Retailing

Retailing consists of those business activities involved in the sales of goods and services to consumers for their personal, family or household use. The field of retailing is both fascinating and complex. It has enormous impact on the economy, in distribution, and its relationship with companies that see goods and services to retailers for their resale or use. Retailing is the final stage in the distribution process, it does not necessary have to include a retailer, manufacturers, importers, non-profit firms, and wholesalers, and other organization are also considered as retailers when they sell goods and/or services to final consumers. Competition in the retailing scene has intensified manifold for the past few decades, generally as a consequence of new technologies, more sophisticated management practices and industry consolidation. These trends have been especially pronounced in the food industry. There has been a significant amount of studies that examine the issues of retail channel management and retail marketing strategies to tackle the fierce competition in existing retail channels in food industry. As in all other industries, the ultimate decider of the eventual success of an alternative retail channel is the CONSUMER. Consumers refer to individuals who buy products and services for themselves or on behalf on their households. They are invariably either users of these products or services or responsible for the welfare and well being of those who are. Since consumers are extremely crucial for retailers, an understanding of consumer behaviour is an essential prerequisite of successful retail marketing strategy and one of the most fundamental principles of in exerting influence on consumer patronage decision process. Without customer focus, marketing planning can easily be dominated by the actions of competitors or internal influences. The success of a retailer depends on how well he/she selects, identifies and understands his customers. The feasibility of new retail channels is also highly dependent on retailers. Ability to select the type of consumer segments to reach (mass markets, market segment, or multiple segments), to identify the characteristics and needs of the specific target market and understanding how consumers make decisions. According to Peter McGoldrick, the most successful examples of innovation and evolution in retail formats are retailers that respond accurately and profitably to previously unsatisfied needs.

TYPES OF RETAIL OUTLETS The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats: • Hyper marts, typically 8,000 sq.ft and more • Large supermarkets, typically 3,500-5,000 sq. ft. • Mini supermarkets, typically 1,000-2,000 sq. ft. • Convenience stores, typically 750-1,000sq. ft. • Discount/shopping list grocery

Industry Profile in India Retailing in India
Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP.[1] The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value.[2][3] Organised retailing, absent in most rural and small towns of India in 2010, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly-traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local mom and pop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[4] Supermarkets and similar organized retail accounted for just 4% of the market in 2008.[5] Until recently, regulations prevented most of the foreign investment in retailing. Some retails faced complying with over thirty regulations such as "signboard licences" and "anti-hoarding measures" before they could open doors. There are taxes for moving goods to states, from states, and even within states in some cases. However, the Indian government has been opening the retail market and simplifying regulations. In November 2011, Indian central government announced major reforms paving way for giants such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple to enter one of the fastest growing retail market of 1.2 billion people.[5] This announcement immediately caused intense activism - both in opposition and in support - within India. On 7 December 2011, Indian government conceding to the opposition, announced it is suspending the retail reforms till it reaches a consensus.[6] Most Indian shopping takes place in open markets or millions of small, independent grocery and retail shops. Shoppers typically stand outside the retail shop, ask for what they want, and can not pick or examine a product from the shelf. Access to the shelf or product storage area is limited. Once the shopper requests the food staple or household product they are looking for, the shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar or equivalent to the product the consumer is asking for. The product typically

has no price label in these small retail shops; although some products do have a manufactured suggested retail price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and household products arbitrarily, and two consumers may pay different prices for the same product on the same day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers do not have time to examine the product label, and do not have a choice to make an informed decision between competitive products. India's retail and logistics industry, organized and unorganized in combination, employs about 40 million Indians (3.3% of Indian population).[7] The typical Indian retail shops are very small. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganized retail shops in India employ family members, do not have the scale to procure or transport products at high volume wholesale level, have limited to no quality control or fake-versus-authentic product screening technology and have no training on safe and hygienic storage, packaging or logistics. The unorganized retail shops source their products from a chain of middlemen who mark up the product as it moves from farmer or producer to the consumer. The unorganized retail shops typically offer no after-sales support or service. Finally, most transactions at unorganized retail shops are done with cash, with all sales being final. Between 2000 to 2010, consumers in select Indian cities have gradually begun to experience the quality, choice, convenience and benefits of organized retail industry.

Growth
Growth over 1997-2010

India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it required government approval. The approval requirement was relaxed, and automatic permission was granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign direct investment, representing a very small 1.5% of total investment flow into India.[8] Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approved and implemented. For a country of 1.2 billion people, this is a very small number. Some claim one of the primary restraint inhibiting better participation was that India required single brand retailers to limit their ownership in Indian outlets to 51%. China in contrast allows 100% ownership by foreign companies in both single brand and multi-brand retail presence. Indian retail has experienced limited growth, and its spoilage of food harvest is amongst the highest in the world, because of very limited integrated cold-chain and other infrastructure. India has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons. However, 80 percent of this storage is used only for potatoes. The remaining infrastructure capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India, on average, every year.[8]

Indian laws already allow foreign direct investment in cold-chain infrastructure to the extent of 100 percent. There has been no interest in foreign direct investment in cold storage infrastructure build out. Experts claim that cold storage infrastructure will become economically viable only when there is strong and contractually-binding demand from organized retail. The risk of cold storing perishable food, without an assured way to move and sell it, puts the economic viability of expensive cold storage in doubt. In the absence of organized retail competition and with a ban on foreign direct investment in multi-brand retailers, foreign direct investments are unlikely to begin in cold storage and farm logistics infrastructure. Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to a number of intermediaries involved in the traditional Indian retail chain, norms are flouted and pricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organized retail.[8] The 60%+ margins for middlemen and traditional retail shops have limited growth and prevented innovation in Indian retail industry. India has had years of debate and discussions on the risks and prudence of allowing innovation and competition within its retail industry.[9] Numerous economists repeatedly recommended to the Government of India that legal restrictions on organized retail must be removed, and the retail industry in India must be opened to competition. For example, in an invited address to the Indian parliament in December 2010, Jagdish Bhagwati, Professor of Economics and Law at the Columbia University analysed the relationship between growth and poverty reduction, then urged the Indian parliament to extend economic reforms by freeing up of the retail sector, further liberalisation of trade in all sectors, and introducing labor market reforms. Such reforms Professor Bhagwati argued will accelerate economic growth and make a sustainable difference in the life of India's poorest.[10],[11] A 2007 report noted that an increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent.[12] The Retail Business in India is currently at the point of inflection. As of 2008, rapid change with investments to the tune of US $ 25 billion were being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 6575 billion) in the next 5 years. India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The predictions for 2008 is 7.9%.[13] The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country.[14]

[23] Delving further into consumer buying habits. Consumers in the status category buy because they need to maintain a position in their social group. A. Furthermore. food accounted for 70% of indian retail. washing machines. When it comes to the festival shopping season.[22] 1. iPods. The opening of retail industry to free market competition. while the home supplies retail was growing between 20% to 30% per year.[15]. CTVs/LCDs.[19] The Economist forecasts that Indian retail will nearly double in economic value.[16].[edit] Growth after 2011 Before 2011. Well over 30% of food staples and perishable goods produced in India spoils because poor infrastructure and small retail outlets prevent hygienic storage and movement of the goods from the farmer to the consumer. The Indian Retail Market Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. chain stores with centralized operations and shops in malls.T. India had prevented innovation and organized competition in its consumer retail industry.8 million households in India have an annual income of over 45 lakh (US$85. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0. refrigerators. Kearney estimates India's organized retail had a 31% share in clothing and apparel. some claim will enable rapid growth in retail sector of Indian economy. but was under-represented by organized retail. it is primarily the statusoriented segment that contributes largely to the retailer’s cash register. expanding by about $400 billion by 2020. camcorders.[17] A 25% market share.500).[24] . Indulgence-oriented products include plasma TVs. In 2011. Others believe the growth of Indian retail industry will take time.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world. state-of-the-art home theatre systems. Several studies claim that the lack of infrastructure and competitive retail industry is a key cause of India's persistently high inflation.[21] These data correspond to retail prospects prior to November announcement of the retail reform. food waste is rife. because of unorganized retail. and gaming consoles. high-end digital cameras. in a nation where malnutrition remains a serious problem.[18]. purchase decisions can be separated into two categories: status-oriented and indulgence-oriented. microwave ovens and DVD players fall in the status category. is estimated to be over $250 billion a year: a revenue equal to the 2009 revenue share from Japan for the world's 250 largest retailers.[17] One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year. with organized retail possibly needing a decade to grow to a 25% share. given the expected growth of Indian retail industry through 2021.[20] The projected increase alone is equivalent to the current retail market size of France. Indulgenceoriented buying happens with those who want to enjoy life better with products that meet their requirements. of which a miniscule $27 billion comes from organized retail such as supermarkets. dishwashers.

Challenges include: Geographically dispersed population. Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years.[28] The world’s fifth largest retailer by sales. Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity.[27] see also for more Detail Pick/Müller "[2]"</ref> Carrefour. However. The first of the stores..(19) Challenges A McKinsey study claims retail productivity in India is very low compared to international peer measures. is slated to open in north India by the end of 2008. the world’s second largest retailer by sales. retailing in India needs to cross the following hurdles:[32] . account for about 6% of Indian labor work force currently . Training and development of labor and management for higher retail productivity is expected to be a challenge. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in India.most of which is unorganized. limitations of mass media and existence of counterfeit goods.[25] Entry of MNCs The world's largest retailer by sales. plans to set up shop in India with a wholesale cash-and-carry business and will help Indian conglomerate Tata group to grow its hypermarket business. This about a third of levels in United States and Europe. which will sell groceries.While India presents a large market opportunity given the number and increasing purchasing power of consumers. For example. technical services and know how to an Indian company for directto-consumer retail. studies have found that only a limited number of small vendors will be affected and that the benefits of market expansion far outweigh the impact of the new stores. little use of IT systems.[30] Tesco Plc. both organized and unorganized.[29] Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors would be threatened. is planning to setup two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner. consumer appliances and fruits and vegetables to retailers and small businesses. India's labor productivity in food retailing is about 5% compared to Brazil's 14%. the labor productivity in Indian retail was just 6% of the labor productivity in United States in 2010. small ticket sizes. complex distribution network. [31] Total retail employment in India. To become a truly flourishing industry. while India's labor productivity in non-food retailing is about 8% compared to Poland's 25%. there are significant challenges as well given that over 90% of trade is conducted through independent local stores. and about half of levels in other emerging economies.

It is expected that these stores will now have full access to over 200 million urban consumers in India. or they can decide to not implement it if they so choose. packing. both multi-brand and single brand stores in India will have to source nearly a third of their goods from small and medium-sized Indian suppliers. In other words. in the most radical pro-liberalisation reform passed by an Indian cabinet in years. and about five to six million of them in . out of some 7935 towns and cities in India. can own 100 percent of their Indian stores. as supermarkets are known in India. Low skill level for retailing management. India retail reforms Until 2011. Taxation. Actual implementation of policy will be within the parameters of state laws and regulations. and cumbersome local laws. The states of India have the prerogative to accept it and implement it. including cold chains.[34] A Wall Street Journal article claims that fresh investments in Indian organized retail will generate 10 million new jobs between 2012-2014. forbidding foreign groups from any ownership in supermarkets. prime minister. Indian central government denied foreign direct investment (FDI) in multi-brand Indian retail. Regulations restricting real estate purchases. which favours small retail businesses. Lack of trained work force.[15]. The government of Manmohan Singh. to sell multiple products from different brands directly to Indian consumers. such as Apple and Ikea. single brand retailers. convenience stores or any retail outlets. transportation. multi-brand retailers must have a minimum investment of US$100 million with at least half of the amount invested in back end infrastructure. all multi-brand and single brand stores in India must confine their operations to 53-odd cities with a population over one million. It has the potential to transform not only the retailing landscape but also the nation's ailing infrastructure. the opening of retail competition will be within India's federal structure of government. the policy is an enabling legal framework for India. up from the previous cap of 51 percent. the Indian government announced relaxation of some rules and the opening of retail market to competition. Lack of Retailing Courses and study options Intrinsic complexity of retailing – rapid price changes. In November 2011. The opening of retail industry to global competition is expected to spur a retail rush to India. Absence of developed supply chain and integrated IT management.        Automatic approval is not allowed for foreign investment in retail. announced on 24 November 2011 the following:[15][33]       India will allow foreign groups to own up to 51 per cent in "multi-brand retailers". refrigeration. constant threat of product obsolescence and low margins. sorting and processing to considerably reduce the post harvest losses and bring remunerative prices to farmers.

who see large foreign chains as a threat. the government will additionally alienate much larger segment of India's population supporting FDI. on 4 December 2011. claimed that India’s government may put the FDI retail reforms on hold until it reaches consensus within the ruling coalition.[34] It is expected to help tame stubbornly high inflation but is likely to be vehemently opposed by millions of small retailers. Traders add huge mark-ups to farm prices. India Today claims the policy is good for the small Indian farmer and the Indian consumer. president of the Centre for Policy Research. the Chief Minister of the Indian state of West Bengal.[37] India Today claimed that the resistance to Indian retail reforms is primarily because it has been badly sold. The mom-and-pop farmers of India support these reforms. They urged farmers. who is against the policy and whose Trinamool Congress brings 19 votes to the ruling Congress party-led coalition." Mr Banerjee said. The government has already annoyed those who oppose change and innovation in retail. So they will now have the worst of both worlds." Chandrajit Banerjee. while offering little by way of technical support to help farmers boost their productivity. By putting retail reforms on hold.logistics alone. claimed any U-turn or postponement of retail reforms will cause an immense loss of face to the Congress-led central government of Manmohan Singh. called placing investment and innovation in retail on hold for the sake of vested interests as unfair and detrimental to vast majority in India.[38] Pratap Mehta. pushing up retail prices significantly. "I think foreign chains can also bring in humongous logistical benefits and capital.[35]. on 3 December 2011. The consumers of India want the reforms. claims Mehta. Confederation of Indian Industry. Hitherto India's food supplies have been controlled by tens of millions of middlemen (less than 5% of Indian population).[36]. packaging technology. The need to control food price inflation -.[40] Several newspapers claimed on 6 December 2011 that India parliament is expected to shelve retail reforms while the ruling Congress party seeks consensus from the opposition and the Congress party's own coalition partners. analysts claim. "The biggest beneficiary would be the small farmers who will be able to improve their productivity by selling directly to large organised players. consumers and the common people to raise their voice against this false drama of apprehension against investment and modernising trade in organised retailing. Analysts said allowing in big foreign retailers would provide an impetus for them to set up modern supply chains. with refrigerated vans. Mamata Banerjee. They called upon Indians to come out and strongly support progressive measures and reforms with the same spirit and gusto with which we take the liberties to criticize policies or issues we do not appreciate. cold storage and more efficient logistics. Reuters reports that this risked a possible dilution of the policy rather than a change of heart. Suspension of retail reforms on 7 December 2011 . told Reuters. even though it can help fix the exploitation of Indian farmers by the decades-old "arhtiya" and "mandi" monopoly system. [edit] Indian retail reforms on hold According to Bloomberg. Ashok Ganguly and other economic policy leaders of India.averaging double-digit rises over several years -. even though the retail market is being opened to just 53 cities out of about 8000 towns and cities in India. director-general.[39] Deepak Parekh.prompted the government to open the sector.

the following findings were revealed: • The total retail market size in India in 2008 was estimated at US$ 353 billion. media proliferation. • The size of organised retail sector by 2010 is estimated to reach US$ 51billion.[41] Anand Sharma. Organised retail is on all time high in India. The Indian retail market. . suggesting it is weak and ineffective in implementing its ideas. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. • The annual growth of the retail market in India is expected to be around 8 percent. It is currently around 12 per cent. sea change in demographics of country and international exposure. The sector is at an inflexion point where the growth of organised retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. which is the fifth largest retail destination globally. was ranked second after Vietnam as the most attractive emerging market for investment in the retail sector by AT Kearney's seventh annual Global Retail Development Index (GRDI). In a joint study recently conducted by ASSOCHAM and KPMG. an embarrassing defeat for the Indian government. • The total retail market size in India is likely to touch US$ 416 billion by 2010. The Indian population is witnessing a significant change in its demographics. the reports claimed. • The estimated annual growth of organised retail sector is 40 per cent. various brands which are gaining value thereby enhancing industry growth. availability of various funding options. India's Commerce and Industry Minister. The share of retail trade in the country's gross domestic product (GDP) was between 8–10 per cent in 2007." RETAIL INDUSTRY IN INDIA The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores. "The decision to allow foreign direct investment in retail is suspended till consensus is reached with all stakeholders. hypermarkets. and is likely to reach 22 per cent by 2010.would be. supermarkets and specialty stores. • The present share of organised retail sector is estimated at 7 per cent. regulations like VAT implementation to make processes simple. in 2008. after a meeting of all political parties on 7 December 2011 said. • The estimated share of organized retail in total retail by 2010 is 12 per cent. The growth is boosted by various factors such as availability of professional practices.

as opposed to the world median age of 33. India is home to a . Two-thirds of Indian population is under 35. ahead of Russia. placing India on the radar as one of the most promising retail destinations of the world. promise a continued robust growth story. The average annual growth rate for 1994-2004 was pegged at 6.• The investment into modern retailing formats over the coming 4-5 years is expected to be around US$ 25-30 billion. Analysts predict India to sustain an average GDP growth rate of 5 per cent till the mid of this century. Rapid Economic Growth The fast and furious pace of growth of the Indian economy is the driving force for Indian consumerism. with its young population just beginning to embrace significant lifestyle changes. Projections by analysts suggest that India has the potential to be labelled the fastest-growing economy and outpace the developed economies by 2050. The more recent growth rates of over 9 per cent posted for India. in terms of emerging market potential and is deemed a ―Priority 1‖ market for international retail. Private consumption accounted for 62 per cent of India’s GDP in 2004-05. Potential untapped market India ranks first. with India projected to outpace the other developed economy markets by 2050. India possesses the advantage of having a largely young population. India is home to 20 per cent of the global population under 25 years of age. with the median age of 23 years. Advantage India Against the backdrop of an accelerating modern retail revolution. with the share set to reach its maximum in 2010. comparable to most of the leading economies around the world. Organised retail penetration is on the rise and offers an attractive proposition for entry of new players as well as scope for expansion for existing players. second only to China. The Young India Against the backdrop of an ageing world. with the Indian consumers confident about their earnings and are spending a large portion of their high disposable incomes. This trend is projected to continue for the next decade.1 per cent. The large proportion of the working-age population translates to a lucrative consumer base vis-à-vis other economies of the world. India presents a significant market. 35 per cent of India’s population is under 14 years of age and more than 60 per cent of the population is estimated to constitute the working age group (15-60) till 2050. India offers to be an attractive destination for global corporations and leading retailers seeking emerging markets overseas.

000 pre-college institutes and over 11. To further . A report by Images Retail estimates the number of operational malls to grow more than two-fold. ―The Indian economy is more stable than other economies across the world and one must not confuse India with the rest of the world‖. Besides. Over 37. Government Initiatives The government has taken various measures to promote and encourage investment in the Indian retail industry. Despite the inflation experienced during the period.000 – US$ 4. In fact. specifically to sell premium branded goods. Retail Management is a sought after education stream amongst students.000.700. The Government allows 100 per cent FDI in cash and carry through the automatic route and 51 per cent in single brands.large base of consumers with annual incomes ranging from US$ 1.000 in 14. Indian retailers are a happy lot. Top realtors and local retail chains are developing malls in regional boroughs. Despite the global economic slowdown. Abundant availability of skilled Labour India has a vast resource base of talent and skilled labour. With English being the language for business in India.5 per cent during the September 2008 quarter over the same period in 2007. A steadily rising percentage of rich and super rich population and impressive disposable incomes offers a spectrum of opportunities. the language skills of the Indian workforce score higher than that of emerging economies. it was a lot higher than the 7 per cent registered during the previous three quarters for these firms. India has one of the largest number of retail outlets in the world. with major retail developments even in tier-II and tier-III cities in India. there is an associated surge in branded discount outlets in India. The great Indian consumer market is still going strong. and a further 715 malls to be added by 2015. the second-quarter results of leading 70 consumer-related firms revealed that their aggregate revenues increased by 8. with 205 million square feet by 2010. retailers are also foreseeing further drops in rentals in 2009 and they are optimistic about their expansion plans for this year. to cross 412.000 students were enrolled in about 150. with over 15 premier institutes offering specialised courses in Retail Management. The impressive retail space availability and growing trend of consumerism in the emerging cities and small towns add to the market attractiveness. the franchise route is available for big operators.700. Even as the organised retail market is starting to take off.000 higher education institutions in 200506. spanning from rural retailing to luxury retailing. Indian retailers are still optimistic about the India growth story. With the 3040 per cent drop in retail rentals. comprising of over 75 million households. Even though this was a tad lower than the 9 per cent growth posted during the first quarter of 2008-09. The ETIG analysis carried out by the Economic Times revealed that most mass consumer goods and service in India were not much affected by the global economic slowdown.

with a shop floor of less than 500 square feet. there were about 35. Most of them belong to independent enterprises in the form of small family businesses. India represents an economic opportunity on a massive scale. This fuels the growth of the grey market and duty-free purchases. This means that foreign retailers and consumer goods manufacturers can only participate in the retail market through indirect access strategies. However. Estimates of the size of the retail sector vary. or in businesses upstream of retailing. Organizational characteristics Given the traditional and underdeveloped state of the Indian retail sector. but a small number of items remain fully controlled. both as a global base and as a domestic market. This sector consists of small family-owned stores. or by having a manufacturing base in India. There are also extensive controls on packaging.attract global retailers. the Indian government has indicated in 2005 that liberalization of direct investment in retailing is under active consideration. franchising emerged as a popular mode of retailing. even as the stringent regulatory environment encumbers investment by foreign brands. this is an area of ongoing debate. labelling and certification. with recent calculations putting the annual value of Indian retailing anywhere between US$180 billion and US$292 billion in 2003. Price controls have been progressively liberalized since 1992. Regulatory controls on foreign direct investment (FDI) have relaxed considerably in recent years. Hence. such as wholesaling. However. At present the organized sector (everything other than these small family-owned businesses) accounts for only 2 to 4 percent of the total market although this is expected to rise by 20 to 25 percent by 2010. while retailing currently remains closed to FDI. many industry experts feel that the Indian tariff structure has to be streamlined as India levies one of the highest duties and taxes on imported luxury goods. located in residential areas.000 outlets run by cooperatives. there has been a reduction in government support for cooperatives. franchising or licensing. However. the economic survey 2007–08 has suggested a share for foreign equity in all retail trade and 100 per cent in respect of luxury brands and other specialised retail chains. spurred by the encouragement given by the Indian Government. Sales of franchises grew at a rapid pace of 14% per annum over the review period. the organizational characteristics of retail enterprises are rudimentary. They consider that there are considerable . Many of the companies surveyed believe that the potential size of this market is underestimated. competition and foreign investment since the 1990s led to a proliferation of brands with both foreign and Indian companies acquiring strong brand equity for their products. Cooperatives have been present in India for several decades. In 2002. However. The retail sector is largely made up of what is known in India as the unorganized sector. Economic liberalization. since the 1990s. which viewed the cooperative movement as an integral component of its erstwhile socialist policies.

Shopping malls are becoming increasingly common in large cities. Poor quality of infrastructure. changing lifestyles and food habits are resulting in the rapid expansion of branded food outlet and café chains. Organized jewellery retailers are increasingly offering brand solutions to the demand for quality and value. driven by changing lifestyles and by strong income growth. Gemstones and jewellery represent the most significant specialist segment of Indian retailing. All companies agree that Indian consumer markets are changing fast. say companies. Advertising is becoming a bigger part of the marketing mix. Food and beverage offer the greatest organized retail growth opportunities. The structure of retailing will also develop rapidly. assisted by the likely fall in retail lending rates and more efficient and consumer-friendly lending practices. The number of department stores is growing much faster than overall retail. Indian consumers are becoming increasingly sophisticated and knowledgeable about products. media channels that allow companies to communicate with consumers are growing in diversity and reach. Distribution continues to improve. Marketing and advertising are of increasing interest and concern to consumer companies. The main growth opportunity in the segment is in processed foods: rapid growth in the processed food segment is already apparent. growth will be boosted. but increasingly brands have to be associated with value. as consumers move away from traditional retail settings reliant on family retailers. with rapid growth in disposable incomes. coupled with poor quality of the distribution sector. but it still remains a major inefficiency. This depends both on the growth of personal disposable income and the extent to which organized retailers succeed in reaching lower down the income scale to reach potential consumers towards the bottom of the consumer pyramid. Companies are concerned about identifying consumer insights and the profusion of media channels. And if retailing is liberalized. and announced development plans project at least 150 new shopping malls by 2008. Indian companies . and inventories which have to be maintained at an unusually high level.opportunities for organized retailers in the kind of rural territories that many companies have failed to address. Foreign brands remain very powerful in India. Consumer credit will also grow. but so will competition. Supermarkets have been taking an increasing share of general food and grocery trade over the last two decades. The very fact that politicians have left the issue open leads us to think the restrictions are going to be reviewed. the development of modern urban lifestyles. A critical issue is how fast and how far the consuming class will grow. Companies expect retail growth in the coming five years to be stronger than GDP growth. results in logistics costs that are very high as a proportion of GDP. especially in clothing and personal care products. Companies expect that the next cycle of change in Indian consumer markets will be the arrival of foreign players in consumer retailing. at an annual 24 percent. which in turn will be supported by favourable demographic patterns. and the emergence of the kind of trend-conscious consumers that India has not seen in the past. say companies.

Hyper Marts/ Super Markets Large self-service outlets. etc. catering to a variety of consumer needs. all under a common roof. Further.00. the biggest success is K Raheja's Shoppers Stop. Big Bazaar. Reliance. They lend an ideal shopping experience with an amalgamation of product. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. toys. ft. These are located in or near residential high streets. the Mumbai books retailer Crossword. Among these.000 sq ft and large supermarkets ranging from of 3. the power to drive down prices. Piramyd.000 sq ft to 7. Located mainly in metro cities. Super Markets can further be classified in to mini supermarkets typically 1. discount stores or factory outlets. in proximity to urban outskirts Ranges from 60. The product category can range from a variety of perishable/ non-perishable goods.000 sq ft to 2. a Pantaloon.000 sq ft and above. Examples include Shoppers Stop. Retail Formats in India Malls The largest form of organized retailing today. home. These stores today contribute to 30% of all food & grocery organized retail sales. but foreign players will come in and challenge the locals by sheer cash power. Chains such as the Bangalore based Kids Kemp.500 sq ft to 5.000 sq ft. which started in Mumbai and now has more than seven large stores (over 30. Department Stores Large stores ranging from 20000-50000 sq. catering to varied shopper needs are termed as Supermarkets.know Indian markets better. Discount Stores As the name suggests. classified into localized departments such as clothing. Convenience Stores . Specialty stores. service and entertainment. are focusing on specific market segments and have established themselves strongly in their sectors. RPG's Music World and the Times Group's music chain Planet M. ft) across India and even has its own in store brand for clothes called Stop. groceries. offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. having a strong focus on food & grocery and personal sales.000 sq.

"All marketing decisions are based on assumptions and knowledge of consumer behavior. . biology. seven days a week. many product decisions are made every day. Defining Consumer Behavior What is Consumer Behavior? How many times throughout the day do people make product decisions? If you stop to think about it. Prices are slightly higher due to the convenience premium. use (consume). also known as Category Killers. chemistry and economics. offer several brands across a single product category. MBO’S Multi Brand outlets. A more in depth definition will also include how that process impacts the world. countries and ultimately the world. some without much thought.000 sq." (Hawkins and Mothersbaugh. and dispose of products and services. Consumer behavior incorporates ideas from several sciences including psychology. These usually do well in busy market places and Metros. 2007). Product decisions also shape life for the consumer. What should I wear? What should I eat? What am I going to do today? Many product decisions are answered routinely every day and they help move the economy of cities.These are relatively small stores 400-2. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day. How can simple decisions be so important? Why do marketers spend millions of dollars to uncover the reasons behind these decisions? To define consumer behavior: it is the study of consumers and the processes they use to choose. Researching consumer behavior is a complex process. feet located near residential areas. but understanding consumer behavior is critical to marketers-they can use it to:  Provide value and customer satisfaction.

price and customer service in order to give customers positive value and satisfaction. satisfied customer. if the customer was satisfied. Marketers have to provide the right combination of quality. or it could be negative if they did not find any value in their purchase. that does not create a happy.) Consumer Behavior Value and Relationship Quality  Consumers choose goods and services based on the assumption that they will be rewarded with value and satisfaction. That will in turn create happy. Consumption is the process by which goods and services are used and assigned a level of value by the consumer. Quality + Price + Customer Service = Value and Satisfaction That level could be positive. promote healthy habits. . The formula looks like this: If a product/service is provided that has low quality. reduce drug use etc. Improve products and services. having a great product at the best possible price means nothing if the customer is treated badly. Expand the knowledge base in the field of marketing. or not provided with the opportunity to return unwanted items. Apply marketing strategies toward a positive affect on society (encourage people to support charities. and a high price. loyal customers. Create a competitive advantage Understand how customers view their products versus their competitors' products.       Effectively target customers. At the same time. Enhance the value of the company.

if the customer does not think so. If a customer has a bad experience with an employee. the brand name and the employees. however we can take a look at some of the components of quality for products and services: Products        Performance-The product does what it is supposed to do. the company. Serviceability-The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs.So what is meant by 'Quality?' Quality is a product or service's ability to meet the customers' need or want. Reliability-The service is performed right. Snob effect: Desire to buy something nobody else has. for example a restaurant cooks (service) and provides the food (product). Features-The product includes all the specifications that it says it has or that are required. Quality is difficult to define. Sometimes it seems that there is no reason for a purchase. . Aesthetics-This is important to consumers. shelter) and Safety and Security. The customer has to have positive feelings about the product. such as:     Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social status. Reliability-The product performs consistently. they will be less likely to purchase from the entire company's offerings. Customers expect technical competence and professionalism from salespeople. Services      Responsiveness-Services are performed in a prompt manner. Empathy-Providing individualized attention to customers will make them feel special and keep them coming back. then it won't sell. but in reality there is always a reason. this includes safety measures. Bandwagon effect: Desire to buy something everybody else is buying. preference for buying increases with price. any one of which can become the deciding factor. and varies with each consumer. products have to look good. preference for buying increases with rarity or scarcity. Why People Buy Marketers spend millions of dollars trying to understand why people buy products and services. Durability-When the product is being used it has to last under the conditions of normal use. Many factors are involved in a customers' buying decision. Assurance-Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. Perception-Even if the product has good quality. and this contributes to a brand equity and identity. preference for buying increases with perceived popularity. and all subsequent times. Tangibles-Some services provide physical evidence that they occurred. Economic-To enhance their lifestyle or to fulfill two of Maslow's needs: physiological (food. the first time.

furniture and convection ovens. Impractical-is the opposite of practical. Emotional-purchasing products based on feelings       . Irrational-products are purchased for foolish or absurd reasons. especially in a social setting. Rational-Purchases are made with logical. such as shoes and medicine. Psychological-This is the study of how people interact with their environment. for example air fresheners. People want to feel accepted and loved by their peers and they need to consume products that will appeal to their chosen groups. For example a consumer wants to join a kayaking team would have to purchase the proper gear. feelings. thought out reasoning. purchasing products that are not necessary. and behaviors of group interaction. clothing and maybe even music genre in order to fit in with the group.  Sociological-The study of the thoughts. Practical-Consumers purchase products because they need them to survive. products are consumed to enhance their well being. Factual-Purchasing products based on researched reports.

Satisfaction. Confidence. Buy to satisfy a want (desire). To Protect       Investment Self Employees Property Money Family To Make    Money Satisfied customers Good impressions To Improve       Customer relations Employee relations Image Status Earnings Performance To Reduce       Risk Investment Expenses Competition Worry Trouble . Convenience. Profit.  Buy to satisfy a need (for a reason). Pleasure. Consumers Also Buy: To Increase        Sales. Production.

end user. it can be broken down by:          Relationship Customer Type Product Use Buying Situation Purchasing Method Behavior Geographic Location Demographics Psychographics Relationship  Kind of relationship— weak. ―arm’s length‖ dealing. strong. Customer Type  Type of customer— manufacturer.To Save     Time Money Energy Space Segmentation. Demographics and Behavior Segmentation is the process of breaking down the intended product market into manageable groups. . close partnership. retailer. military. government. service. wholesaler. non profit.

new purchase. Climate— cold. strong. informed. Occasion--Regular occasion. functional. Midwest. indifferent. large city = more resources. Africa. Type of problem solving needed-routine. rural— country. South. Asia. psychological. Gender— male. rainy. 20. Geographic Location      Region of world. service. Age— Infant. 2. 40. convenience. medium. Size of city— population under 5. potential user. negative. Europe. 3. country=more dependence on neighbors and pooling resources. tween (age 8 to 12). professional service. desirous. Brand Familiarity-Unaware. modified rebuy. social.Product Use  How customer’s use product— installation. unsought product. eaten. 50. economy. Buying Situation  Buying situation— rebuy. ex user. 30. aware. hot. interested. mountains. New England. Attitude toward product--Enthusiastic. 60. Loyalty status--None. first time user. accessories. neither. high. positive. Behavior          Needs—economic. South America. extensive. city.000 people to 4 million or more. medium. Benefits--quality. teen. Demographics     Income— under $5. Regions within that country— (For Example USA) Pacific Northwest. female. raw material.000 to $250. intending to buy. limited. warranty. comparison shopping. regular user. college age. Family size— 1 person. Purchasing Method  Purchasing methods— Internet. financing. long term contract. toddler. cash on demand. special occasion. 4. User status--Nonuser. speed. hostile. convenience. beaches. 70-90.000+ a year. components. Information required-low. both. 5 or more. Urban vs. . absolute. more independence. preschool. country— North America. desert.

Silver Fox is a 4060 year old wealthy. etc. Race— White. part-time. Russian. Matures. career driven man seeking a younger woman). Black. some high school. Religion— Christian. Hispanic. extended parents (grandparents raising their grandchildren). recently divorced. Silent. Cougar/Silver Fox (Cougar is a 40-60 year old weathly. professional. craftsperson. DINKS (double income no kids). empty nester (children have moved out). SINKS (single income no kids). high school graduate. Generation— (For Example USA) GI Generation. values. African. mixed race. o Excitement. Personality traits o Sincerity. Indian etc. hobbies. Asian. which is usually better than the current one. elementary school age. atheist. Everyone has two lifestyles. retired (either wealthy or Medicare dependent/poor). Job— unemployed.       Family life cycle— young. single. college graduate. Native American. and the one they desire to be in. Education— grade school or less. farmer. There are also Boomerang Kids (adult children have moved back home). some college. interests. single. toddler. the one they are in now. Islam etc. teen. media preferences. Gen X. Almost all decisions are influenced by the buyer’s current and desired lifestyle. o Sophistication. Muslim. career driven woman seeking a younger man. graduate degrees. engaged. French. retired. o Ruggedness. single parents. Boomlets. English. Psychographics   Lifestyle— interests. Baby Boomer. married with kids (babies. . activities. Gen Y. same-sex couples. Jewish. older). agnostic. single. Culture/nationality—American. full-time. opinions. housewife. student. o Competence.

comfortable people. c) Believers are Fulfilleds without the resources. iv) Leisure activities center around the home and family. wealth is accumulated assets that people already have (cars. church. practical consumers that look for functionality. vii) Income is $5 million a year and up. . vi) 72% married. According to the VALS Lifetime Scale. Social class— Lower. v) Conservative. middle-low. middle-upper. vi) Income is $2-$5 million a year. segmentation separates consumers into eight distinct categories based on income and social class. Remember that income is not the same as wealth. a) Actualizers b) Fulfilleds c) Believers d) Achievers e) Strivers f) Experiencers g) Makers h) Strugglers See below for more detail and examples. i) Conservative. sophisticated. value and durability in the products they buy. iv) Concerned with social issues. upper-upper. income is money that is earned. i) Successful. working class. ii) Value order. 59% men. community and the nation. knowledge and responsibility. iii) Leaders in business and government. abundant resources. v) Have a taste for the finest things in life. blue collar. satisfied. ii) Image is important not as a status symbol but as an expression of their independence and character. a) Actualizers are those with the most wealth and power. iii) Most are well educated and in or recently retired from professional jobs. i) Mature. Segmenting Public Another way of segmenting publics is to do it based on values and lifestyles. b) Fulfilleds have high resources and are principle-oriented professionals or retirees. or they can have lots of wealth and no job. upper. active. house. Some people can have a high income and have no money because they spent it all. middle. conventional with concrete beliefs based on traditional established codes: family. 95% college educated. art). Such segmentation regularly is used by marketers to focus product and service appeals on particular socioeconomic levels. high self esteem. ii) Deeply rooted moral codes.

ii) Politically uncommitted and ambivalent about what they believe. . i) Practical with constructive skills. iii) Easily bored and impulsive. raising children. v) Respectful of government ideas and organized labor. building a house. v) Image is important to them.000. fixing cars. vi) Unimpressed by material possessions other than those with a functional purpose. vi) They favor established prestige products and products that demonstrate success to their peers. 39% men. canning vegetables. i) Seek approval from the world around them. ii) Striving to find a secure place in life. iii) Avid consumers that spend much of their money on clothing. 90% of Americans make $100. iv) 34% married. ii) Value predictability and stability. v) Income around $100. and are disposed toward taking risks. are action oriented. v) Median age is 26. vi) Income is around $50. Actualizers. music and movies. ii) Experience the world by working in it. fast food. iii) Politically conservative. 46% men. g) Makers also are action oriented but have low resources. 6% college educated. iii) Deeply committed to work and family. This group is shrinking due to high credit card debt. 41% college educated.000 to $2 million. d) Achievers have high resources and are status oriented. 77% college educated. viii) Income around $200.000 a year. vi) Income is $500. They are only .000.000 or less a year in income. i) Seek recognition and self definition through achievements at work and school.5% of the population in the USA but control 80% of the wealth. vii) 73% married. iv) Wish to obtain things that are out of their reach. and Believers are upper class. iv) Suspicious of new ideas. vital. e) Strivers lack the resources of Achievers but are equally status oriented. impulsive and rebellious. v) Median age is 58.iii) As consumers they are predictable and conservative. iv) Social lives are centered around family church and career. 53% men. favoring American products and established brands. f) Experiencers have high resources. bad mortgages and an increasing level of unemployment in America. Achievers and Strivers are the middle class. iv) 70% married. i) Young. Fulfilleds.

i) Have constricted lives.vii) Sometimes called the ―working class. family issues. These three classes total around 30 million Americans. Makers Appeal to function . v) Chief concerns are about their health and safety. viii) 47% married. Experiencers Action! Appeal to a sense of youth and fun. which is equivalent to minimum wage.000 a year. Strivers Appeal to the sense of attaining products they will feel important having. Experiencers. How do you appeal to each of these groups? Actualizers Appeal to their sense of independence and emphasize how it will enhance character. vii) Loyal to favorite brands. iii) Uneducated and limited skills. x) Median income is $9. iv) Without strong social bonds. h) Strugglers have the lowest resources. also family and work. Makers. image is important to them. 37% men. About half are married in an effort to combine resources.‖ viii) Income is around $30. ii) Chronically poor. Believers Appeal as an established brand. Fulfilleds Appeal to family issues.000 a year. vi) Cautious consumers. and Strugglers are lower class. Achievers Appeal to their need to feel prestigious. 3% college educated. ix) Median age is 61. durability and value.

When a customer walks into a store. Companies that help their customers learn about their products and create positive feelings with their product. (thoughts.the customer processes the stimulus. values. The value and meaning assigned is largely determined by internal factors. service. Learning is a change of behavior following an interaction between a person and their environment. Three things influence consumer's ability to understand messages: . and employees-have a competitive advantage The Learning Process:    Exposure . hearing). going on the Internet) or remembering it for future information. touch. quality. Most attitudes. and price. preferences. perception. service.the customer becomes aware of product. tastes. reads a magazine or tries a free food sample. drives by a billboard. feelings. behaviors. whereas a consumer who does not enjoy drinking milk and sees the same ad. For example. taste. service or advertisement through at least one of their five senses (sight. Memory Marketing messages can be effective only if the consumer correctly understands the messages. lifestyle) which are different for each consumer. a consumer who drinks lots of milk. brand name.Strugglers Appeal to loyalty and security Internal Influences . proper nutrition. smell. etc. Value and meaning always together. because of that interaction they learn not to touch the hot stove again. sees an advertisement that says "Got Milk?" and since they already have positive feelings for the product they will purchase more milk. Social organizations help people learn "appropriate" beliefs about issues like drinking and driving. Understanding . symbolic meanings and feelings are acquired through learning. may dismiss the ad or may try drinking more milk for a short period of time and then decrease consumption again. People buy things and then make decisions for future purchases based on if they liked the product. Memory refers to a consumer's ability to understand the marketing messages and assign them value and meaning. attitude. the learning process begins Attention . seeking more information (asking family and friends. goes onto a website.the customer interprets the information and acts on it either by purchasing the product or service. dismissing the information. and remembers them when needed. personality. emotion. motivation. A person touches a hot stove and then gets hurt.Learning Consumer behavior is largely learned behavior.

but when they opened shops in Malaysia. the color red makes people eat 25% more. Familiarity: Generally. More involvement means more sales. service and marketing information will have more recall than a consumer with less involvement. Characteristics of the environment . words. in the US in the 1990s. the Starbucks Coffee Company logo is green. while the adults are remembering being there as children. however. then they are not going to purchase it. it will invoke ideas. and a direct recovery of past experiences. the more likely they are to purchase it. Font: The presentation of words and how they are shaped will also enhance the marketing message and contribute to the value and meaning. and slogan work together to create an image in the mind of the consumer. in the US. ketchup sales began slipping and to revamp sales. it is best to word marketing messages on a level most people can understand. they want adult customers to remember being taken to the Disney parks as a child and then repeat the experiences with their own children.Physical Characteristics of message    Imagery: When the brand name. these two different fonts for a cigarette company will convey entirely different meanings. For example. have positive thoughts about them and know what to expect. ketchup manufacturers created green and purple ketchup. Coca-Cola and Disney do not change their logos— customers are familiar with them. when consumers became tired of them. having too much familiarity can lead to adaptation. The meaning and value assigned to colors changes with the culture. Involvement: A customer with higher levels of involvement with the product. Disney is big on evoking nostalgia and past experiences. but only for a few months. so that most of the time consumers don’t even know they are being affected! For example. and color affects consumers in a subjective manner. Expectations: If the customer doesn’t know what to expect from the product or service. therefore most restaurants use red as their main color. they had to change the logo to brown because in that culture green is associated with sickness. feelings and objects. these novelty items boosted sales. the more familiar a customer is with a product. For example. so marketers need to be fully aware of how color is interpreted by different groups of people. Much of their advertisement depicts families having wonderful experiences together. when customers become tired of their ―familiar‖ purchases and seek out novelty items. Physical limits: Marketers need to remember that some consumers have limitations such as hearing impairment or color blindness and this needs to be taken into consideration when creating marketing messages. Characteristics of the message receiver (consumer)      Intelligence: unless you are specifically marketing a product to extremely intelligent individuals. Creating more interest in the product and making a website more interactive will help to increase sales. For example. and may attract two different customers. and don’t ever talk to your customers in a way that would make them feel inferior. This explains why familiar brand names like Campbell’s Soup. Color: Colors have an enormous impact on marketing messages.

attraction. Timing: Many factors will influence how a message is interpreted and assigned value including: amount of time customer has to view a message. most people fall somewhere in between Productivity-ability to use emotions to solve problems B. Let's face it. A customer driving in the morning 70mph past a billboard for coffee may only have a few seconds to interpret the message. you could get skin cancer" or "Use sunscreen to moisturize and protect your delicate skin".   Intensity of information: If a consumer is overloaded with stimuli in an environment. and interpret information Perception has four major steps: 1. and type of medium used. organize. it can be difficult to break through all of it and get to your target market customers. the characters in the show use the brand name products and may even talk about how they like the brand name. Emotion Emotion is difficult to define. they are much more likely to avoid the ad. and is processed more thoroughly by the consumer and may be remembered better. marketers use product placement in the actual movie or television show. Emotion can be used to create product benefits. we live in a world cluttered with advertisements. Perception Perception is the process by which people select. Emotion in advertising enhances attention. Exposure . or not comprehend it at all. Marketers have to be more creative since customers can now skip commercials (thanks to recordable television). Such as with Tide detergent and Cheerios cereal. Emotion and Perception A. Marketers are also making use of new social marketing movements such as Twitter and Facebook that can be programmed to reach customers that want to see your marketing messages. This is all part of the advertising. However. and even more difficult to predict. These are the elements of the relationship between emotion and understanding:     Self control-the ability to control your emotions Emotional empathy-the ability to understand other people's emotions Positive/negative outlook-a person's outlook on life can be upbeat and optimistic or depressed and negative.When a stimulus (like a billboard) comes within range of your senses (vision) . they are important to marketers because consumers tend to react to marketing messages and make purchases based on feelings and emotions. time of day. but since it is a time of day when that product is most consumed. "If you don't use sunscreen. that couldn't have happened without those products. Framing: Messages can be framed to seem positive or negative and this will affect how customers assign value. they may be more likely to act on the message. their commercials feature families having wonderful moments together.

Motivation is the energizing force that activates behavior. Nerves pass the information onto the brain for processing 3. therefore gaining protection and avoiding loss and fear of fire. According to McGuire. there are 12 psychological motives. Exposure Must physically reach the consumer 2.2. Attention . 12 reasons why consumers are motivated to make purchases.when marketing messages are assigned meaning 4. Need for consistency 2. Need for cues 5. Need to categorize 4. Interpretation It must be properly interpreted 4. Attention The consumer must attend to it 3. According to Maslow's hierarchy of human needs. Products that are purchased because of a need will satisfy a goal and avoid unwanted consequences. For example. Memory Must be stored in memory that will allow retrieval Motivation Motivation is an internal state that drives us to satisfy needs. Interpretation . Long-term—for retention For an ad to be successful it must have the following four elements: 1. a state of tension exists that drives the consumer to the goal of reducing this tension and eliminating the need. for each need there are positives gained and negatives that are avoided by meeting that particular set of needs. Need for independence . Need for attribute causation 3. Consequently.Determined by the individual and the situation. Short-term—for immediate decision making b. Memory   a. Once we recognize that we have a need.      1. people need to feel secure so they purchase smoke detectors. only unmet needs motivate.

and behavior that enhances family and culture. Need for modeling 11. Need for ego-defense  The need to defend your identity. 5. 6. Need for reinforcement 9. sporty. Need for self-expression 7. heavy duty trucks and pets. This helps consumers quickly narrow down their choices when purchasing a vehicle. People that listen to country music will purchase products like cowboy boots. electric and so on. Need for independence   Americans strive for individuality and self-expression and many products are marketed as "limited edition" or being different and unique The Japanese culture discourages individuality and focuses on affiliation. 2. van. Vehicles are categorized into cars. 3. heavy duty trucks. SUV's. Need for affiliation 10.       6. hybrid. light trucks. some people choose to attribute it to themselves.200 pen? What is that saying about that person? 7. Need for attribute causation  People have the need to determine who or what causes things to happen to them. Need to categorize  Categories allow people to process a large amount of information. fate or an outside force like God. Need for novelty 12 Need for Assertion 1. . 4. Need for consistency  People have a basic desire to have all parts of themselves consistent and they purchase products that fulfill this need. especially clothing and cars. Clothing plays an important role in presenting image of a person. People quickly judge others by the clothing they are wearing and the vehicle they drive. Need for self-expression  Americans are known for letting others know who and what they are by their extravagant purchases. mid-size. Who really needs a $1. An insecure customer will purchase well-known brand names for fear of being labeled socially incorrect. Need for cues  Most people will view others' behavior and infer what they feel and think. For example. Need for ego-defense 8.

     Frugality—consumers restrain themselves and think heavily about purchases Impulsiveness—purchases are made without much thought beforehand Anxiety—a person with lots of anxiety may have more post-purchase dissonance and feel upset about purchases after they get them home Bargaining—some consumers prefer to bargain for purchases. but that depends on the person. Most consumers respond positively to ads that appeal to this need. Need for novelty  People have variety seeking-behavior and this may be a reason for brand switching and impulse buys. Personality is unique to individuals. it gives them a sense of control over their spending Vanity—taking excessive pride in one’s appearance and accomplishments . Need for reinforcement  People are motivated to act because they are rewarded for doing it. Marketers will use interviews and focus groups to understand personality and how it relates to the purchase of certain products." this will appeal to women by showing that the product increases your self-esteem. and especially teenagers-and in their social world conformity mean acceptance. which is a critical part of all people's lives. while people in stable life situations will seek change. Need for Assertion  Customer's need to engage in activities that will increase self-esteem and self-esteem in the eyes of others.8. it will say "show off your beautiful legs to your man. Need for modeling  Conformity and the need to base behavior on that of others. is a combination of characteristics and traits and influences purchasing behaviors. In an advertisement for a ladies razor. intentions and behavior that people express as they move through their environment. Need for affiliation  Affiliation is the need to develop mutually helpful and satisfying relationships with others. but may be applied to groups. 11. 9. emotions. People experiencing rapid life changes will seek stability. This is the major motivation of children. showing off a new diamond ring to your friends creates acceptance and approval. 12. Personality is defined as the thoughts. 10. Personality Some marketers believe we choose products that express our personalities. tweens (8-12 year olds). The travel industry uses this by changing up their ads and showing adventure vacations where people are actively having fun and some ads showing relaxing vacations where people are swinging in a hammock. For example.

expressed outwardly about a person. Lifestyle can include things like bowling. behavior and cognition. kayaking. For example most ads targeting children show children that are almost too old for the product. car racing. consumers will consider various choices and develop beliefs about each choice. attitudes and activities. There are three components of attitude . This sis sometimes called the ABC's of attitude. interest in politics.     Competence—being responsible and dependable Excitement—craving daring and spirited purchases Ruggedness—craving products that are tough and strong Sincerity—honest and genuine Sophistication—desiring products that are glamorous and prestigious Lifestyle and Attitude A. Attitude An attitude is an internal evaluation. These three components work together to form a hierarchy of effects: Purchase High involvement Hierarchy of effects Belief—affect—behavior Low involvement Belief—behavior—affect Experiential Affect—behavior—belief Behavioral Influence Behavior—belief—affect In a purchase that requires a high level of involvement. having pets. Marketers exploit this desire to move into a better lifestyle by showcasing people who are better off than the intended target market in their ads. cooking. watching sporting events and so on Everyone has two lifestyles-the one they are currently in and the one they want to be in. this appeals to younger children who desire to be like them. Lifestyle is a way to segment people into groups based on three things: opinions.affect. such as a car. Lifestyle Lifestyle is a common word to explain complicated consumer behaviors. which is always better than the current one. Lifestyle means the ways groups of consumers spend time and money. object or issue. attending charity events. B. then they develop feelings about the .

Introduction What are external influences in consumer behavior? a. . Group members share common interests. Beliefs. red is the color of choice for weddings. Clubs and Associations. but is also dependent on culture. Here is a list of the external influences that affect consumer behavior:          Age Race Gender Education level Cross-cultural influences Sub-cultures (Hispanic-American) Social status (upper. What a consumer eats. such as music. such as clubs and organizations. so that passersby will be more likely to want to come in. childhood and social environment. or not. lower) Customs. External influences .products (affect). Many bakeries will pump the smell of their treats outside the store.  Values  Community c. and lighting. they may attract young adults. such as family members. Friends. then develop beliefs about their purchase and that leads to developing feelings about the product or service. their parents become less of an influence and peer groups become more of an influence. Habits Reference groups are groups that have shared beliefs. Primary groups are those with the most influence. interests and behaviors and influence a consumer’s behavior: Examples include: Religious. Traditions. secondary groups have less interaction than the primary group. some groups have more power than others over consumers’ decisions. Color is a huge influence on behavior. and finally they act on the behavior and decide to purchase. since different cultures perceive colors differently. In the US white is a color worn at weddings. Whereas with a behavioral influence. and believes are all learned and influenced by the culture they live in.  People are social and they want to belong to special groups. middle. All groups exert what is called social power. Expectations. but drive away older consumers. Co-workers. Family. wears. and in China. color. External influences can also include situational influences. sometimes called atmospherics—sensory items in an environment that may change buying patterns. Political. As children grow into teenagers. influence each other. If a store plays loud rock music. smell. the customer will act first (purchase). and share rules and values. All of these are external factors that affect purchases. their family.

consumers will go through an external information search. or products that they are brand loyal to. Toddlers. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying. Engaged couples are buying products to begin a life together and the recently divorced are buying products that they already had and now need to replace. their pets and vacations. DINKS are ―double income no kids‖ and SINKS are ―single income no kids‖.d.Wealthy or Medicare dependent The engaged couples and the recently divorced spend money on similar products. their house. Elementary School Age (5-7). Advertising and promotions e. although for different reasons. A purchase may be ultimately made due to Heuristics. Stages of the Family Life Cycle (FLC)               Young and single Engaged couples DINKS (Double Income No Kids) SINKS (Single Income No Kids) Married with children: Babies. Before making a purchase. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. Tweens (812). so they spend their extra money on themselves. Teens (13-17). such as purchasing from specific countries of origin. family and coworkers about their experiences with the product. Extended parents are grandparents taking care of their grandchildren. Same sex couples and singles are grouped together whether they have children or not. Older Single parents Empty nester Boomerang Kids (adult children who have moved back in with their parents) Extended parents (grandparents raising their grandchildren) Blended Families (stepchildren) Cougar and Silver Fox Recently divorced Same-sex singles/couples Retired . It includes:      Personal experience—have they purchased this product before? How do they feel about it? Websites/Internet search—researching the quality of the product Knowledge—someone with little or no knowledge of the product will need lots of information! Friends/reference groups—consumers ask friends. Family Life Cycle (FLC) Family life cycle is defined as what type of family the target market consumer is in. because of their lifestyle and . Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it on.

At their American based restaurants they serve beef hamburgers. In the Hispanic culture a girl becomes an adult at 15th birthday party. ii. Tradition/Change: Some societies prefer traditions over making changes. The Japanese culture focuses on the collective.interests. ix. not salt. How does culture affect consumer behavior? Whatever a person consumes will determine their level of acceptance in their society. Cleanliness: In the US. parents. where people generally look out for themselves. Culture includes knowledge. Masculine/Feminine: Cultures define the roles of men and women differently. if McDonald’s had ignored this cultural difference they would not have been successful in India! That was the problem when The Walt Disney Company opened EuroDisney outside Paris. In many Asian and European countries. b. it was almost a failure because Disney ignored the culture. Extended/Limited Family: In the US. cleanliness is very important. families move away from each other and generally don’t live together in the same house. If someone does not act consistently with cultural expectations. c. morals. Boomerang kids are adult children who are living with their parents. art. vii. including their rank. iii. In other cultures showering on a daily basis is unnecessary. they risk not being accepted in society. customs. because the Indian people do not eat cow meat. Adult/Child: Different cultures will define when someone is an adult. The French people drink wine at very young ages and prefer sugar on their popcorn. iv. they used lamb meat for their hamburgers. but in some South American countries it is 14 or 15 years old. grandparents and even aunts and uncles live together in the same house. Postponed gratification/Immediate gratification: American culture is centered on immediate gratification ―I want it now!‖ . in fact most of the products advertised on American TV claim to improve cleaning. In the Hebrew culture a boy becomes a man at 13 during his Bar Mitzvah ceremony. and any other capabilities and habits acquired by humans as members of society. and prestige in society. In the US it is 18 years old. and people work to better society as a whole. What happens when a company ignores culture? McDonald’s is one of the most popular restaurants in the world. like Americans. but when they decided to open restaurants in India. law. kids. Consumer Culture a. v. belief. Individual/Collective: The culture in the US is an individualistic society. Youth/Age: The value placed on Elders depends on the culture vi. d. Hard work/Leisure: In some cultures hard work is valued over leisure time. An empty nester is someone whose children are now grown adults and have moved out of the house. viii. Disney did not accommodate their theme park until they realized that the French people were indeed their target market. Factors that Define a Culture          i. so they changed the name of the park to Disneyland Paris and made modifications to their menus and also to the wait lines in the park.

Likelier to hold a professional position. Relies on service from others rather than own efforts. Good in School. but the level of influence will depend on where the product will be consumed—in public or in private—and whether the product is a want or a need. Confident. Pays Attention to Detail. and women who get pregnant before marriage are often shunned. Family Influences (Birth Order) Where a child places in the birth order can have an effect on how they see themselves. The middle child often seems to have the most negative impressions of his lot in life. And older siblings may feel that the younger siblings get away with things they were not able to when they were the same age. Younger children always want to be able to do the things older siblings are allowed to do. Americans have two lifestyles—the one they are in and the one they strive to be in. in Muslim societies those topics are taboo. Social Environment and Social Class Social Environment Reference groups have an influence on purchasing behavior. Feels unfairly treated when doesn't get own way. opinions. . which is usually better than their current situation. May feel special. Concerned with meeting parents’ expectations. It is important for a marketer to understand the subdivisions of society in order to better choose target markets for their products and services. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and advertises sexual activity. Overly Critical. Social Class Populations can be subdivided into groups who members share similar hobbies. and activities. Here are the levels of birth order:      Only Child Oldest Child Second Oldest Sibling Middle Child of Three Siblings Youngest Sibling Only Child           Pampered and spoiled Is center of attention. x. and therefore affects their consumer behavior. often enjoys position.

If first child successful.Oldest Child             Is only child for period of time. Becomes boss of family in getting service and own way. Organized. Confident. used to being center of attention. May develop competent. Born Leader. If this failed. Believes must gain and hold superiority over other children. If first child is "good. Determined. Always has sibling ahead who's more advanced. Strives to keep or regain parents' attention through conformity. May push down other siblings. Develops feelings of inferiority or becomes "speeder" and overtakes older siblings. Learns to deal with both oldest and youngest sibling. Expects others to do things. often allies with oldest child against middle child. Sometime strives to protect and help others." Develops abilities first child doesn't exhibit. Second Oldest Child        Never has parents' undivided attention. responsible behavior or become very discouraged. Feels "squeezed" if third child is born. may feel uncertain of self and abilities. Likes to Avoid Trouble. Often doesn't like position. Acts as if in race. If youngest of three. Youngest Sibling          Feels every one bigger and more capable. trying to catch up or overtake first child." Places others in service. Persistent Affectionate Crave the Spotlight . Becomes discouraged and "problem child" or elevates self by pushing down other siblings. take responsibility. Middle Child of Three Siblings      Has neither the rights of oldest nor privileges of youngest. chooses to misbehave. Remains "The Baby. controlling often important. May be rebel. Being right." second may become "bad. May feel like they don’t have place in family. Is adaptable. Eager to Please. make decisions.

but what exactly is it? Is a store necessary for shopping to take place? What motivates someone to shop? Marketers. if the store is crowded or empty—situational influences can affect purchasing decisions. The Science Behind Shopping D. Employees become consumers as they spend their earned paycheck on products and services. Companies depend on loyal customers and repeat purchases to bring in sales and profit and to pay their employees. Time C. taking your kids to the grocery store increases your likelihood of spending more money 150% because parents shopping with children are more likely to be influenced by the   . Shopping is an important factor in any economic system and changes the standard of living. A. Shopping Habits E. Atmospherics and Situational Influences B. Consumers depend on purchases to give them value and satisfaction. For example. Conditions—Women tend to purchase more when they shop with friends. colors and clothing of the employees will affect the motivation of the consumer. Place and Conditions. Online shopping Habits F. Situational Influences are factors specific to a time and place that a customer reacts to. retailers and manufacturers spend lots of money to get consumers to shop. The customer may not have time to consider all the brand alternatives and this will affect what they purchase. furniture. Eating Habits Situational Influences and Atmospherics The three major situational influences are Time.Situational influences on consumer behavior (outlet selection) Shopping is an activity that everyone in the world participates in.  Time—If a customer is in a hurry or the store is crowded this can change the way information is processed. a restaurant selling seafood seems to have more credibility in an ―ocean‖ themed décor environment. shopping alone or with friends or with their kids. if the consumer is in a hurry or relaxed. but not every shopping trip results in a purchase. The motivation to shop can depend on factors that cannot be controlled by the consumer or the marketer. Place—the décor. Economic systems depend on consumers buying products and services.

Creating positive feelings about a store also generates loyal customers and repeat shopping visits. Music isn’t just about speed. safety and employees. Color—colors mean different things to different cultures. however we already know one thing—if a store smells bad. such as cents-off sales or 2-for-the-price-of-1. clothing and knowledge of the products. This is done quite often in the promotion of frequently purchased products like toothpaste. an end-of-aisle display featuring a particular brand of snack food will increase purchases of this brand over normal shelf sales.         Physical Features—décor. Colors are used to affect customers and in most cases they won’t even know it! In the US red is an energy color and is often used to stimulate the appetite. sounds. if it is cold outside you would be more likely to purchase a hot drink. lights. Grocery stores are arranged to maximize exposure to items not routinely purchased while obtaining normal grocery purchases. For example. colors and furnishings. A Texas barbeque themed restaurant would attract more customers with country music rather than pop music. colors. the type of music must match the store. Promotional deals.product preferences of their children. music. Slow tempo music relaxes the customer and causes them to linger in the store longer. There are several things a customer would do in this situation: CUSTOMER BEHAVIOR IN A STOCKOUT SITUATION . The term for this research is called atmospherics. weather. Atmospherics is the physical manipulation of the store environment (physical or online) to change the mood of the customer. Sales personnel can often persuade a consumer to purchase or not purchase a particular brand based on their mood. employee clothing. Point-of-purchase displays can attract attention to a brand and produce a greater likelihood of purchasing that brand. and the store (or website) needs to have full understanding of colors and their meanings. Smell—the study of smell and how they affect shopping habits is just beginning. Store layout can also affect brand purchase as well as the total in-store expenditure. attitude. offer an economic purchase incentive. A department store that wants to sell expensive clothing needs to have stylish fixtures. Marketers have researched customer behavior enough to know that certain environmental factors will affect their shopping habits—smell. The more crowded a store is the more likely customers are going to feel confined and unhappy and will find a way to spend less time in the store and may make uninformed shopping decisions. and the employees should fit into this stylish atmosphere. customers won’t shop long! Music—music influences a customers’ mood. where as blue is a calming color. whereas fast tempo music may be better for stores and restaurants that need rapid turnover. lights. All of these things combine to create feelings in customers. Stock-out means that a store has run out of a product (or has not restocked the product) and this can lead to brand switching or store switching. crowds. Crowds—are always going to lead to negative shopping experiences. Climate will affect purchases. Creating a positive store environment causes people to stay in the store longer and the longer a customer spends in a store the more money they are likely to spend. store layout and visible configuration of shelves and merchandise.

An independent retailer usually only has one location and is a small business owned by a person or group of people.PURCHASE BEHAVIOR Buy a substitute product at the original store. The owner then runs the store for the corporation and in turn makes a percentage of the sales as profit. Retail outlets can be an independent retailer. but time can affect consumption in three forms: . Manufacturing companies make the products that retail outlets sell. each with its own level of service and product assortment. this may replace the intended brand for future purchases Wait to purchase until the intended product is available Not make any purchase Purchase the intended brand at another store VERBAL BEHAVIOR Consumer makes negative comments about the original store Consumer makes positive comments about the substitute store Consumer makes positive comments about the substitute product ATTITUDE CHANGE Consumer has a negative attitude about the original store Consumer has a positive attitude about the substitute store Consumer has a positive attitude about the substitute product Retail outlets are physical (or virtual online) stores that sell product/services. Here is a chart with some examples of the different types of retail outlets: Time Time is something that customers give up in order to shop and this is a very valuable thing! It is necessary to give up time for consumption to occur. a chain store or a franchise. A chain store is a store with many locations throughout a region. The amount of gross margin a company makes often depends on their level of product turnover. A franchise is when a corporation sells partial ownership of their store locations to local businesspeople. There are several different types of retail outlets. The less product turnover a company has the more likely they are to need high prices in order to make a profit. McDonald’s is perhaps the best known franchise in the world.

Until the proliferation of the Internet shopping depended on physical stores being located near potential shoppers. which helps regulate our sleeping and awake times. Consumers often purchase things without thinking and don’t consider the consequences. A tracker is a field researcher of the shoppers. Shopping activities. Epistemic Shopping—Customers shop to obtain information about the products they intend to purchase in the near future. It studies shoppers interacting with retail environments (and not only stores – this includes banks and restaurants). ii. Italians. display. so this means they study every rack. entrance. c. Four Types of Shopping Activities i. Acquisitional Shopping—Customers go to the store intending to make purchases and acquire product or services. they are also affected by the amount of daylight. ii. parking lot… every nook and cranny that you could imagine of a retail environment. The most important research tool is a person called a tracker. iii. Overall consumers tend to spend more money in the summer. while those in the UK. Danes. Most people are naturally sleeping (or tired) during midnight to 6am and from 1pm to 3pm. Time of Year—Consumers are affected by the changing seasons. The Science Behind Shopping a. consumers shop earlier in the day. and some Asian countries drink tea. There are usually one of four reasons why consumers go to a store (or visit a shopping website): b. exit. In order to counteract this many people turn to energy drinks and caffeine in the morning hours. iii. Now consumers are purchasing product from around the globe and having it shipped right to their door via the Internet. Experiential Shopping—Recreational activities to satisfy the customer’s need for fun and relaxation.known (and usually higher priced) brand because they don’t have time to consider the alternatives. cashier line. Sometimes people shop just for the experience or due to boredom. Customers in a hurry may choose the well. counter.i. People who shop during these hours may have less energy and may not make informed purchases. Anthropology (behavioral science) has devoted a branch to the study of modern shoppers…. Impulsive Shopping—Spontaneous shopping that leads to a need for self-fulfillment. They . Research in the study of shopping is not high-tech. iv. French and Americans drink coffee. Time Pressure— When customers don’t have a lot of time they tend to process less information because time is important for thorough problem solving. Or they may choose the least expensive product and risk buyer’s remorse (cognitive dissonance). Trackers make their way through stores following every little move a shopper makes. Food items vary with the season and holidays. Consumers can also purchase in other non-traditional ways such as vending machines and the use of their Smartphones to make a purchase from anywhere. but not just according to the product needs such as coats in winter and sunscreen in summer. Time of Day—Everyone has a circadian rhythm. Due to daylight savings time and the increased amount of darkness in winter. and they tend to purchase more comfort products.

How long do customers linger in a store/given area? iv. the sale items. Which areas of the store are the most/least crowded? v. the more you buy. How long are lines? d. Stores are designed to keep you there for hours on end so you’ll buy more! If customers can see over the shelves. After a few bumps the shopper would leave the rack. During an early study of Bloomingdales in New York City. They noticed this by looking at the tie rack that was located right near the doorway they were studying. by Paco Underhill (author of The Science of Shopping) he put a camera in one of the main entrances of the store hoping to study how shoppers negotiated the doorway during its busiest time. Which direction do customers turn when they enter the store? ii. they noticed that shoppers . Here are some of the things a tracker will analyze. They moved the tie rack and sales went up quickly and substantially. and stores take advantage of that to get us to buy more. Where are the sale items located? iii.follow a shopper around inconspicuously and record virtually everything the shopper does – such as how many ties they pick up or how many towels they may touch. i. Theory of the Butt Brush i. 30-40 minutes = average $72. and the bathrooms? . They apply extreme attention to a specific area and then analyze what could make that retail space better for the shopper and more profitable for the retailer. Also. The more time you spend in a store. Paco told this to his client and his client noted that the sales of the ties were lower than usual. but 3 hours or more = average $200. The trackers notice things about the retail environment that a normal employee wouldn’t notice. ii. they will spend more time in the store because they can see the available merchandise. Shopping Habits a. iii.00. What impediments to shopping are there? vi. (that’s why certain items are in easy reach). Then they would be bumped by people heading in and out of the store. i. Essentially humans are pretty predictable. notice how you have to walk through the store to get to the escalator.especially women – don’t like being brushed from behind. People would go to the rack and browse through the ties that were on display. Overview Studies find that it's part of our psychological makeup to do the same things over and over again. Instead. If a shopper touches or picks up the merchandise they are more likely to buy it.

but not too near -. The 5 Types of Shoppers. Touching the product 2. . Shop once a week = 66% chance of making an impulse buy. Discovering Bargains 4. Intimidating Service 7. Talking to employees 5. ―why in the world did I buy that?‖ the answer might have to do with your shopping personality type. The higher the "interception rate" (contacts with employees). ii. Mirrors 3. iii. Placement of key merchandise in a "transition zone" near the door -. Crowded stores and aisles c. v. What Shoppers Like      1. the higher the chance of purchase. the more likely you are to splurge. If you've ever come home after shopping and wondered. vi. Obscure Price Tags 6. Long Lines 3. The Way You Shop Can Influence How Much You Spend. Too Many Mirrors 2. (Being Forced to ask) Dumb Questions 4. Here are some other shopping habits that Paco Underhill (author of The Science of Shopping) uncovered through his research: i.is advised. b.  1. The Touchy-Feely Shopper—a shopper that picks something up and then usually purchases it. Shop 3 or more times a week = 57% chance of making an impulse buy. the more people you shop with. What Shoppers Do Not Like        1. determines the "capture rate" (the percentage of customers who actually "see" a given product on the shelf) iv.iv. Recognition by employees v. You will be more likely to make an impulse buy when shopping with another person. The "boomerang rate" (the percentage of shoppers who failed to walk down the full aisle). Research Discoveries. Merchandise out of stock 5. You will overspend if you wait until the last minute and make one big trip to the store.

All consumers are confronted with unplanned and impulsive shopping decisions. but less so when it comes to items like digital cameras. Six motivation-based shopping orientations of college students i. 4. and then runs around frantically. They don’t enjoy shopping and tend to shop outlets where they are assured of getting the items they need quickly. . iii. Collectors/Gathers: stockpile items and to purchase large quantities to either save money or alleviate the need for shopping. An impulsive purchase is made spontaneously and usually without regard to costs or negative consequences. and there is a difference between making an impulsive product choice and an unplanned one. and purchase task.this type enjoys shopping with friends and almost never shops alone. especially around the holiday season. They like to go to sales and consider shopping to be entertainment. Impulse Purchasing vs. Guerrilla Shopper--the opposite of the mall lingerer. shopping impetus. They attempt to get the best price and take advantage of retailer guarantees. ii. Unplanned purchases are usually made because of a need. they think everything in the store is a bargain. iv. They plan before shopping and like to shop alone. trying to get all the shopping done in one shot. A consumer may make an unplanned purchase because something in the store. ii.    2. They are usually motivated by the need for immediate selfgratification. If they see one bargain. Warehouse stores like Costco may be a bargain when it comes to batteries and cereals. This person waits until the last minute. The Mall Lingerer –these shoppers take their time going through a store. The Sales Junkie--these people are subjected to a spillover effect. Predators: speed oriented in their shopping. Unplanned Shopping i. they tend to make a lot of impulsive purchases. Hibernants: are indifferent toward shopping. making them apt to spend more money. triggers a reminder that they need something. vi. 3. For instance. They like to shop alone. They are willing to search extensively and have little store loyalty. Scavengers: enjoy shopping both to make purchases and as an activity. There shopping patterns are opportunistic rather than need driven and they will often postpone even required purchases. some dollar-store items (like peroxide. iii. 5. tomato sauce and Gatorade) are sometimes cheaper at supermarkets/discount stores. Their shopping approach is based on product type. such as a point of purchase display. The Social Shopper-. Chameleons: shopping styles are situation-specific or constantly changing. Foragers: motivated to purchase only the desired items. They make numerous unplanned purchases. d. v. e.

Give the customer personal attention. or socks to go with their new shoes. Employees can ask consumers to purchase an umbrella to go with their new raincoat. 3. 5. Add-on purchases. . Placing certain products together in the store—such as putting the peanut butter next to the bread—will help consumers remember how well those product go together. or buy 2 for $5. Promotional sales and discounts. and lowers their ability to think about the consequences. Make the consumer feel good. Buy one get one free offers. Make it easy for the customer to buy.iv.00. a ―special‖ deal or free products can create positive feelings. Give the customer less time to think about the purchase with things like automatic one-click buying on a website. 4. when they may not be. causes the consumer to think the products are on sale. 2. How do retailers encourage consumers to make impulse purchases?      1.