CONSUMER BEHAVIOR IN RETAIL

CONSUMER BEHAVIOR IN RETAILSMITU MALHOTRA , XLRI , SEPT 20152Why People Go Shopping?Personal motivesRole playingDiversionSelf gratificationLearning about new trendsPhysical activitySensory stimulation

3Why People Go Shopping?Social motivesSocial experienceCommunication with othersPeer group attractionStatus and authorityPleasure of bargaining

PURCHASE AGENTS FOR CUSTOMERS OR SELLING AGENTS FOR SUPPLIERS ?CONSUMER ANALYSIS MANUFACTURER OR RETAILERS TASK ? REQUIRE CONSUMER INSIGHTS TO :-

ASSIST IN TG SELECTION DETERMINE MARKET POTENTIAL DESIGN MARKET OFFERSASSESS REASONS FOR RETAIL PERFORMANCE

RETAILERS SHOPPER VS CONSUMER ?

HOW ARE THEY DIFFERENT ?

CONSUMER

SHOPPER

TO INFLUENCE CONSUMER DECISIONS ABOUT WHERE TO SHOP WHAT TO BUY RETAILER OBJECTIVE Exercise HOW DO YOU SHOP FOR :

monthly grocery buying bread in a hurrybuying a suitbuying sunglasses

11Outlet Selection and PurchaseDecision SequenceOutlet First, Brand SecondBrand First, Outlet SecondSimultaneous12Marketing Strategy Based on Decision Sequence

13FACTORS AFFECTING STORE CHOICE CATEGORYPERSONALITY YOUNG GROUP VS OLD CONSUMPTION PATTERN FILL IN VS MONTHLY BUYSHOPPING TASK URGENT PURSHASE/LARGE QUANTITIES/REGULAR PURCHASE/NEED IDEAS

SHOPPER REQUIREMENTS

SOURCE nacs/CCRRC AND INTEGER 2009UNDERSTAND CONSUMER CHARACTERSTICS CONSUMER DECISION MAKING PROCESSERGO ?CONSUMER CHARACTERSTICS SECCTION I 1-GEOGRAPHIC CHARACTERSTICSKIND OF CRS IN TRADING AREACLIMATE ,TRANSPORT , INFRASTRUCTURE2-DEMOGRAPHIC NO. OF HHS, AGE , INCOME ,OCCUPATION ETC.LIFESTYLE STAGE ANALYSIS

HELPS ESTIMATING BUYING POWER.NUMBER OF HH IN THE AREA X AVG DISCRETIONARY HH INCOME X %AGE OF DISPOSABLE INCOME SPENT ON PARTICULAR CATEGORY

DISCETIONARY INCOME(MONEY AVAILABLE AFTER PAYING FOR BASIC COMMITMENTS ) VS DISPOSABLE INCOME( AFTER TAX)

3-PSYCHOGRAPHICS V-A-I-OLINK TO SHOPPING BEHAVIOUR- CONSUMPTION IS AN EXTERNAL EXPRESSION OF INTERNAL FEELING.4-NEEDS/ WANTS/EXPECTATIONS ABOUT ASSORTMENTCONVENIENCESERVICEVALUE EXPERIENCE

CONVENIENCE MODEL

SOURCE COCA COLA RESEARCH AND INTEGER 2010FUNCTIONAL ENGAGEMENT- E.G. DISPLAYEMOTIONAL ENGAGEMENTDISPLAY MAKING LOOKING FOR THE PRODUCT EASIER

http://www.youtube.com/watch?v=qWEOlLNua-U

VARIOUS ORIENTATIONSECONOMIC SHOPPERPERSONALISING SHOPPERETHICAL SHOPPERAPATHETIC SHOPPER

5-SHOPPING STYLE OR ORIENTATION

HIGH EGO INVOLVEMENTAPPAREL HOME FURNISHINGS LOW EGO INVOLVEMENTCLEANING PRODUCTSTYPE OF TRIP ROUTINE STOCK UPFILL IN EMERGENCYADVENTUREDecision map to choose formats in food retailing

Source cocacola retail research -2007

Source cocacola retail research -2007

TYPES OF SHOPPERS PLANNERSPARTIAL PLANNERSIMPULSE BUYERSProduct buy plannedbrand not so muchShoppers (81%) include the type of product, and not the brand, leaving the door open for brands and retailers to drive brand switching in-store via compelling marketing materials at-shelf.Respondents also report that their shopping lists also typically include the quantity needed (67%), but not details like the size of an item or its price. This may indicate that most price-based decisions (price and/or price-per-unit valuations) are being made at shelfWhile it is not surprising that discounting plays a significant role in list development, roughly a third of all list-making shoppers are influenced by recipes (34%) and product recommendations (31%) from friendsyet another opportunity to engage shoppers with more experiential shopper marketing tools built around meal solutions and occasion-based product assortments other than margin-eroding price promotionsDespite pre-planning, most shoppersstill make off-list purchasesFor a leading retailer like Safeway, getting an additional 10% of existing shoppers to add three more items could amount to more than $1.5 billion sales a yearCONSUMER DECISION MAKING PROCESSSECTION IISHOPPING AREASTORE PRODUCTCHOICE ABOUT

AWARENESSKNOWLEDGEPREFERENCESCONVICTIONSPURCHASE POSTPURCHASE

ATTRACT CUSTOMERS MASS MEDIABUILD RELATIONSHIP MORE IN-STORE PROMOTIONSSTAGESAPPLICATIONSAPPAREL INSIGHTSHow half the world shops: Apparel in Brazil, China, and India

SOURCE MCKINSEY November 2007CHINAChinas mass-market consumers have relatively small, undifferentiated wardrobes.Forty percent of the Chinese respondents, for example, report wearing similar clothing at work, formal social occasions (such as weddings), and dates with friends or family

THEREFOREApparel retailers in China may find it more challenging than they do in other emerging markets to establish themselves as specialists in clothing subcategories, such as ladies office clothing or specialty outdoor casual clothing.Chinese consumers of apparel dont appear to place a premium on foreign brandsThese figures stand in stark contrast to our findings in India, where about 50 percent of respondents say that international brands are superior in value or qualityWhats more, Chinese shoppers seem to rely more heavily on price to form their perceptions of a products quality than do shoppers elsewhere.Whereas nearly half of the respondents in Brazil, India, and Russia believe that they can quickly assess the quality of a garment without taking its cost into account, only 22 percent of Chinese consumers say the same.India: Shopping with the familyIndians devote roughly the same share of their income to apparel as do Chinese and Brazilians.

But the countrys lower per capita income levels mean overall spending on apparel is significantly lowernearly 40 percent of the mass-market Indian shoppers we surveyed said that their most important shopping occasions revolved around special events, such as weddings and annual religiousFurthermore, to a greater extent than elsewhere, shopping is a family activity in India: nearly 70 percent of its shoppers always go to stores with family, and 74 percentmore than twice the average of Brazil, China, and Russiaview shopping as the best way to spend time with familyAs in many markets, in India women are the primary decision makers in apparel purchases for the entire family. But Indias men also have an important roleIndia is unusual in that the market for mens apparel is larger than the womens market, where traditional Indian apparel still dominates. Mass-market apparel retailers must therefore find formats and merchandising approaches that will attract shoppers seeking apparel not only for special occasions but also appealing to the entire familyBrazil: Fashion conscious, credit readyBrazils consumers are extremely fond of shopping for clothes: almost 80 percent of our respondents look forward to it, a figure much higher than those for China and Russia, though about the same as the one for Indiamore than half of Brazils shoppers say they use most of the clothing they buy for going out with friends and family; the proportion giving that answer in China, India, and Russia is much lowerFASHION CONSCIOUSBrazils mass-market apparel shoppers seem particularly conscious of fashionFashion trends there are strongly shaped by local celebrities (in particular, prominent characters from popular television soap operas),81 percent of our respondents agree with thestatement, I trust local brands, compared with a bit less than half of those we surveyed in China, India, and Russia.Similarly, only 11 percent of Brazilians agree that foreign brands are higher quality than local brandsa proportion much smaller than it is in the other countriesBrazilians are far more open to using credit than are consumers in the other markets 65 percent of the Brazilians had bought something on credit during the past six months, compared with 25, 9, and 8 percent of the shoppers in Russia, China, and India, respectivelyAll major local and multinational apparel retailers therefore offer cards with low initial spending limits that increase as consumers prove their creditworthiness. These private-label cardsoffered through retailer-owned finance operations or joint ventures with banksnow finance around 70 percent of total sales for Brazils larger apparel retailers and sometimes generate profits comparable to those that retailers earn from apparel purchases.CON BEHVR affects DECISIONS ONSTORE FORMAT CHOICELAYOUT AND DESIGN OF THE STOREAISLE WIDTHHOT SPOTS , COLD SPOTS CATEGORY DISPLAY CUSTOMER SERVICEPROMOTIONSBILL BUSTERSBRAND SPECIFIC PROMO

PDH - Toothbrush

Bristle strength ( Hard / Soft) is the key purchase decision criterion for the shopper and should be highlighted for ease of shopping Functional feature / Benefit should be highlighted at the point of purchase

Format is not applicable for nowPack type is not applicable for nowSource: Colgate47Purchase Decision Hierarchy - ChocolatesHow do shoppers purchase Chocolates?1st AttributeBrandCDMPerketc2nd AttributeType of chocolate4th AttributeVariant3rd AttributePrice5th Attribute Pack size6th Attribute Promotions7th AttributeProduct form Dark chocolateWhite chocolate Fruits & nutsRaisins Buy 2 CDM and get a Perk free Small LargeMouldCountMOSTIMPORTANTLEASTIMPORTANTChocolate shopping dictated by taste buds Brand followed by type and price emerge as the 3 most significant decisions that a shopper takes in buying chocolatesSource: Cadbury India Ltd.484849The Indian Consumer Is Rapidly TransformingOutlook From Traditional to Modernized TraditionalParadigm Shift in almost all aspects of life

Food and GroceryClothingFootwearConsumer durable / appliancesHome linenMovies and theatreEating outCategories constituting 80 % of SEC AB consumer discretionary spending 1991Food and GroceryClothingFootwearConsumer durable / appliancesExpenditure on DVDs and VCDsHome linenHome accessories AccessoriesGiftsTake-away/ Pre cooked / RTE mealsMovies and theatreEating outEntertainment parksMobile phones and serviceHousehold helpTravel packages Club membershipComputer Peripheral & Internet Usage2009Services are now taking away a huge chunk of the Consumers Wallet.. On Much Wider Range of Services and ProductsTRAVEL RETAILING MOBILE COMMERCE SPEED RETAILING EXPERIENCE RETAILING TRENDS 2015SOURCE DELOITTE GLOBAL POWERS OF RETAILING 2015 OVER 1 BILLION PEOPLE ARE TRAVELLING EACH YEAR APPOX 15 % OF POPULATION 6TH CONTINENT AIRPORT RETAILING , LUXURY RETAILING BUILDING BRAND AWARENESS IN EMERGING COUNTRIES TRAVEL RETAIL 65% OF POPULATION WILL BE USING MOBILE PHONES GOOGLE GLASS , APPLE WATCH PAYMENT OPTIONS MOBILE RETAILING NEW AGE SHOPPERS SHOPPING IS CHANGING

INVOLVING MORE DIGITAL ENGAGEMENTTesco home plushttp://www.youtube.com/watch?v=TL3oDAEX28M

SAME DAY DELIVERY BY AMAZON DRONE DELIVERY

FASTER RETAILING ENTERTAINMENT , EDUCATION, ENGAGEMENT CREATING BUYING EXPERIENCE

OMNI CHANNEL EXPERIENCE EXPERIENCE RETAILING