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Understanding the Retail Customer

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  1. Understanding the Retail Customer

  2. 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

  3. Thus very crucially one needs to analyze • The relevance (weight) of the retail market. • The structure of the buying population and how it effects the retail • Thus need to make: Define the Market Structure of the buying population Population analysis Demography analysis Geography analysis

  4. 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.

  5. 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

  6. Qualified market: Those from the available market who are legally permitted to buy the product Eg: Crossword Michael Jackson’s CD Products 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

  7. 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

  8. Structure of the buying population The buying population can be divided • Based on the customers nature • And based on his intensions behind purchasing the merchandise

  9. Buying Population Consumer Market Organizational Market Corporate Reseller

  10. 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 Conti..

  11. Population Analysis

  12. 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

  13. 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

  14. 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 %

  15. DemographicAnalysis

  16. DemographicAnalysis • 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

  17. 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)

  18. Age distribution of population

  19. 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’.

  20. 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.

  21. 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 like Videos or comics reading areas Kids clubs Kids oriented visual displays (colorful signs & lighting) at the exit --- Retailers LEAVE NO CHANCE • Training store personnel to value and assist child customer

  22. 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.

  23. 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)

  24. 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

  25. 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)

  26. Urbanization

  27. 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 %

  28. 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???????.

  29. TheWorkingWomen • 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.

  30. 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

  31. 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

  32. 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.

  33. 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

  34. Geographic analysis

  35. 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

  36. Region-wise spending pattern in India Customer Outlooks Research

  37. Consumer Buying Behavior

  38. 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)

  39. 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

  40. Consumer buying behavior • Buying considerations- What consumers buy. • Buying situations- how much do they buy • Buying centers- who buys • Buying influences- why do they buy (motives) • Consumers buying process • Buying scenes- where do they buy from?

  41. 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

  42. 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)

  43. 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.

  44. 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

  45. 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

  46. Inventories of Motives Food & Drink Majority today prefer having food outside/ ready to eat concept Personnel Comfort Retail itself gives them comfort Freedom from fear and danger Rise to the needs of safety thus retailers established Smoke detectors, emergency alarms, better packaging. To be superior Increase in competitive spirit among the customers Thus retailers came up with various products claiming to be fastest, smartest or the strongest so that one who owns feels superior

  47. Personnel attractiveness Major motive is to look attractive Thus retailers coming up with cosmetics, accessories and health products Welfare of loved ones Insurance policies, infant clothing Home safety devices, kitchen gloves, aprons Social Approval High requirement of acceptance of the group they are in Thus retailers follow latest trends of having personnel grooming and personnel hygiene (shampoos, tooth pastes, deodorants) To live longer Desire to live longer Led to development of health clubs and fitness centers

  48. Physiological factors that Motivates • Perception about • Retail stores • Merchandise • Price • Location • Convinience • Parking • Friendly sales persons • Varieties and brand

  49. Personal Factors • Personality • Family • Stage in life-cycle • Social factors effecting oneself (class, reference group, aspiration group (sports/film)

  50. Consumer Buying Process 5Decision Making Process – How do they buy