9.Working women consider location as very important while buying dairy products.
10.While house wives expect discounts on personal care products and cleaning
products from retail stores.
11. Married people with kids prefer a retail store with good ambience as against the
ones without good ambience.
12. It is interesting to note that the income groups ’501-1000 US $’, ’501-1000 US
$’ and ’5001-10000’ expect a good ambience when buying vegetables and fruits.
Location and availability are considered as important by almost all the income
groups.
13. For personal care products the income levels above 501 US$ expect a good
ambience.
14. No matter what the income level, good price, quality and availability are
expected by all income levels.

6.2. RECOMMENDATIONS
Based on the research and conclusion arrived by analysis, the following are
recommended for retailers as well as FMCG manufacturers:
1. Price and Quality are very important for any customer and hence great
care should be taken by the retailers as well as the manufacturers.
2. Ambience plays a very important role for selling personal care
products since customers who fall under all income levels prefer the same.
Hence retailers should make sure that the same is provided at their store.
3. Working women prefer fast billing and quick shopping and hence seperate
counters for women, or for lesser quantity buyers or for cash only are
recommended.

6.3. FUTURE WORK

43
This thesis can be further proceeded by finding out if there would be differences in
the factors between customers from different cultural backgrounds. This would be a
very interesting study but would require time and channels though which different
people around the world can be contacted for responses.

REFERENCES

PAPERS:

ƒ Lesley Chiou, Empirical Analysis of Retail Competition: Spatial Differentiation at

Wal-Mart, Amazon.com, and Their Competitors, May 2005
ƒ Huddleston, P., J. Whipple, and A. VanAuken. “Food Store Loyalty: Application of
a Consumer Loyalty Framework.” Journal of Targeting, Measurement and
Analysis for Marketing 12 (No. 3, 2004): 213-230.
ƒ Messinger, P.R., and C. Narasimhan. “A Model of Retail Formats Based on
Consumer’s Economizing on Shopping Time.” Marketing Science 16 (No. 1,
1997): 1-23.
ƒ Bai, Junfei , Wahl, Thomas I. and McCluskey, Jill J.(2008) 'Consumer Choice of
Retail Food Store Formats in Qingdao, China', Journal of International Food &
Agribusiness Marketing, 20: 2, 89 — 109
ƒ Joseph F.Dash, Leon G.Schiffman, and Conrad Berenson, Risk - and Personality
- Related Dimensions of Store Choice, Journal of Marketing, Vol. 40 (January
1976) pp. 32-39
ƒ Kahn, B.E., and D.C. Schmittlein. “Shopping Trip Behavior: An Empirical
Investigation.” Marketing Letters 1 (1989): 55-70.
ƒ Bawa, K., and A. Ghosh. “A Model of Household Grocery Shopping Behavior.”
Marketing Letters 10 (No. 2, 1999): 149-160.
ƒ Kim, B.D., and K. Park. “Studying Patterns of Consumer’s Grocery Shopping
Trip.”Journal of Retailing 73 (No. 4, 1997): 501-517.
ƒ Ackerman, D., and G. Tellis. “Can Culture Affect Prices? A Cross-Cultural Study
of Shopping and Retail Prices.” Journal of Retailing 77 (2001): 57- 82.

44
ƒ Kim, J., and B. Jin. “Korean Consumers’ Patronage of Discount Stores: Domestic
vs. Multinational Discount Store Shoppers’ Profiles.” The Journal of Consumer
Marketing 18 (No. 3, 2001): 236-255.
ƒ Bhatnagar, A., and B.T. Ratchford. “A Model of Retail Format Competition for
Non-durable Goods.” International Journal of Research in Marketing 21 (2004):
39-59.
ƒ Fox, E.J., A.L. Montgomery, and L.M. Lodish. “Consumer Shopping and Spending
Across Retail Formats.” The Journal of Business 77 (No. 2, 2004): s25-s60.
ƒ D’Haese, M., and G. van Huylenbroeck. “The Rise of Supermarkets and
Changing Expenditure Patterns of Poor Rural Households Case Study in the
Transkei Area, South Africa.” Food Policy 30 (2005): 97-113.
ƒ Seiders, K., C. Simonides, and D. Tigert. “The Impact of Supercenters on
Traditional Food Retailers in Four Markets.” International Journal of Retail &
Distribution Management 28 (No. 4/5, 2000): 181-193.
ƒ Carlson, A., J. Kinsey, and C. Nadav. “Consumers’ Retail Source of Food: A
Cluster Analysis.” Family Economics and Nutrition Review 14 (2002) 11-20.

Books:

Retailing in the 21st Century by Edward J.Fox and Raj Sethuraman June 2005

45
APPENDICES

7.1. Preliminary Questionnaire:

Dear All,

I am doing my final thesis for an online course that I have enrolled in. I need your inputs for
developing a questionnaire for my thesis. I would like you to answer just one question in
that regard:

Question: Please write down (Tell me) atleast 5 aspects that make you choose a retail
store for buying Fast Moving Consumer Goods (example vegatables, dairy products,
personal care products). It could be the parking space or the display or any 5 aspects that
come to your mind. Please reply to me as soon as possible.

Regards,
Poornima

46
7.2. Final Questionnaire:

Questionnaire for Final Project for Online MBA programme

at Blekinge Tekniska Högskola, Sweden

Please fill up the below questionnaire with your response. I assure

you that the information given by you will be considered confidential
and shall not be shared with any other party.

I. Respondent’s Details:

Name: ____________________________

Age: ________ years

Gender (please choose): Male / Female

Profession (please choose):

If Employed, then, IF Unemployed, then,

In Govt Service: Student:

In Private Sector: Seeking Employment:

In Public Sector: House Wife:

Monthly Salary Range (please choose):

47
Less than US $ 300 US $ 3001 – 5000

US $ 301 – 500 US $ 5001 - 10000

US $ 501 – 1000 More than US $ 10001

US $ 1001 – 3000

Marital Status (please choose):

Single:

Widowed/Seperated:

Widowed/Seperated with kid(s):

Married:

Married with Kid(s):

48
 School of Management
Blekinge Institute of Technology

II.

1. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying vegetables & fruits

Factors Rank
Price
Product Quality
Ambience
Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

2. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying dairy products (like
milk, yogurt etc)

Factors Rank
Price
Product Quality

FE2413 - 2010 Master’s Thesis in Business Administration

 School of Management
Blekinge Institute of Technology

Ambience
Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

3. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying bakery items (like
cakes, bread etc)

Factors Rank
Price
Product Quality
Ambience
Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

FE2413 - 2010 Master’s Thesis in Business Administration

 School of Management
Blekinge Institute of Technology

4. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying personal care
products (like soap, shampoo)

Factors Rank
Price
Product Quality
Ambience
Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

FE2413 - 2010 Master’s Thesis in Business Administration

 School of Management
Blekinge Institute of Technology

5. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying cleaning products (like
washing powder, toilet cleaner etc)

Factors Rank
Price
Product Quality
Ambience
Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

6. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think
are important in a retail store when buying confectionaries (like
chocolates)

Factors Rank
Price
Product Quality
Ambience

FE2413 - 2010 Master’s Thesis in Business Administration

 School of Management
Blekinge Institute of Technology

Parking Space
Display
Fast Billing and Quicker Shopping
Customer Service
Location
Discounts / Offers / Benefits
Availability of all brands / products

FE2413 - 2010 Master’s Thesis in Business Administration