Post on 27-Dec-2015
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Understanding the Retail Customer
Why its needed to understand the Customer Retailing means purchasing and selling of
goods for its further consumption
Consumption = the individuals preferences and choices.
Thus CB plays a crucial role in determining the success and growth of the retail stores
Thus very crucially one needs to analyze 1) The relevance (weight) of the retail market.
2) The structure of the buying population and how it effects the retail
Thus need to make:Define the MarketStructure of the buying populationPopulation analysisDemography analysisGeography analysis
The Market Defining the market is the first step
Since the market consists of consumers whose needs highly differ
And for that Market segmentation is very necessary
so as to understand the needs & to select a consumer group that retailer will serve.
But to define that market a retailer should follow the process below:
Total Population: Total no. of people residing in a particular area
Potential market: filter the individuals who are interested in buying the product
Available market: Those in the potential market who have money
Qualified market: Those from the available market who are legally permitted to buy the product
Eg: Crossword Michael Jackson’s CDProducts Permitted only above 18.
Target market: Portion of qualified and available market that retailer has decided to serve
Penetrated market: Identifying the individuals in the target market who have
purchased the product
Thus with this retailer can define their market as a group of consumers/organizations that are
Interested in their product
Have resources to purchase the product
And permitted by the law to purchase this
product
Structure of the buying populationThe buying population can be divided
Based on the customers nature
And based on his intensions behind purchasing the merchandise
Buying Population
Consumer Market Organizational Market
Corporate
Reseller
Conti.. Consumers
Buy for themselves
For their families
Buying Decisions are influenced buy
Preferences Referrals Status Family Geography Demography
Corporate Are the companies that
make use of merchandise offered for corporate use
And even those who promote sales for retailers by giving coupons to their employees
Resellers
Population Analysis
Population Analysis Next step after defining the market
Since bearing in mind more of consumers
Retailer needs to make a population analysis of the market they have decided
This analysis would be carried out on the facts and figures of various governmental surveys
Like Analyze the total population so as to know
the total maximum demand in the market
Look to the birth rate, death rate, population mobility rate (immigration,
emigration, migration)
Birth and immigration gives pool to retail
Death and emigration (out) gives reduction in the population
Growth rate of income group
Level of increase in female workforce
Race & Ethnicity (civilization):
According to Central Intelligence Agency (CIA) in India
Indo-Aryans 72 % (adjust)Dravidians 25 %Mongols & others 3 %
Demographic
Analysis
It is used to describe the population
Each differ at age, gender, occupation, family size, structure etc.
These individuals of similar character are grouped together to form a customer segment
Demographic
Analysis
Example: Fresh fruit drinks like Tropicana (bigger tetra-packs)
Age group 15-40 Gender Male/female Status upper Middle- higher Family size 3-5 members
We can club them in one group for one product that too for a specific size.
And thereby provide a customized services to each group of population (as only population analysis will not work)
Age distribution of population
YEARBelow 5 yrs
Between 0-15
Between >15-59 years
+ 60 years
1991 12.80 37.76 55.58 6.67
2001 10.70 34.33 58.70 6.97
2011 10.10 28.48 63.38 8.14
2016 9.7 27.73 63.33 8.94
Number of younger people as compared to the population of other age group is on the rise.
Thus India can be called a “Young Nation”
This age distribution explains the increased spending on leisure activities and increased sales of ‘impulsive buy’.
Retailers need to change Need to change their approach on the
basis of the growing population.
Like if the population of 0- 4 and 5-14, the retailer should more concentrate on kids market.
The strategy should be such that they can attract more kids to the retail stores.
Like concentrate on offering more kids product lines.
Credit cards for kids (through parents)0-4 (like petro-card)5-14 (pure credit card to save culture)
Entertainments likeVideos or comics reading areasKids clubsKids oriented visual displays (colorful
signs & lighting) at the exit
--- Retailers LEAVE NO CHANCE Training store personnel to value and assist
child customer
Eg: Citi Kids Futures Master Card
Cardholders can earn up to 2% Kids Futures Rewards with every purchase made by the card.
Holders of Citi Kids Futures Master Card qualify for a 20% bonus from CESG (Canadian Education Savings Grant).
Customers get the facility of 24 hour customer service.
Cardholders are not required to pay any annual fee.
Moreover by analyzing the population retailers can adopt various strategies, that urge people to buy the products
Example: the young population would prefer to have a shopping experience of DIY (Do-it-Yourself)
And aged population would like to have a DIM (Do-It-for-Me)- expecting the retailers to be more cooperative and service-oriented.
(big-bazaar stairs)
Income The National Council for Applied Economic Research
(NCAER) classifies consumer households on the basis of their income in to five category.
Very rich (more than 3,60,001) Consuming (80,001-3,60,000) Climbers (40,001-80,000) Aspirants (28001-40,000) Destitute (needy) (less than 28,000)
These groups are chiefly used by market planners for segmenting the affordability element of the target group
Urbanization Urban areas are the focus of organized
retailers as more concentration of population and wealth in
these markets
Immigrants to these areas could be easily drawn to the cultural attractional base of these cities.
Fewer number of social constraints
And they adopted highest perception of higher income. (intensions to buy are more)
Rank City Country
1 Tokyo Japan
2 Mexico Mexico
3 Mumbai India
8 Kolkatta India
13 Delhi India
Urbanization
The shrinking household The number and composition of households do
affect the purchases made by consumers.
The Indian household distribution is changing rapidly.
The size is shrinking day by day
Mostly because of the prevailing trends of staying alone and even lower birth rates.
No doubt members have reduced but number of houses have risen up with 12 %
Conti.. The Indian family which was
predominantly a joint-family set has been slowly replaced by nuclear set
And even families without children.
How did this changing situation affect retail???????.
The Working Women Be it the purchase of groceries or car, the
majority of purchase decisions in any household have been usually made by women
The increased cost of living and drive to prove themselves has shifted women from there houses to enter in to workforce.
Majority of urban population with double income thus their requirements from a retailer has also changed.
Conti.. As dual earners time spent on shopping
reduced with the decrease in women free time.
The buzz word is convenience.
No longer willing to travel to their favorite stores, for their time and choices
Convenience, Quality and availability became the prime factor
Research says that working women where ready to pay 10 % more than a housewives.
Even began spending more towards lifestyles (apparels, Personnel care products, technologies)
Their spending increased on Eat outs Cosmetics and make-ups Books and music Gifts Mobile phones Movies and other weekend freak outs
What retailers can do for these Women To ensure convenience the retailers hold
sales during weekends.
Can provide Playing rooms for children, well equipped with games so as to give parents an undisturbed shopping experience.
Little gestures like giving chocolates and sweet gifts to children so as to make shopping experience pleasant for both parent and a child.
The Diversified Minorities
Minorities which follow various religion and speak different languages make it necessary for a retailers to consider their
multicolored tastes and preferences
At most while operating in areas having sizeable minority population.
Eg: Retails having events during Christmas
Geographic analysis
Geographic analysis To know the spread of a market, a retailer
should know the density of the population
Should analyze the regional market , metro geography, non-metro geography.
As buying priorities would be entirely different in these areas.
Like
Region-wise spending pattern in India
East West North South
Grocery Grocery Grocery Grocery
Apparel Eating out
Personal care
Saving
Saving Personal care
Eating out
Books
Personal care
Books, music
Books, music
Apparels
Eating out
Saving Saving Eating outC
ust
om
er
Ou
tlooks
Rese
arc
h
Consumer Buying Behavior
The study of consumers helps firms and organizations improve their marketing strategies
By understanding issues such as how
The psychology of how how consumers think, feel, reasons, and
select between different alternatives (e.g., brands, products)
how the consumer is influenced by his or her environment
(e.g., culture, family, society, media)
Limitations in consumer’s knowledge or information processing leads to gr8 problems
As marketers adapt and improve their marketing campaigns and marketing strategies based on Consumer knowledge.
to more effectively reach the consumer.
By the following
Consumer buying behavior
1. Buying considerations- What consumers buy.
2. Buying situations- how much do they buy
3. Buying centers- who buys4. Buying influences- why do they buy
(motives)5. Consumers buying process6. Buying scenes- where do they buy from?
1. Buying considerations- What consumers buy.
Retailers needs to identify What they buy Their motives behind buying them
Generally customers purchase the products that are capable of satisfying their needs
Thus Retailer needs to offer products from buyers perspective
where he looks at the product based on 3 factors
Product Tangibility: refers to its size, shape, weight, along with the ingredients and other features.
Product durability: Useful life span of the product
Product availability: Intensity of availability
Convenience products
Shopping products: (more time spent in information search and
comparisons)
Specialty products: Least concerned about time, effort and
expense as no substitutes can replace)
2. Buying situations-how much do they buy Means the volume of goods purchased buy
each individual
For that needs to analyze the following:
Buys for himself or for household Frequency of buying Ability and authority of buying.
3. Buying centers- who buys Identifying who does the buying
If for oneself – buying depends on personnel choice
If purchases for household- collective buying decision.
If products are for household then retailer needs to concentrate on family as a single customer and try and convince all
4. Buying influence: why do they buy Its because of the motives
There are many factors that motivates them. Supporting their purchase with some reason
For that referring Melvin Hattwick, Inventories of motives
Inventories of MotivesFood & Drink
Majority today prefer having food outside/ ready to eat concept
Freedom from fear and dangerRise to the needs of safety thus retailers established
Smoke detectors, emergency alarms, better packaging.
Personnel ComfortRetail itself gives them comfort
To be superiorIncrease in competitive spirit among the customersThus retailers came up with various products claiming
to be fastest, smartest or the strongest so that one who owns feels superior
Welfare of loved onesInsurance policies, infant clothing
Home safety devices, kitchen gloves, aprons
Social ApprovalHigh requirement of acceptance of the group they are inThus retailers follow latest trends of having personnel grooming and
personnel hygiene (shampoos, tooth pastes, deodorants)
Personnel attractiveness Major motive is to look attractiveThus retailers coming up with cosmetics, accessories
and health products
To live longerDesire to live longerLed to development of health clubs and fitness centers
Physiological factors that Motivates Perception about
Retail stores Merchandise Price Location Convinience Parking Friendly sales persons Varieties and brand
Personal Factors Personality Family Stage in life-cycle Social factors effecting oneself (class,
reference group, aspiration group (sports/film)
Consumer Buying Process
5 Decision Making Process – How do they buy
Stimulus1. Social Cue:
A Non-commercial source, a friend tells you that there is a scheme at shoppers stop
2. Commercial Cue: adssales pitchesPoint-of purchase displays
3. Physical Drive:Retailer puts it for all but only can attract
fewshould touch ones senses like hunger, thirst, heat.
If such a drive is strong then action and if weak it may be ignored
Problem Awareness If the retailer has succeeded in creating
stimulus. (social, commercial, physical)
Customer moves further from arousal stage to realization stage Realizes his need to repurchase Realizes his need to replace Realizes his unfulfilled desire Realizes his need for a try
Information search Once he/she decides to purchase he further
moves to collect information
Searches for the alternative goods available and even study the characteristics of each alternative.
Retailers play a major role by helping them in making decisions To make it more convenient came with Point of sale advertising, Product displays and
appoints knowledgeable salespeople
Evaluation
Price QualityColors / Varieties availableAffordabilityRetails brand name (if couldn't decide)
Finally purchase, discuss terms and post services
Buying Scenes : From where
CategoryOutlet
Saree Salwar suits
Sport shoe
T-shirts
Exclusive store
13 % 12 % 54% 15%
Multi-brand
79 % 83 % 42 % 54 %
Departmental store
2 % 2 % 4 % 3 %
Street Market
6 % 3 % - 10 %
For Apparels and Footwear
For the Researchers