Consumer Buying Behavior by bilal ahmed shaik

8/12/2019 Consumer Buying Behavior by bilal ahmed shaik

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SHAIK BILAL AHMED

ROLL NO: 13325580164

IMA

24-E

TO STUDY THE CONSUMER BUYING BEHAVIOR

TOWARDS ORGANIZED FMCG RETAIL OUTLETS.


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INTRODUCTION

Every business conducted for the purpose of selling or offering for sale; any good, wares

and merchandise, other than as a part of wholesale business to the final consumer can be

defined as retail business.

Retail is the second largest business in the United States both in number of establishments

and the number of employees. The US retail industry generates $ 3.8 trillion in retail sales

annually ($ 4.2 trillion if food service sales are included), approximately $11,993 per

capita. The retail sector is also one of the largest worldwide.

Wal-Mart is the worlds largest retailer and the worlds largest company with more than $

312 billion (USD) in sales annually. Wal-Mart employs 1.3 million associates in the

United States and more than 400,000 internationally. The second largest retailer in the

world is finances Carrefour.

What Is Retailing?

Retailing is all the activities involved in selling goods and services directly to final

consumers for their personal non business use.

The word retail is derived from the French word retailer, meaning to cut a piece off or to

break bulk. A retailer buys goods or products in large quantities from manufacturers or

importers, either directly or through a wholesaler, and then sells individual items or small

quantities to the general public or end user customers, usually in a shop, also called a

store. Retailers are at the end of the supply chain. Marketers see retailing as a part of their

overall distribution strategy.


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TYPES OF RETAILING

Retailing can be classified under two heads:

Store Retailing

Non- Store Retailing

Store Retailing

Retail stores come in a variety of shapes and sizes, and new retail types keep emerging.

They can be classified by one or more of several characteristics:

Amount of service

Product line

Relative prices

Control of outlets

Type of store cluster

1) Amount of service:

Different products require different amounts of services and customer service preferences

vary.

Self service retailers:

Customers are willing to perform their own Locate Compare - Select process to save

money. Today self service is the basis of all discount operations, and typically is used by

sellers of convenience goods (such as super markets) and nationally branded; fast moving

shopping goods (such as catalog showrooms).


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Limited service retailers:

Retailers such as Sears and J.C Penrey, provide more sales assistance because they carry

more shopping goods about which consumers need information. Their increased operating

costs result in higher prices.

Full service retailers:

Like specialty stores and first class department stores, have sales people to assist

customers in every phase of the shopping process. Full service stores usually carry more

specialty goods for which customers like to be waited on. They provide more liberal return

policies, various credit plans, free delivery, home servicing and extras such as lounges and

restaurants.

2) Product line:

Retailers can also be classified by the depth and breadth of their product assortments. The

depth of a product assortment refers to the number of different versions of each product

that are offered for sale. The breadth of the assortment refers to the number of different

products that the store carries.

Specialty stores carry a narrow product line with a deep assortment within that line.

Examples include; stores selling sporting goods, books, furniture, electronics, flowers or

toys. Today specialty stores are flourishing due to the increasing use of market

segmentation, market targeting and product specialization.

A department store carries a wide variety of product lines. Each line is operated as a

separate department managed by specialist buyers and merchandisers.

Super markets are large, lowcost, lowmargin, highvolume, Selfservice stores

that carry a wide variety of food, laundry and household products.

Convenience stores are small stores that carry a limited line of high turnover convenience

goods. These stores located near residential areas and remain open long hours, seven days


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a week. Convenience stores much charge high prices to make up for higher operating costs

and lower sales volume. But, they satisfy an important consumer need.

Super stores, combination stores and hyper markets are all larger than the conventional

super market. Many leading chains are moving towards super stores because their wider

assortment allows prices to be 5-6 % higher than conventional super markets.

Combination stores are combined food and drug stores. Examples are A & Ps family

marts and Wal Marts - super centers. Hyper markets combine discount, super market and

warehouse retailing, and operate like a warehouse.

3) Relative prices:

Retailers can also be classified by the prices they charge. Most retailers charge regular

prices and offer normal quality goods and services at a higher price. Retailers that feature

low prices include:

Discount stores sell standard merchandise at lower prices by accepting lower margins and

selling higher volume. Occasional discounts or specials do not make a store a discount

store. A true discount store regularly sells its merchandises at lower prices, offering mostly

national brands, not inferior goods.

4) Control of outlets:

About 80 % of all retail stores are independents accounting for 2/3 of retail sales. Other

forms of ownerships include the corporate chain, the voluntary chain and retailer

cooperative, the franchise organization, and the merchandising conglomerate.

The chain store is one of the most important retail developments of this century.

Corporate chains appear in all types of retailing, but they are strongest in department,

variety, food, drug, shoe, and womens clothing stores. The size of corporate chains allows

them to buy in large quantities at lower prices, and chains gain promotional economies

because their advertising costs are spread out over many stores and over a large sales

volume.


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The voluntary chain is a wholesaler - sponsored group of independent retailers that

engage in group buying and common merchandising.

The retailer cooperative is a group of independent retailers that setup a jointly owned

central wholesale operation and conduct joint merchandising and promotion efforts.

A franchise is a contractual association between a manufacturer, wholesaler, or service

organization (the franchiser) and independent business people (the franchisees) who buy

the right to own and operate one or more units in the franchise system.

Merchandising conglomerates are corporations that combine several different retailing

forms under central ownership and share some distribution and management functions.

Examples include: DaytonHudson and J.C Penney.

5) Types of store cluster:

More stores today cluster together to increase their customer pulling power and to give

consumers the convenience of one stop shopping.

Central business districts: A central business district comprises of banks, departed stores,

specialty stores, and movie theatres.

A shopping center is a group of retail business planned, developed, owned and managed

as a unit.

NonStore Retailing

Although most goods and services are sold through stores, Nonstore retailing has been

growing much faster than store retailing.

Traditional store retailers are facing increasing sales competition from catalogs, direct

mail, telephone, home TV shopping shows, online computer shopping services, home

and office parties and direct retailing approaches.

Nonstore retailing includes; direct marketing, direct selling and automatic vending.


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RESEARCH OBJECTIVES

1. To study the Consumers Perceptions towards various aspects of Mega Marts.

2. To study the different demographic, psychographics and situational variables

which are affecting the selections of retail outlets.

3. To know the Products knowledge & promotional tools adapted by Organized

Retailers in Delhi

4. Understanding the needs of the customers.

5. To study various parameters taken into consideration by customers, while making

a buying decision.

6. To study the satisfaction level of consumers for Organized FMCG Retail outlets

likeHyper City, D-Mart, Big Bazaar, Reliance Super, Vishal Mega Mart.

7. To study about the changes those customers wants in these Organized FMCG

Retail Outlets.

8. To study about the quality, services, product range provided by these Organized

FMCG Retail Outlets.

9. To undertake a comparative analysis of Indian consumer buying habits at Local

KiranaWalasv/s Organized Retail Formats in the city.10. To suggest improvements to these Organized FMCG Retail Outlets in the city.


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INDIAN RETAIL INDUSTRY

Retailing in India is one of the significant contributors to the Indian economy and accounts

for 35% of the GDP. However this sector is in a fragmented state with over 12 million

outlets operating in the country and only 4 % of them being larger than 500 sq. ft. in size.

This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the

total retail market size. Thus, India has the highest number of outlets per capita in the

world with a variety spread retail network but, with the lowest per capita retail space (@ 2

sq. ft. per person as compared to 16 sq. ft. per person for USA).

The Indian retailing industry is currently estimated $ 205 billion (Rs. 930,000 crores) and

is expected to grow at 5% p.a. The current size of the organized retail market is $ 6 billion

(Rs. 28,000 crores), thereby a mere 3% of the total retailing market with a projected

growth rate of 25-30 % p.a. and it became $ 8 billion (Rs. 35,000 crores) by 2005 and $ 24

billion (Rs. 100,000 crores) by 2010, with its contribution to total retailing sales likely to

rise to 9% by decade end.

INDIAN RETAIL MARKET

The retail sector in India is highly fragmented and mostly owner-runMom and Pop

outlets. The entire sector is dominated by smallretailers consisting of local Kirana shops,

general stores, footwear andapparel shops, hand-cart hawkers andpavement vendors.

Thesetogether form the unorganized retail or traditional retail. Accordingto the

Investment Commission of India (ICI) estimates, there are over 15million such Mom and

Pop retail outlets in the country.

In terms oftotal sales, one can find a wide range of estimates and this definitelyreflects

lack of sound official government data. ICI had estimatedIndian retail sales figure at

US$262bn for 2010, although marketestimates ranged from US$200bn to as high as

US$386bn for that year. Various agencies have made efforts to project the growth rate

ofthe total retail market till 2013 and the figures hover around 13-15.5 percent


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Emerging Trends in Indian Retail Industry

Tier II phenomenon

Small towns with a population of 0.5 to 1 million ( likeSurat, Lucknow, Dehradun,

Vijayawada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and

Ludhiana etc.), are witnessing a defined increase in disposable income coupled with high

aspiration levels leading to enhanced spending on consumer goods along with lesser

aversion to credit. With consumption in metros with already being exploited (85% of retail

sales as of now), these TierII areas are fresh targets and are expected to contribute 20-25

% of organized retailing sales.

Retailers are introducing contemporary retail formats such as Hyper markets and Super

markets in these new pockets of growth. Mall development activities in these small towns

is also picking up, creating quality space for retailers to fulfill their aggressive expansion

plans. Keeping in view the relatively smaller size of the market, the average size of a retail

mall in Tier II cities ranges between 1,00,000-120,000 sq. ft. in comparison with the larger

metros where a number of malls measure over 5,00,000 sq.ft.

Entry of International Players

The fight today is not between big Organized Retail Stores (3%) and unorganized Kirana

shops (97%), but its between global giants like; Wal-Mart, Tesco and shoppers stop,

pantaloons. Entry of these global players will impact the way Indian retailers operate, as

much as it will change the way Indian consumers live and do their shopping. They will nolonger be just dependent on their local Kirana shop for their everyday needs. They could

just shop once a week or once a month at comparatively cheaper rates and remain hassle

free. Indian retailer will also need to quickly come to terms with the market realities. On

one hand they will fight size factor and the other hand great efficiencies.

Emergence of New Retail Formats


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Currently the new sector in India is populated with the traditional mom & pop stores and

some 1,000 odd supermarkets under organized retail chains. A daring few ventured into

the organized hypermarkets with successful results and this format is being fast replicated

by other players. This experience indicates that the Indian Consumer has matured to the

next level of shopping experience. Given the Indian conditions and the vast diversity a

single format may not be possible for the national presence, but region specific formats

may evolve. An interesting fact is that of lack of presence of organized retail chains in the

rural/semi-urban centers as over 60% of Indian population is still in these parts. An ideal

no-frills model to start with would be ideal for the rural markets; this would help to take

them to the next level of the supermarket experience.

Specialty Malls

Keeping in mind the astonishing pace with which new supply is expected to enter the

market, many mall developers in a bid to offer a distinctive value proposition, are planning

to develop specialty malls. These niche developments shall emerge as one - stop

destinations in their chosen product categories. The Delhi - based Aerens Group has

developed Gold Souk, an exclusively jewellery mall that is already operational in Gurgaon

and has ambitious plans to replicate the concept across the country. Further a number of

analogous developments like a wedding mall by omaxegroup, Automobile Mall, etc.

are also in the offering. In line with international trends, Home Malls offering the entire

range of building and interior decor solutions are also coming up in various parts of the

country including Pune (Ishanya promoted by Deepak fertilizers and petrochemicals

corporation Ltd.), Gurgaon & Kolkata.

Price Correction

Fallout of the surge in mall development activity shall be that developers will be forced to

offer retailers prime real estate spaces at costs lower than those prevailing today, as the

space required by retailers to fulfill their expansion plans is likely to be lesser than offered.

This correction could result in a more structured retail real estate market that would allow

retailers a higher margin on their real estate investments, thereby enabling them to expand

faster. Further, the relatively overserved cities could witness higher activity, as real

estate space becomes more affordable, thereby, reducing the breakeven period for


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retailers. Moreover, under - served markets could provide enough margins to retailers to

compensate for loss of margins in some of the overserved markets.

Transformations and Innovations of Supply Chain and Transportation Logistics

To counter the unbeatable advantages of convenience of a hop, skip and a jump access and

home delivery, organized retailers seem to have just one optionoffer attractive prices to

the consumer. A successful retailers winning edge will therefore come from sourcing

how best it can leverage its scale to drive merchandise costs down, increase stock turns

and get better credit terms from vendors. Efficient supply chains can achieve this objective

and fuel demand. The supply chain in India is full of inefficienciesa result of inadequate

infrastructure, too many middlemen, complicated laws and an indifferent attitude.

More Use of Technology

Retailing; as discussed before is at a nascent stage in India. The complicated information

systems and underlying technologies are in the process of being established. Most grocery

retailers like Food World have started tracking consumer purchases through CRM. The

lifestyle retailers through their affinity clubs and reward clubs are establishing their

processes. The traditional retailers will always continue to exist but organized retailers are

working towards revamping their business to obtain strategic advantages at various levels

market cost, knowledge and customer. With differentiating strategies value for money,

shopping experience, variety, quality, discounts, advanced technologies, change in the

equilibrium with manufacturers and a thorough understanding of the customer behavior,

the ground is alls et for the organized retailers.


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Community Involvement

Footfalls in most malls are observed to be significantly higher on weekends. To ensure

regular walk-ins on weekdays, mall developers have started to focus on involving the local

community. They have recognized that their centers need to be entertaining, and that

shoppers want their malls and town centers to blend with and reflect their own

communities. Their philosophy today is thus to create a center where people would want

to stay well beyond their shopping time to enact the rituals of urban life. Activities like

karate classes and painting competitions for children pull their salaryearning parents to

visit the mall.

For example, South - dale Mall, USA contains a school, an auditorium, an iceskating

rink and even a zoo for the same reason. Dandia and Navratre parties at Ansal Plaza and

Festival Parties at other malls also have the same objective.

The present best example would be the Infinity &Inorbit Mall within our locality is trying

to offer the complete family solutions with the delicious food courts to advanced gaming

zones.


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AN INVESTIGATION OF CONSUMER BROWSING BEHAVIOR

Browsing behavior is a significant form of consumer behavior which can occur

independently of specific purchase occasions.

The focus of the present study is upon a different aspect of non-purchase consumer

behavior-browsing. Most of us at one time or another has visited a retail store without a

particular purchase in mind. Such browsing may be done 'for the fun of it," to see new

developments in a product class, or perhaps just to fill time while waiting. Given the

pervasiveness of browsing behavior among consumers, it is surprising that this element of

consumer behavior has received so little research attention.

For purposes here, browsing is defined as the examination of a store's merchandise for

recreational or informational purposes without a current intent to buy. As defined,

browsing is both a form of leisure activity and a form of external search behavior.

Browsing can provide a consumer with a way to spend a rainy afternoon and in addition it

can add to the individual's store of information concerning new product developments,

brand differences, or sale prices. Furthermore, the search aspect of browsing may be

pleasurable in and of itself. The browser can satisfy his/her curiosity motives and add to

feelings of self-esteem through the acquisition of product-specific or marketplace

expertise.

Consumer Attitude

Consumer attitude helps the organization to understand the purchasing pattern of

consumer. For example customer wants to buy from local Kirana store (Mom & Pop store)

because of location is convenience for them. If the retailer comes to know what exactly is

the reason of purchasing so the retailer can change his store accordingly, because the main

reason for the existence of retailer is customer and I have to change according to customer.


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Consumer Attitude is very important in Retail consumer attitude means the behavior

which a consumer shows while purchasing. The consumer shows different consumer

attitude because of different names

Demographics

Psychographic

Situation

The main aim of this project is to find out The Attributes that customers keep in mind

while purchasing from Organized Retail Outlets.

Location

Ambience

Pricing

Quality

Variety

Customer Services

A Fair World

Allowing foreign direct investment in multi-brand retail has been a vexed issue formany years now. It returned to the public domain when the commerce ministry came upwith a discussion paper in July, inviting views from all stakeholders.

Last month, worlds largest retailer Wal-Marts CEO, Mike Duke flew down to thecountry, days before US President Barack Obamas visit, to hard sell the benefits ofinternational competition in multi-brand retailing to Indian consumers as well as smallgrocers.

While commerce and industry minister Anand Sharma and the Planning Commission havesupported FDI in retail, those opposing the idea include micro, small and mediumenterprises (MSME) ministry and communications & IT ministry, besides differentassociations of small retailers.

The biggest fear is that the arrival of the likes of Wal-Mart, Carrefour and Tesco willlead to a huge loss of jobs in traditional retail sector, which is considered the second-largest employer in the country after agriculture with more than 20 million people acrosssome 12 million shops and accounting for more than 95% of total sales.


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THE LATEST NIELSEN STUDY ALLAYS THAT FEAR

The Indian shopper, it says, flits across formats to buy different items from each storetype. For instance, they visit neighborhoodpaan shops for salty snacks and chocolates,

chemists for deodorants and milk beverages, and modern trade outlets for brandedgrocery and liquid toilet soap.

While modern trade is driving sales ofpremium household and food categories,traditional trade has begun selling more personal grooming products such as hairconditioners, fragrances, deodorants and hair dyes than ever before. Diapers, liquid soap,washing products and squashes are selling equally big from both the channels.

Grocers Grow Smarter

Price is a big factor though,of all the shoppers who participated in the Nielsen study,

nearly 40% said they know the prices of most items in both modern and traditional tradeformats, while 45% said they notice a difference in prices between the two formats.

Big retailers have an edge here, thanks to their ability to check operational costs, bargainhard with suppliers and launch private labels.

According to another Nielsen study, modern retail dropped prices by more, or increased

them by less, for more product categories than traditional retailers, or kiranas, betweenthe October-December 2009 quarter and the January-March 2010 quarter.

Small grocers too now offer decent discounts to consumers, thanks to joint purchases andtie-ups with top consumer product companies such as Hindustan Unilever, Procter &Gamble, Godrej Consumer Products, Dabur and Marico.

BharatiyaUdyogVyaparMandal, the biggest association of mom-and-pop stores in thecountry with more than 5 million members, has formed city-centric associations tonegotiate directly with manufacturers and do away with any middlemen. This has helpedkiranas offer 5-20 % discounts on MRP of branded products like detergents, shampoos,

soaps, oil and atta.


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They are helped by FMCG players, which are facing increased competition from privatelabels, or own-brands, of big retailers and are under constant pressure to increaseretailers margins. Programmes such as Hindustan Unilevers Perfect Store andDaburs Parivar adopt kiranas and teach them category management and effective

merchandising to make them more engaging and presentable.

Stores are a reflection of the aspirations of any society, says Godrej ConsumerProducts executive vice-president, marketing, TarunArora. Although modern trade isroughly around 6% of total retail, traditional stores have learnt a lot from it andconsumer companies have become catalyst in the process, resulting in the emergence ofcrossover shoppers, he adds.

All this has left consumer the winner. She gets never-before bargains from modern retailand never-before service from small grocers. Attitude of kirana owners has changed alot, especially in areas where catchments ofmodern retailers and mom & pop stores are

the same, says Ashwin Merchant, a Mumbai-based independent marketing advisor.

The countrys largest retailer Future Groups director, food strategy, Damodar Mallsays that any format, whether traditional or modern, that meets consumer needseffectively will do well. Modernization of all trade is in favour of the consumer, headds.


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CONCLUSION

From above survey we conclude that

The main factors that affect the retail business in location

Indians Consumers are price sensitive they seek value for money so price also

matter for Indian customers.

The purchasing pattern of the people in one location is totally different from other

location.

Customers service is not so much important in grocery retail, Quality & Price

matter a lot

The reason for which people prefer to buy from organized retail store is variety of

product available under one roof and customer has not to move from one shop to

another shop for his/her daily needs.

Most of the people use to purchase their daily needs whenever they require.

I can conclude my points.

1. The main factor that affects the retail business is the Location.

2. Indians are price sensitive they seek value for money so price also matter for

Indian customers.

3. The purchasing pattern of the people in one location is totally different from other

location in Country.

4. Customer service is not so much important in grocery retail, quality & price matter

a lot.5. The reason for which people prefer to buy from organized retail store is variety of

products available under one roof and customers has not to move from one shop to

another shop for his/her daily needs

6. Most of the people use to purchase their daily needs whenever they require.

7. Organized Retail is still a new concept in India and holds a lot of potential in

coming years.


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Suggestions

I have asked some of the customers to give suggestion to make it better place for

shopping. Some of the valuable suggestions are as follows:-

Pricing of products should be low inside the outlets as compared to outside stores.

Most of the customer suggested that the fruits and vegetables must be fresh in

stores otherwise its not worth.

Non- vegetarian & some of the vegetarian items should not be frozen for many

days because it loses its nutritious contents.

Credit facility must be provided to the customer just like local Mom & Pop

(Kiranawala) provides. CSAs should be well trained to provide good customer service.

Big brands must improve service quality as its name is big (reputed) in the market.

There must be enough number of POS and all must be in working conditions

during peak hours because customer has to wait in queue.

All items must be in enough quantity some time customer finds some items out of

stock (butter milk, curd, butter etc.)

More discounts schemes should be available in the other stores as like Big Bazaar.

Home delivery service system should be started.

RECOMMENDATIONS


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Economic times retail news (December 4, 2010)

Article by Knight Frank Research

http://retail-guru.com/indian-consumers-are-crossover-shoppers-nielsen-study/

http://www.indianbusiness.nic.in/economy/retail.htm

http://www.thoughtsofanordinaryman.com/2008/06/review-reliance-super-mumbai.html

http://www.financialexpress.com/news/bharti-launches-easy-day-stores-in-ludhiana/297827/

http://bigbazar.com

http://www.retailindustry.about.com/

http://hindubusinessline.com

http://www.indiaretailbiz.com/blog/2008/04/17/wal-mart-backed- bharti-enters-retail-with-debut-of-every-dat-chain-in -India-launches-3-convenience-stores in ludihana/

http://www.magportal.com

http://www.vishalmegamart.net

www.ril.com

www.reliancefresh.info

Consumer Buying Behavior by bilal ahmed shaik

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