13536622 to study the consumer behaviour in max lifestle retail lucknow
TRANSCRIPT
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ACKNOWACKNOWLLEEDGEMENTDGEMENT
Concentration, dedication and application are necessary but not sufficient to achieve an
goal. These must be awarded by guidance, assistance and co-operation of some person t
make it enable.
Many people have given their valuable time and ideas to enable me to complete th
research and the report. I am deeply indebted to all for their ideas and assistance, whil
bearing the entire responsibility for weakness in the report.
I am highly obliged to MR. NIKHIL RANJAN (STORE MANAGER) and MRS. RITA
CHATTERJI (ASSISTANT STORE MANAGER), MAX LIFESTYLE, LUCKNOW
for providing me an opportunity to undergo this project report.
I am also indebted to MR. RAZAUR RAHMAN & ALL FACULTY MEMBERS o
SRMCEM, LKO who have been a constant source of inspiration and provided guidanc
to me at every point of time.
My gratitude to all those, who RESPONDED TO MY QUESTIONNAIRE in a we
defined manner and helped me acquiring knowledge.
Lastly, I thanks all those, who have directly or indirectly, helped me in this project..
ABHISHEK PANDEY
ABHISHEK PANDEY, SHRI RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOWABHISHEK PANDEY, SHRI RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOW
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PGDM- I YEAR
DECLARATIONDECLARATION
I, ABHISHEK PANDEY, student of POST GRADUATE DIPLOMA IN
MANAGEMENThereby declare that the project report entitled A DETAIL STUDY O
CONSUMER BEHAVIOUR AND BUYING BEHAVIOVR OF CUSTOMERS IN MAX
STORE OF LUCKNOW CITYhas been compiled by me on the basis of my project report an
has not been submitted any where in any manner.
It is a report, which is based on various interviews, surveys that is conducted during m
project report period in LUCKNOW as a student of P.G.D.M. from SHR
RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOW.
ABHISHEK PANDEY
PGDM- I YEAR
ABHISHEK PANDEY, SHRI RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOWABHISHEK PANDEY, SHRI RAMSWAROOP COLLEGE OF ENGG & MGMT, LUCKNOW
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EXECUTIVE SUMMARYEXECUTIVE SUMMARY
This study is a modest effect at understanding the consumer behavior especially i
retail store in Lucknow. Analysis to Lucknow people perception of retail store (surve
only retail channel in Zee mall). The survey was constituted in visiting of Zee Mal
Customers were interviewed by means of carefully prepared questionnaire to study an
understand customer behaviour in depth. I study also the consumer decision making i
retail store in Indian city and what effect consumer decision-making in retail store.
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PREFACEPREFACE
The sea of change can pull customers in many directions. It is our responsibility to light the wa
and take care of them before the competition does.
RETAILING Means Re-tailing to the customers so that they comeback
Retailing consists of all activities involved in selling goods and services to consumers for thei
personal, family, or household use. It covers sales of goods ranging from automobiles to appare
and food products, and services ranging from hair cutting to air travel and computer education
Sales of goods to intermediaries who resell to retailers or sales to manufacturers are no
considered a retail activity.
The retail sector in India is highly fragmented with organized retail contributing to only 2% o
total retail sales. The retail sector in developed countries was also highly fragmented at th
beginning of the last century but emergence of large chains like Wall Mart, Sears, an
McDonalds led to rapid growth of organized retail and growing consolidation of the reta
industry in the developed countries.
Organized retail is growing rapidly and we see the emergence of large organized retail chains lik
Shoppers Stop, Lifestyle, and Westside. We also find retail malls mushrooming all over th
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country. The opportunities in retail industry in India will increase since Indian retailing is on th
threshold of a major change.
The study of retailing is very important to MBA students interested in employment opportunitie
with large retail chains.
The remarkable world of RetailThe remarkable world of Retail
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Retailing
including all
activities
involved in
selling goods or
services directly
to the finalconsumers for
personal, non
business use
Any organisation
selling to final
consumers-
whether it is amanufacture,
whole seller, or
retailer is
doing retailing.
Consumers
today can shop
for goods &
services in a
wide variety of
retail Org. The
best- known type
of retail is the
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Retail, according to Concise Oxford English Dictionary, is "the sale of goods to the public for us
or consumption rather than for resale."
World over, the retail segment has performed exceptionally since its inception in the 20th century
Sample these facts:
Retail is currently the biggest industry in the world with sales of $7.2 trillion
Every 10th billionaire in the world is a retailer.
25 of the top 50 Fortune 500 companies are in retail.
The Indian retail story couldn't have been more different. India has approx 12 million retai
stores, more than rest of the world put together. But the per capita square feet area under retail i
just 2 sq.ft or 0.2 sq. meters with fragmented keerana stores being the predominant players.
Retailing in India has remained in the unorganized sector and largely untouched by corporate
The first decade of modern retail in India has been characterized by a shift from traditiona
channels to new formats including department stores, hypermarkets, supermarkets and specialt
stores across a range of categories.
Modern retail formats have mushroomed in metros and mini-metros, in the last few years moder
retail has also established its presence in the second rung cities. Thus, exposing the residents o
these cities to shopping options, they have never experienced before. It has been forecasted tha
the share of modern retail will increase from 2 per cent currently, to about 15-20 per cent over th
next decade.
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Increase in media penetration to 38-million cable household and 80-million TV househol
in 2001
The first decade of modern retail in India has been characterized by a shift from traditional kiran
shops to new formats including department stores, hypermarkets, supermarkets and specialt
stores across a range of categories. Modern retail formats have mushroomed in metros and min
metros. In the last few years, modern retail has also established its presence in the second-run
cities, exposing residents to shopping options like never before. However, even as moder
retailers garner share from traditional channels, there is a larger role they would be required t
play in boosting consumption levels.
Figures suggest that the total turnover of the sector is around Rs 10 lakh crores, of which 4 pe
cent is contributed by the organised sector.
During the last decade, India's middle- and high-income segment notched up an impressive 10
per cent growth. This segment has been triggering the demand for consumer goods. Increase
awareness, free access to information and choice in competing products and services are makin
customers redefine the retail business. They are on the lookout for convenience, speed, efficienc
and a wide range of products. Retailers need to explore different channels of retailing to cater t
customers' needs.
The days of brick-and-mortar's limited potential are fading and retailers need to tap the immens
opportunities that other channels offer.
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Driven by increasingly intense competition in an increasingly global marketplace, retailers mus
seek new ways of capturing the hearts and minds of consumers. The traditional levers of pric
selection and location although still important are no longer sufficient as bases fo
competitive differentiation. Retailers should be focused on improving the end-to-end shoppin
experience, boosting sales and winning customer loyalty by connecting to the shopper in ever
possible way.
Multichannel retailingis all about giving the customer a choice of which shopping channel he o
she wishes to purchase products through. The most popular shopping channels include the stores
Internet and catalogues and telemarkets (including mobile shopping).
Retailers must provide a seamless multichannel experience for their customers. For this, the
become the most valuable consumers within a retailer's customer base.
Multichannel retailing needs to be adopted:
Growmarket share
Increase customer base
Offerconvenience
Achieve cost reductions through economies of scale, supply chain efficiencies, an
logistics
Improve customer analytics
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Opennew revenue streams by cross-sell & sell ups
Reduce cycle time between order and delivery
Lowerfulfillment cost & Improve demand planning
However, going multichannel, the retailer should not ignore the critical part: the custome
Customers have become more sophisticated and expect a retailer to recognize them.
Evolution of Indian RetailEvolution of Indian Retail
Traditional Rural Retail Fairs
Traditional Family Run Convenience Stores
Traditional Rural Retail FairsTraditional Rural R etail Fairs
Traditional rural retail fairs are a very big attraction to foreign tourists. We
have the Pushkar fair in Rajasthan which brings in a lot of revenue both fromdomestic buyers and buyers from abroad. In the Pushkar fair l ive s tock l ikecamels, horses, cows, goats, and sheep are sold as well as bought. A range ofexotic i tems are also available. The traditional i tems here are handmade jewelry and other colorful memorabilia of Rajasthan.
Traditional rural retail fairs in India deal in a good number ofhandcraftsitems which are mentioned below:
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http://business.mapsofindia.com/india-retail-industry/evolution/traditional-rural-retail-fairs.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-family-run-convenience-stores.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-rural-retail-fairs.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-rural-retail-fairs.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-family-run-convenience-stores.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-family-run-convenience-stores.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-family-run-convenience-stores.htmlhttp://business.mapsofindia.com/india-retail-industry/evolution/traditional-rural-retail-fairs.html -
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Hand painted wooden chest drawers
Wooden wall bra ckets
Embossed wooden table
Hand painted chairs in chowki
Wooden corner stand
Wooden Hand painted table
Embossed wooden chairs
Brown wooden stool
Camel bone Jewelry
Metal jewelry
Snake charmer puppets
Handmade candles
The Suraj Kund mela is also a huge galore of Indian traditional i tems. Thisfair is held at Haryana which is 8 kilometers from South Delhi. The fair hasbeen held for the last 20 years. The fair deals in items categorized as
Indian arts
Handicrafts
Heritage
Culture and tradit ion
Traditional rural retail fairs have a typical rural set up l ike:
Huts of mud
Thatched platforms
lamps of wood
String cots
Plainness ground
The small thatched s tores are a vibrant display of handcraft i tems. The focusevery year is on a part icular State for instance, in 2006 i t was Maharashtra. Th
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other group of i tems representing the Indian Subcontinent available thereare:
Classical
Tribal art
Folk art
As such Traditional Rural Retail fairs involve credit worthy art isans andweavers of over 350 in number and they are selected from across the country.Along with the county's r ich cultural heritage being showcased, the fair isopen to foreign traditional goods as well. The more rejuvenating side of these
fairs would be listed as under:
Indian Sweets Snacks
Indian folk music
Classical dance
Bengal t iger show
Elephant rides
Tiger show and rides
Giraffe tricks
Balloon and Clay i tems
Painting
Games
Therefore, traditional rural retail fairs are a never ending occupation and thekey to it l ies in the originality and attractiveness of the items.
Traditional Family Run Convenience Sto resTraditional Family Run Convenience Stores
Traditional family run convenience stores are too well established in Indiathan to be wiped out and besides there is uniqueness in the tradit ional i temsthat represent the sub-continent. The retai l stores in India are essentiallydominated by the unorganized sector or t radit ional s tores . Infact the tradit ionalstores have taken up 98 percent of the Indian retail market. Now stores run byfamilies are primari ly food based and the set up is as Kirana or the 'corner
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grocer' stores. Basically they provide high service with low prices. If the storesare not food based then the type of retai l i tems available are local in nature.
The traditional family run convenience stores can take pride in the fact that theKirana is the most common outlet forms for the consumers. The toughcompetition for convenience stores are coming from organized retail storesdealing in food i tems, l ike:
Apna Bazaar
Canteen s tores
Food World Subhiksha
Food Bazaar
Convenience Storesare open for long hours and is one of the formats ofthe Indian r etail stores tha t cater to basic ne eds of the consu mer. A goodexample of such would be Convenio. These s tores are found in bothresidential as well as commercial markets. The food products oft radit ional family run convenience s tores are comprised of branded aswell as non-branded i tems. The benefi ts of family run convenience s toresis that they give importance to:
Personal touch
Facilities of credit
Quick home delivery
Non-food based stock comprises of multiple and varieties of local brandsThe future of such stores as they face competition from organized sector,would depend on the fol lowing part iculars:
Place and capacity
Diligent area coverage
Disciplined work schedule
Managing turnover
Revenue from assets
Customer service and sat isfaction
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The traditional family run convenience stores serves the purpose of thehousewives who definitely wants to avoid traveling long distances to purchasedaily needs. The convenience factor in terms of i tems, among people in generalcan be highlighted as below:
Groceries
Fruits
Drug Store
Necessary statio nery
As such tradit ional family run convenience stores are here to stay and canno
be oversized by the organized retai l sector besides, i t represents the variety o
India
Indian retail industry
India retai l industry is the largest industry in India, with an employment ofaround 8% and contributing to over 10% of the country's GDP. Retail industry
in India is expected to r ise 25% yearly being driven by s trong income growth,changing l i festyles , and favorable demographic pat terns.
I t is expected that by 2016 modern retai l industry in India will be worth US$175- 200 bi l l ion. India retai l industry is one of the fastest growing industrieswith revenue expected in 2007 to amount US$ 320 bi l l ion and is increasing at arate of 5% yearly. A further increase of 7-8% is expected in the industry ofretai l in India by growth in consumerism in urban areas, r is ing incomes, and asteep rise in rural consumption. I t has further been predicted that the retai l ingindustry in India wil l amount to US$ 21.5 bi l l ion by 2010 from the current s izeof US$ 7.5 bi l l ion.
Shopping in India have witnessed a revolution with the change in the consumerbuying behavior and the whole format of shopping also al tering. Industry ofretai l in India which have become modern can be seen from the fact that thereare mult i- s tored malls , huge shopping centers , and sprawling complexes whichoffer food, shopping, and entertainment al l under the same roof.
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India retail industry is expanding itself most aggressively, as a result a greatdemand for real estate is being created. Indian retai lers preferred means ofexpansion is to expand to other regions and to increase the number of their outlets in a city. It is expected that by 2010, India may have 600 new shoppingcenters.
In the Indian retai l ing industry, food is the most dominating sector and isgrowing at a rate of 9% annually. The branded food industry is trying to enterthe India retai l industry and convert Indian consumers to branded food. Since apresent 60% of the Indian grocery basket consists of non- branded items.
India retai l industry is progressing well and for this to continue retai lers aswell as the Indian government will have to make a combined effort.
Indian organized retail marketIndian organized retail market
Indian organized retai l market is growing at a fast pace due to the boom in theIndia retai l industry. In 2005, the retai l industry in India amounted to Rs10,000 bi l l ion accounting for about 10% to the country's GDP. The organizedretai l market in India out of this total market accounted for Rs 350 bi l l ionwhich is about 3.5% of the total revenues.
Retai l market in the Indian organized sector is expected to cross Rs 1000billion by 2010. Traditionally the retail industry in India was largelyunorganized, comprising of drug stores, medium, and small grocery stores.Most of the organized retai l ing in India have s tarted recently and isconcentrat ing mainly in metropoli tan ci t ies .
The growth in the Indian organized retail market is mainly due to the change inthe consumers behavior. This change has come in the consumer due to increasedincome, changing lifestyles, and patterns of demography which are favorable.Now the consumer wants to shop at a place where he can get food,entertainment, and shopping al l under one roof. This has given Indian organizeretail market a major boost.
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Retai l market in the organized sector in India is growing can be seen from thefact that 1500 supermarkets, 325 departmental stores, and 300 new malls arebeing built . Many Indian companies are entering the Indian retai l marketwhich is giving Indian organized retai l market a boost . One such company isthe Reliance Industries Limited. I t plans to invest US$ 6 bi l l ion in the Indianretai l market by opening 1000 hypermarkets and 1500 supermarkets .
Pantaloons is another Indian company which plans to increase its retail space t30 million square feet with an investment of US$ 1 billion. Bharti Telecoms anIndian company is in talks with Tesco a global giant for a 750 million joint
venture. A number of gl obal retail gi ants such as Walmart, Carr efour, and MetrAG are also planning to set up shop in India. Indian organized retail marketwill definitely grow as a result of all this investments.
Indian organized retai l market is increasing and for this growth to continue theIndian retailers as well as government must make a combined effort.
The Global Retail Industry : An OverviewThe Global Retail Industry : An Overview
Retail has played a major role world over in increasing productivity across a wide range o
consumer goods and services .The impact can be best seen in countries like U.S.A., U.K
Mexico, Thailand and more recently China. Economies of countries like Singapore, Malaysia
Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector.
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Retail is the second-largest industry in the United States both in number of establishments an
number of employees. It is also one of the largest world wide. The retail industry employs mor
than 22 million Americans and generates more than $3 trillion in retail sale annually.
Retailing is a U.S. $7 trillion sector. Wal-Mart is the worlds largest retailer. Already the world
largest employer with over l million associates, Wal-Mart displaced oil giant Exxon Mobil as th
worlds largest company when it posted $219 billion in sales for fiscal 2001. Wal-Mart ha
become the most successful retail brand in the world due its ability to leverage size, market clou
and efficiency to create market dominance. Wal-Mart heads Fortune magazine list of top 50
companies in the world. Forbes Annual List of Billionaires has the largest number (45/497) from
the retail business.
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GLOBAL RETAILGLOBAL RETAIL
19991999 20022002 20052005
Total Retail (US$ Billion)Total Retail (US$ Billion) 150150 180180 225225
Organized Retail (US$ Billion)Organized Retail (US$ Billion) 1.11.1 3.33.3 77
% Share of Organized retail% Share of Organized retail 0.70.7 1.81.8 3.23.2
Rank Retailer Home Country
1. Wal-Mart Stores, Inc. U.S.A.
2. Carrefour Group France
3. The Kroger Co. U.S.A.
4. The Home Depot. Inc. U.S.A.
5. Metro Germany
(Source: STORES / Deloitte Touch Tomahastsu)
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The factors responsible for the development of the retail sector in India can be broadl
summarized as follows:
Rising incomes and improvements in infrastructure are enlarging consumer market
and accelerating the convergence of consumer tastes. Looking at income classification
the National Council of Applied Economic Research (NCAER) classifie
approximately 500Io of the Indian population as low income in 1994-95; this
expected to decline to 17 by 2006-07.
Liberalization of the Indian economy which has led to the opening up of the market fo
consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. t
make significant inroads into the vast consumer market by offering a wide range o
choices to the Indian consumers.
Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.
The internet revolution is making the Indian consumer more accessible to the growin
influences of domestic and foreign retail chains. Reach of satellite LV. channels i
helping in creating awareness about global products for local markets. About 47% o
Indias population is under the age of 20; and this will increase to 55h by 2015. Thi
young population, which is technology-savvy, watch more than 50 TV satellit
channels, and display the highest propensity to spend, will immensely contribute to th
growth of the retail sector in the country.
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As India continues to get strongly integrated with the world economy riding the waves o
globalization, the retail sector is bound to take big leaps in the years to come. The Indian retail
sector is estimated to have a market size of about $ 180 billion; but the organised secto
represents only 2% share of this market. Most of the organised retailing in the country has jus
started recently, and has been concentrated mainly in the metro cities. India is the last large Asia
economy to liberalize its retail sector. In Thailand, more than 40% of all consumer goods are sol
through the super markets and departmental stores. A similar phenomenon has swept through a
other Asian countries. Organized retailing in India has a huge scope because of the vast marke
and the growing consciousness of the consumer about product quality and services. A stud
conducted by Fitch, expects the organized retail industry to continue to grow rapidly, especiall
through increased levels of penetration in larger towns and metros and also as it begins to sprea
to smaller cities and B class towns. Fuelling this growth is the growth in development of th
retail-specific properties and malls. According to the estimates available with Fitch, close t
2Smn sq. ft. of retail space is being developed and will be available for occupation over the nex
36-48 months. Fitch expects organized retail to capture l5%- 20% market share by 2010. A
McKinsey report on India says organised retailing would increase the efficiency and productivit
of entire gamut of economic activities, and would help in achieving higher GDP growth. At 6%
the share of employment of retail in India is low, even when compared to Brazil (l4%), an
Poland (12%).
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Key Strategic Factors in RetailingKey Strategic Factors in Retailing
The key to success is identifying a superior value-promise and who is in a better position to do i
than retailers? Retailers are the closest to the point of purchase and have access to a wealth o
information on consumer shopping behaviour. Retailers have some unique advantages fo
managing brands such as continuous and actionable dialogue with consumers, control over bran
presentation at point-of-sale, control over shopping environment, display location/adjacencie
and signage. And they have used this advantage with tremendous success.
The 3 stages of evolution of the trade channel are shownThe 3 stages of evolution of the trade channel are shown
in the exhibit below :in the exhibit below :
Extended Limited Direct
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Manufacture
Depo/CNF
Distributor
Retailer
Shopper
Manufacture
Depo/CNF
Retailer
Shopper
Manufacture/ Retailer
Shopper
As seen, the role of the intermediary is being diminished gradually, which has obviou
implication of backlash of the trade channel upwards towards the suppliers. This is more severe i
countries such as India, where the channel economics in favour of the middlemen is still stron
enough given the fragmentation of the retail sector. Therefore when FoodWorld, the largest groce
in
India has a direct supply contract with over 20% of its key suppliers, it gives rise to conflict o
interest with the distribution infrastructure that suppliers have painstakingly built over the years.
Thus companies like HLL have evolved a distinct distribution channel altogether (called Moder
Trade) to service the needs of such large grocers. Even the mom and pop stores (known a
kirana shops) are affected due to this unfair back-end advantage extended by the suppiier to it
leading accounts (the emerging supermarket chains).
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The strategies adopted by the retailer to compete with branded goods are illustrated by th
following diagram. Branding the store and following a private label strategy is the key strategy
which helps the retailer to compete with branded products.
FORMAL RETAILING SECTORFORMAL RETAILING SECTOR
1. Typically large retailers
2. Greater enforcement of taxation mechanisms
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3. High level of labor usage monitoring
7
Weekly MarketsVillage FairsMelas
Convenience StoresMom andPop/Kiranas
PDS OutletsKhadi StoresCooperatives
Exclusive BrandOutletsHyper/Super Markets
Department StoresShopping Malls
Traditional/PervasiveReach
GovernmentSupported
Historic/RuralReach
Modern Formats/International
Evolution of Indian retail
Source ofEntertainment
Neighborhood
Stores/Convenience
Availability/ LowCosts /
Distribution
Shopping
Experience/Efficiency
CATEGORIES OF INDIAN RETAILCATEGORIES OF INDIAN RETAIL
1. Corporate Houses
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Tatas: Tata Trent
RPG group: Food World, Health and Glow, etc
ITC: Wills Life Style
Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc.
2. Dedicated brand outlets
Nike, Reebok, Zodiac etc
3. Multi-brand outlets
Vijay Sales, Viveks etc
4. Manufacturers/ Exporters
Pantaloons, Bata, Weekender
Classifying Indian retailClassifying Indian retail
(A)Modern Format retailers
1) Supermarkets (Foodworld)
2) Hypermarkets (Big Bazaar)
3) Department Stores (S Stop)
4) Specialty Chains (Ikea)
5) Company Owned Company Operated
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(B)Traditional Format Retailers
1) Kiranas: Traditional Mom and Pop Stores
2) Kiosks
3) Street Markets
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4) Exclusive /Multiple Brand Outlets
(C)Large Indian retailers
1. Hypermarket
1) Big Bazaar
2) Giants
3) Shoprite
4) Star
II Department store
1) Lifestyle
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2) Pantaloons
3) Piramyds
4) Shoppers Stop
5) Trent
III Entertainment
1) Fame Adlabs
2) Fun Republic
3) Inox
4) PVR
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The Indian retail sector can be broadly classified intoThe Indian retail sector can be broadly classified into
a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector Traditional types o
retailers, who operate small single-outlet businesses mainly using family labour, dominate thi
sector In comparison, super markets account for a small proportion of food sales in Indi
However the growth rate of super market sales has being significant in recent years becaus
greater numbers of higher income Indians prefer to shop at super markets due to higher standard
of hygiene and attractive ambience.
b) HEALTH & BEAUTY PRODUCTS
With growth in income levels, Indians have started spending more on health and beauty product
.Here also small, single-outlet retailers dominate the market .However in recent years, a few reta
chains specializing in these products have come into the market. Although these retail chain
account for only a small share of the total market their business is expected to grow significantl
in the future due to the growing quality consciousness of buyers for these products
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C) CLOTHING & FOOTWEAR
Numerous clothing and footwear shops in shopping centers and markets operate all over Indi
Traditional outlets stock a limited range of cheap and popular items; in contrast, modern clothin
and footwear stores have modern products and attractive displays to lure customers. However
with rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikel
that the traditional outlets will survive the test of time.
D) HOME FURNITURE & HOUSEHOLD GOODS
Small retailers again dominate this sector. Despite the large size of this market, very few larg
and modern retailers have established specialized stores for these products. However there i
considerable potential for the entry or expansion of specialized retail chains in the country.
E) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign companies durin
the post liberalization period. A greater variety of consumer electronic items and househol
appliances became available to the Indian customer. Intense competition among companies to se
their brands provided a strong impetus to the growth for retailers doing business in this sector.
F) LEISURE & PERSONAL GOODS
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Increasing household incomes due to better economic opportunities have encouraged consume
expenditure on leisure and personal goods in the country. There are specialized retailers for eac
category of products (books, music products, etc.) in this sector. Another prominent feature of thi
sector is popularity of franchising agreements between established manufacturers and retailers.
Benefit to customer through retailer sector There has been a significant chan
in retail trading over the years, from small kiranawalas in the vicinity to big super markets
transition is happening from the traditional retail sector to organized retailing. T
unorganized sector still holds a dominant position in this industry. The organized segme
holds just about 1.2% of the current US$ 245 billion retail market, which is expected
reach about US $ 385 billion by the middle of this decade. With consumers looking
convenience with multiplicity of choice under one roof and expectations evolving over tim
consumer demand is truly the driving force for organized retailing in the country. Food a
beverages form the main chunk of the retail market. They are followed by apparel a
footwear. The Indian textile industry, the backbone of the apparel segment, has a large sh
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of the Indian economy, accounting for over 20% of industrial production as well
providing direct and indirect employment to around 65 million people. Despite the re
store density in India with regard to population being the largest, it is estimated that ov
90% of the stores are less than 500 sq. ft in size. Industry estimates put the number of ret
outlets at 12 million. This is clearly indicative of small-shop ownership crowding t
unorganized segment of retailing. While this fragmented market structure does po
significant challenges for organized retailing, potential does exist if modern information a
supply chain management systems are to support the development of convenience sho
that match customer expectations. Today trend is the development of integrated retail cu
Entertainment centers or shopping malls. An increasing number of retailers are focusing
malls now as opposed to stand-alone developments. While the number of shopping ma
has seen a massive surge in the recent past in the metros and their suburbs, the latest trend
this sector is the increasing focus on providing leisure activities such as multiplex
facilities for kids' entertainment, eateries etc. within the mall premises. Customer less t
time consumes and more entertainment with his family in malls because they with
shopping mall number of retail shop and variety of products and selected the product th
want. Good environment in mall. Less crowed and These are enclosed, air-condition
multi-level malls of at least 100,00 sq ft. Critical to these malls is the concept of t
anchor, the key outlet or store around which other outlets cluster. The most popular Indi
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anchors include Shoppers' Stop, Globus, Pantaloon, Lifestyle and hypermarkets like B
Bazaar and Giant. Cinemas also often anchor malls. Driven by the lucrative tax breaks, t
old single screen theatres are being divided into three-five smaller screens, as was done
the US, years ago. Example for wave and PVR.
Landmark GroupLandmark Group
The Landmark Group, founded in 1973 with a s ingle s tore in Bahrain has growinto one of the largest retai l conglomerates in the Middle East and is expandinrapidly in India. I t currently operates over 750 s tores across the region with retai l presence in China as well . In addit ion to i ts retai l sector, the Group haa l so d ive rs i f i ed in to l e i sure , food , ho te l s and e lec t ron ics and has c rea ted comprehens ive in frast ruc ture including i t s own logi st ic s and d i st r ibu tiodivis ion, to support i ts retai l operat ions and other businesses.
Key FactsKey Facts
35 Years of retail experience.
Turnover in excess of US$2.5bn.
Total retail space over 10 million sq ft.
Retail Presence across 12 countries: Bahrain, China, India, Jordan, Kingdom of SaudiArabia, Kuwait, Oman, Qatar, Spain, UAE, Pakistan & Egypt.
Operates over 825 stores.
Employs 24,000 personnel.
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Core Values of Landmark GroupCore Values of Landmark Group
1. Passion for excel lence We are committed to set t ing industry benchmarks be i t our product or pract ices . Our doctrine is to s tr ive and maintain the lead iwhatever we do , with s t ri c t adherence to qual i ty and de liver ing va lue fomoney.2. Integri ty in everyth ing we do - Our bus iness i s d r iven by t rus t , s t ronethics and mutual respect.
3. Empower ing peop le to s trive and de liver O ur c or e s tr en gt h i s o ue mp lo ye es. We b elie ve in g iv in g o ur p erso nne l the o ppo rtu ni ty a nrespons ibi li ty that a re in tegra l to thei r p rofes s ional deve lopment and ouGroups success .4. Adapt ing to changing market and customer needs We keep ourse lveabreast with industry trends and dynamic consumer preferences. Our offeringkeep evolving to address changing and discerning consumer needs.
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Look Good Feel GoodLook Good Feel Good
Max a value re tai l s tore for the family was launched in May 2004 in th
UAE.
With s tores that typical ly measure between 25,000 to 30,000 sq. f t , Ma
re ta i l s i t s own labe l c lo th ing for men , women and ch i ld ren as we l l afootwear and home ware.
A pioneer in the Middle East of the global t rend of del ivering quali ty an
value at very at tract ive prices , Max is being increasingly recognized as key player in the value retail format.
With 75 stores across UAE, Saudi Arabia, Jordan, Kuwait, Bahrain, Qatar
Oman & India, Max plans to expand i ts network in more potential marketwithin the Middle East , Turkey and India to build a s ignificant presencfor the brand by target ing to have 100 stores by 2009.
A g oo d s ho pp in g e xp er ie nc e a nd g re at v al ue i s a n as su ra nc e t hatranslates into making customers Look good. Feel good with Max.
Key FactsKey Facts
Established in 2004.
75 stores spread across 8 countries.
The Largest Value Fashion Chain in the Middle East
Products designed and developed exclusively for Max, by a large team ofin-house designers and buyers.
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KIDSWEAR DEPARTMENT
INFANTS SECTION: -
BOYS (SIZES) PREPACK GIRLS (SIZES) PREPACK
6-12 MONTHS 3 6-12 MONTHS 3
12-18 MONTHS 3 12-18 MONTHS 3
18-24 MONTHS 3 18-24 MONTHS 3
TOTAL 9 9
BOYS SECTION: -
SUB SECTION 1-8 YEARS PREPACK 8-14 YEARS PREPACK
SIZES SIZES
2-3 YEARS 3 8-9 YEARS 3
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3-4 YEARS 3 9-10 YEARS 3
5-6 YEARS 3 11-12 YEARS 3
7-8 YEARS 3 13-14 YEARS 3
TOTAL 12 12
GIRLS SECTION: -
SUB SECTION 1-8 YEARS PREPACK 8-14 YEARS PREPACK
SIZES SIZES
2-3 YEARS 3 8-9 YEARS 3
3-4 YEARS 3 9-10 YEARS 3
5-6 YEARS 3 11-12 YEARS 3
7-8 YEARS 3 13-14 YEARS 3
TOTAL 12 12
INFANTS GIRLS
TUNICV-NECKR- NECKCOLLERFRONT OPEN
SKIRTCAPRI
SHIRT
2-8 BOYS
T-SHIRTDENIM JEANSTROUSERS
CARGO
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PAINTS
CAPRI COTTON WOVEN
KNITTED DENIM
2-8 GIRLS
TUNICSKIRTST-SHIRT
HALTER NECKPOTSEGDEHALF SLEAVESCUT SLEAVESSLEAVELESSHOODED SKIRT
SPORTS CAPRILEGINGS
LEGINGSFULL LEGINGS
LONG TOPS
MINI SKIRTSCALF LENGTH SKIRTDENIM
JEANSCAPRI
STYLES: - KNIT TOP, KNIT BOTTOM, WOVEN TOP, WOVEN BOTTOM, SPEGDEE, HALTENECK TOP, DRESS, TUNIC, DENIM, CAPRI, DONGRIE, 3 PIECE PACK (SPORTS, SLEAVELESSHALF SLEAVES), 2 PIECE PACK (NIGT WEAR, SKIRTS).
ETHNIC
FUSION
KURTIROUND NECKV-NECK
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HALTER NECKMATKA NECKCUT NECKSQUARE NECKCUT SLEAVESSTEPS KURTI
SKIRTSTRAIGHT SKIRTSCRUSH SKIRTSCRUSH ANKLE SKIRTS
FABRICS: - ACOBA, COTTON, GORGET, SHIFFON, LINEN, VISCOS.
SIZES PREPACK
XS 1S 2M 2L 2
TRADITIONAL
KURTISHORT LENGTH KURTIHE KURTALONG KURTA
DUPATTACOTTONSHIFFON
SALWARPATIALANORMALCHOORIDAR
SIZES PREPACK S 2M 3L 3XL 2XXL 1
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ETHNIC WEAR BASICS: -
KURTASALWARCHOORIDARPATIALADUPATTAPANTSBASICS SLIPS
HOMES
TABLE MATTABLE RUNNERTABLE COVERDUBLE BED SHEETSINGLE BED SHEETDOUBLE BED COVERSINGLE BED COVERNAPPKINTOWEL
BATH MATSCUSHION COVERS
WESTERN WEAR
COREKNIT TOPWOVEN TOPKNIT BOTTOMWOVEN BOTTOMSKIRTS
YOUNGKNIT TOPWOVEN TOPKNIT BOTTOM
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WOVEN BOTTOMDENIM BOTTOMJACKETSHORTSSKIRTS
SPORTYJACKETKNIT TOPWOVEN TOPKNIT BOTTOMWOVEN BOTTOM
DENIMDENIM FULL LENGTHCAPRI
NIGHT WEARGOWNSSLEEPWEAR
MENSWEAR
CASUAL DENIMBOOT CUTREGULAR FITSLIMFIT
CASUAL NON- DENIMKNITTED TOP- FULL SLEAVESKNITTED TOP- HALF SLEAVESKNITTED TOP- SLEAVE LESS
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WOVEN TOP- FULL SLEAVESWOVEN TOP- HALF SLEAVESWOVEN TOP- SLEAVE LESSWOVEN TOP- H/S BASICWOVEN TOP- F/S BASIC
FORMALWOVEN BOTTOM- FLAT FRONTWOVEN BOTTOM- PLEATEDWOVEN TOP- FULL SLEAVESWOVEN TOP- HALF SLEAVES
INNER WEARTRUNK VALUE PACKWEST VALUE PACKY FRONT VALUE PACK
SEMI FORMALWOVEN BOTTOM- FLAT FRONTWOVEN BOTTOM- PLEATEDWOVEN TOP- FULL SLEAVESWOVEN TOP- HALF SLEAVES
SPORTS WEARKNITTED TOP- FULL SLEAVESKNITTED TOP- HALF SLEAVESKNITTED TOP- SLEAVELESS
JACKETKNITTED TRACK BOTTOMWOVEN TRACK BOTTOMWOVEN TRACK SHORTSKNIT TRACK SHORTS
SIZES- SHIRTS T-SHIRTS DENIM REGULAR FIT SLIM FIT
39 to 44 S to XL 28 to 36 28 to 36 28 to 38
FOOTWEARMENS FOOTWEAR
CASUAL SHOES FORMAL SHOES CASUAL LACE UPS FORMAL LACE UPS
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CASUAL SLIP UPS CASUAL SLIP ONES CASUAL SANDALS FORMAL SANDALS SPORT SHOES
LADIES FOOTWEAR
H-HEAL SANDAL M-HEAL SANDAL WEDGE HEAL SANDAL FLAT SANDAL CASUAL SANDAL SPORTS SANDAL COMFORT SANDAL FORMAL SANDAL EVA SANDAL
KIDS FOOTWEAR
KIDS BOYS KIDS GIRLS
INFANT BOYS INFANT GIRLS BOTIES
STORE OPENING
1. Check the lock before unlock.
2. unlock the door at 9:30 am.
3. Switch on optimum lights on floor.
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4. Security in place with complete uniform.5. Adequate housekeeping staff sould be in store.
6. Select the housekeeping workdone, cleaning, moppng.
7. Switch on A.C. at 10:00 am.
8. Switch on the music.
9. Trials rooms are empty and clean before 10:30 am.
10.Floats issued in tills and dedicated cashier by 10:25 am.
11.Ensure that staff is complete uniform by 10:30 am.12.Merchandise well present on the floor.
STORE CLOSING
1. All the tills closed.
2. Switch off sensomatic, E.D.C. machine, music at till point.
3. Recycling of Security ags and hangers.
4. Merchandise well present on the floor.
5. Trial rooms are empty.
6. Switch off A.C.
7. Switch off all lights.
8. Lock Managers room.
9. Lock I.T. room.
10.Switch off Sensomatic on both floors and at entrance.
11.Security in place with complete uniform at back door.
12.Manager signature.
13.Security signature.
DUTIES &RESPONSIBILITIES OF STORE MANAGER
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Duties & Responsibilities
Sales Forecast ing & Budget Personnel Recruitment, selection, training, motivation and evaluation Merchandise Display, Inventory Management and merchandise reorders Handling s tore receipts , preparing bank transact ions, opening and closing
store Reviewing customer complaints Reviewing computer data forms Review of overal l operat ions and reports to top management.
DEPARTMENT MANAGERS DETAIL CHECKLIST
Cleaning and Dusting Floor cleaned and Mopped Fixture (Clean, Alignment & Breakage) Stock Replenishment
All style displayed on floor. Size cubing on all merchandise Price tickets on all merchandise Securi ty tag on al l merchandise Merchandise well presented Shelf Talkers (Clean and Properly displayed) Ensure ironing of Merchandise is in process . Trial rooms clean Cash Counters Clean (Merchandise, hangers & tags) Daily sales register updation Daily grooming check
Ensure that the adequate manpower on the floor on hourly basis Staff should try and attend each and every customer, greeting is very
important Ensure that staff is regularly interacting with the customer by giving
exceptional service for customer del ight at al l t ime Ensure the presence of one manager at any given t ime on each floor Time and again check that the villing check out is fast enough as per the
standard norms
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Ensure that the lunch breaks should s tart by 1:00 pm and finished by max
4:00 pm Ensure the presence of al l s taff on the floor in peak hours between 5:00
pm to 9:3 0 pm Time and again check on walk-ins, average bill size, sales on hourly basi
an accordingly Encourage the s taff for further improvement Ensure your morning shift staff and weekly off for the next day is
conveyed to all staff. Maintain DMs log book on daily basis & acknowledge by SM, ASM on
daily basis
CRE DETAIL CHECKLIST
Cleaning and dust ing of shelves, browsers , arms & back bars . Check at 10:30 am floor clean & mopped Fixture (Clean & Alignment) Have a walk on the floor after 10:30 am and check the replenishment
require Stock replenishment for new lines & broken sizes on the floor
Remove broken s izes from the floor i f i t is not available in back Ensure that all style displayed on floor Price tickets on all merchandise Start s ize cubing on al l merchandise Security tags on all merchandise Merchandise well presented Start i roning of merchandise at 10:00am t i l l 4:00 pm Trials rooms (clean, tokens and manned) by 10:30 am Try and attend each and every customer, greeting is very important.
Distribution Of Target In Departments
Let,
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Store target = Rs 50,00,000
Department Target = Rs. 9,50,000
Department Target in % = 19%
One Month = 8 weekends and 23 week days
One Weekend Target = Rs 9,50,000/23 = Rs 41304
Total weekend target = Rs 41304*8 = Rs 3,30,434
Total weekday target = Rs 9,50,000- Rs 3,30,434 = Rs 6,19,566
One weekday target = Rs 6,19,566/23 = Rs 26,937
CRE target (Monthly) = Rs 9,50,000/5 = Rs 1,90,000
One Weekend Target = Rs 41304
One Weekday Target = Rs 26937
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DIPSTICK PARAMETERS
Enable retai lers to f ind out about the health ofspecific area of operat ion in an instant .
Customer Transactions
Customer Conversion Ratio Return To Net Sales Transactions Per Hour Sales Per Transaction Hourly Customer Traffic
Stocks
Average Selling Price Average Stock Price Stock Turnover/Inventory Turnover Rate Percentage Inventory Costs
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Gross Margin Return on Inventory Markdown Goods Percentage Shrinkage to Net Sales
Space
Occupancy Cost Per Square Foot Sell ing Space Sales Per Square Foot Stock Per Square Foot Percentage of Selling Space
Employees
Net Sales Per Full Time Employee Labour Productivi ty Gross Margin Per Full Time Employee
Customer Conversion Ratio
Customer Conversion Ratio= Number Of Transactions x 100
Customer Traffic-Reflects Retai lers abil i ty to turn a potential customer into a buyer-Low f igure means that p romotiona l ac tiv it i es a re no t be ing converted in tsales or that the overall sales effort needs to be assessed afresh-Automatic counting mechanisms or periodic surveys of customer traffic
Returns to Net SalesReturns to Net Sales
Returns to Net Sales= Total Returns x 100
Net Sales
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-Indicat ion of Customer sat isfact ion-Increase in value is an early warning indication-Quality of merchandise is a suspect
Transactions Per Hour
Transactions Per Hour = Number Of Transactions
Number of Hours
-Hourly var ia t ions in sa les ac t ivi t ies i s important for se t t ing s tore hours anstaff schedules-Cash registers will give the time of sale
Sales Per Transaction
Sales Per Transaction= Net Sales
Number Of Transactions
-Reflects Retai lers abil i ty to turn a potential customer into a buyer-Low f igure means that p romotiona l ac tiv it i es a re no t be ing converted in tsales or that the overall sales effort needs to be assessed afresh-Automatic counting mechanisms or periodic surveys of customer traffic
Hourly Customer Traffic
Hourly Customer Traffic= Customer Traffic In
Number of Hours
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-Can be applied to an entire s tore or a s ingle department to schedule hours anestablish staff levels-Used to track customer traffic
Average Sell ing Price
Average Selling PriceTotal Values o f Good Sold
Total Quantity Sold
Average Stock PriceAverage Stock Pr ice
= Total Values of Goods in Stock
Total Quantity in Stock
-Turning stocks around efficiently yields better profits-If dai ly sales account for 2% sales i t wil l take 50 days to sel l s tock and in 36days the turnaround of the s tock is 365/50 i .e 7.3 t imes
Stock Turnover / Inventory Rate Turnover
Stock Turnover / Inventory Rate Turnover= Net Sales
Average Re tail Value of Inventory
-Indica tes how of ten the inventory i s sold and replaced in a given per iod o
time-When this ratio declines there is a possibility that the inventory is excessive
Percentage Inventory Carrying Costs
Percentage Inventory Carrying Costs
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= Inventory Carrying costs x 100
Net Sales
-Important measure as there is a r ise in inventory carrying costs due to higheinterest rates- Important to reduce s tock obso lescence and prevent b lockage of work incapital-Retai lers use this measure to t rack the percentage of their net sales representeby the fixed costs of maintaining inventory.
Gross Margin Return on Inventory
Gross Margin Return on Inventory= Gross Margin
Average Value of Inventory
- GM RO I c om pa re s t he m arg in o n s al es w it h t he o ri gi na l c os t v al ue omerchandise to yield a return on merchandise investment-Preferably the inventory i s to be valued a t cos t ra ther than re ta i l va lue as igives a bet ter indicat ion of investment
Markdown Goods percentage
Markdown Goods percentage
= Net Sales at Markdown
Total Net Sales
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- If t he ra tio i ncr ea ses, t he r et ai le r may ne ed t o ta ke a c lo ser lo ok amerchandising practices, especially pricing-Markdowns may be symptoms of other problems l ike or buying, advert is ing ostore layout .
Shrinkage to Net Sales
Shrinkage to Net Sales= Actual Inventory Book Inventory x 100
Net Sales
-Percentage of net sales lost due to shrinkage-Does not indicate cause of shrinkage but the magnitude of the problem.
Occupancy Cost Per Square Foot Selling Space
Occupancy Cost Per Square Foot Sell ing Space= Occupancy Cost
Square Feet of Selling Space
-Translates into occupancy cost per unit of selling space-In other words the amount that needs to be generated by that unit of space t justify occupancy costs-For mult i-unit retai ler i t is a useful tool to compare the performance of unit
at different locations.
Sales Per Square Foot
Sales Per Square Foot= Net Sales
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Square Feet of Selling Space
-Used to compare different departments or stores using a common standard-Important tool to decide al ternate uses of the space
Percentage of Selling Space
Percentage of Selling Space
= Selling Space x 100
Total Space-Efficiency of space utili ty- Ra ti o v ar ie s w it h m er ch an dis e a nd c an b e u se d t o c om pa re d iff er endepartments or stores.
Net Sales Per Full Time Employee
Net Sales Per Full Time Employee= Net Sales
Total Full Time Employ ees
-Average Sales generated by each full t ime employee-Can be used to set performance targets.
Labour Productivity
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Labour Productivi ty
= Total Labour Costs x 100
Net Sales
-Tracks labour costs incurred to achieve a given sales volume-Can be applied purely to sales employees
Gross Margin Per Full Time Employee
Gross Margin Per Full Time Employee= Gross Margin
Total Full Time Employees
-Gross p rof i t genera ted pe r employee, used to gauge pe rformance of saleemployees-Not the only measure but a s tart ing tool .
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THE STORE LAYOUT
The store design and layout tells a customer what the store is all about. It is a very strong tool i
the hands of the retailer for communicating and creating the image of the store in the minds of th
customers.
For a retailer store layout is:
The primary considerations that the retailer takes into account while choosing the look for hi
store are his target audience, their needs, and buying habits and the merchandise that he is goin
to sell. Creating a store image is like giving a personality to the store
For the consumer:
A store needs to be simple to navigate; it must appeal to his sensory perceptions and must create
sense of belonging, a sense of relationship, a sense of security or assurance and a sense o
pleasure in the shopping experience
Finally it is the physical attribute of the store which affects the customers sensory perceptions
and makes him relate to the store in a particular manner.
The store layout can be classified into
Grid
Race track
Free form.
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Grid layout: It is most commonly used in a supermarkets and discount stores. It Is
preferred layout in many retail stores that adopt self service.
Race track layout: This layout is popularly found in department stores. The display is in th
form of the race track or a loop with a major aisle running through the store. It links the variou
departments or the sections inside the store.
Free form layout: In a f reeform, merchandise i s a r ranged in an asymmetricamanner . I t a l lows for f ree movement and i s o f t en used in re ta i l ou t l e t s tencourage people to browse and shop.
MAX STORE LAYOUT
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Kids wear DepartmentFoot wear DepartmentWestern wear DepartmentEthnic wear andhome DepartmentAccessoriesDepartmentMenswearDepartment
CashTill
BaggageCounter700 ft2
2350 ft2
1502 ft2
2315 ft2
1805 ft2
2234 ft2
1234Pantry
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Consumer Behavior and Marketing Strategy
The study of consumers helps f irms and organizat ions improve their marketinstrategies by understanding issues such as how
The psychology of how consumers think, feel , reason, and select betwee
different al ternat ives (e.g. , brands, products);
The the psychology of how the consumer i s in f luenced by h i s o r he
environment (e.g., culture, family, signs, media);
The behavior of consumers whi le shopping or making other market in
decis ions;
Limita t ions in consumer knowledge or informat ion process ing abi l it ie
influence decis ions and marketing outcome;
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How consumer motivat ion and decis ion s trategies differ between product
that differ in their level of importance or interest that they entai l for thconsumer; and
How marke te rs can adapt and improve the i r marke t ing campaigns an
marketing strategies to more effectively reach the consumer.
Understanding these issues helps us adapt our s trategies by taking the consumeinto cons idera t ion. For example , by unders tanding tha t a number of di f ferenmessages compete for our potent ia l cus tomers a t tent ion, we learn tha t to beffect ive, advert isements must usually be repeated extensively. We also learthat consumers wil l sometimes be persuaded more by logical arguments , but ao the r t imes wi ll be persuaded more by emot ional o r symbolic appea ls . Bunderstanding the consumer, we wil l be able to make a more informed decis ioas to which strategy to employ.
One "off ic ia l" def ini t ion of consumer behavior i s "The s tudy of individualsgroups, or organizat ions and the processes they use to select , secure, use, andispose of products , services , exper iences , or ideas to sa t i s fy needs and thimpacts that these processes have on the consumer and society." Although i t i
not necessary to memorize this defini t ion, i t brings up some useful points : Behavior occurs e i ther for the individual , or in the context of a grou
(e.g. , f ri ends i nf luence w ha t k inds o f c lo thes a per son w ea rs ) o r aorganizat ion (people on the job make decis ions as to which products thfirm should use).
Consumer behavior involves the use and disposal of products as wel l a
the s tudy of how they are purchased. Product use is often of great interest o t he m ar ke te r, b ec au se t hi s m ay i nf lu en ce h ow a p ro du ct i s b es posi t ioned or how we can encourage increased consumption. Since manenvi ronmental p rob lems resu lt f rom product d isposa l (e .g . , motor o
be ing sen t in to sewage systems to save the recyc ling fee , o r ga rbagpiling up at landfills) this is also an area of interest.
Consume r behav io r i nvol ve s s ervi ce s a nd i de as a s w el l a s t angi bl
products.
The impac t o f consumer behavior on soc ie ty i s a l so of re levance . Fo
example, aggressive marketing of high fat foods, or aggressive marketin
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of easy credit , may have serious repercussions for the nat ional heal th aneconomy.
There are four main applicat ions of consumer behavior:
T he m os t o bv io us i s f or market ing s trategy i.e ., fo r making be tt emarketing campaigns. For example, by understanding that consumers armore recep t ive to food adver t i s ing when they a re hungry , we l ea rn tschedule snack adver t i sements la te in the af ternoon. By unders tandin
that new products are usual ly in i t ia l ly adopted by a few consumers anonly spread la ter, and then only gradual ly, to the res t of the popula tionwe lea rn tha t (1 ) companies tha t in t roduce new produc t s mus t be we lf inance d s o t ha t t he y c an s ta y a fl oa t unt il t he ir p roduct s bec ome commercia l success and (2) i t i s important to please ini t ia l cus tomerss ince they wi ll in tu rn in fluence many subsequent customers b ranchoices.
A second appl ica t ion i s public policy. I n t he 1980s , A c c u t a ne , a ne amiracle cure for acne, was introduced. Unfortunately, Accutane resultein severe birth defects i f taken by pregnant women. Although physician
w ere i ns truc te d t o w arn t he ir f emal e pat ie nt s o f t hi s, a numbe r s ti became pregnant while taking the drug. To get consumers at tent ion, thFedera l Drug Administ ra tion (FDA) took the s tep of requir ing tha t vergraphic pictures of deformed babies be shown on the medicine containers
Social market ing involves get t ing ideas across to consumers ra ther thas el li ng s omet hi ng . M ar ty F is hbei n, a marke ti ng p ro fe ss or, w en t osabbat ica l to work for the Centers for Disease Control t rying to reducthe inc idence of t ransmiss ion of diseases through i l legal drug use . Th bes t solut ion, obvious ly, would be i f we could get i l legal drug users ts top. This , however, was deemed to be infeasible. I t was also determinethat the pract ice of sharing needles was too ingrained in the drug culturto be s topped. As a resul t , us ing knowledge of consumer a t t i tudes , DrFishbein crea ted a campaign tha t encouraged the c leaning of needles ibleach before sharing them, a goal that was believed to be more realistic.
As a f ina l benef i t , s tudying consumer behavior should make us be t t econsumers . Common sense sugges ts , for example , tha t i f you buy a 6l iquid ounce bot t le of laundry detergent , you should pay less per ouncthan if you bought two 32 ounce bott les . In pract ice, however, you ofte
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pay a size premium by buying the larger quanti ty. In other words, in thicase , knowing this fac t wi l l sens i t ize you to the need to check the unicost labels to determine if you are really getting a bargain.
There are several units in the market that can be analyzed. Our main thrust ith is course i s the consumer. However , we wi l l a lso need to analyze our owfi rms s t rengths and weaknesses and those of compet ing f i rms. Suppose , foexample, that we make a product aimed at older consumers, a growing segmentA competing firm that targets babies , a shrinking market , is l ikely to considereposi t ioning toward our market . To assess a competing firms potential threawe need to examine i t s asse ts (e .g . , technology, pa tents , market knowledge
awareness of i ts brands) against pressures i t faces from the market . Final ly, wneed to assess condit ions ( the marketing environment) . For example, al thougwe may have deve loped a p roduc t tha t o f fe r s g rea t appea l fo r consumers , recession may cut demand dramatically.
Segmentation
Segmentation is important in consumer analysis because understanding thconsumer will allow us segment the market more meaningfully.
Segmentation basically involves dividing consumers into groups such tha
members of a group (1) are as similar as possible to members of that samgroup but (2) differ as much as possible f rom members other segmentsThis enables us then to "treat" each segment differentlye.g., by:
Providing different products (e.g. , some consumers l ike cola taste
while others prefer lime)
Offering d i fferent pr ices ( some consumers wi ll take the cheapes
product available, while others will pay for desired features)
Distr ibut ing the products where they are l ikely to be bought by thtargeted segment.
Culture
Culture is par t of the external influences that impact the consumer. Thais, culture represents influences that are imposed on the consumer by otheindividuals.
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The defin it ion of culture i s "That complex whole which include
knowledge, belief, art , morals, custom, and any other capabili t ies anhabits acquired by man person as a member of society."
Culture has several important characteristics:
(1) Culture i s comprehensive . ( 2) Cul tu re i s learned rather than beinsomething we are born with. (3) Culture is manifested within boundarieof acceptable behavior . (4) Conscious awareness of cul tural standards il imited. (5) Cultures fal l somewhere on a continuum between stat ic andynamic depending on how quickly they accept change.
Different perspectives exist in different cultures on several issues; e.g.:
Monochronic cultures tend to value precise scheduling and doing onth ing a t a t ime; in polychronic cultures, in contrast , promptness ivalued less, and multiple tasks may be performed simultaneously(See text for more detail).
Space is perceived different ly. Americans wil l feel crowded wherpeople from more densely populated countries will be comfortable.
Symbols differ in meaning. For example, while white symbols puriti n t he U .S. , i t i s a sy mb ol of d ea th i n Ch in a. Co lo rs t ha t arconsidered masculine and feminine also differ by culture.
In terms of etiquette, some cultures have more rigid procedures tha
others. In some countries, for example, there are explicit standards ato how a gif t should be presented. In some cul tures, gif ts should b
presented in pr ivate to avoid embarrassing the recipient ; in othersthe g if t should be made pub li cly to ensure tha t no percept ion osecret bribery could be made.
The United States has undergone some changes in i ts predominant culturover the last several decades. Again, however , i t should be kept in minthat there are great var ia t ions wi th in the cul ture . For example , on thaverage, Americans have become less materialistic and have sought morleisure; on the other hand, the percentage of people working extremellong hours has a lso increased. The text d iscusses changes in values imore detail .
Demographics and Social Stratification
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Demographics are c lear ly t ied to subculture and segmentat ion . Herehowever, we shift our focus from analyzing specific subcultures to tryinto understand the implications for an entire population of its makeup.
Several issues are useful in the structure of a population. For example, isome rapidly growing countr ies, a large percentage of the populat ion iconcent rated among younger generat ions . In countries such as KoreaChina, and Taiwan, this has helped st imulate economic growth, while icer tain poorer countr ies, i t puts pressures on society to accommodate aincreasing number of people on a f ixed amount of land. Other countr iesuch as Japan and Germany, in con tras t, exper ience p roblems with "graying" society, where fewer non-retired people are around to support aincreasing number of aging seniors . Because Germany actually hoveraround negat ive population growth, the German government has issuelarge financial incentives, in the forms of subsidies, for women who havchildren . In the United States, popula t ion growth occurs both throug
b ir ths and immigra tion . S ince the number o f b ir ths i s not g rowing problems occur for f i rms that are dependent on populat ion growth (e.gGerber, a manufacturer of baby food).
Family Decision Making
The Family Life Cycle . Individuals and families tend to go through a "lifcycle." The simple life cycle goes from
child/teenager ---> young single ---> young couple* ---> full nest
---> empty nest ---> widow(er).
*For purposes of th is d iscussion , a "couple" may e i ther be marr ied omerely involve living together. The breakup of a non-marital relationshi
involving cohabitation is similarly considered equivalent to a divorce.In r ea l l if e, thi s s itua tion i s, o f course, a b it more compl icated . Foexample, many couples undergo divorce. Then we have the scenario:
full nest ---> single parent
Family Decision Making : Individual members of families often servd iff er en t r ol es i n d ec is io ns t ha t u lt ima te ly d raw o n sha red f am il
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resources. Some individuals are information gatherers/holders, who seeout information about products of relevance. The decision maker(s) havthe power to determine issues such as:
whether to buy;
which product to buy (pick-up or passenger car?);
which brand to buy;
where to buy it ; and
when to buy.
Group Influences
Humans are inherent ly social animals, and individuals great ly inf luenceach other.
A useful framework of analysis of group influence on the individual is thso cal led reference group the term comes about because an individuauses a relevant group as a standard of reference against which oneself i
comp ar ed . Ref er en ce g ro up s com e i n s ev er al di ff er en t fo rms . Thaspirat ional reference group r efer s to those o ther s aga inst whom onwould l ike to compare oneself . For example, many f irms use athletes aspokespeople, and these represent what many people would ideally l ike t
be. Associative reference groups include people who more real ist ical lrepresent the individuals current equals or near-equalse.g., coworkersneighbors, or members of churches, clubs, and organizations. Finally, thdissociative reference group includes people that the individual would nol ike to be like. For example, the store l i terally named The Gap came abou
because many younger people wanted to actively dissociate from parentand o th er o ld er and "un co ol " p eo pl e. The Qua li ty P ap er back Boospecifically suggests in i ts advertising that i ts members are "a breed apartfrom conventional readers of popular books.
Diffusion of Innovation
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The d if fusion o f innovat ion r efer s to the t endency o f new product s
practices, or ideas to spread a mong people. Usually, when new products oideas come about , they a re only adopted by a small g roup o f peoplinitially; later, many innovations spread to other people. The bell shapecur ve f requ en tly i ll us tr at es t he r at e o f ado pt io n o f a n ew p ro du ctCumulative adoptions are reflected by the S-shaped curve. The saturatio
point is the maximum proport ion of consumers l ikely to adopt a producIn the case of refr igerators in the U.S. , the saturat ion level is near ly onhundred percent of households; i t well below that for video games thateven when spread out to a large part of the population, will be of interes
to far from everyone.
Some cultures tend to adopt new products more quickly than others, baseon several factors:
Modernity: The extent to which the cul ture is receptive to newthings. In some countr ies , such as Br i ta in and Saudi Arabiatradition is greatly valuedthus, new products often dont fartoo well . The United States, in contrast, tends to value progress
Homophily: The more similar to each other that members of cul ture are, the more l ikely an innovation is to spreadpeoplare more likely to imitate similar than different models. The twmost rapidly adopting countr ies in the World are the U.S. anJapan . Whi le the U.S . interes ting ly scores very low, Japascores high.
Physical distance: The greater the dis tance between people , thless likely innovation is to spread.
Opinion leadership: T he more opi ni on l ea de rs a re val ue d a nrespected, the more l ike ly an innovat ion i s to spread. The s tyle oo pi ni on l ea de rs m od er at es t hi s i nf lu en ce , h ow ev er. I n l esinnovative countries , opinion leaders tend to be more conservativei .e . , to reflect the local norms of resis tance.
Perception
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Background . O ur perce pt ion i s a n a pp roxi ma ti on o f r ea li ty. O ur b ra iat tempts to make sense out of the s t imuli to which we are exposed. This workwell , for example, when we "see" a fr iend three hundred feet away at his or hecorrect he igh t; however, our pe rcept ion i s somet imes "off"for examplec er ta in s ha pe s o f i ce c re a