A study on factors considered by consumers for patronizing a retail outlet

1

Acknowledgement

The descriptive study intends to explore the Factors considered by consumers for

patronizing a retail outlet with the emergence of new formats of retail chains it becomes

essential to examine the behaviour pattern of the consumer. In this regards, store patronage

becomes the key driving factor in Retail Industry. The information assimilated in this

research project was categorized primarily on the nature of the sources i.e. primary sources

(interviewing customers with a designed questionnaire) and secondary sources (published

articles, text books, reference books, available journals, and web pages).

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LIST OF CONTENT

1 Introduction and Objective1.1 Background of the study 1

1.2 Rationale of the study 3

1.3 Research objectives 4

2 Research Methodology 5

3.1 Store Patronage3.1.1 Introduction 7

3.1.2 Definitions 8

3.1.3 Retail Store Patronage 9

3.2 Store Presentation and Setting 12

3.3 Store Loyalty and Image 14

3.3.1 Antecedents of Store Image 14

4 Behavioural Study4.1 Consumer behaviour and the effect of the environment 15

4.2 S-O-R Model 16

(Stimuli - Organism - Response) Model

4.3Environmental Responses and Approac - Avoidance Behaviour 19

5 Consumer Retailing Decisions 21

5.1 Consumer Decision Making Process 23

5.2 Factors influencing the consumer decision making process 25

5.3 Retail Patronage Behaviour 30

6 Statistical Analysis 32

7 Conclusion 37

8 Appendix 38

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Background of the study

The customers process the information around them and approach the retail spaces to

consume according to their expectancy level. Consumers approach different store types to

explore product reviews and to shop products according to their needs and their desired

estimates. Some customers frequently visit the brand stores to update themselves with the

brand portfolio and some visit to other forms of retail shops with competing brands to

enjoy high price saving offers.

But consumers buying or selecting a particular retail outlet is the behavioral issue

influenced by their reference groups (friends, relatives and so on) culture, their

upbringing, family lifecycle etc. The store image is a major determinant which helps

customer to patronize a retail outlet. The shopping environment factors bridge a

relationship with the prospects for regular shopping experience.

At present scenario, time is constraint and money has become luxury. So customers have

focused on selecting an appropriate retail outlet which gives a value added services,

focuses on customer’s needs, attentiveness for queries and customers’ patronage those

retail space if they find greater return over their total shopping cost.

As Indian Economy is growing at a higher pace, more and more sophisticated retail

formats are giving a competitive edge their unorganized counterparts in attracting

footfalls. Retail sector in past one decade in India has shown enormous growth. The

impact can be seen all over. The kind of growth seen and felt is never before. In India

itself in the year 1998 the total organized was 1.8% and by the year 2005 it reached 3%.

Today the organized retail is growing @ 30% – 35% per annum. The total retail size is

Rs.930 million and the organized retail is just 3 % of it by Dec. 2005. The expected

growth by AC Neilson is by 2009 - 2010 the organized retail would be 8 – 10%. India is

looked upon as most haunted destination by different global companies and is on radar of

global retailers. Young India factor and the PPP are there to add on to this. Ultimately it

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is the customer who is changing and the businesses are to take the advantage. As Indian

economy is growing at a higher pace, more and more sophisticated retail formats are

giving a competitive edge to their unorganized retailers in increasing footfalls.

There is just not a change but a phenomenal change in customers & their demands. The

psychological framework has changed as well as lifestyle of individual are getting

affected due to environmental influences like that of : liberalization , information flow,

technological changes, literacy rate, high & better income due to opening of BPO’s, etc..

This all combined together has an impact on individuals purchasing & consumption

behavior.

As a result of the change in the customers there is a dramatic change that retail industry

in India has gone through. With change the explosion that Indian Retail Industry has

shown is also exceptional. Looking to the opportunity into this area, big Industry giant

have entered into the retail business. Competition is pruning at a tremendously fast pace.

Any retailer cannot ignore the customer and cannot make the mistake of not keeping his

customer for lifetime. Thus the industry has to focus on the Patronizing. Committing this

act of ignoring the customer loyalty the retailers how so ever big will be loosing in long

term. Thus to sustain and grow in future patronizing is what should be looked into by the

retail giants.

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Rationale of the study

Every retail marketer focuses on niche marketing to develop a long term relationship with

their customers and develop a customer centric environment for generating positive word

of mouth communication for the potential buyers in the retail setting.

The consumers process the information around them and approach different retail spaces

to consume according to their expectancy level. Consumer approaches different store

types to explore product review and purchase to satisfying their needs.

Few customers visit the brand outlets for upgrading with latest in fashion and trend and few

visit other retail forms with competing brands to access higher prize saving. But consumers

buying or selecting a particular retail outlet is largely influenced by their influence groups

(family, friends, brand endorsers, etc.) as well as their culture.

Consumers process the over communicated information by the marketers and select a

retail outlet which meets their expectancy level (satisfaction of right shopping,

appreciated on product purchased and feeling a sense of not being over charged on prices

etc.) as well as develops a trust. And their patronizing ability leads to highly competitive

marketing exercises for the same product by different competing brands and stores Store

patronage is been classified into store factors consists of ambience, layout (physical

evidences), product display and availability, trained personnel and consumer behaviour

aspects along with shopping orientations. In this study, the store factors are primarily

aimed to act as a catalyst by different individuals or group of individuals for patronizing a

retail outlet. The durable product is available at manufacturer’s retail outlet across the

region as well as at another store types packed with same brand and other brands too.

Customer analysis the product category and rest factors like technical support, price

offerings at various locations, store image, value added services before making a

decision.

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Research Objectives

This project aims at understanding the factors that affect a customer to patronage a retail

outlet (durable products) and identifying the store attributes for developing store

patronage.

I would like to develop a model which must focus the store factors considering by

consumers for store patronage. Because of varied lines of retail formats in existence in

India, as well as changing customer; marketers have identified patronage a strategic tool

for developing a long term relationship with customers.

Consumer’s first store selection plays a decisive role in designing a retail mix of a brand.

For any product category, the retail counters are channelized according to the customers’

preferences leads to an interactive sales bridge. And continuous up gradation with

knowledge and adapting innovative means to generate interest of visiting the store

regularly which could probably transform him into a long term customer. Customers’

patronage any retail outlet where they feel they are valued as well as find a sense of

satisfaction of their personal needs. This cycle keep moves on and enhance brand equity

for that particular store. Sometimes it is difficult to design a common brand theme and

buying environment because of large involvement of infinite individuals as prospects

with different information processing level. Each brand preciously defines its positioning

strategies then starts formulating a set of actions for achieving those objectives. A

customer is being focused and over communicated by competing brands through

innovative communication tools. And sometimes this stimulus affects his/her buying

decision even selection a retail outlet with competing brands.

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Research Methodology

This study is primarily based on secondary data available from various reference books,

working papers, text books, journals, research material and web pages.

Although, a set of qualitative data collected through a designed questionnaire at different

shopping scenarios.

Questionnaire design:

The questionnaire is a suitable tool to collect relevant data from the target group and

evaluation becomes easier. The questions are derived from the objective of the study and

formulated in order to get error free responses from the respondents and close ended

questions would not be complex for characteristics evaluation.

This questionnaire contains all measures regarding store factors like convenience, store

layout, personnel attentions and knowledge, store image, product availability, display

management at the store, customers’ attitudes towards a single or multi brand outlets, pre

and post sales services and the store environment.

The data collected from primary and secondary researches is analyzed on the following

variables:

i. Environmental factors like, convenience of location,

ii. Store Factors: Store type (brand outlet/ multi brand outlet), ambience, product

display mechanism, demonstrations and store environment.

iii. Customers Attitude and shopping motives.

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iv. Unique assortment: unique product availability with value added services.

Assumptions

A. Respondents included in the sample could accurately answer questions related to

their durables

B. Store patronage experiences.

C. Environmental dimensions included in this study exist in both the types of retail

stores (i.e. brand outlet and a multi brand outlet).

D. Respondents’ behavior reflected one of the three types of shopping orientations

included in this study.

E. Respondents could read and understand the questionnaire.

Limitations

A. This study focused on the subjects’ responses based on scenarios and not their

actual behavior while shopping for durables in the retail stores.

B. This study involves only one product category (i.e. durables) and results may not

apply to shopping for other products.

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Store Patronage

Store Patronage involves the consumer’s choice for a particular retail store1. Past retail

and marketing studies have identified several consumer-oriented store attributes (e.g.,

price, quality, variety, discounts, and store reputation) and their relationship to store

patronage, but these studies overlooked how the physical environment affects retail store

patronage. This examined differences in (a) importance ratings of environmental

dimensions for three shopping scenarios, (b) importance ratings of environmental

dimensions for each shopping orientation, (c) perceptions of the store environment for

each shopping orientation, and (d) attitude toward the store environment and first store

choice. The statement of problem, research objectives, conceptual framework,

hypotheses, conceptual definitions, assumptions, and limitations are presented in this

chapter.

Store choice is dependent on the timings of shopping trips (as consumers may go to a

small or local store in short fill – in trip) and go to a larger store for regular shopping

trips. Consumer’s personal differences interact with situational factors and together they

determine the store choice and shopping trip behaviour.

A consumer’s selection of a store is not completely random. The more recent he

purchases experience and the more frequent visits the store, the more he is likely to

repurchase that product in the store. This shows that the past experience influence on

store choice and patronizing ability to either change, alter or reinforce the new shopping

experience.

Thus, we can say that consumer’s characteristics interact with situational variables to

impact how information about the retail mix is processed, resulting in store choice and

affecting store patronizing decisions. 1 Shim & Kotsiopoulos, 1992

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The store patronage is result of both the relative importance of various motives and

shopping assessment of alternative stores with respect to various factors (locations, store

image, product availability, past shopping experience etc.) used in making the decisions

Loyal shoppers, as per the first definition, are so rare as to be practically negligible. One

of the earliest studies in this area was by2.This has been found to be true in subsequent

studies. Most consumers are multiple-store shoppers though differences exist across store

types. As quoted in a study “Grocery Stores have fairly low loyalty in the sense of

generally not satisfying…customer’s total needs.” Extending this, one can intuitively say

that consumers would display greater patronage behaviour for furniture as compared to

garments, more for garments as compared to grocery etc. In any case, exclusive shopping

at a single store is rare.

In the second definition, patronage is usually measured by comparing consumer’s total

weekly/monthly purchase (in money terms) from the store, with the normal family

consumption in a month.

The third definition recognizes the multiple-store shopping behaviour and measures

patronage as the proportion of trips made to a particular store given the average number

of trips made in a given time period.

The fourth definition, more applicable in studies related to frequently purchased, low-

value items like groceries, looks at number of items purchased and not its value as an

indication of patronage behaviour.

The last definition presupposes that loyalty erodes fast. It has found application in

situations where competitiveness is high, promotions and deals are constantly offered to

lure shoppers, and retaining a customer is difficult given the numerous alternatives.

2 Cunningham, 1961 pg 401

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Consequently this definition is more applicable in a more competitive scenario than

afforded in India at present.

Retail Store Patronage

This can be broadly classified into two categories:

I. Trade-Area Related: These studies focus on the Product/Market Characteristics.

Convenience is the primary reason that consumers show patronage. These studies assume

that convenience is the primary reason for loyalty. Most work in this area stems from a

model proposed3.

The Huff Model states that customer patronage is directly proportional to utility factors

given by square feet and inversely proportional to disutility factors given by physical

distance. The limits to enhancing loyalty is essentially seen as the limited centripetal pull

of a store/shopping centre.

Location-related variables are given importance in analyzing both trade areas and retail

patronage behaviour.4 These studies most often count the benefits of locating a store in a

shopping centre/mall to increase the store ‘destination’ traffic rather than just stay with

the convenience pull. In fact, these studies determine shopping centre traffic more

accurately than single store traffic.5 The Huff model has subsequently been studied by

introducing trade overlap areas for effects on store patronage. Generically speaking, these

studies have resulted in the formation of the Theory of Gravitational Pull in the field of

retailing patronage studies. Apart from distance, several other factors such as Income and

social class perceptions have also been studied from the perspective of retail centre

patronage decisions. 6

II. Product-related: Within a given trade area, these studies emphasize the ‘uniqueness

of assortment’ as a way of influencing store loyalty and patronage. In consumer

3 Huff, 1964, pg.4 Hubbard, 1978, pg.5 Gautschi, 1981, pg.6 (Moore and Barry, 1969)

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priorities, assortment and variety comes after convenience and price7. Given that

consumers are favourably inclined to revisit a store where they have had positive

shopping experiences (found something they could not find anywhere else), these studies

suggest that competing stores need to differentiate themselves based on type and quality

of assortment. The emphasis here is on tailoring the environmental cues using retail mix

elements to foster patronizing. One oft used strategy is to develop own store Private

Labels.

Consumers have distinct perceptions of national and local brands vis-à-vis the retail

private store brands. It is observed that there are certain product categories where ‘quality

believability’ of national brands is far too strong for store brands to make any impact on

consumer loyalty. In India, grocery retailer brands in product categories like honey, jam

etc. are showing a much more favorable sales impact as compared to ketchup.

Internationally, coffee has greater store-brand loyalty as compared to loyalty to national

brands. It is too premature for an Indian retailer to explore into the territory of brand

building given the limited promotional budgets at present (In grocery retailing, store

brands account for less than 2% of sales value in Food World and regional/local chains

like Subhiksha (Chennai), Homeland (Pune) are yet to invest in private labels). But one

expects that in a few years, push for greater margins and the need to retain the loyal

consumer will mean more investment in this area. Internationally, private store brands

account for 20-30% of total store sales in groceries.

Additionally, to fully understand the implication of removing (or in fact adding) items to

assortment depth on customer purchase patterns, there needs to be an understanding of

these implications coupled with issues of product substitution, price, store environment

effects, and the presence of competing offers, as well as customer’s purchase goal 8 in

their study of fresh flower category, found that the store environment (either that of

selected store for purchase or indeed that of competitors) made no significant impact on

purchase decisions. However, if the store has a poor environment and a competitor is

located close by, then, unsurprisingly, they found that it was likely that the customer

7 (Arnold et al.1983, Craig et al. 1984, Louviere and Gaeth, 1987). 8 Koelemeijer and Oppewal (1999),

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would go to the competitor. Perhaps more interestingly, they reported that assortment size

had a strong effect on the purchase.

The actions required to keep loyal customers have two aims: the first is defensive, to give

the customer no reason to leave a brand or company; the other is offensive, to create a

personalized relationship with the clients, the basis of a more intimate and therefore

involving bond, what Americans call’ Customer bonding’9.

The attention of retail managers is increasingly focusing on how customers find their way

around product ranges and brand knowledge within stores, as well as how they navigate

store aisles. New consumers are looking for ‘edited choices’; that is visible guidelines to

help them save time and efforts. Smart retailers who understand this particular consumer

want are targeting specific grouping of products to appeal to specific segments of new

consumers. For example, a supermarket, rather than following the traditional practices of

locating additive-free products with other products 10

9 (Cross and Smith, 1994 10 (Leiz, 2002)

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Store Presentation and Store Setting

Internal layout and presentation are most important for the retailer. As they make a clear

statement about the standard and quality of the merchandise and service (total product)

offerings. At first glance, customers utilize the physical (and social) surroundings to

gather the vital clues that inform their expectations prior to service delivery. Throughout

these assessments, the effect of physical evidence – such as design features and images

presented- are highly important and unquestionably guide customers’ decision making

and evaluate process11.

The overall appearance of a retail setting will therefore tend to pre-determine a

customer’s attitude towards the organization. Newcomers will certainly base their

expectations on the first visual encounter, which then becomes a reference for future

visits.

A physical environment that provides appropriate cues that might result in approach

behaviour may then, after consideration of social environment, be avoided. A customer

may be attracted to a restaurant on the strength of its exterior and a glimpse of its interior

from across a busy street. But, if on closer inspection the establishment is bereft of

customers, that fact alone may produce enough of a negative impression to ensure that

the potential customer does not enter the restaurant.

12suggests that positive moods (outcomes) can result from this constant interaction with

the physical setting. People continually scan their inanimate (built) environment for

evidence, in an attempt to establish an overall impression.

11 (Zeithaml and Bitner, 199612 Gardner (1985)

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It is the visual arrangements that direct people’s evaluative processes 13

This communication can be seen in the context of the promotion mix that in turn

completes the marketing mix model with its 4 Ps including product, price, place, and

promotion14.

Besides the attraction of existing customers to continue patronizing the retail outlet, the

acquisition of prospective new customers based on interactive communication gains a

decisive role in the present retail environment 15

16implies that this visual merchandising, this “promotion of individual lines, is the ‘silent

salesman’ of the retail context”.

However, visual merchandising, particularly in relation to window displays, is a

somewhat neglected area within the traditional retail literature 17

The overall purpose of in-store merchandising is obviously to make products more

attractive and more visible, thereby leading, hopefully, to their purchase 18

13 Zeithaml and Bitner (1996). 14 (Borden 1964; Kotler 1997)15 (Ghosh 1994; Levy and Weitz. 1995; Dunne and Lusch 1999). 16 Buttle (1988) 17 (Lea – Greenwood, 1998). 18 (Hart and Davies, 1996).

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Store Loyalty and Store Image

Several studies report direct linkages between Store Image and intensity of Store Loyalty. 19Thus, we can conclude that more positive the Store Image the greater is the degree of

loyalty. An important aspect if retail strategy involves attracting consumers by

communicating a store image to relevant target market. A successful retail image depends

upon the firm’s ability to appropriately match store attributes and benefits with target

market characteristics. Thus the characteristics of consumers are an important

consideration in developing retail image and retail strategies. Because the characteristics

are important in retailing, considerable attention has been given to developing

classification of consumers which may be useful for retail managers 20

Antecedents to Store Image

I. Retail Mix Elements:

21based on his references to several other studies, proposes a model that patronage is the

result of past purchasing experience and the customers’ (favourable) image of the store.

He stresses that Patronage behaviour is the culmination of

1. Past purchase experience and

2. The congruity of the Store Image between the retailer and the consumer.

Several studies have established the linkage between various elements of the retail mix

and impact on store image and hence loyalty. 22varied assortment, one of the retail mix

19 (Kunkel and Berry-19688, Reynolds, Darden and Martin9, Korgaonkar, Lund and Price- 1985). 20 (Stone, 1965). 21 Osman 22 Kahn and Lehmann, (1991)

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elements, may be the key driving force to store choice. If retail mix elements are in

congruence with the desired benefits, it results in customer loyalty. These studies indicate

that Retailers adapt their retail mix according to what they perceive as important

attributes to their target market and how they perceive their consumers as processing the

information conveyed by the retail elements. The aspect of congruity between the retail

mix elements as designed by the retailer and the self-image/self-concept of the consumer

has received much attention. Research has shown that greater the congruence between

Self Image and Store Image, greater is the probability that the customer is loyal 23

II Consumer Personal Characteristics impact how information about retail mix

elements is processed:

Based on the above interactional relationship, we can identify Consumer Characteristics

as another antecedent. 24identified three influencers of consumer patronage: Consumer

Characteristics (which impacts the store choice and the shopping patterns), Competitive

Environment (as determined by the competing outlets in the trade area) and Store

Characteristics (as defined by the specific retail mix elements). Studies that have

incorporated individual differences have studied its impact on store image through a

variety of intervening/influencing/moderating variables.

25“The Store patronized is a result of both the relative importance of various motives and

the shopper’s assessment of alternative stores with respect to the various factors used in

making the selection.” This leads us to examine two aspects related to individual

dispositions: one related to customer motives in shopping and the other related to

information processing about the store related aspects.

Recreational shoppers have greater tendencies than economic shoppers to go to prestige

stores as well as being a store loyal for any brand. They are also much more trend

23 Pathak, Crissy and Sweitzer-(1994)

24 Black (1984) 25 Bellenger, Robertson and Greenberg, (1977),

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oriented and information-seeking as shown by their tendencies to dress in the latest

styles26.

The recreational shopper is not a discount shopper and wants the atmosphere and services

associated with loyal stores. This concept supports a retail image associated with full

service, well known brands, exciting atmosphere, meaningful communication methods

and a self expressive product display techniques along with personal attention 27

26 (Gutman and Mills, 1982).

27 Darden and Hasten, (1995).

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Behaviour and the effect of Environment: A psychological perspective

Store patronage is defined and measured in behavioral terms. There are five ways of

looking at patronage and these are not mutually exclusive:

1. Does the consumer shop exclusively at Store X?

2. Does the customer spend ‘larger’ % of total expenditure at Store X?

3. Does a ‘larger’ % of total shopping trips to similar stores happen at Store X?

4. Does the customer buy a ‘larger’ % of quantity/items at Store X.?

5. Is the consecutive trips made to Store X ‘significantly’ more than consecutive runs

made to other similar competing stores?

Earlier environmental studies conducted by 28and 29identified the emotional responses

(i.e., pleasure, arousal, dominance) that individuals exhibit while in a particular

environment. Furthermore, 13proposed that an individual would engage in either approach

or avoidance behaviors to show preference or lack of preference for several types of retail

stores. Of the four approach-avoidance dimensions (i.e., physical, exploratory,

communication, performance/satisfaction) discussed by these researchers, physical

approach-avoidance was expressed as store patronage; however, these researchers did not

explore the relationship between specific environmental dimensions (e.g., layout, style of

décor, temperature, lighting) and physical approach-avoidance (i.e. store patronage).

While 30randomly assigned subjects to different stores and investigated responses to

stores under different situations (i.e., different day, time of day), this study examined the

influence of environmental dimensions on store patronage for subjects across different

shopping scenarios. Subjects were asked to complete a survey questionnaire to address

this gap in the retail store patronage literature.

28 Mehrabian and Russell (1974)29 Donovan and Rossiter (1982) 1

30 Donovan and Rossiter (1982)

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The impact of the interplay between physical environment and behaviour is also of

interest of outside the sphere of retailing. The most general consideration of these types

of impact- the relationship between physical setting and behaviour- is to be found in

environment psychology. Within this field, 31developed a theoretical model that they

argued is applicable to built any environment. It rests on a stimulus- organism- response

(S – O – R) approach. 33suggested that the outcome of the impact of various stimuli

(present in the environment) was represented by approach or by avoidance behaviour.

Intervening between the environment and the behavioral outcomes of approach or

avoidance are three emotional states: pleasure, arousal, and dominance (PAD). The

combination of these three emotional states is seen to determine whether or not a person

wishes to remain in a particular environment – i.e. engage in either approach or

avoidance behaviour.

Retailers have to establish mechanism by which they are able to ensure, or at least

increase, the likelihood of approach behaviour being stimulated. This means that retailers

must make a careful and conscious use of stimuli that make a physical environment. Such

management therefore needs to consider both its upper and lower layers. However, the

greatest degree of control can be associated with the specifics of the retail unit itself. It is

here that retailers can attempt to create approach behaviour that will result in customers

being attracted to the particular retail environment. Once in the environment – and in the

store- the retailer’s next task is to continue to provide and environment (giving particular

stimuli) that ensures customers approach behaviour continues.

Environment Responses

31 Mehrabian and Russell (1974)3

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Fig: consumer responses to the retail environment

At first level, the retailer’s task is to select locations that are congenial to the intended

customers. These locations are determined bye core elements of brand proposition, nature

of the neighborhood.

At the second level, the task is to design an internal store environment which elicits the

appropriate behaviour response. Within the general model – using the notion of approach

and avoidance- in terms of individual are categorized into three.

The first category relates to a person’s physical movement to the environment.

Second category implies the extent of exploration of the environment that may lead to a

favorable attitude, preference and liking.

The third degree concerns the degree to which a customer feels comfortable with

approaching, or being in proximity to, others within the environment.

Environmental Responses and Approach-Avoidance Behavior

Social

Physical

Stimuli Customer

Approach

Avoidance

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35 developed a framework for environment-user relationships in service organizations.

The overall objective of this model is to explore the role of the physical environment in

service organizations. His framework proposes that consumers and employees in service

settings perceive a variety of environmental factors. These factors are ambient conditions;

space/function; and signs, symbols and artifacts. Ambient conditions consist of

temperature, air quality, noise, music, and odor. The space/function dimension includes

the layout, equipment and furnishings. Signage, styles of décor and personal artifacts are

among the sign, symbols and artifacts dimension. Both consumers and employees

respond to the environment cognitively, emotionally, and physiologically. These internal

responses then influence the behavior of consumers and employees, as well as affect their

social interactions. Furthermore, Bitner states that the perceived servicescape (i.e.,

physical setting, environment in service organizations) and environmental factors does

not directly cause people to behave in certain ways. Instead, consumer perceptions of the

servicescape lead to certain beliefs, emotions and physiological actions that influence

behaviors.

To discuss individual behavior, 32states that individuals react to environments in two

ways to show preference (i.e., approach) or lack of preference (i.e., avoidance) for a

particular environment. Designing environments, which enhance approach behaviors (i.e.

store patronage) and encourage social interactions, present many challenges for service

organizations because optimal design for one person or group of people may not be the

optimal design for others. For example, a setting that is conducive to an employee’s work

needs may not enhance the social interaction between employees and consumers 40.

Furthermore, an environment that promotes approach or patronage behavior for one

consumer may not elicit the same response in another consumer or group of consumers.

Consumer Behaviour and Retailing Decisions

3 32 Bitner (1992)4

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Decision making with regard to retail outlet selection is very similar to consumer

decision-making on brands where the consumer goes through a process starting from

identifying needs to post-purchase issues. There are a few interesting and important

dimensions associated with consumer behaviour and retail outlet selection.

Does the retail outlet have psychological implications on the target segment? When Titan

and Timex watches were retailed through exclusive shops, consumers wanting lower-end

watches probably felt that a typical Titan showroom was too elitist, which could have had

a negative impact.

Does selection of outlets varies in accordance with types of product categories? While

buying a TV or a washing machine, would consumers visit an exclusive showroom of

BPL, Onida or Sony, or would they visit a multi-brand outlet?

Would there be differences in the psychographic (and demographic) profiles of

consumers choosing outlets? What is the sequence in which consumers are likely to go

about their decisions? Will they select the brand or the category first before choosing the

outlet?

What is the impact of the image developed by a retail outlet? Is FoodWorld different

from a neighborhood grocery shop in the minds of consumers? What kind of perception

are consumers likely to have with regard to shopping from an online outlet such as

Fabmart vis-à-vis a brick-and-mortar outlet like Fountainhead or Landmark?

Would consumers be interested in store or retail brands? Traditionally, retailers have

been carrying manufacturers' brands. But in recent times (at least to a significant extent in

the foods category), supermarkets such as Food World have started carrying retail or

store brands. Nilgiri's is another example in the South which carries its own brands of

chocolates, biscuits and other commodities.

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Marketers need in-depth knowledge about the various dimensions which link retailing

and consumer behaviour. There is research required to handle retail decisions in a

competitive context. McDonald's found that a major chunk of its consumers decide to eat

a few minutes before they make the purchase decisions and hence it is building small

outlets in large supermarkets such as Wal-Mart and Home Depot. It is providing play

areas to ensure a number of families visit its outlets with children. A few companies also

operate through kiosks in airports, malls and high-traffic areas. Sunglass Hut is a brand

which operates kiosks at various places which displays about 1,000 different models

along with their prices. Consumers could place an order through these kiosks and the

product is home-delivered.

There are three fundamental patterns which a consumer can follow and they could be:

(I) Brand first, retail outlet second

(ii) Retail outlet first, brand second

(iii) Brand and retail outlet simultaneously.

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The Consumer Decision Process

33developed the consumer decision process and the store choice decision model. The

decision process model can be applied to all decisions that consumers make in the

marketplace; however, the store decision model applies only to decisions made about

specific retail stores. Seven stages are included in the consumer decision process model.

They are need recognition, search for information, pre-purchase alternative evaluation,

purchase, consumption, post-purchase alternative evaluation, and divestment. A need is

recognized when a perceived difference between the desired and the actual state of affairs

occur.

For instance, a consumer may recognize the need for a new dress. Next, the consumer

engages in an information search to facilitate decision making and to reduce the

perceived risk often associated with purchasing a dress. Pre-purchase evaluation involves

assessing several criteria, such as fabric type, construction detail, and brand name to

decide on an appropriate dress.

At the purchase stage, the consumer makes decisions related to whether to buy, when,

what, and where to buy, as well as how to pay for the dress. After purchase and use of the

dress, the consumer makes a post-evaluation. This evaluation involves determining

whether the dress meets the expected level of performance. The consumer often

expresses their satisfaction or dissatisfaction with the dress. Finally, after using the

product over time the consumer disposes of the dress because it no longer meets

functional or psychological needs or because the item is obsolete.

At the purchase stage in the consumer decision process, the consumer decides where or

what stores to purchase a product (e.g., a dress) once the need is recognized. With respect

to the store decision model, 41examined store choice as a function of consumer

characteristics and store characteristics. The store decision process involves four

33 Engel, Blackwell, and Miniard (1995) 4

26

variables: evaluative criteria or attributes, perceived characteristics of stores,

comparison process, and acceptable and unacceptable stores.

The model proposes that consumers form images (i.e., overall perception) of stores based

on the combination of perceived criteria or attributes. Often these attributes are combined

to form categories. Some attributes include location, assortment breadth and depth, price,

advertising and sales promotion, store personnel, services, and other store characteristics.

In retail studies, consumers list attributes that come to mind when thinking about a

particular store or store type or they are often given a list. Consumers rate stores relative

to each attribute or category on Likert-type scales of importance (e.g., 1-to-7). At the

comparison process (i.e., in the mind of the consumer), the consumer compares the

importance of store attributes with the store’s image (i.e., overall perception) to

determine which stores are acceptable and those that are unacceptable. For example, if

quality is important to the consumer, and if store A is perceived as having lower quality,

while Store B is perceived as having higher quality, the consumer will choose Store B

rather than Store A.

Factors influencing the consumer decision making process 34

34 Pradhan Swapna (2007)

27

After understanding the factors that affect the customer’s buying process, it is necessary

for the retailer to understand the manner in which a customer makes a decision. This

requires an understanding of consumer behaviour.

The decision process model can be applied to all decisions that consumers make in the

marketplace; however, the store decision model applies only to decisions made about

specific retail stores. Seven stages are included in the consumer decision process model.

They are need recognition, search for information, pre-purchase alternative evaluation,

purchase, consumption, post-purchase alternative evaluation, and divestment. A need is

recognized when a perceived difference between the desired and the actual state of affairs

occur.

For instance, a consumer may recognize the need for a new dress. Next, the consumer

engages in an information search to facilitate decision making and to reduce the

perceived risk often associated with purchasing a dress. Pre-purchase evaluation involves

assessing several criteria, such as fabric type, construction detail, and brand name to

decide on an appropriate dress. At the purchase stage, the consumer makes decisions

related to whether to buy, when, what, and where to buy, as well as how to pay for the

dress. After purchase and use of the dress, the consumer makes a post-evaluation. This

evaluation involves determining whether the dress meets the expected level of

performance. The consumer often expresses their satisfaction or dissatisfaction with the

dress. Finally, after using the product over time the consumer disposes of the dress

because it no longer meets functional or psychological needs or because the item is

obsolete.

There are few factors which influence mentioned below:

28

o Socio cultural background of shopper

o Travel time and distance

o Location convenience

o Range of merchandise

o Stage of family life cycle of consumer

Typically, the need for a product or a service starts at the time when the need for the

particular or service is recognized. A need may be psychological or functional.

Psychological needs are associated with personal gratification that the customer may get

from purchasing or owning the product.

29

The next stage is where the consumer seeks information about the product and the place

where he can make the purchase. The source of this information may be a magazine,

family, newspaper, friends and the Internet. Any earlier experience of buying the product

or the service may also affect the decision to purchase.

Fig: the Customer Decision-making Process

Stage 1: Identification of a need of the product or service

This arises when the customer becomes aware of his need for a particular product or

service. Typically, a consumer may realize that he needs a product when the current that

he is using does not his expectations.

Stage 2: Search for information

The second step involves the gathering of information on how to solve the problem. This

search may be internal (from memory), or external (friends, family. Published resources,

Search for information

Customer

Internet

Store

Media & Ad

Store Visits

Evaluation of options……..purchase

Need recognized

30

salesperson, the internet, etc). Based on the information gathered, the consumer arrives at

an evoked set or a consideration set of products and services that he may choose from

Stage 3: Evaluating Alternatives

These evaluative criteria are used by consumers use to consider different options. These

would vary from person to person and may be influenced by the situation. For durable

products, after sales service would be a key differentiator after the brand purchased.

Stage 4: The Purchase Decision

At this stage, the decision is made about first, whether to buy or not. It is possible to get

close to a purchase, but abort the decision to buy a number of reasons, such as declined

for financing, getting “cold fleet”, a stock out or such other reasons.

The experience during and after the purchase leads to satisfaction or dissatisfaction with

that particular store. The customer assimilates the experience that he has had while

shopping and his, post purchase satisfaction or dissatisfaction. He is also influenced by

opinions and the experiences that friends and family have had with the store. Over a

period of time, all these factors lead to a customer patronizing a particular store.

31

Fig: How Customers’ Develop Loyalty Towards a store

Retailers need to understand this process and tap into the buying process, so that they can

develop loyalty over a period of time.

Recognise desire to shop

Evaluate options & select store

Past shopping experience

Beliefs & attitudes

Information search

Store visit (s)

Decision

Outcome

32

Retail Patronage Behavior

Store Patronage is identified in 35model as approach-avoidance behavior. 42 proposes that

perceptions of the environment or environmental dimensions lead to certain beliefs or

emotions about the environment, which then determine whether a consumer will

approach (i.e. patronize) or avoid a particular setting.

36 used Patronage model of consumer behavior as the theoretical framework in the first of

a two-part study. Darden’s model proposed shopping orientations as the key construct,

and information sources and personal characteristics as antecedents to shopping

orientations.

He also hypothesized that shopping orientations determine the importance of store

attributes, which in turn impact patronage behavior. In 1992, 43proposed relationships

among the following: (a) personal characteristics and importance of store attributes, (b)

personal characteristics and patronage behavior, (c) information sources and importance

of store attributes, (d) information sources and patronage behavior, and (e) shopping

orientations and patronage behavior.

35 Bitner’s (1992) 4

36 Shim and Kotsiopoulos (1992)4

33

Fig: Factors influencing Patronizing a retail outlet

34

Statistical Analysis

This research is a qualitative study used to test for statistical differences in

(a) Importance ratings of selected environmental dimensions for each shopping scenario,

(b) importance ratings of selected store environmental dimensions (ambience, display

mechanism) for each shopping orientation, (c) perceptions first store choice, and (d)

attitude toward first store choice and store patronage (repeat brand purchase from the

same outlet).

A set of qualitative data is collected from different response groups at a Samsung brand

outlet and a multi brand outlet present in the same retail premise through a questionnaire

which were focused on their their past shopping experiences and store selection

techniques.

Summary of Data Analysis

Respons

e (Yes)

Respons

e (No)

Does the above mentioned

stores give you value added

services?

85% 15%

Does store ambience affect your

decision?

95 5%

Do product demos and displays

influence your shopping?

100 -

How often do you shop from the

same store?

80% freq 20%

depends

Do you purchase from brand

outlet or other retail shop with

competing offers?

75% 25%

35

Does the location influence

buyer’s decision?

75% 25%

Does location really bother you

for repeat purchase?

- 100%

Do you differentiate two forms of

outlet on their after sales service

of durables?

90% 10%

Does the knowledge of store staff

help you to regular purchase from

the same outlet?

100% -

Is value added services an

important factor for selecting a

durable outlet for quality

assurance?

75% 25%

36

Bars show Sums

1.00 1.25 1.50 1.75 2.00

Do you purchase from brand outlet or retail shop

0

4

8

12

Do

es s

tore

am

bie

nce

aff

ect

yo

ur

dec

isio

n? f requent depends

1.00 1.25 1.50 1.75 2.00

Do you purchase from brand outlet or retail shop

Bars show percents

1.00 1.25 1.50 1.75 2.00

Do you purchase from brand outlet or retail shop

0%

25%

50%

75%

100%

Per

cen

t

f requent depends

1.00 1.25 1.50 1.75 2.00

Do you purchase from brand outlet or retail shop

37

Bars show Means

1.00 1.25 1.50 1.75 2.00

Does store ambience affect your decision?

0.2

0.4

0.6

0.8

1.0

Do

es t

he p

rod

uct

dis

pla

y an

d d

emo

s af

fect

pu

rch

ase?

f requent depends

1.00 1.25 1.50 1.75 2.00

Does store ambience affect your decision?

38

dependsfrequent

How often do you buy from same store?

12.5

10.0

7.5

5.0

2.5

0.0

Co

un

t

dependsfrequent

12.5

10.0

7.5

5.0

2.5

0.0

noyes

Does store ambience affect your decision?alw

aysso

metim

es

Do

you

pu

rchase fro

m b

rand

ou

tlet or retail sh

op

39

Conclusion

The store patronage is a result of both the relative importance of various motives and

shopping assessments of alternative stores with respect to the various factors used in making

the selection.

Store choice is dependent on the timings of shopping trips as consumers may go to a small

local store in short fill-in trips and go to a larger store for regular shopping trips. Consumers’

personal differences interact with situational factors and together they determine the store

choice and shopping trip behaviour.

For every merchandise category the factors would be different for patronizing a retail outlet.

Durable products certain factors that extremely affect the customer is the store image and for

that the location comes secondary. The store image is developed due to store ambiance,

knowledge of the sales personnel, and the assortments available.

If the manufacturers brand is preferred then an individual would like to go to specific

branded outlet, where as if the brand has to b e finalized then he / she prefers going to the

MBO, yet the ultimate factor that comes in is the trust factor. For patronizing for durable

products the store image plays the major role along with the after sales service.

A consumer’s selection of a store is not completely random. The more recent he purchases

experience and the more frequent visits to the store, the more he is likely to purchase that

product in the store. This shows that the past experience influences store choice and

patronizing ability to either change, alter or reinforce the new shopping experiences.

Thus, we can say that consumers’ characteristics interact with situational variables to impact

how information about the retail mix is processed, resulting in store choice and impacting the

store patronage nature.

40

Appendix

Questionnaire

Name ………….

Age …….

Gender ………

Does the location of the store influence your choice?

O Yes O No

Do you purchase product from brand outlet or retail shop with competing brands?

O Always O Sometimes O Depends

Does the above store give you value added services?

O Yes O No

Do you seek the product information available at the outlet?

O Yes O No

Does the store ambience influence your selection of a store?

O Yes O No

Does the product display and demos affect your purchase?

O Every time O Sometimes O Never

How often do you shop from the same store?

O Frequently O Depends

Does location really bother you for repeat purchase?

O Yes O No

41

Do you differentiate two forms of outlets on their after sales services of durables?

O Yes O No

Does the knowledge of store staff help you to repeat purchase from the same store?

O Yes O No

Is value added services an important factor for selecting a durable outlet for quality

assurance?

O Yes O No

42

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