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S. Nicholas Samuel Professor and Chair of Agricultural Business and Marketing, The University of Adelaide, Australia Elton Li Lecturer, Department of Agricultural Business, The University of Adelaide, Australia Heath McDonald Lecturer, Swinburne University of Technology, Melbourne, Australia
Examines empirically the purchasing behaviour of Shanghai buyers of processed food and beverage products. An average of only 3.66 product items are purchased on each shopping occasion. Explains the value or weight of purchases by various geographic, demographic and behavioural factors, speciﬁcally: the distance travelled to the shop (closely related to the frequency of shopping), the gender of shopper, whether the shopping was undertaken on the main shopping day of the week, and income (by far the dominant explanator). However, because of the limited quantities purchased on each shopping occasion, and the low numerical variation in purchases, the question for future research is whether some combination of low value attached to shopping time, logistical limitations, and storage constraints operate to limit the purchases of shoppers. Such research ﬁndings would support a decentralized retail strategy for sales maximization. This article has previously appeared in the International Journal of Retail & Distribution Management, Volume 24 Number 4, 1996, pp. 20-28.
potential of the market unless they take into account the shopping behaviour peculiar to the Chinese. This implies that retailers need to undertake relevant marketing research to establish a position that is consistent with their target market choice. As mentioned previously, it is increasingly being recognized that the success of a retailing formula in a company’s home country is no guarantee that it will succeed in another country Retailers . should consider the cultural, economic, regulatory and social factors which may hinder the duplication of successful retailer strategies. According to Albaum et al.[14, p. 184]: “People of different nations may not have the same shopping practices as the home market. For example, the self-service concept may be strange and unacceptable to them…” Hence, for retailers to maximize marketing opportunities in competitive environments, retail strategies must be distinctive to meet the peculiar needs of particular target markets. If, for instance, logistics is a constraint on shopping, decentralization of outlets, personal selling and home delivery may well be options to be considered in the services mix on offer. By implication, for the full beneﬁt of appropriate entry and manufacturing strategies to be realized, they must be matched with appropriate retail strategies. Only through an understanding of Chinese shopping practices can effective retail strategies be determined for that country . In the light of the foregoing, the objective in this paper is to use primary survey data to analyse the shopping practices of Chinese urban consumers in the city of Shanghai in relation to processed food and beverage products. Shanghai is representative of the part of China which is relevant to international investors and marketers. Shanghai is effectively a city-state, with an official population of 13.6 million but an actual population of several million more. Located in a rapidly growing littoral province, Shanghai is China’s leading port city, and the largest of its 14 open coastal cities. Shanghai has
High levels of personal savings, steadily growing incomes and over one billion potential consumers have made the Chinese market increasingly attractive to foreign companies looking to expand abroad. Many high proﬁle foreign companies such as McDonald’s, Panasonic and Toshiba have launched or renewed large-scale marketing campaigns into China. With this growing level of consumer spending power coupled with the interest of the Chinese Government in increasing the country’s foreign dealings, it seems likely that China will become one of the more important consumer markets over the next decade or so. Despite its potential importance, relatively little is known about shopping behaviour in China. Some authors would argue that companies should exhibit sensitivity to target country conditions, particularly in regard to product and advertising strategies[2-4]. Many of the studies in relation to China support the adaptation of strategies in such areas as consumer decision making, advertising techniques[5,6] adoption behaviour, and, most relevantly, retailing practices. All these studies highlight the uniqueness of the Chinese consumers and market behaviour. Much of the focus of corporate and academic attention has been on developing innovative entry strategies for the Chinese market. There is a common presumption that once manufacturing strategies are in place, the Western model of retailing is appropriate for rapidly developing economies such as China’s[10, p. 394; 11, p. 251]. The basis of this presumption is that, with increasing economic development, supermarkets, hypermarkets and convenience stores logically become the major outlets for food product sales[12,13]. The retail and distribution system in China is unique, however, and foreign companies seeking to implement Western retailing procedures are unlikely to realize the full
British Food Journal 99/4  133–141 © MCB University Press [ISSN 0007-070X]
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• LogInc: logarithm of household income. model and methodology Data The database used for this study is part of a much larger primary database created for the purpose of analysing the market demand for processed food and beverage products in urban China. The data were collected over a 16 day period by randomly questioning over 550 shoppers who purchased processed food and beverage products from three typical specialist processed food and beverage shops in downtown Shanghai. These regression results are examined further in the analysis which follows. all responses are divided by all customers. that the behaviour over the survey period typiﬁed behaviour over the year. income. and • the sex of the shopper (Gender). and information relative to shopping behaviour (distance travelled to shop. and in the light of the principles delineated previously in the conceptual framework.S. Nicholas Samuel. The broad hypothesis is that the purchases of shoppers are affected by logistical. on the basis of pre-determined time lapse to ensure randomness. • LogDist: logarithm of distance from the store. This they would need to do by formulating tailored marketing strategies designed to ease constraints on shopping in order to. demographic information (age. Hence. and thereby maximize retail sales. This is because nonsigniﬁcance in the variables will be shown to have implications for marketing strategy formulation. The data. hence. • HasInf: dummy variable set to 1 if the family has infant (0 to 3 years). Information on shopping behaviour would make an important contribution to knowledge for the purpose of decision making. behavioural and demographic factors. and be patronized by middle to upper class urban Chinese with a demonstrated preference for Western-type convenience in food preparation. Results The nature of purchases A central feature of Chinese shopping practice is the paucity of purchases of processed [ 135 ] . it is hypothesized that the number of product types purchased. over the survey period of 16 days. Face-to-face interviews were conducted to note purchases made. because there is an increasingly competitive marketing environment in China. It is important to note that the survey sample is not meant to represent all Shanghai consumers. reduce the non-pecuniary cost to consumers of the goods purchased. the population of relevance is the subset of upper to middle class consumers who have demonstrated a preference for convenience foods through their purchases of processed food and beverage products. Speciﬁcally. The retail outlets selected would be the most relevant for the distribution of internationally marketed products. in effect. This study is based on primary data from that part of the market survey relating to shoppers in Shanghai. retailers would need to pay increasing attention to consumer satisfaction. Other functional forms were tried but their results either do not differ substantially from the results presented here. The aspects examined are whether purchases in Shanghai are explained signiﬁcantly by: • shopping taking place on a weekend (Weekend). • Gender: dummy variable set to 1 if purchaser respondent is male. household size). The regression results are presented in Table I. and the logarithm of value of purchases are a function of the following listing of explanatory variables in ordinary least squares regression: • MainShop: dummy variable set to 1 if respondent indicated main shopping for the week. • ShopFreq: number of times to this shop last month. the logarithm of weight of purchases. • the level of income of the shopper (LogInc). Elton Li and Heath McDonald The purchasing behaviour of Shanghai buyers of processed food and beverage products: implications for research on retail management British Food Journal 99/4  133–141 In short. or were judged to provide an inferior ﬁt. shopping frequency). Model and methodology Central to the following analysis is a regression model. • the shopping occasion being identiﬁed as the main shopping for the week (MainShop). as was probably the case) and. • Has Young: dummy variable set to 1 if the family has young children (4 to 12 years). but only that component of the Shanghai population patronizing urban processed food and beverage shops. A general assumption underlying the method of survey is that when. An implied assumption is that the survey period was a normal period (that there were no unusual factors like festivals. The regression results are subsequently evaluated using supplementary information from the same survey. • FamSize: number of persons in the family . Both signiﬁcant and non-signiﬁcant variables are analysed. there will emerge a proﬁle of consumer behaviour of the targeted population. • the presence of young children in the shopper household (Has Young).
the estimation of the ShopFreq variable not being statistically signiﬁcant in the weight equation. Importantly. it does nevertheless explain the value of purchases. b and c are signiﬁcantly different from each other at the 10 per cent level of statistical signiﬁcance [ 137 ] . The value of 0. there is no signiﬁcant difference in the number and weight of products purchased between those who travel short distances and those who travel long distances (Table III). Gender of shopper If logistical factors were a constraint. Nevertheless.01) than in the “value” equation (see below). It might be expected that those who shop fewer times per week would make more purchases per shopping occasion. and 23 per cent over 10km.61km (who shop more than once a week) (Table III).35(c) 36.12b 3. This is consistent with the prior belief that logistical and storage constraints.72 3. on the basis explained in the conceptual framework. Nicholas Samuel.29(b) 31.61c 3. low opportunity cost).S.39(108) Average distance travelled (km) 16. number of shoppers and quantities purchased Shopping frequency per week Once or less One to three Three All Average frequency per week (number) 0.54(c) 34. the two-thirds of shoppers who shop once or less a week travel an average distance that is over four times further than the minority one-third who shop more frequently (more than once a week). logistical. While distance to the shop does not signiﬁcantly explain the quantities purchased.e. compared with those who travel an average of only 3.65 3. it is possible that male shoppers would purchase signiﬁcantly more in terms of weight than females. for the distances grouped.25kg. This evidence also is consistent with the belief that logistical and storage factors may explain some shopping behaviour. the number of products purchased average less than four for all groups.66(82) Shoppers (number) 352 150 50 522 Notes: Figures in parentheses are relative standard errors (RSEs).07(66) Value purchased (renminbi) 44. Accordingly.27 2. by implication. of shoppers who travel an average distance of 16km shop much less frequently (an average of 0. And this is in a situation where there is no signiﬁcant difference in income per person between the groups.81 3. but not necessarily more in terms of Table III Relationship between shopping frequency. Hence.12km) spend 27 per cent more money on purchases without buying signiﬁcantly more in quantity (Table III). that distance (and. standard errors expressed as a percentage of the mean a The estimates within the column are not signiﬁcantly different from each other at the 10 per cent level.66(37) Weight purchased (kg)a 2.38 5.06(24) Products purchased (number)a 3. and has a smaller value (0. About 17 per cent of those interviewed travel over 5km. in circumstances where there is low value attached to alternative activities (i. i. In the regression results in Table II. may affect shopping behaviour. Elton Li and Heath McDonald The purchasing behaviour of Shanghai buyers of processed food and beverage products: implications for research on retail management British Food Journal 99/4  133–141 their while to incur high travel costs to make their limited purchases. and the range in the weight of goods carried by the groups of shoppers examined did not vary by over 0.e.04 implies that doubling the distance travelled to the shop is associated with a 4 per cent increase in the value purchased. storage and opportunity cost factors) may affect the shopping behaviour of Chinese consumers.08 1. living less than 2km from the shop.03 1. About 37 per cent of surveyed shoppers can be regarded as neighbourhood shoppers.53 times a week). the estimated coefficient of the LogDist variable in the “weight” equation is not statistically signiﬁcant. Those who travel further (an average distance of 16. this result is not numerically signiﬁcant for logistical purposes (see below).71c 12. Thus. The foregoing evidence is consistent with the theoretical belief explained in the conceptual framework. The evidence in Table III shows that shopping less frequently does not cause shoppers to buy signiﬁcantly more in quantity on each shopping occasion. This evidence raises the question of whether those who travel further purchase higher-valued products to make the high time cost of travel worthwhile. The regression results presented in Table I support this evidence.95 2. Shopping frequency There is a strong relationship between distance and shopping frequency The majority . the estimated coefficient of the LogDist variable in the value equation is statistically signiﬁcant at the 1 per cent level.53 2.
It is clear that the average number of product types.10 3.38 1. Thus.70 (69) 37.02 (75) 33. 30 per cent more in terms of product weight. and 40 per cent more in terms of product value. Elton Li and Heath McDonald The purchasing behaviour of Shanghai buyers of processed food and beverage products: implications for research on retail management British Food Journal 99/4  133–141 Buyers at the highest one-third income ranking purchase 18 per cent more product types.66 (37) 3. standard errors expressed as a percentage of respective means a The column estimates are not signiﬁcantly different from one another at the 10 per cent level [ 139 ] . and bought signiﬁcantly more in statistical terms. Those who had over twice the income per person purchase 40 per cent more in terms of total value and 20 per cent more in terms of unit value. Nevertheless.e. • whether the shopping is the main shopping occasion for the week.31 3rd 33 194 219.65 (36) 3. demographic and behavioural factors are shown to affect the shopping behaviour of surveyed Chinese consumers. while average income per family member is not signiﬁcantly different between household sizes.00 Type (number)a 3.99 2. that is relatively more important for explaining shopper purchases. still purchase only a little more than half a kilogram in absolute terms. and income do not increase Table V Purchases in relation to income categories Income ranking per person (%) Average per person income/month (renminbi)a Product weight (kg)a Product value (renminbi)a Consumers (number) Product type (number)a 1st 33 192 706. Conclusions and implications for research on retail management The factors signiﬁcantly explaining purchases of processed food and beverage products in Shanghai in statistical terms are: • the distance travelled to the shop (closely related to frequency of shopping). weight of purchases.20 3.60 2. than those in the lowest one-third ranking (Table V).70 (54) 2.52 (119) 422.36 40.10 (80) Note: Figures in parentheses are relative standard errors (RSEs).06 (70) 2.04 34. the different quantities purchased by the different income groups are not numerically signiﬁcant for logistical purposes. the stronger effect of income was on the value of purchases than on physical quantity . by implication of other evidence (the regression results in Table I).40 (26) 3. Clearly. geographic. that it is income per person rather than family size. and • the income of the shopper (the dominant factor).66 (36) Weight (kg)a 2.07 (67) Product value (renminbi)a 33. i. signiﬁcantly at larger family sizes.66 (8) Income per person (renminbi)a 412. The explanatory power of income in the foregoing analysis is enhanced when examined in the light of the evidence in Table VI. with income being by far the most important single factor.S.83 29.04 (81) 320. value of purchases.09 (58) 2. • the gender of shopper. Nicholas Samuel.06 Note: a The three estimates within each of the columns are signiﬁcantly different from one another at the 10 per cent level Table VI Average purchase factors and income per person classiﬁed by family size Family size 1-3 4-6 Over 6 All Shoppers (%) 70. Thus.67 2nd 33 186 342.27 1. This conﬁrms.05 100.91 (55) 445. the shoppers who had more than twice the income compared to the others.61 3.68 28.53 (63) 34. The shoppers who spend more are more likely to be males Family size The evidence is that family size does not explain signiﬁcantly the weight and value of purchases.
Elton Li and Heath McDonald The purchasing behaviour of Shanghai buyers of processed food and beverage products: implications for research on retail management British Food Journal 99/4  133–141 13 Cheesman. M. Nicholas Samuel. Information Series.. Queensland Department of Primary Industries and Rural Industries Research and Development Corporation. New York. Wilkinson. NY. “Marketing to China: still the silk road”.. Oxford. 16 Thorelli. Addison-Wesley. 1994. Standskov.S. International Marketing and Export Management. Australia. [ 141 ] . International Marketing Strategy. and Cavusgil. Statistical Publishing House of China. Smith. R. Canberra.. K. N... 15 State Statistical Bureau of China (SSB). H. J. H. 3rd ed. 1990. 1989. 14 Albaum. in Thorelli. E. H.. “Food retailing in East Asia and Australia: emerging opportunities for agribusiness”. RIRDC Research Paper 94/11. S. 1992. Pergamon Press. G. Duerr.. and Breddin.. and Battat. Beijing. (Eds). 1995. Agribusiness Marketing Services. L.Y. 17 Samuel. S.N. “The market for processed food and beverages in urban China: an analysis of survey data”. Statistical Yearbook of China 1992.. and Dowd. J.. Brisbane. Jolly.
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