1 Study of Factor Affecting Customer Retention

Study of Factors Affecting Customer Retention Market Research

In

SUBMITTED TO

Prof. Sameer Phanse

VPMs Dr V.N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES, THANE

MMS III

Chanakya-15

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INDEX

Genesis of the Report.3 Globus ...........4 Customer Retention5 Objectives of Project..........6 Research Details.....7

Analysis of the main research .......9 Hypothesis Formulation ...14 Testing of Hypothesis and Result......15 Conclusion.....16 Limitations of the Project......18 Recommendation and Suggestions....19 Appendix...20 Bibliography......22

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Genesis of the Report

Retail Industry is booming sector in India. This sector is growing at the rate of 11.4% (acc. BMI India Retail Report2009). It is divided in to organized and unorganized retail sector. Organized retail constitutes about 3% of total retail market whereas remaining 97% is of unorganized. Apparel and food sector are major sector in organized sector. Globus of R. Raheja group is the first Indian brand to enter into the fashion clothes. The company focus is to provide fashionable clothes to changing India. The company was successful to achieve good growth and build itself as brand in minds of customer at initial stage. Company suffered higher losses in the recession period and even fails to meet its profit target after completion of that period. The company finds out that the earlier customer of globus are not coming back to repurchase its clothes. So to retain the customer is big challenge faced by company The purpose of this report is to find out which are the factor affecting the customer retention and the areas where globus should improve itself to provide better service to customers. The methodology used in the project was interrogation study, observation techniques, and study of graphs, charts and questionnaires. Statistical tools such as Chi Square Test were used to determine the grey area where preventive actions need to be taken. This report not only identifies the problematic area but also provides suggestions and recommendation to take corrective measures.

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globus
History: globus is part of Rajan Raheja group. The company launched in January 1998. This company deals with the apparels and clothing. The store is of Department Stores type in retailing. The company opened its first store in 1999 at Indore followed by launch of second store in Chennai. The flagship store in Mumbai was opened on 1st November 2001. There are 24 stores of globus all over India. Mission: Achieve customer delight by offering quality product and service through a process of continuous innovation and adaptation. Build a dynamic team of committed and passionate employee through sustained learning and grooming Develop mutually beneficial relationship with our business partners Employ cost effective process and thereby create strong organization

Customer Loyalty Program of GLOBUS "PRIVILEGE CLUB"

The customer reward program followed at Globus is called the 'Globus Privilege Club'. This is the first of its kind program in India where the members are rewarded immediately for their purchase at any of the stores. Three types of membership cards: Privilege Card Gold Card
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Customer Retention
Many Companies are looking for growing their business and profit, for that they are ready to spend their time, money and resources in the search of the new customers. Companies are using all possible channels, tools and skills for acquisition of new customer. Though it is not sufficient to acquire only new customer, company must keep the existing one. Many companies suffer from high customer churn. Customer retention is always economical than customer acquisition as acquisition costs 5times more than customer retention. Traditionally companies emphasis on making sales instead of relationships building or caring for customer after sales. Benefits of Customer Retention: Retained customer buys company product new and existing one. Talks In favor of company and its product. Easily accept new product and innovation in product of company. Cost less to serve than new customer due to familiarity with process. Offer product and services to others, giving mouth publicity. Ignores competitive brand, product and advertisements. Less sensitive to price. Customer Satisfaction: Whether the buyer is satisfy after purchase depend upon the offers performance in relation to buyers expectation. If performance falls short of expectation customer became dissatisfied. Customer satisfaction is needed for customer retention. A Satisfy Customer bring customer back for purchasing in company.

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Objectives of Project

In Retail Industry customer retention is extremely important. It is something which can make or break a business as customers are what make the business operate. If there are no customers, then there is no business. Generally for retaining one customer company required 1% amount & for acquiring same customer required 5times of the amount.

So to reduce this expenditure store is focusing on customer retention. To understand the factor affecting on customer retention. To analyze reasons for customers brand switching. To analyze the current perception about Globus in minds of customer To identify the companys position among competitors. To understand retail industry.

The market research is based on the basis of above parameters so that reasons behind customer research can be successfully find out.

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Research Details
Research methodology:- A system of model, procedures and techniques used to find the results of a
research problem.

This study is simultaneously investigating multiple direct links between service, quality, and behavioral intentions of customer retention. This research is study of consumer buying behavior, their perception, satisfaction, need and wants. It explores the factors which are necessary to retain customers by the retailer, because customer retention has a more powerful effect on profits than market share. Research Type:Type used in research is Descriptive type. The objective of descriptive studies is to answer the WHO, WHAT, WHEN, WHERE AND HOW of the subject under investigation

Research problem: Globus is located at Teen haat Nakas Eternity Mall, Thane. When store was established it was doing excellent revenues to the company but now sale has decreased. In the year 2008-09 it was 7,13,60,570 and now it has decreased up to 4,99,87,799 which is about 29.99%. The recession period was the worst time for globus and it had incurred tremendous losses. Even after the end of this recession store become failure to achieve its target. By studying customer database it was observed that the earlier customers who were shopping at globus are not coming back for shopping specially after the opening of Korum mall. These customers are the gold card holder customers who were contributing major part in the profit of globus.

To identify why the customers are switching from globus to other brand this research was conducted.

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Information Required.

Primary data Survey of consumers though questionnaire Observation : Observation made on the competitor malls and competitor stores/brands in this mall. This observation was based on different parameters like their collection of apparel, quality, prices, staff and service, visual merchandising and arrangement in mall, total environment of mall and stores, also different other stores and things which attracts the consumers to come in these malls.

Secondary data Customer database that have been not purchase from last 6th months. Existing Customer database Sales report before & after starting competitors store/mall. Sample area:The area covered for the research is Thane especially Ghod Bander Road as most of the target customer of globus resides at Ghod Bander Road . Sample size:The sample size for the research is of 100 candidates. Type of sampling:- Convenient Sampling The sampling method used for this research is Convenient Sampling as customer who have not purchased were selected and from them some of the customer were not ready to give their opinion

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Analysis of the Research

Q1.Which things you consider while going to shop your apparels?

Price Brand 4 10 7 9 16 20 34 Brand ambassador Advertise Collection of apparel Service

Options were asked to know which factors influence there buying decisions. From above graph it can be seen that 32 respondent prefer the collection of apparel of the shop i.e. they prefer shop which will give them nice collection of apparel. While 20 respondents go for brand they will only buy the branded product and 16 respondents lookouts for prize of the clothes. Out of remaining respondent 10 look for what kind of service they get, 9 took recommendations, 7 go for advertisement and 4 look at the Brand ambassador.

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Q2. Which mall do you prefer for shopping?

Options were given to customer for choosing a mall they prefer for shopping. The option of the mall given are from thane. This is because sample population is from thane and

13

17 Eternity

customer usualy prefer to go in nearest mall for day to day shopping. Objective of the question is to know wheather the globuss location is one of the reason for customer switching or not. 38 out of 100 prefer Korum mall for shopping 32 respondent prefer R-mall and only 17 prefer Eternity mall for shopping while remaining 13 having no preferance or they prefer some other mall/shops for shopping.
R mall Korum Others

38

32

Q3. Which things do you like about mall you mentioned in previous Question?

In this question respondent has to choose the possible factors for which they prefer the mall they mentioned above. 28 customer prefer the mall which is having the product for every

Variety of brands 15 28 11 19 27 Accessiblity Environment Every thing undder one roof Prices

segment i.e. product required by every member in the house, from child to adult. This is followed by 27 respondents who opt for variety of brands available in the mall. From remaining respondent 19 prefers accessibility i.e. easy to reach place, 15 look out for price and 11for environment.

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Q4. Rate the collection of apparels of globus

Options were given from very bad to very good to know the customers perception about the collection of apparels. Above graph is showing that 35 out of 100 customers are

10 14 17

24

Very Bad Bad Average

having bad perception about the collection of apparel in the minds of costumers while 24 customers are having very bad impression about collection of apparel in globus where as 17 think it is average, 14 think it is good and remaining 10 thinks its very good.

35

Good Very Good

Q5. How do you find the collection of apparel in globus?

Respondents were told to mark the various options according to their preference. Here customer has to choose option to

6 39 8

26

Fashionable Affordable

describe collection of apparel in globus or what is their opinion about it. 39 among the respondent said globus collection is repetitive, while 26 opt for trendiness. 21 out or remaining said it is affordable while only 8 respondent said it is variety giving.

21

Variety giving Repetitive other

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Q6. Which brands other than globus you prefer to shop?

In this question options were given on the basis of Pilot study to know which competitive brand respondent prefer most for shopping/ where the customer had switched most. Response of the customer shows that

12 15 20

Life Style 28 Pantaloons Shopper's Stop 19 West Side Reliance Trend others

customer preference for Life Style is most and 28 customer prefer this brand while 20 prefer Shoppers Stop Followed by 19 people who prefer pantaloons, 15 West Side and 12 go for Reliance Trend and remaining prefer others.

Q7. Which things do you like about other brands/Shops you mentioned earlier?

Respondents were told mark the various options according to their preference for the specialty or features for which they

Collection of apparel 9 5 28 Price Quality 10 16 Variety Service Others

prefer brand they mentioned in earlier question. 32 respondents prefer the brand which gives variety to them, 28 look for the

32

brand which will give them nice collection of apparel of particular brand. While 16 look at the quality of brand, 10 go for the price followed by 9 respondents prefer service given by brand and 5 opt for other things

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Q8. Should globus include variety of brands? If any other pleases Suggest. This was an open ended question in that customer has to answer that if globus include more brands, would they come to globus for shopping again or not? Many of the customers give positive response to this question i.e. they are ready to come back to globus if they keeps variety of brands. Suggestion for the brand from them are like Me, And, BIBA, Peter England, Levis, Park Avenue, Mufti, Pepe, Lee, variety in Spykars etc. Q9. Can you recall any recent adv/promotion of globus? Where? This was an open ended question. Very few of the respondents were able to recall the advertisement/promotions of globus, mostly the customer remembers advertise did by earlier brand ambassador KAREENA KAPOOR which was in media last year but not now. Some of the respondent recall advertises in Hoardings of thane road and some customer gets the SMSs from about sale in the globus and some recall ads in news paper. Except these no any other advertise/promotion are noticed by customers. Q10. Suggestions for globus In this question customers have to give suggestion for improvement in globus. Customers give suggestion regarding the type of the collection they keep in their shop. Mostly they want the variety in the collection of apparel. Also they wanted to see some new sections in the globus in feature like the traditional section in Mens ware, more clothes in Kid section with toys and stationary, lingerie, Foot ware, cosmetics and perfumes. Some of the respondents make complaint about size unavailability and unawareness about the sale season and some makes complaint about offers given by globus. Some of the respondents suggest improving section like Panjabi Suits, Women and Men Formal ware, Kurti Section etc.

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Hypothesis Formulation

The data compiled through the questionnaire is of qualitative nature and so Chi- Square Test can be applied on the Null (H0) and Alternate (H1) Hypothesis

The results are obtained by considering the Parameter used to rate the collection of apparel in globus

The results are shown below: The hypothesis for the study is defined as below:

Null Hypothesis (H0) customer retention (in globus). Alternate Hypothesis (H1) customer retention (in globus)

: There is no significant effect of the Collection of apparel on the

: There is significant effect of the Collection of apparel on the

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Testing of Hypothesis

Out Put: WEIGHT BY frequency. NPAR TEST /CHISQUARE= Lable /EXPECTED= EQUAL /MISSING ANALYSIS. Chi-Square Test: Frequencies Lable
Observed N Very Bad Bad Average Good very good Total 24 35 17 14 10 100 Expected N 20.0 20.0 20.0 20.0 20.0 Residual 4.0 15.0 -3.0 -6.0 -10.0

Test Statistics Lable Chi-Square DF Asymp. Sig. 19.300

a

4 .001

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.

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Result

Chi Square Value Parameter Table Value (5 % significance)

Contractor Compliance

18.47

19.300

Chi square value is greater than Table value thus null hypothesis is rejected
Therefore the Collection of apparel shows significant effect of on the customer retention in globus and as the most of the customer opt for bad option it can be concluded that poor collection of apparel affecting the customer retention.

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Conclusion

In retail sector the product is combination of goods and services. From the data analysis it can be seen that very few customers are satisfied with the collection of apparel in the globus. Product offered by globus is trendy, having good quality but repetitive. Globus always offers something different than other to customers but over the period of time the collection of globus has got saturated therefore the consumers are not coming back to buy its clothes. This analysis also states that brand which offers variety in clothes are preferred by customer and customer would like to see such variety in globus also. From the above graphs and data it can be concluded that place at which globus is having its outlet i.e. at Thane Eternity mall is not preferable by respondent for shopping resulting in to less foot fall which intern resulted into less customer coming to globus. Also it is observed that other competitive mall like R mall and Korum is having more brands and different type of things under one roof i.e. products for everyone in house, which may be the reason for not choosing the mall by customers. While going for shopping many of the customers take variety and type of the collection of clothes in mind also brand name, price etc From the above graph it can also be concluded that globus is lacking in the promotion/ advertisement or the promotion/ advertisement done by globus so they are not recognized by the people. This is resulting in to the less visibility of the globus.

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Limitations of the Project

Time Constrain: There are many aspects within this research area but this study is focusing on some of them. It is believed that more amount of data give higher accurate results. But due to time limitation it was difficult to get high amount of data so a complete picture of topic will not provided.

Cost constraint: Research is a costly process. Different costs are involved in the research. As it was academic research cost is one of the limitation

Restriction in sample selection: There was a restriction in sample selection as many of the customers were based at thane Ghod Bunder road and also the survey has to done on the switched customer only so it was not possible to get response from everyone.

Respondent Bias: This thesis will be based on more on primary data which get collected from the customer. There may be some biased customer which will affect final result.

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Recommendation and Suggestions

Product: Globus should offers a wide range in Own Brand and also include product of others brands to provide variety to consumer. Should include other product which varies from mens traditional wares, Accessories, Foot Wares, Cosmetics etc. Price: Can introduce new segment pricing lesser than existing Place: Can open new outlet in nearby area of target customer as its strong competitors are at nearby area. Promotion: Sponsoring events Advertisement:- TV Commercials, Effective print ads, Internet ads, other out door ad media. Branding:- Branding can be done through Brand Endorsement by Celebrity. They should change the perception of customer for brand from Globus Fashion for changing World to fashion is equal to globus / fashion only at the globus Relationship Marketing: Globus can use customer relationships strategies to retain their customers. It will help to hold the customer. Globus can take the ideas and suggestion from their sales executive because they are the one who are in continuously contact with the customers. Competitors analysis is very important to study competitors plan and move to modify companys strategy accordingly to that. So it should be done on regular basis. Continues research should be done to know which are the current trends in the market also ti helps to bring innovations in product and to deal with customers changing tests and wants which is required to be in market

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Appendix
Questionnaire
Name: Tel No: Which things you consider while going to shop your apparels? Brand Collection Price Brand Ambassador Quality Advertise Service Age :

Recommendations

Which mall do you prefer for shopping? Eternity R mall Korum Others

Which things do you like about mall you mentioned in previous Question? Diff Brands Accessibility Environment Everything under one roof

Rate the collection of globus Very good Good Average Bad Very Bad

How do you find the collection of globus? Fashionable Affordable Repetitive Variety giving

Which brands/Shops other than globus you prefer to shop? Life style Pantaloons Shoppers Stop West Side Others

Which things do you like about other brands/Shops you mentioned earlier? Collection Price Variety Service Others

Should globus include variety of brands? If any other please Suggest

Can you recall any recent adv/promotion of globus? Where?

Suggestion for globus

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Chi-square Table

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Bibliography
Retail Marketing Management, Gilbert, Pearson R. Paneerselvam, Research Methodology, Prentice Hall of India, New Delhi, 2008

Webliography

www.globus.in www.wikipedia .com www.businessmapsofindia.com www.ibef.org

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