01 Chapters 01-04 USDS 01-11-2017 PDF
01 Chapters 01-04 USDS 01-11-2017 PDF
01 Chapters 01-04 USDS 01-11-2017 PDF
CHAPTER - I
INTRODUCTION
1.1 INTRODUCTION TO RETAILING
The Indian Retail Industry is the fifth largest in the world. Comprising
of organized and unorganized sectors, Indian retail industry is one of the
fastest growing industries in India, especially over the last few years. Though
initially the retail industry in India was mostly unorganized, however with the
change of taste and preferences of consumers, the Industry is getting more
popular these days and getting organized as well. The Indian Retail Industry is
expected to grow from US$330 billion in 2007 to US$640 billion by 2015.
According to the 10th Annual Global Retail Development Index (GRDI) 1 of A.T.
Kearney, India is having a very strong growth fundamental base that’s why it’s
the perfect time to enter into Indian Retail Market. Indian Retail Market
accounts for 22% of country’s GDP and it contributes to 8% of the total
employment. The total retail spending is estimated to double in the next five
years. Of this, organized retail –currently growing at a CAGR of 22%- is
estimated to be 21% of total expenditure. The unorganized retail sector is
expected to grow at about 10% per annum with sales expected to rise from
$309 billion in 2006-07 to $496 billion in 2011-12. This paper focused on
changing face of Retail Industry, organized or unorganized retail industry,
major players in retail industry and also highlights the challenges faced by the
industry in near future.
1 A.T.kearney, 2006, “Emerging Market Priorities For Global Retailers”, Global Retail
Development Index, 2006
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have stepped up their defenses and are striving to gain edge over global
players by using their knowledge of local markets. Clearly the next wave of the
retail boom is upon us.
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India’s sheer market size and the purchasing power of its growing
middle class have contributed to its growing middle class have contributed to
its prominence as a retail destination. The market remains quite fragmented,
yet organized retail has made impressive gains in 10 years. Regulatory
challenges prevented many retailers from entering, while others were forced
into the unfamiliar stance of entering the country with a partner. Despite the
hurdles, postponing entry into India is not an option, given the crunch for
desirable real estate. Foreign retailers that can successfully forge local
partnerships and establish a network posed for growth will find India a
rewarding market.
According to Ireena Vittal, McKinsey said that she is clearly seeing five
trends in the Indian economy: (i) Shoppers are getting richer faster. India has
one of the youngest population in the world which has a high acceptance of
new brands. (ii) Many more Indians are emerging within the country
geographically and digitally. The top eight cities of India are countries in their
own right in terms of population and purchasing power. At least ten states
have developed a very large consumer base, with each going at differentiated
rates.
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Before entry of the modern retail store chains in India, an early form of
‘supermarket’ had existed in India for the last many decades in the form of
Super-Kirana. It is a single-unit, family run, ambient, more efficient than
traditional kirana store. These are still popular, especially in small towns.
Economic reforms in 1990 provided the right kind of environment for the
development of modern retail in India. It is only for a decade or so that a
western-style supermarket, although on a smaller scale, appeared in India,
mainly in southern cities such as Hyderabad, Chennai, Bangalore, Madurai,
Coimbatore, Hubli - Dharwad, Visakhapatnam and also in New Delhi and
Mumbai. Traditional kirana stores and supermarkets are the most visible face
of retailing in India. Apart from these there had been many retail ventures in
India, mainly led by private sector, which over a period of time have become
modern face of Indian retailing. Retail growth is not just confined to metros
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like Delhi, Mumbai, Kolkata, Hyderabad, Bangalore, and Chennai, but non
metros like Vijayawada, Tirupathi, Mysore, Tiruchirappalli, Surat, and Indore,
Chandigarh and small cities and towns are catching up very fast. These cities
projected to touch over US$ 20,000 million by 2010-11. With the growth in
the IT / ITes sector and other sunrise sectors like bio-technology, hospitality,
etc. concentrated on these cities. The metros have experienced exponential
growth over the past few years, and are expected to demonstrate robust
economic performance in the coming years. Indian market is well diversified
and almost every type of customer is found here just like in other parts of the
world.
The southern part of India is undoubtedly the most literate part of the
entire country. It has the highest percentage of literacy and also has the
highest number of organised retail stores compared to any other region. It is
in many states of South India that most of the biggest global names in the
InfoTech industry have their offices and an extremely large pool of manpower
talent have brought more prosperity to these states. It is also said that the
organized retailing in India in-fact originated from the south and has been
gradually spreading to the other parts of the country. Metros like Bangalore,
Hyderabad, and Chennai are growing at an exceptional rate, with the retail
buzz in these cities becoming more pronounced day by day.
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A boom in the retail sector has helped the new players to explore new
markets, but still huge challenges are faced. The government has limited
the Foreign Direct Investment (FDI) for 51% in the field of retail for any Single
brand in a view to protect the small scale retailers and even delaying the FDI
approvals. Due to this in the long run, it would affect the opportunities and
Technological Innovations. The tax system in India differs from one state to
another, which is forcing the organized sector to restrict them in expanding
their business. A Uniform central tax system would be an ideal solution to get
rid of this hindrance.
Another huge challenge faced by the organized retail sector is the lack
of government initiatives is amendments in Labor Laws, Tenancy legislation
etc. The Labor laws should be relaxed, where it’s difficult to manage
employees in the operations. A special clearance should be taken for extended
working hours. Laws pertaining to restriction of Inter-state flow of goods
should be eased and the clearance of licenses and other regulations should be
done quickly. The factors that triggered the exponential growth in the sector.
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Conceptualization (1990-2005)
The threshold of the year 1990 witnessed a new beginning in retailing
business. This time it was not the manufacturers looking for an alternative
sales channel, but it was the pure-play retailers who entered the retail market,
to expand the industry. Some of the notable examples are Pantaloon’s
Shoppers Stop and Lifestyle. It is interesting to note that most of the new
retailers in this era focussed on apparel and other fashion related categories.
An important occurrence during this time was the liberalisation of Indian
economy and opening of entry opportunities for foreign brands/retailers. The
first generation of international retailers to make an entry during this phase
include McDonald’s, Benetton, Levi Strauss, Adidas, Reebok, and Nike
(Cushman & Walkfield 2010).
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In the real estate front, there is frenetic activity with a large number of
malls proposed or developed across major metros and upcoming tier-II cities.
One of the main reasons, for luxury retail not taking up in India is the lack of
luxury retail environment. There is an evident lack of space for premium
brands which led the early entrants to restrict their presence to star hotels in
big cities alone. (Cushman & Walkfield 2010).
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On the basis of the above information, FW defined its objective as: "To
offer the Indian housewife the freedom to choose from a wide range of
products at a convenient location in a clean, bright, and functional ambience
without a price penalty."
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Within a short period, SSL emerged as the largest single retailer for
Levis, Pepe, Lee, Arrow, Zodiac, Reebok, Nike, Parker, Ray Ban, Swatch,
Chambor, Revlon, Lego, Mattel and many other leading brands. The company
closely monitored the movement of all brands, and if any brand failed to meet
customer expectations, it was phased out. SSL also launched a range of
private labels like Life, Kashish and Karrot in the premium classic, value
classic and value fashion segments. A team of designers were recruited from
India's premier fashion design institutes to develop private labels.
Earlier, Indian customers were used to shopping for their apparel and
accessories at various shops (as no shops offered all the products at one
place), which paid little or no attention to the ambience or the comfort of their
customers. SSL, apart from offering a complete range of garments and
accessories, included central air – conditioning, impeccably maintained trial
rooms, beautiful rest rooms, play area for children, large car parking, in –
store café, and other services such as alterations, goods exchanged without
any questions and gift wrapping.
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Weaknesses
Demographic differences between the regions require a regionally
adjusted approach to business.
Presence of a significant number of strong and well-established players in
the sector limits market entry potential.
Relatively small domestic market limits growth opportunities.
High real-estate and distribution cost are the obstacles for growth of retail
in India.
Opportunities
Increasing awareness of consumers about products and services.
Changing consumers’ requirements and lifestyles.
Innovation for new product development.
Private label sector has been boosted by economic downturn
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Threats
Economic slowdown is having an adverse effect on consumer spending.
Rigid government policies and regulations restrict the entry of new
players.
Price competition among retailers puts downwards pressure on margins.
Entry of International players in Indian markets consumes the share of
Indian retailers.
2 Taneja, A. (2005) Keynote address. 2nd annual ICSC-India Shopping Center and Retail
Conference; 29–30 August, Mumbai.
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3 Singh, H. and Bose, S.K. (2008) My American cousin: Comparison between Indian and the US
shopping Malls. Journal of Asia-Pacific Business 9 (4): 358–372
4 Mehta, R. (2007) A study on the Indian real estate market for investment: A qualitative
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5 Tiwari, M. (2008) Big brands plan to pull out of malls. The Economic Times 21 September:
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“In the 1970’s, products were made from the manufacturing, rather than
the customer point of view. But with the focus shifting to the consumer,
marketing has assumed a much larger role”.
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A brand (or marque for car model) is a name, term, design, symbol, or
other feature that distinguishes an organization or product from its rivals in
the eyes of the customer.[2][3] Brands are used in business, marketing,
and advertising.
The AMA recognizes that, brands today are much more than that. As
can be seen, according to these definitions brands had a simple and clear
function as identifiers. Before the shift in focus towards brands and the brand
building process, brands were just another step in the whole process of
marketing to sell products. For a long time, the brand has been treated in an
off-hand fashion as a part of the product, . Branding is a major issue in product
strategy. As the brand was only part of the product, the communication
strategy worked towards exposing the brand and creating a brand image.
Within the traditional branding model, the goal was to build a brand image, a
tactical element that drives short-term results. It is mentioned that the brand
is a sign–therefore external-whose function is to disclose the hidden qualities
of a product which are inaccessible to contact. The brand served to identify a
product and to distinguish it from competition. In the journey from product-
centric brands to customer-centric brands, many consumer companies have
locked in on a transitional concept – segment-specific brands. While brand
Nike focuses on physically active consumers, brand Disney focuses on parents
with small children. This is a significant step in the right direction and it
reflects growing awareness of the power of customers.
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A brand means much more even than its product and service features.
Brands are built from nothing less than the sum of a customer’s experiences
with a product, service or company. Customers’ total brand experience
determines whether a customer buys anything more from the company and,
just as importantly, whether the customer spreads awesome or awful word of-
mouth to friends and family. In effect, the brand experience moves a consumer
up the ladder of loyalty from a mere consumer to a brand evangelist.
Organizations have realized that a strong identity can help them align
with the marketplace, attract investment, motivate employees and serve as a
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means to better differentiate and position their products and services in the
minds of the consumers. Thus, many organizations are striving to develop a
distinct and recognisable corporate brand identity. Brand identity is based on
a thorough understanding of the firm’s customers, competitors and business
environment. The Brand identity needs to reflect the business strategy and
the firm’s willingness to invest in the programs needed for the brand to live
up to its promise to customers. Strong brands enjoy customer loyalty and a
potential to charge premium prices, and considerable brand power to support
new product and service launches. Companies need to have a thorough
understanding of the customer beliefs, behaviors, product or service
attributes, and competitors. Consumer-brand knowledge can be defined in
terms of the personal meaning about a brand stored in consumer memory,
that is, all descriptive and evaluative brand-related information.
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1991 economic reforms. They have had competition from Indian apparel
retail brands and moreover with the rise of consumerism, the difference of
perception of various brands is decreasing thus bridging the gap between the
big cities and other urban centers. Regional differences in India have also been
incorporated in this review to uncover the changing Indian consumer market.
2001). The experiential aspect invariably consists of the sum of all points of
contact with the brand and is known as the brand experience (Brakus et.al,
2009) which is a brand's action perceived by a person. Brand experience as a
concept is defined as certain sensations, feelings, cognitions, and behavioral
responses evoked by brand-related stimuli which arise as part of a brand’s
design and identity, packaging, communications, and environments (Brakus
et.al, 2009). The psychological aspect, sometimes referred to as the brand
image, is a symbolic construct created within the minds of people, consisting
of all the information and expectation associated with a product, service or
the company that is providing them (Engel, Blackwell & Miniard, 1995; Dacin
& Mitchell, 1986).
Today, the search for the ties that bind customers to brands has taken
on fresh urgency. The branding aspect of commodities acts as an integral part
of brand’s sustainability (Okonkwo, 2007). The brand is the reason why
consumers associated themselves with a company that creates and sustains
the attraction and desire for products (Bororian & Poix, 2010). The equity
markets are volatile and venture investors are chastened, so loyal customers
represent a company’s best prospects for pumping capital into a business
which can be counted on to build a solid base of revenues as well as to expand
profits.
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brand name at the rudimentary level (Hoyer & Brown, 1990). In this context,
Rossiter and Percy (1987) related brand awareness to (a) the consumers’
ability to trace a brand in different conditions and (b) the likelihood that a
brand will easily come to consumers’ mind. Similarly, increase in brand
awareness raises the likelihood that the brand will be considered more
frequently while purchase is made (Baker et al., 1986). Brand image is
generally the perception of the product by the consumer which links features
or characteristics of a particular brand to consumers’ memory and builds a
general brand impression. It is quite evident that brand awareness and brand
image influence the formation and strength of general brand impressions.
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are its actual characteristics. According to there are at least nine brand
associations. The associations convey either the concept, or the meaning of
the product in terms of how it fulfills a customer’s need. From a brand
association perspective felt that brand equity is closely related to brand
association. “A brand association is anything linked in memory to a brand”
(Aaker, 1996). The researchers also suggested that brand association can be
divided into three major categories: attributes (including product-related
attributes and non-product-related attributes such as price, brand
personality, emotions and experience), benefits (what customers think the
product or service can do for them, including functional benefits, symbolic
benefits and experiential benefits) and attitudes (customers’ overall
evaluations of the brand) (Keller,1998). The most powerful brand
associations are those that deal with the intangible or abstract traits of a
product. Brand association can assist with spontaneous information recall and
this information can become the basis of differentiation and extension. Strong
association can help strengthen brand and equity. Similar to perceived quality,
brand association can also increase customer satisfaction with the customer
experience.
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remains just as a printed record on a good. A brand transfers its equity into
the process of production and distribution, which constitutes the essence of
service sales as well. Brand values need to be embodied in a brand symbol.
The representatives of cognitive psychology state (Keenan, 1976; Lakof, 1987)
that it is easier to define certain categories indicating their typical features
instead of exactly naming the attributes of a good that require judicious parts
of those categories. Every brand forces to think spontaneously about
particular goods more in comparison with another, as well as about particular
actions as a means of communication. Prototype goods contain various
elements of brand identity. Some prototype goods are able or rendering brand
identity, regardless of the fact that brands, in essence, develop identity; Values
of brand identity transfer the essence of brand only then if they exist within
the essence of brand. Tangible and intangible realities go one after another as
values manage certainty and certainty manages these values. For example, the
identity of Benetton brand is constituted by tolerance and friendship.
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By building customer trust and loyalty to the family brand name, all
products that use the brand can benefit. Good examples include brands in the
food industry, including Kellogg’s, Heinz and Del Monte. Of course, the use of a
family brand can also create problems if one of the products gets bad publicity
or is a failure in a market. This can damage the reputation of a whole range of
brands.
(ii) Individual Brand name-An individual brand name does not identify a
brand with a particular company. For example, take the case of Heinz. Heinz is
a leading global food manufacturer with a very strong family brand. However,
it also operates many well-known individual brand names. Examples include
Farleys (baby food), Linda MacCartney Foods (vegetarian meals) and Weight
Watcher’s Foods (diet/slimming meals and supplements). Why does Heinz
use individual brand names when it has such a strong family brand name?
There are several reasons why a brand needs a separate identity – unrelated
to the family brand name:
The product may be competing in a new market segment where failure
could harm the main family brand name
The family brand name may be positioned inappropriately for the target
market segment. For example the family brand name might be positioned
as an up market brand for affluent consumers.
The brand may have been acquired; in other words it has already
established itself as a leading brand in the market segment. The fact that it
has been acquired by a company with a strong family brand name does not
mean that the acquired brand has to be changed.
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Consumers may likely use the brand and products in line with their
own personality traits, in other words, all the marketing activities are aimed
at having consumers believe and recognize a brand personality, and
reinforcing the communication between the brand and the consumer (Govers
and Schoormans, 2005), in order to enhance the brand’s loyalty and equity.
Brand personality has become a widely discussed issue in recent years. It has
been emphasized in many brands and products, including durables goods,
consumables goods, entertainment and luxury goods, and so on (Kumar et al.,
2006; Govers and Schoormans, 2005; Mengxia, 2007). Consumers may have
their own preference for the brand and product in compliance with their
brand personality and personality traits or their own concepts (Govers and
Schoormans, 2005). However, in fact, brand preference only involves in the
affection in brand loyalty, it may not develop any purchase behavior.
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Service firms should follow a proactive approach i.e. begin the service
and satisfaction management process before they even come in contact with
customers and also be reactive i.e. look forward for customers to complain,
welcome them and tell them what to do. This study is an attempt to develop a
thought on how to focus on enabling and keeping promises in service firms
because how promises are kept is a clear indication of how strong and for how
long shall the customer relationship be. The service sector dominates the
Indian economy today, contributing to more than half of our National Income.
Since services are intangible in nature and cannot be checked before the
purchase is actually made therefore, it is very critical to deliver what has been
promised to the target customer.
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Product use is often of great interest to the marketer, because this may
influence how a product is best positioned or how we can encourage the
consumption of a product in market. Consumer behavior involves services
and ideas as well as tangible products. The impact of consumer behavior on
society is also relevant. For example, aggressive marketing of high fat foods, or
aggressive marketing of easy credit, may have serious repercussions for the
national health and economy. Services are also marketed in much the manner
as goods and commodities. Still there are wide difference between goods and
services based on their characteristics and attributes.
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CHAPTER - II
REVIEW OF LITERATURE
2.1 INTRODUCTION
Review of literature is an indispensable part of any research as it
enables the researchers to carry out their research in various dimensions. By
reviewing the earlier studies related to a relevant area in which the research
is intended to be carried on, the researcher comes across the various ways in
which it was initiated, the path through which such research explored and
how it reached its destination. Hence, this study is the upshot of the earlier
studies related to consumer behaviour in organized retail stores which could
be found in various international and national journals and magazines. The
review has led the present study to be meaningful and thought provoking. The
various reviews collected were grouped into four sections as reviews related
to retail industry, Branding, and consumer behaviour and brand related
consumer behaviour for better understanding.
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The changing retail structure has provided the consumers with more
options in the form of formats and services such as less travel time, large
variety of products and quality products etc, as observed by Popkowski et al
(2001).
Dixon (2005), delineated that the recent best practice research and
guidance has emphasized the important role that can be played by retail-led
urban regeneration projects, particularly in ‘under-served markets’ in the UK.
His paper critically examined the role of retailing in urban regeneration
focusing on in-town shopping centres located in inner city areas of the UK.
The paper is based on the case study research in these centres, and was
completed during 2003 for the office of science and technology. The paper
examined how employment impact in retail-led regeneration is commonly
measured and calls for more research to determine the real impact of retail in
deprived communities using other relevant measures.
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Prasad & Reddy (2007) elucidated that Indian food and grocery retail
sector is in the transformation mode for various reasons like strong macro-
economic fundamentals. The changing socio-economic scene drives the
traditional and the small scale retail outlets into organised retail formats
which are aimed at catering to the evolving tastes and needs of the discerning
consumers. But the very fast changing trends in food and eating habits of
consumers have contributed immensely to the growth of ‘Western’ format
typologies such as convenience stores, departmental stores, supermarkets,
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Sinha & Kar (2007), enumerated in their analysis that the Indian
retail sector is going through a transformation and this emerging market is
witnessing a significant change in its growth and investment pattern. Both
existing and new players are experimenting with new retail formats.
Currently, two popular formats hypermarkets and supermarkets are growing
very fast. Apart from the brick -mortar formats, brick -click and click-click
formats are also increasingly visible on the Indian retail landscape. Consumer
dynamics in India is changing and the retailers need to take note of this and
formulate their strategies and tactics to deliver value to the consumer. Their
analysis also investigated the modern retail developments and the growth of
modern formats in India.
Sinha and Uniyal (2007), in their study found that retailing is one of
the largest industry in India and one of the biggest sources of employment in
the country. Retail sales in India amount to $180 billion and account for 10-11
% of gross domestic product. The Indian retail market has around 14 million
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outlets and has the largest retail outlet destiny in the world. The retail
industry in India is largely unorganized and predominantly consists of small,
independent, owner-managed shops. However the retail sector in India is
witnessing a huge revamping exercise as the traditional retailers are making
way for new formats. These modern retail formats provide wide variety to
customers and offer an ideal shopping experience with an amalgamation of
product, entertainment and service, all under a single roof. The Malls,
convenience stores, department stores, hyper/supermarkets, discount stores
and specialty stores are the emerging retail formats that provide different
shopping experience to consumers, (Sinha and Kar, 2007).
Sreejith & Jagathy Raj (2007), in their study discussed that IT and
related services played a major role for India’s current 9.2. GDP growth.
Organized retailing in India is one more example for its open economy. The IT
industries were able to develop a demand for Indian talents all over the world
and improved their living standards. It directly impacts only a small minority
of Indian population while organized retail affects every single Indian and
every sector of Indian society. Their study gives a glimpse of the slow
evolution of retail markets over the years in India and its contribution for
economic growth. The likely positive impact of this revolution in different
sectors is enumerated. The study also reveals the consumption pattern of
society, increased customer satisfaction and likely change in the market
shares of the different types of sellers.
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Dr. Biradar et.al. (2008), in their article pointed out that the
organized retail sector is registering tremendous growth fuelled by the
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The study by Dash et al (2009) and CII (2008), depicted that growing
middle class, large number of earning youth customers, increase in spending,
and improvement in infrastructure, Liberalization of Indian economy and
India’s booming economy are the various opportunities for organized retailing
in India. On the other hand, complexity of taxes, lack of proper infrastructure
and high cost of real estate are the hurdles which need to remove for retail
success in India. Enjoyable pleasant and attractive in store shopping
environment increases the chances of impulsive buying among consumers,
Crispen et al (2009).
Jain and Bagdare (2009), in their study found that layout, ambience,
display, self service, value added services, technology based operations and
many more dimensions with modern outlook and practices are the major
determinants of modern retail formats.
Prasad & Ansari (2009), stated in their study that web store
environment and customer service have significant impact on the willingness
to buy from online retail stores. They have also identified that customer
service and online shopping enjoyment have significant impact on the
willingness to buy from online retail stores than the perceived trust.
While the study by Ali and Kapoor (2010), indicated that a higher
income and educational level of consumers influences their decisions on
product and market attributes while gender and age seems to have no
significant impact.
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billion Euro making it the fourth largest retailer in the world behind Wal-Mart
(a turnover of 271 billion Euro), Carrefour (82 billion Euro) and Tesco (68
billion Euro). Further, nearly 60% of METRO Group’s revenues came from
outside Germany. The story of the growth and transformation of METRO
Group from its humble beginnings in the Ruhr valley of Germany just 45 years
ago to its present size and scope as a global retailing group is an interesting
and important case study, particularly from the viewpoint of providing
insights into successful international retailing and global expansion.
The recent time has been observed as growth of Indian organized retail
market with many folds. Numerous business groups are attracted in the past
few years, including some renowned business groups like Bharti, Future,
Reliance, and Aditya Birla to establish hold, showing the future growth in
times to come. In addition, organized retail sector has also grabbed the
attention of foreign companies, showing their interest to enter India,
(Dalwadi 2010).
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Prof. Kalpana (2015), stated in her study that “India’s total retail is on
increase. Recent policy changes and greater external liberalization of retail
sector will bring many more foreign retailers to India. It is expected that FDI
will accelerate the growth of organized retail. India’s huge population with
large proportion of young, increasingly brand- and fashion-conscious
population, high potential growth in consumer expenditure, growing middle
class are some of the factors due to which the macro trends for the sector
looks favorable. Organized retail whose share in total retail was 8% in 2012 is
expected to assume 24% share of total retail market in India in 2020. Among
organized retail segments, Mass Grocery and Apparel are segments growing
faster than other segments. In next few years, multi-brand organized retail is
expected to expand in specialty stores such as Consumer Electronics,
Footwear, Furniture and Furnishing etc.
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Van Reil and Blomback (2005), in their study stated that brand
image, is the totality of consumer perceptions about the brand, or how they
see it, which may not coincide with the brand identity. Companies have to
work hard on the consumer experience to make sure that what customers see
and think is what they want them to, thus highlighting the notion of brand
identity. Brand identity is “the strategically planned and operationally applied
internal and external self-presentation and behaviour of the company”. Brand
identity is a vague but vital aspect of a company and now is considered to be
one of the most important factors in the strategic positioning of products in
the minds of the consumers (Bounfour, 2002).
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Faircloth, Capella, and Alford's (2001) conceptual model – adapted from the
work of Aaker (1991) and Keller (1993) – the primary conceptual model . The
study focuses on the sponsorship relationship between the New Zealand All
Blacks and their major sponsor and co-branding partner, adidas. Results
support the view that Keller (1993, 2003) proposes that brand image is
antecedent to the brand equity construct. Results are also consistent with the
findings of Faircloth et al. (2001) that brand image directly impacts brand
equity.
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Xiao Tong and Jana M. Hawley (2010), in their research work in the
topic, Measuring Customer Based Brand Equity Empirical Evidence from the
Sportswear Market in China, examine practicality and applications of a
customer-based brand equity model in the Chinese sportswear market. Based
on Aaker’s conceptual framework of brand equity, this study employed
structural equation modeling to investigate the causal relationships among
the four dimensions of brand equity in the sportswear industry. The findings
conclude that brand association and brand loyalty are influential dimensions
of brand equity. Weak support was found for the perceived quality and brand
awareness dimensions. The paper shows that sportswear brand managers
and marketing planners should consider the relative importance of brand
equity in their overall brand equity evaluation, and should concentrate their
efforts primarily on building brand loyalty and image.
Rajat Roy and Ryan Chau, (2011), titled a research paper about,
“Consumer-based brand equity and status-seeking motivation for a global
versus local brand", The purpose of this research is to explore how a
successful global and a local brand may compete side by side in an existing
market place based on consumer-based brand equity and consumers' status-
seeking motivation for purchasing a global versus local brand. The results
show that a global brand is generally preferred in terms of all the dimensions
of consumer-based brand equity over a local brand. A global brand is strongly
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Chieng Fayrene Y.L. and Goi Chai Lee, (2011) in their research study
on “Customer based brand equity: A literature review” envisaged that, Brand
equity is a concept born in 1980s. It has aroused intense interest among
business strategists from a wide variety of industries as brand equity is
closely related with brand loyalty and brand extensions. Besides, successful
brands provide competitive advantages that are critical to the success of
companies. Brand equity has been examined from financial and customer-
based perspectives. The aims of the study are to review the dimensions of
customerbased brand equity by drawing together strands from various
literature and empirical studies made within the area of customer-based
brand equity. A conceptual framework for measuring customer based brand
equity is developed to provide a more integrative conceptualization of brand
equity.
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Burns and Warren (1995), found in their study that consumers travel
beyond their local shopping area to other shopping centers in order to access
a wider selection of products than that available locally, and this satisfied ‘a
need for uniqueness’. At odds with this conclusion, research based on
consumer responses showed that convenient location has the greatest impact
on consumers’ choice of center.
Davies (1995), expressed in their work that the way we think about
retail location is dominated by the idea that the primary role of the retail store
or the retail center is to attract the shopper to the location. An alternative
paradigm exists, of taking retailing to where there are people, either at home
or in crowds and this is likely to become more important for a number of
reasons. Just because a crowd exists does not mean that the people in it can be
easily converted to being shoppers. A number of factors will determine the
likely levels of sales: the complementarity of the merchandise with the
primary activity being followed by the crowd; the ease with which they can
exit from that activity; the associated issue of how much time they perceive is
available to them; and the level of crowding.
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shopping malls, with too many stores offering too much of the same
merchandise. So given the apparent similarity in shopping center attributes,
shoppers will probably choose to visit the nearest shopping mall when faced
with the existence of more than one shopping mall within ‘reasonable’
traveling distance. However, not all shoppers seem to conform to such
normative behavior. Past research has revealed that many consumers make a
decision regarding where to shop based on their attitude toward a mix of
stores, the shopping center environment and entertaining shopping
experience.
Pashigian and Gould (1998), stated in their study that consumers are
attracted to malls because of the presence of well–known anchors –
department stores with recognized names. Anchors generate mall traffic that
indirectly increases the sales of lesser–known mall stores. Lesser–known
stores can free ride off of the reputations of better–known stores. Mall
developers internalize these externalities by offering rent subsidies to
anchors and by charging rent premiums to other mall tenants. The results of
this article suggested that mall developers are behaving rationally because
they know that anchors attract customers to the mall and increase the sales of
other mall stores.
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Tuli and Mookerjee (2004), in his study found that some consumers
placed the greatest value on convenience and economic attributes including
convenience to home, accessibility, and the presence of services such as banks
and restaurants. Others however, emphasized recreational attributes
including atmosphere, fashion ability, variety of stores and merchandise.
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Kaur and Singh (2007), opined that the retail boom in India has
brought tremendous opportunities for foreign as well as domestic players.
The changing lifestyle of the Indian consumer makes it imperative for the
retailers to understand the patterns of consumption. The changing
consumption patterns trigger changes in shopping styles of consumers and
also the factors that drive people into stores. Hence, the key objective of their
paper was to uncover the motives that drive young people to shop in
departmental stores or malls. A sample of 115 students was taken and their
responses were gauged through a personally administered, structured
questionnaire. The results revealed that the Indian youth primarily shop from
a hedonic perspective. They importantly serve as new product information
seekers and the retailing firms can directly frame and communicate the
requisite product information to them.
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present age, goods are not only consumed for their use or exchange value, but
are also consumed as signs of luxury, exoticism, and excess. Thus consumers
need to be seduced and delighted when they come to a store for shopping.
Stores with a beautiful display, perfect lighting coupled with appealing smell
and music can create sensations and affect consumer shopping attitude and
patronage behavior.
Atiq (2010), in her article suggested that the Indian retailers should
understand that retailing has to be taken as a brand in itself. A single large
retailer should not be allowed to capture the larger market share. The Indian
government should not make haste in inviting the foreign retailers; instead it
should wait to see the great power of the Indian retailers. But then, Indian
retailers have to master both the art and the science of retailing by looking at
the way the giant retailers are organizing and managing their activities. Indian
retailer needs to be innovative and needs to understand the regional
variations in consumer tastes.
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behaviour is the study of the ways of buying and disposing of goods, services,
ideas or experiences by the individuals, groups and organizations in order to
satisfy their needs and wants.
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Sheth & Mittal (2004), in their study found that the purchasing
process is a combination of mental and physical activities that ends with an
actual purchase almost daily Therefore it is interesting to study the
connection within “what we buy” and “why we buy it”. In this circumstance,
brands play a leading role in customer decision making. There are many
factors or attributes of consumers effecting their view and decisions. In
today’s increasing competitive marketplace, Consumers differ in their
perceptions; they would necessarily hold different images for any specific
brand and often have to make a choice among a range of products or brands in
the market that differ very little in its price or unction.
Kahle and Kim(2006), found in their research that in the present day
’s growing competitive market place, consumers have to make their choice
between a variety of product or brands in the market that differ very small in
its price or function. They argue that in such situations, their final decision
depends on the image they relate with dissimilar brands. Additionally the
authors express that the brand image has increased reputation as the feelings
and images associated with brand and a well known and accepted brand
image is one of the most important assets a firm possesses
capability to recover brand when given the product category and the needs
fulfilled by the category, or some other type of search as a indication.
Holt (2015), stated in his study that branding has become one of the
most important aspects of business strategy. Branding is central to creating
customer value, not just images and is also a key tool for creating and
maintaining competitive advantage.
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The study by Dash et al. (2009), Kaur et al. (2008) and CII (2008),
depicted that the growing middle class, large number of earning youth
customers, increase in spending, and improvement in infrastructure, and
liberalization of the Indian economy offer tremendous opportunities for
organized retailing in India. Accordingly, six emerging retail formats viz. malls,
speciality stores, convenience stores, discount stores, hyper/supermarkets
and departmental stores have been taken up in the present study.
assortment with private label brands including Wal-Mart, Tesco, Reliance and
Marks & Spencer’s. Other important strategies which retailers cannot put
behind are: free gifts and discounts as these strategies attract all groups of
consumers to visit retail formats and shop in large quantities, (Kocas and
Bohlman, 2008; Dalwadi et al., 2010; Fam et al., 2010; Grewal et al., 2011).
Accordingly, twenty marketing strategies have been taken up. These are:
advertisement, competitive pricing; free gifts, discounting options, loyalty
programs, developing public relations, attractive merchandising, private label
branding, customer segmentation, customized technology adoption, better
internal environment, entertainment facilities, personal selling, after sale
services, store image/positioning, training to sales personnel, festival offers,
customer delight / satisfaction, understanding the customer and franchise/
joint venture.
Only few studies have covered the consumer perspectives, but even
these studies have focused on only one or two sectors, basically the food and
the apparel sector.
Moreover there is hardly any study covering all the important aspects
of retailing like emerging retail formats, influence of retail attributes on
consumers’ choice for these retail formats, impact of demographic factors on
consumers buying behavior, type of products and marketing strategies of
retailers. So there is enough scope of research in this area. In the present
study, an attempt has been made to provide the consumers’ and retailers’
perspective regarding the preferences of emerging retail formats and the
important marketing strategies of retailers to attract consumers. Finally,
based upon the results, a framework covering all these aspects of retailing has
been developed for consumers’ preferences for emerging retail formats.
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Da Silva, R.V. and Alwi, S.F.S. (2006) Cognitive, Affective Attributes and
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Lather, A.S., and Kaur, T. (2006). Shopping Malls: New Retail Formats keeping
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CHAPTER - III
RESEARCH METHODOLOGY
3.1 INTRODUCTION
Research methodology is considered as “lifeline” for any type of social
science research especially in behavioral studies. The researcher need to
narrate the methodology perfectly and navigate things accordingly which
yields a fruitful research outcome for any emerging researcher as well as
society. The methodology which is consider as path finder for defined
problems in any research, where it helps in choosing valid sample and
relevant sampling technique along with adequate sample size . The unit also
describes valid statistical tolls used for the purpose of interpretation
“and concludes results in an efficient way, where the readers can understand
the research outcome easily.
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and time. Planning of design must be carried out cautiously as even a small
mistake might mess up the purpose of the entire project. The design helps the
investigator to organize his ideas, which helps to recognize and fix his faults, if
any. In a good research design, all the components go together with each other
in a coherent way. The theoretical and conceptual framework must with the
research goals and purposes. In the same way, the data gathering method
must fit with the research purposes, conceptual and theoretical framework
and method of data analysis.
The population for the present study consists of the frequent buyers
/visitors of retail outlets and shopping malls in Hyderabad city. The
population for the present study is infinite population.
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analysis. The sample frame for the present study can be defined as the retail
consumers in Hyderabad and Secunderabad of Telangana state, who are
frequent buyers of different items preferably once in a month from their
nearest shopping malls in study zone.
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The study analysis done with 900 responses, which is > 601,
considered as statistically valid sample. From this calculation, the Scholar
decided to distribute 40 each questionnaires in major 30-35 shopping malls in
the study zone and expected to get above 890 filled in valid forms, the
researcher succeed to get nearly 900 valid forms, with the help of these 900
responses, the researcher proceed for data analysis.
This justifies that the sample considered for the purpose of the study is a
valid sample and accordingly the statistical analysis carried out in chapter IV
may be considered as representative of the population.
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Primary Data:
For the present study, primary information is gathered by using a
structured questionnaire. Questionnaire method was employed as it allows
the researcher to gather structured information from a large number of
individuals, allows for anonymity and it is economical to use. Moreover,
analysis of questionnaires is easy due to structured information in the
questionnaire with few open- ended questions. To elicit the responses, a
detailed questionnaire has been designed. Information is obtained from
frequent buyers in Shopping malls and conventional stores of all around
Hyderabad city. A preliminary questionnaire is developed using 5 point Likert
scales. The questionnaire is pre-tested several times to arrive at appropriate
wording, format, length and sequencing of the questions. Pre-test feedback is
used to refine the questionnaire until it is ready for data collection. After fixing
the questions for the independent and dependent variables based on the type
of questions different values are assigned to the Likert scale.A covering letter
explaining the purpose of the research and assuring respondents of the
anonymity and confidentiality of the research accompanied each
questionnaire. The survey was done during February 2015 to March 2016.
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with draft questionnaire and 52 respondents have given their opinions which
accounts of 76% response rate.
Secondary Data
Secondary information is collected from the different journals, internet
and periodicals, retail service providers websites.
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Keeping in view the objectives of the present study only 14 items were
chosen.
Consumers’ Shopping Experience Scale developed by N.Chitra. (2011)
was used in the present study. The scale was used to study Consumers’
Shopping Experience in Malls with reference to durable and Non durable
products. The resulting 12- item Scale examines 7 dimensions. Cronbach
alpha, was determined for the scale in the pilot study is reported as 0.79.
The instrument reflects 6 dimensions: Store Accessibility, Freshness of
items, Variety of Items in the Store, Impulse Buying, Service Quality and
Amusement.
Consumer Brand Preference Scale was developed from C R Mathuravalli
“An Investigation of Consumer Preferences Towards Store Brands
Purchase In Madurai District” Kalasalingam University, 2013, Priyanka
Patni “A Study on Brand Management of Apparels Sector in Ajmer District”
Bhagwat University, 2012 and Haresh B. Vaishnavi “Effects of Sales
Promotions on Consumer Preferences and Brand Equity Perception”
Saurashtra University, 2011. Scoring for the instrument was on a five-
point scale: 1= Poor, 2= Average, 3= Good, 4= Very Good 5= Excellent. The
total score range is 12 (score 1 each item *12 items) to 60 (score 5 each
item *12 items). A mean score for the entire instrument was computed as
well as a mean score for each item. Keeping in view the objectives of the
present study, only 10 items were chosen and were reframed to suit the
requirement.
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Dependent Variables:
An independent variable is a variable believed to affect the dependent
variable. This is the variable that, the researcher, will manipulate to see if it
makes the dependent variable change. To reiterate, the independent variable
is the thing over which the researcher has control and is manipulating. In this
experiment, the researcher testing with the help of consumer income, brand
awareness like things impact on buying behavior.
Independent Variables:
Confounding variables are a specific type of extraneous variable.
Extraneous variables are defined as any variable other than the independent
and dependent variable. So, a confounding variable is a variable that could
strongly influence your study, while extraneous variables are weaker and
typically influence your experiment in a lesser way.
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Reliability Analysis
Analysis of the measurement model starts with the assessment of the
significance level of the indicators, followed by verification of the scale
validation. According to Nunnally (1978), Cronbach‟s α-value must be higher
than 0.7. Hence the 36 factors for testing customer satisfaction have a high
reliability score i.e., Cronbach‟s alpha of 0.802 as could be seen in below table.
As per statistical rule (>0.7) the reliability analysis is satisfied perfectly.
N %
Valid 897 99.4
Cases Excludeda 03 .6
Total 900 100.0
a.Listwise deletion based on all variables in the procedure.
Reliability
Table 3.4 : Reliability Analysis dimension wise.
Reliability Statistics
Cronbach's N of
Dimensions
Alpha Items
Consumer buying Behaviour (Durable) .746 10
Consumer buying Behaviour (Non –Durable) .854 10
Factors influencing consumer buying behavior in mall .820 11
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Inference: Cronbach’s alpha has been run dimensions wise for to check their
reliability. The above table displays some of the results obtained. The alphas
for the all the dimensions of consumer buying behavior (durable), consumer
buying behavior (non durable), factors influencing consumer buying behavior
in mall, brand preferences, brand image, brand loyalty, comparison between
facilities in organized mall and un organized malls, customer service and
merchandise provided at the store and overall variables the alpha values are
0.746, 0.854, 0.820, 0.631, 0.835, 0.837, 0.834, 0.821 and 0.876 all the values
are greater than 0.6 it indicates good internal consistency among the
variables.
Content Validity
Content validity is often seen as a prerequisite to criterion validity,
because it is a good indicator of whether the desired trait is measured. If
elements of the test are irrelevant to the main construct, then they are
measuring something else completely, creating potential bias. Content
validity, sometimes called logical or rational validity, is the estimate of how
much a measure represents every single element of a construct.
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Construct Validity
Construct validity is the appropriateness of inferences made on the
basis of observations or measurements (often test scores), specifically
whether a test measures the intended construct. Constructs are abstractions
that are deliberately created by researchers in order to conceptualize the
latent variable, which is the cause of scores on a given measure (although it is
not directly observable). Construct validity examines the question: Does the
measure behave like the theory says a measure of that construct should
behave?
ANALYSIS OF DATA
The following statistical tools were used to analyse the collected data.
1. Means and Standard Deviations for each individual item in all the Scales
i.e. Consumer Buying Behavior Scale, Branding Scales and Shopping
Experience Scale(customer services and store facilities) were computed.
Overall Means and Standard Deviations were also computed for all the
scales.
2. Factor Analysis was used to filter the various factors influencing the
buying behavior of consumers with respect to durable and non-durable
goods. Factor Analysis was also done for identifying the most influencing
factors on Consumer Buying Behaviour.
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3. Regression Analysis was done to study the impact of brand related factors
such as Brand Image, Brand Loyalty and Brand Preference on the
Consumer Buying Behaviour.
4. Chi- Square tests were computed to study the association between various
Demographic Variables such as education, occupation, family size etc. on
Consumer Buying Behaviour.
5. Chi- Square tests were computed to study the association between various
Demographic Variables such as education, occupation, family size etc. on
Brand dimensions.
6. Correlation was computed to study the relationship between age and
Consumer Buying Behaviour
7. T-test was computed to study whether there is any significant difference in
the Consumer Buying Behaviour between males and females
8. ANOVA was done to study whether there is any significant difference
between age, income and Consumer Buying Behaviour.
In spite of the above limitations the researcher has made all the efforts
to derive the results with the available data.
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CHAPTER SCHEME
The present study is divided totally into 6 chapters.
Chapter IV discussed the Retail Industry profile and includes various aspects
such as organized and unorganized Retail Sectors in India, Classification of
Retail formats, current trends in Retailing in India, the challenges or organized
retailing in India Challenges and opportunities in the organized retailing in
India and he projected trends in Retailing.
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CHAPTER - IV
RETAIL INDUSTRY:
GLOBAL AND DOMESTIC PERSPECTIVE
The global retail industry has been growing at a rapid pace during the
last few decades. A retail sale through modern formats is rising faster than the
total retail sales. The share of modern retail has risen from about 45 per cent
in 1996 to over 52 per cent in 2006. However, the spread of organized
retailing in different countries varies depending upon the socio-economic
factors related to the country. In the developed economies, organized retailing
is in the range of 75-80 per cent of total retail, whereas in developing
economies, the unorganized sector dominates the retail business. The share of
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organized retailing varies widely from just 1.00 per cent in Pakistan and 4.00
per cent in India to 36.00 per cent in Brazil and 55.00 per cent in Malaysia.
Modern retail formats such as hypermarkets, superstores, supermarkets,
discount and convenience stores are widely present in the developed
countries, whereas such forms of retail outlets have just begun to spread in
developing countries in recent years, where the retailing business continues
to be dominated by family-run neighborhood shops and open markets.
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4.2.4 Europe
Retail markets across Europe vary widely, depending on their level of
maturity and the local economic situation. Investment and development in
Eastern Europe is constant and growing. Poland is entering its third decade of
dynamic growth with new overseas retailers and luxury brands entering the
market. Thirty new global brands set up operations in the country last year. In
Russia, a retail boom is just beginning with 63 new complexes in 40 Russian
cities completed in 2013. In long-established markets, such as the
Netherlands, certain retailers have had a slow year, although growth
continues in the food sector. A trend in Western Europe sees investment in
outdated shopping centres to allow retailers to expand locally.
4.2.6 Australia
Though the Australian retail sector previously sustained a downturn,
domestic retailers have emerged in better shape than other developed
economies. Retail property in particular is performing well, with revenues
growing at 3.6 percent on average over the past five years – mirrored by
increased investment from foreign retailers extending or establishing
operations in Australia. This is expected to continue for the next five years.
The retail market is divided into two sectors – consumer goods and fast-
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moving consumer goods (FMCG). FMCG has enjoyed a steady average annual
growth of 2.4 percent, forecast to continue at 2.3 percent up to 2019.
Consumer goods has seen negative growth of nine percent on average,
however is expected to return to two percent growth per year for the next five
years.
4.2.7 Asia
Asia remains a hospitable environment for retailers, who are
continuing to deliver innovative brand showcases and make large investments
to secure prime locations. We have seen a drastic shift from a ‘build it and
they will come’ approach to more strategic decision making when it comes to
retail facilities. Developed markets such as Hong Kong, Singapore, Malaysia
and Japan continue to benefit from both strong domestic demand and an
influx of tourist dollars from China, India and the West. There is also growth in
India and China, although recent spikes in Chinese consumer confidence have
been driven by demand in tier four, and not major, cities. Automotive retailers
are anticipating huge growth opportunities in China, where 22 million
vehicles were sold last year. Vietnam and Indonesia are still largely based on
independent retailers, and are seen as longer term prospects.
Over the next five years Asia and Australasia will deliver the strongest
retail volume growth of any region, averaging 4.6% annually. With sales of
almost US$7 trillion in 2014, Asia is also comfortably the world’s largest
regional retail market, with China accounting for much of this. However, this
outlook comes with a degree of risk attached. Decelerating growth in China,
weakness in Japan and mixed signals from India will all weigh on the regional
outlook. Large players are now showing signs of switching emphasis to
smaller Asian markets, notably Indonesia and Vietnam, with the former
supported by strong demographic and income growth and the latter opening
up more to foreign retail investments.
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Metro and Tesco seek to recapture revenues in their core home markets they
have divested or rationalized operations in emerging Asia. Asian retail
markets are also evolving quickly, with e-commerce channels showing
particularly strong growth. Indeed, declining investment in physical stores
from firms like Walmart has been replaced by a greater commitment to
investing in fast-growing e-commerce channels.
singled out second tier city Chengdu as the world’s most active retail
development market in 2012. In India, too, the relaxation of FDI laws around
single brand retail stores has allowed the development of well sited flagships
in key city locations. The likes of H&M, IKEA and Marks & Spencer have been
quick to seek market entry.
Rising incomes in many parts of the region mean that the dramatic
shift towards discount retail channels taking place in regions like Western
Europe is not as apparent in Asia, although it is catching on. A price sensitive
public in Japan means that 100 Yen shops, led by Daiso, already proliferate but
bargain-hungry Chinese consumers is also joining the fray.
The Asian clothing and apparel sector is expected to grow rapidly over
the next five years. Annual average expenditure growth on clothing and
footwear, at 9.5%, will comfortably outstrip that of any other region as rising
incomes lead more Asian households towards discretionary purchases. As
more households move into middle class income brackets, consumer
complexity will increase and fashion will form a sizeable part of the identity of
an increasingly sophisticated Asian consumer base.
Demographics will help too. The fact that India and China accounted
for a combined population of 2.6 billion people in 2013 (37% of the world’s
population) means that the overall market size for clothing is also larger than
that of any other region. Consumer expenditure on clothing and footwear in
Asia is expected to reach almost US$920 billion by 2018, compared to an
estimated US$625 billion in 2014. The Chinese market will account for over
US$500 billion of this total by 2018, equivalent to those of Western Europe or
North America.
2015-16
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Earlier the Hogg market even had a garden with a beautiful fountain
adding to its ambience and benches too for tired shoppers. Today, the New
Market continues to be a premier shopping area in Kolkata despite a part of it
being incinerated in late 1985. Its red-brick Gothic clock-tower today bears
testimony to the past Grandeur of this first shopping centre in India.
Francis, Harrison and Hathaway; Hall and Anderson; the Army and
Navy stores; white a way; laidlow and Co. In their scope and outreach these
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shops rivaled those to be found in cities of the same size in Britain, Europe or
the United States”.
If one were to go back to the early 80s, it can be said that organised
retail, to a great extent was visible in the functioning of stores such as
‘Akbarally’ in Mumbai and ‘Nilgiris’ and ‘Spencers’ in Chennai. These stores
later evolved into multi chain outlet and were the first to bring on the ‘onset of
organised retail’ in India.
The Khadi and Village Industries (KVIC) was set during post
Independence and today it has more than 7000 stores across the country.
While Independence retail stores like Akbarally’s, Vivek’s and Nallis have
existed in India for a long time, Reliance , Garden silk mills, Madhura
Garments, Arvind mills etc have set up show rooms for retail sale of their
branded products. It is important that for centuries now, India has been
operating within her unique concept of retailing. Retailing in its initial period
was witnessed at the weekly Haats or Gathering in a market place where
vendors put on displays their produce. Off course this practice is still
prevalent in many towns and cities in India: then the market saw the
emergence of the Local banias and his neighborhood Kirana shop. Infact these
were the common local mummy-dady or multipurpose departmental store
located in the residential areas such shops stocked goods and multipurpose
utility and were with the vision of providing convenience at the door step of
the consumer. While barter would be considered to be the oldest form of
retail trade, since Independence, retail in India has evolved to support the
unique needs of our country, given its size and complexity. Haats, mandis and
melas have been a part of India landscape. They will continue to be present in
most part of the country and form an essential part of life and trade in various
areas.
The food and beverages segment accounts for the largest share with
more than 70 per cent of the total retail pie. Traditional retail dominates food,
grocery and allied products sector, with the grocery and the staples largely
sourced from kirana' stores and push cart vendors. Food and grocery
constitutes the bulk of Indian retailing and its share is about 60%. Organized
retailing accounts for about less than 2 per cent of the food retailing industry
in India. However, the share of organised retailing in food and grocery
segment could grow to 15-20%, if the current trends in expansion of
organised retail continue has been studied by Reardon et al (2008). Nilgiris,
established in 1905 as a dairy farm near Ootacamund in South India could
perhaps be the first organised supermarket in India. Though Spencers has
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been a part of Indian retail landscape since 1863, it began selling groceries
only in 1920. Safal, established in 1988 by the National Dairy Development
Board (NDDB), was the first organised retailing venture for fruits and
vegetables in North India particularly in Delhi. Establishment and expansion
of the Food World outlets by the RPG Group starting with the first outlet in
Chennai in 1996 led to enhanced corporate interest in food retailing. RPG
(Spencers), Reliance (Fresh), ITC (Choupal Fresh), Aditya Birla (More),
Heritage (fresh@), Pantaloon Retail (Food Bazaar), Bharti (Easy day), Express
Retail (Big Apple) are some of the major corporate houses currently active in
food retailing in India. Much of the expansion in food and grocery retailing in
India is currently concentrated in the southern states, in and around Chennai,
Hyderabad and Bangalore.
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Super markets and hyper markets: Super markets are large, low cost, low
margin, high volume, self service operations designed to meet the needs for
food, groceries and other non food items like health and beauty care
products. Hyper markets are a combination of super markets and
departmental stores. A retail store with a sales area of over 2500 square
meter, with at least 35 per cent of selling space devoted to non-grocery
products like clothes, jewellery, hardware etc. are called hyper markets.
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by it. As of 2005 retail contributed 39 per cent of India‘s GDP, but even with
this, the percentage of retail in the organized sector is only a measly 6 percent.
These counter-stores and street vendors might seem small fish in a retail
industry that is soon to be dominated by giants like Pantaloon and Reliance.
Yet, they cater to a different set of preferences of the Indian consumer and
have traditionally survived on low turnover and thin margins. Individually
they are a minor factor in the retail plans of any giant organized retailer but
collectively they represent the historic state of retail in India that is so deeply
intertwined in the economy of the country and the psyche of the Indian
consumer that co-existence with them is a better policy rather than
competition.
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were being laid, youth were beckoning new awareness in all spheres. And this
brought in an opportunity for retail industry to flourish. First in the metros
and major cities later to impact sub urban and rural market as well.
To your surprise there was not a single mall in India a decade before
and just a few years ago only a handful of them were striving, today there are
more than 50 malls across different cities and 2 years from now around 500
malls are predicted to come up. Indeed this shows a very promising trend
ahead, however before taking a leap into the future of Retail in India, let's see
what the Indian retail Industry is currently occupied with.
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As the major cities have made the present retail scenario pleasant, the
future of the Indian Retailing industry lies in the rural regions. Catering to
these consumers will bring tremendous business to brands from every sector.
However as the market expands companies entering India will have to be
more cautious with their strategic plans. To tap into the psyche of consumers
with different likes and dislikes and differing budgets a company has to be
well prepared and highly flexible with their product and services. In this
regard focusing on developing each market separately can save a brand from
many troubles.
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According to a report, from the year 2003 to 2008 the retail sales are
growing at a rate of 8.3 percent per annum. With this the organized retail
which currently has only 3 percent of the total market share will acquire 15-
20 percent of the market share by the year 2020.
Indian economy and its policies are also becoming more and more liberal
making way for a wide range of companies to enter Indian market.
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Indian population has learnt to become a good consumer and all national
and international brands are benefiting with this new awareness.
Another great factor is the internet revolution, which is allowing foreign
brands to understand Indian consumers and influence them before
entering the market. Due to the reach of media in the remotest of the
markets, consumers are now aware of the global products and it helps
brands to build themselves faster in a new region.
They must also understand the tastes of the Indian consumer who has
only recently started treating retail as a form of leisure. Meanwhile organized
retail will continue to displace many unorganized retailers who are no
competition for the large-scale corporations. Those street-vendors of the
bottom or unorganized retail will be forced to turn back to agriculture or
some other form of livelihood. Yet, corner-stores and hawkers will continue to
be a part of the Indian retail experience. These retailers have always survived
on small, diverse sales with small margins. In that regard, they do not compete
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in the same market as organized retail. The Indian consumer may have
undergone a transformation, but the transformation is only partial. His higher
income, increased exposure and greater willingness to spend will spur the
organized retail sector. Meanwhile the conveniences of home-delivery,
purchases on credit and proximity offered by the unorganized sector will
drive him to the nearest corner-store or street vendor for his small, just-in-
time purchases. Organized retailers have not are and are unlikely to worry
about the threat of unorganized retail as both forms of the retail business
cater to different preferences.
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India’s retail industry is broadly divided into the organized and the
unorganized sector. Organized retailing refers to trading activities undertaken
by retailers who possess legal permissions or licenses to undertake the
activity and are registered for income tax, sales tax, etc. These include the
hyper-markets, super-markets, retail chains, and also the privately owned
large retail businesses. Although the organized sector has seen exponential
growth in recent years, it still contributes to only 3% of the establishments of
the entire retail sector.
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Besides these, any large organized retailer must also get approvals
from a variety of government departments, which also creates barriers to
entry and raises the administrative costs.
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most of it to reach distant markets. The low storage capacity causes heavy
losses to the farmers. A study shows that post-harvest losses of farm produce,
especially of fruits, vegetables and other perishables, have been estimated to
be over Rs. 1 trillion per annum, 57 per cent of which is due to avoidable
wastage. Though FDI is permitted in the supply chain, companies have not
invested in it. Experts believe that without a contractually-binding demand
from the retail sector, the installation of expensive cold storages is not
economically viable.
The opponents are of the view that even the domestic organized retail
sector would be affected since it is still in its nascent stage and may not be
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able to compete with these established global players, whose resources and
technical knowhow cannot be matched by the Indian retailers.
The opponents also believe that the global players would conspire and
exert monopolistic powers and raise prices for the consumers and reduce the
prices received by suppliers, which would result in lower profit margins for
the farmers. The UK Competition Commission report in its 2000 study found
that farmers come under severe pressure from super-markets due to the
latter’s requirement of large volumes for each product. The Indian farmers
may not be able to keep up with the demand from these retailers, who would
then start sourcing agricultural products from other countries. This would
affect the entire agriculture sector which provides employment to roughly
half of the total workforce.
However, our analysis shows that India’s capacity for increasing its
food grain production is very high. Over 25% of its total irrigation potential is
still untapped. India’s current food grain productivity is exceedingly low
despite farmer incomes growing at a healthy rate of 12% (2005-2010). This is
because of difficulty in the procurement of fertilizers, seeds and other raw
materials due to bottlenecks in the supply chain.
From our analysis we find that India will face a threat to self-
sufficiency in food grain production in the next 5-10 years. Food grain
shortage is expected to range from 20-25% by 2025. India’s subsidy bill in
fertilizers amounting to about 1% of the GDP in 2010 is also expected to grow.
This suggests that improvements need to be made in fertilizer usage,
irrigation and technology to attain maximum potential in agricultural
production. We believe that FDI in retail will have positive spill-over effects in
this sector also.
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Retail sector is also highly dependent on the real estate sector as any
retail outlet would require adequate space and infrastructure. The growth in
real estate in India can be stimulated through FDI investments in multi-brand
retail.
The most successful retailers will be the ones that have “complete
control of their value chain, from creation all the way to consumption.”
Retailers will realize this in 2020, which is why we will likely see an increase
in value chain initiatives, single product retail, and private label merchandise.
Additionally, more retailers will get creative with how they fulfill orders and
distribute products. Speed and convenience will become more important than
ever, so merchants will come up with better and faster ways to get products
into the hands of their customers.
The retail sector has played a phenomenal role throughout the world
in increasing productivity of consumer goods and services. It is also the fourth
largest industry in India in terms of number of employees and establishments.
There is no denying the fact that most of the developed economies are very
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much relying on their retail sector as a locomotive of growth. The India Retail
Industry is the largest among all the industries, accounting for over 10 percent
of the counties GDP and around 8 percent of employment.
The Retail industry in India has come forth as one of the most dynamic
and face paced industries with several players entering the market. But all of
them have not yet tasted success because of the heavy initial investments that
are required to break even with other companies and compete with them. The
India Retail Industry is gradually inching its way towards becoming the next
boom industry. The future trend in retail will be more technology driven. In
2020 this is expected that India will pick up growth momentum will seen into
retail. And it is also expected that the retail will come out from the fragile
growth.
Pantaloon Retail Ltd Over 2 million sq.ft of retail spread over 35 cities
(Future Group Venture) with 65 stores and 21 factory outlets
Shoppers Stop Over 3.21 million sq. ft of retail space spread over
(K.Raheja Group Venture) 23 cities with 51 stores
Spencers Retail Retail footage of close to 1 million sq. ft across 45
(Part of RP-SG Group) cities with 200 stores
Lifestyle Retail Approximately 15 Lifestyle and eight Home centre
(Landmark Group Venture) stores
Bharati Retail 74 Easyday stores with plans to invest about 2.5
billion USD over the next five years to add about 10
million sq. ft of retail space in the country
Reliance Retail 700 stores with a revenue of 7,600 crore INR
Aditya Birla ‘More’ 575 stores with approximate revenue of 2,000
crore INR. Recently purchased stake in Pantaloon
Retail
Tata Trent 59 Westside stores, 12 Starbazar hypermarkets and
26 Landmark bookstores
The Indian retail sector accounts for over 20% of the country’s gross
domestic product (GDP) and contributes 8% to total employment. The
cumulative foreign direct investment (FDI) inflows in single-brand retail
trading, during April 2000 to June 2011, stood at 69.26 million USD.
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The current estimated value of the Indian retail sector is about 500
billion USD and is pegged to reach 1.3 trillion USD by 2020.
The penetration level of modern retail (currently 5%) will increase six-
fold from the current 27 billion USD to 220 billion USD in 2020. The Indian
retail sector is expected to grow at a CAGR of 15 to 20%. Factors driving the
organized retail sector include the following:
• Higher incomes driving the purchase of essential and nonessential
products
• Evolving consumption patterns of Indian customers
• New technology and lifestyle trends creating replacement demand
• Foreign entrants in the Indian segment are as follows:
• Germany-based Metro Cash & Carry opened six wholesale centres in the
country.
• Walmart with Bharti Retail, owner of Easyday stores.
• British retailer Tesco Plc (TESCO), signed an agreement with Trent Ltd
(Trent), the retail arm of Tata Group to set up cash-and-carry stores.
• Carrefour opened its first cash-and carry store in New Delhi.
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Mall from the study conducted on the various rental structures of the
tenants, it was apparent that the anchor tenants’ rentals remain more or less
the same across different floors. The average range for anchor tenants is in the
range of Rs 38-52/sq ft per month. The vanilla tenants’ rentals on the ground
floor vary from Rs 70-100/sq ft per month in the Old CBD areas, whereas the
CBD/Off CBD range between Rs 70-130/sq ft per month. The sub urban and
the peripheral zone range from Rs 100-250/sq ft per month. There is a
difference of 20-25 per cent for the first three floors and beyond that there is
no major difference in the rental values. This scenario remains the same in all
operational malls except in GVK One where the rental ranges are more or less
the same across all floors.
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The rental for a revenue share model with minimum guarantee varies
between Rs 28-40/sq ft per month with a revenue share of 5-15 per cent;
whereas rentals for tenants, who are not on the revenue share model, range
from Rs150-300/sq ft per month. The rentals for vanilla tenants in 2007 were
purely on a Leave and Licence agreement. But post 2008, with the economic
slump there has been a shift in the trend and an increasing number of tenants
are going for a minimum guarantee plus revenue sharing model. This is
particularly noticeable in the recently launched large format malls like GVK
One and Inorbit.
At present the suburban zone has five operational malls with anchor
tenants like Shoppers Stop, Inox, Globus, Max, Crosswords and X-cite. The
average anchor rental is approximately Rs 52/sq ft per month. On the other
hand, the peripheral zone has the presence of only Inorbit Mall asretail stock.
The main anchors are Hypercity, Shoppers Stop, Lifestyle and Cinemax. The
average anchor rentals are approximately Rs 43/sq ft per month.
Mall
Malls in Hyderabad have a healthy occupancy rate of over 90 per cent
in most of the micro-markets. For anchor tenants it has been observed that
hypermarkets/ departmental stores occupy a major quantum of the space in
malls, accounting for 37 per cent of the total anchor tenant occupying built-up
area in the malls studied. The hypermarkets are followed by ‘Apparels &
Accessories’ absorbing around 30 per cent of the total existing mall space
occupied by anchor tenants. Multiplexes are the third largest occupiers, to the
tune of around 29 per cent of the mall space stock occupied by anchor tenants,
as they are considered to be the main crowd-pullers in a mall. The remaining
anchor tenant area is accounted for by F&B, Electronics & White goods and
other stores.
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Tata Group
Tata group is another major player in Indian retail industry with its
subsidiary Trent, which operates Westside and Star India Bazaar. Established
in 1998, it also acquired the largest book and music retailer in India
‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across the
country.
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RPG Group
RPG Group is one of the earlier entrants in the Indian retail market,
when it came into food & grocery retailing in 1996 with its retail Food-world
stores. Later it also opened the pharmacy and beauty care outlets ‘Health &
Glow’.
Reliance
Reliance is one of the biggest players in Indian retail industry. More
than 300 Reliance Fresh stores and Reliance Mart are quite popular in the
Indian retail market. It's expecting its sales to reach ` 90,000 crores by 2010.
AV Birla Group
AV Birla Group has a strong presence in Indian apparel retailing. The
brands like Louis Phillipe, Allen Solly, Van Heusen, Peter England are quite
popular. It's also investing in other segments of retail. It will invest ` 8000-
9000 crores by 2010.
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E-trailers: are retailers providing online buying and selling of products and
services.
Discount stores: these are factory outlets that give discount on the MRP.
Vending: it is a relatively new entry, in the retail sector. Here beverages,
snacks and other small items can be bought via vending machine.
Category killers: small specialty stores that offer a variety of categories.
They are known as category killers as they focus on specific categories,
such as electronics and sporting goods. This is also known as Multi Brand
Outlets or MBO's.
Specialty stores: are retail chains dealing in specific categories and provide
deep assortment. Mumbai's Crossword Book Store and RPG's Music World
are a couple of examples.
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Input variables:
The input variables are the stimuli come from the environment. The
input variables consist of informational cues about the attributes of a product
or brand (i.e. quality, price, distinctiveness, service and availability).
Significant Stimulies are the actual elements constituting a brand that the
buyer confronts. EG. price, quality, service, availability. They influence the
consumer directly through the brand's attributes. Symbolic Stimulies are
created by manufacturer representation of their products in symbolic
form.ge.advertisemnet, publicity.
Output variables:
The five output variables in the right hand portion of the model are
buyer's observable responses to stimulus inputs. They are arranged in order
from Attention to Actual Purchase. The purchase is the actual, overt act of
buying and is the sequential result of the attention (buyers total response to
information intake), the brand comprehension, brand attitude (referring to
the evaluation of satisfying potential of the brand) and the buyer intention (a
verbal statement made in the light of the above externalizing factors that the
preferred brand will be bought the next time the buying is necessitated.
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Hypothetical constructs:
Hypothetical constructs have been classified in two groups - perceptual
constructs and learning constructs. The first deals with the way the individual
perceives and responds to the information from the input variables,
accounting for stimulus ambiguity and perceptual bias. The second deals with
the stages from the buyer motives to his satisfaction in a buying situation. The
purchase intention is an outcome of the interplay of buyer motives, choice
criteria, brand comprehension, resultant brand attitude and the confidence
associated with the purchase decision. The motives are general or specific
goals impelling to action, impinging upon the buyer intention are also the
attitudes about the existing brand alternatives in the buyer's evoked set,
which result in an arrangement of an order of preference regarding brands.
Exogenous variables:
The model also includes some exogenous variables which are not
defined but are taken as constant. They can significantly affect buyer
decisions. Some major exogenous variables included in the model are
importance of purchase, personalty variables, culture, social class, financial
status.
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Engel-Kollat-Blackwell Model
The Engel, Kollat and Blackwell Model, also referred to as the EKB
model was proposed to organize and describe the growing body of
knowledge/research concerning consumer behavior.
Information input:
The information input includes all kinds of stimuli that a consumer is
exposed to and triggers a kind of behavior. The consumer is exposed to a large
number of stimuli both marketing (advertising, publicity, personal selling,
demonstrations, store display, point of purchase stimuli) as well as non-
marketing sources (family, friends, peers); thus the various stimuli compete
for consumer’s attention. These stimuli provide information to the consumer
and trigger off the decision making process.
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Information processing:
Stimuli received in the first stage provide information; the information
is processed into meaningful information. The stage comprises consumer’s
exposure, attention, perception/comprehension, acceptance, and retention of
information. The consumer is exposed to stimuli (and the accompanying
information); attention determines which of the stimuli he will focus upon;
thereafter he would interpret and comprehend it, accepts it in his short term
memory and retains it by transferring the input to long-term memory.
Decision-process stage:
At any time during the information processing, the consumer could
enter into this stage. The model focuses on the five basic decision-process
stages, viz., problem recognition, search, alternative evaluation, choice, and
outcomes (post-purchase evaluation and behavior).
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External influences:
The model also proposes certain environmental and situational
influences that affect the decision making process. The environmental
influences include “Circles of Social Influence,” like culture, sub-culture, social
class, reference groups, family and other normative influences; situational
influences include consumer’s financial condition.
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REFERENCES:
Baker, W. J., Wesley, H., Moore, D., & Nedungadi, P. (1986). Brand familiarity
and Bororian, M., & Poix, A.D. (2009). India by Design: The Pursuit of
Luxury & Fashion. brand equity. Journal of Marketing Research, 38,
415–429.
brand rating:A model for assessing brand and attribute effects and their
relationship to dialogue, value. Journal of Business & Industrial
Marketing, 19(2), 99-113.
Duncan, T. R., & Moriarty, S. E. (1997). Driving brand value: Using integrated
Engel, J.F., Blackwell, R.D. & Miniard, P.W. (1995). Consumer Behavior. South-
Govers, P., & Mishra, M. S. (2005). Would Indian consumers move from kirana
stores
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