Factors Influencing Customer Loyalty and Choice of ...830779/FULLTEXT01.pdf · 3.2.1. Preliminary questionnaire: The factors based on which customers choose retail stores to buy FMCG

1

School of Management

Blekinge Institute of Technology

Factors Influencing Customer Loyalty and

Choice of Retailer

While Buying Fast Moving Consumer Goods

By:

Poornima Pugazhenthi

Supervisor:

Jan Svanberg

FE2413 - 2010 Master’s Thesis in Business Administration

2

ABSTRACT

Before several decades a retail store was only a small shop in the locality

from where the consumers living nearby would buy groceries and other products

that they use on a daily basis and was happy and content with it. This is not the

case anymore. From small departmental stores to hypermarkets, there has been

massive growth in the retail industry. Now, every retail store tries to attract

customers by trying to satisfy the customer’s needs both by making the right

product available for its customers and by making it easy for the customer to make

the buying decision. One main reason for the same is that the retail industry has a

lot of competitors and in order to be successful, any retail store should make sure

that they have an edge over the others.

The main aim of this study is to find the factors influencing a customer to

choose a retail store when buying Fast Moving Consumer Goods. By understanding

the same retailers can try and improvise on these factors and thereby increase their

chances of making the customers come back again and again to their store to buy

these goods. Fast Moving Consumer Goods are food and non-food everyday

consumer products that are sold quickly and at relatively low cost. The Fast Moving

Consumer Goods can be classified as Highly Perishable and Others.

The specific objectives of this research are to find the factors influencing a

customer in choosing a retail store for Highly Perishable Fast Moving Consumer

Goods and Other Fast Moving Consumer Goods. Three categories under each of

these classifications are chosen and customer’s choice of retail store for each of

these categories will be assessed. Based on the results after analysing the

responses of several people obtained using a questionnaire, the top factors are

determined.

No matter what the background of the customer, Price, Product Quality and

Availability of all brand and products are the three main factors that determine the

same. Analysis of all the hypotheses shows that there is either no difference or

minimal difference only in the choice of factors by customers of different

demographics such as age, gender, income level, marital status etc.

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TABLE OF CONTENTS

I. Chapter 1....................................................................4

1.1. Introduction

1.2. Purpose and Research Focus

II. Chapter 2....................................................................7

2.1. Literature Review

III. Chapter 3.....................................................................10

3.1. Research Methodology

3.2. Hypothesis

3.3. Information Gathering

3.3.1. Preliminary Questionnaire

3.3.2. Final Questionnaire

IV. Chapter 4.....................................................................13

4.1. Data Collection

IV. Chapter 5.....................................................................15

5.1. Data Analysis

5.2. Problems Encountered

5.3. Limitations

V. Chapter 6.....................................................................42

6.1. Conclusion

6.2. Future Work

VI. References..................................................................44

VII. Appendices..................................................................46

7.1. Preliminary Questionnaire

7.2. Final Questionnaire

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1. CHAPTER 1

1.1. INTRODUCTION

Retailing includes every business that sells goods to customers. These

establishments are usually referred to as shops or stores. The various formats of

retails stores are: Departmental stores, Supermarkets, Hypermarkets, Discount

stores, General merchandise stores, Warehouse stores, Variety store or "dollar

store", Boutiques, Convenience stores, Automated Retail stores like Kiosks, Grocery

stores and e-Retails.

A few decades ago a retail store was only a small shop in the locality from

where the consumers living nearby would buy groceries and other products that

they use on a daily basis and was happy and content with it. This is not the case

anymore. From small departmental stores to hypermarkets, there has been

massive growth in the retail industry. Now, every retail store tries to attract

customers by trying to satisfy the customer’s needs both by making the right

product available for its customers and by making it easy for the customer to make

the buying decision. One main reason for the same is that the retail industry has a

lot of competitors and in order to be successful, any retail store should make sure

that they have an edge over the others.

Research on various retail phenomenons such as retail pricing, distribution

system, transfer mechanisms or delivery, sales techniques, customer service,

buying behaviour etc has been happenning over several decades. Researches on

how a customer chooses his products that is, buying decision have also been done.

Out of all the products sold in a retail store, Fast Moving Consumer Goods

(referred as FMCG henceforth) have a higher percentage of volume and are those

that customers buy often. For example, an average customer would be buying not

more than 10 tv sets throughout his/her lifetime. But any customer would buy a

soap or a tooth paste everymonth or once in two months. This is why FMCG are a

vital part of a retail store and studying them becomes very essential.

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This thesis is a research on one of the phenomenons of retail, which is the

determination of factors that determine the customer’s choice of retail store and

loyalty towards the store, when buying FMCG.

FMCG includes products which are too numerous to count and hence a study

on a few categories of FMCG which will be a good reflection of the whole range of

products becomes necessary. Therefore six categories are chosen and studied.

Perishable categories such as vegetables and fruits, dairy products and bakery

items are the basic perishable FMCG that customers buy almost everyday. Among

the non perishable ones, personal care, cleaning products and and confectionaries

are chosen because these products are used by men, women and children – that is,

everyone in a family are included in the study.

So far, though there has been several studies on retail, none had

concentrated on FMCG alone and this study is unique by concentrating on FMCG,

because the FMCG makes a customer to visit a retail store on a routine basis.

1.2. PURPOSE AND RESEARCH FOCUS

This thesis contributes to a growing literature on shopping behavior and in

specific, factors that lead to the choice of store and loyalty by customers for

FMCG.

The specific focus is on the following six categories of FMCG, these being

everyday items and being used by both genders, adults as well as children:

a. Highly Perishable Fast Moving Consumer Goods:

i. Vegetables & Fruits

ii. Dairy Products

iii. Bakery Items

b. Other Fast Moving Consumer Goods:

i. Personal Care Products

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ii. Cleaning Products

iii. Confectionaries

Factors arrived upon using the preliminary questionnaire include Price, Product

Quality, Ambience, Parking Space, Display, Fast Billing and Quicker Shopping,

Customer Service, Location, Discounts / Offers / Benefits and Availability of all

brands / products etc.

A ranking of the above factors by customers shows the most important and least

important factors that influence the choice and loyalty by the customers while

buying FMCG.

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2. CHAPTER 2

2.1. LITERATURE REVIEW

Several studies on the retail industry have been undertaken- those that talk

about how to attract customers and make them buy at a retail store. Several such

studies are being cited and referred to. One such research on consumer loyalty to

food stores was done by Huddleston, Whipple, and VanAuken (2004) and the

result showed that advertisement, location, product assortment, service and

conveniences such as 24-hour-a-day service and quick checkout – all these

promoted loyalty. Messinger and Narasimhan (1997) have shown that as

shopper’s opportunity cost of time increases larger assortments become more

important.

There are various researches that examine the relationship between

shopper characteristics and shopping behavior.

Shoppers were classified as “routine” - who have higher opportunity cost

and “random” - who face low opportunity cost of time and search more widely

across stores within larger stores for the best price by Kim and Park (1997).

Ackerman and Tellis (2001) studied cross-cultural differences between Chinese

and Americans in terms of shopping behavior. Kim and Jin (2001) studied the

profiles of Korean shoppers of multinationals versus Korean discount stores and

found that a higher percentage of the shoppers who have full-time jobs tend to

patronize the multinational discount stores. However, there are no significant

differences between the two groups with respect to age, family size, education

level, and income. The studies are generally restricted to comparisons of

behavior within the same store format, that is, they are limited to only

supermarkets or to only discount stores.

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A few researchers have examined the shopper’s choice across retail

formats. Bhatnagar and Ratchford (2004) have studied competition for non-

durable goods sales among supermarkets, convenience stores, and food

warehouses. They assume that consumers choose the retail format that

provides the most attractive combination of price, assortment of products, and

travel cost. They conclude that convenience stores charge a higher price but

minimize travel time, supermarkets attract those shoppers who prefer larger

product assortments, and food warehouses are preferred by the heavy users,

such as consumers with larger families. Fox, Montgomery, and Lodish (2004)

study consumer shopping choices among supermarket retailers, mass

merchandisers, and drug stores, and find that consumers respond to variations

in product assortments and promotions more than prices.

Two studies, look at how changes in the availability of supermarkets

and supercenters affect choice among retail format in general. D’Haese and van

Huylenbroeck (2005) provide a case study of the shifting purchasing patterns of

two villages in rural South Africa. The majority of households in their study now

buy their main food items from supermarkets rather than from local shops and

farmers. Seiders, Simonides, and Tigert (2000) study the effects of supercenter

market entry on local traditional food retailers. They find that consumers choose

traditional supermarkets primarily for convenience, quality, and service, and

choose supercenters primarily for price and assortment. Carlson, Kinsey and

Nadav (2002) use cluster analysis to group consumers based on where they

obtained their food and found that half were “Home Cookers”–purchasing 93

percent of their food from grocery stores.

The studies discussed above have been done for all types of products

in general or on specific goods like the non-durable goods and not on the FMCG

which is one of the fastest growing industries which can never reach a

saturation level. There are a lot of innovations happening in these goods and

hence studying the same becomes inevitable. This thesis also differs from other

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researches discussed above on choice of retail store across formats and by

concentrating on FMCG. It also differs from the previous researches by

examining the effects of personal demographic characteristics such as gender,

age, income, marital status etc on the choice. Based on whether there are

differences in the factors, certain conclusions are arrived upon and

recommendations are given for retailers as well as FMCG manufacturers.

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3. CHAPTER 3

3.1. RESEARCH METHODOLOGY

The factors that a customer would consider when choosing a retail store are

derived from the customers which are then ranked based on the responses from

the customers. A list of factors are arrived from the customers just by asking them

so that it would give the customers to express their views without inhibitions. Also

this made customers come up with factors that are very practical. From the replies,

about ten factors are chosen. Based on the ten factors a final questionnaire is

developed. The top ranking factors based on which a shopper chooses a retail store

are determined using the final questionnaire. Also the various

characteristics/demographics of the respondeds are recorded. This is to find out

whether people with different demographics have different choices.

3.2. INFORMATION GATHERING

3.2.1. Preliminary questionnaire:

The factors based on which customers choose retail stores to buy FMCG

products is gathered using interviews, questionnaires and online survey and a list

of factors are gathered. Based on this the final questionnaire is formulated for

futher study.

3.2.2. Final questionnaire:

Based on the list of factors gathered, a questionnaire is drafted and

customers are asked to rank the factors that they think are important for a retail

store to possess to attract customers to buy FMCG.

The most important factors, the top three, will be identified from among a set of

ten factors for each product category given below and respondents are asked to

rank the factors based on their choice.

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There are six product categories that are chosen:

Highly Perishable Fast Moving Consumer Goods:

Vegetables & Fruits

Dairy Products

Bakery Items

Other Fast Moving Consumer Goods:

Personal Care Products

Cleaning Products

Confectionaries

The results obtained from the questionnaire are analysed. The ranks are cumulated

and the top three factors are determined by finding an average of the ranks. For

this purpose MS Excel is used.

3.2. HYPOTHESES

In one of the studies, Kim and Jin (2001) studied the profiles of Korean

shoppers of multinationals versus Korean discount stores and found that a

higher percentage of the shoppers who have full-time jobs tend to patronize the

multinational discount stores. However, there are no significant differences

between the two groups with respect to age, family size, education level, and

income.

The same demographics such as age, family size, income have been taken

along with gender and the occupation of the female respondents for this study.

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The following hypotheses are tested,

Hypothesis 1 – Is there a difference in the factors based on which male and female

customers choose a retail store for buying FMCG?

Hypothesis 2 – Is there a difference in the factors based on which customers of

different age groups choose a retail store for buying FMCG?

Hypothesis 3 – Is there a difference in the factors based on which working women

and housewives choose a retail store for buying FMCG?

Hypothesis 4 – Is there a difference in the factors based on which customers who

are singles, married and married with kids choose a retail store for buying FMCG?

Hypothesis 5 –Is there a difference in the factors based on which customers of

different income groups choose a retail store for buying FMCG?

For the above analysis, MS Excel is used for the quantitative work.

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4. Chapter 4

4.1. DATA COLLECTION

Data collection is a very time consuming process that requires patience and there

are various methods of data collection such as personal interviewing, telephone,

mail and the Internet. For the Preliminary questionnaire data was collected by all

the above methods. Personal interviews were conducted among customers at retail

stores, by telephone & email data were collected from professionals in the retail

industry. The data were collected as an open ended question in order to make the

respondents answer from their own experiences.

For the final questionnaire, emails were sent to different respondents and their

responses were recorded.

The preliminary and final questionnaires can be found in the appendix section of

this report.

4.1.1. Profile of the respondents

The final questionnaire was printed and distributed to several people. Also it was

distributed by email. Out of the 100 respondents, responses were received from 50

people and a database of the respondents’ profile (with demographic details and

ranking of the ten factors) is created.

The following are illustrations of the respondent’s profile:

Gender of the Respondents:

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Age group of the Respondents:

Marital Status of Respondents:

Income level of Respondents:

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5. CHAPTER 5

5.1. DATA ANALYSIS

The information gathered from the 50 respondents are entered into an excel sheet

after segregating them based on the age, gender, marital status etc. Please find the

same in the appendix section.

Based on the ranking given by all the respondents, the top factors that contribute

to the choice of a retail store while buying FMCG are arrived at for each of the

product category. This is done using Microsoft Excel, by finding out the average of

all the ranks for each factor for each product type. This is done for each product

type and for proving all the five hypotheses.

The same is described below:

Vegetables & Fruits

S.No. Factor

1 F2 F3 F4 F5 F6 F7 F8 F9 F10 1 3 1 8 10 9 4 5 7 6 2 2 2 1 3 10 4 9 5 6 8 7 3 3 10 7 9 8 9 8 9 7 9 4 3 1 7 6 10 4 5 1 9 8 5 3 2 4 9 10 6 8 1 7 5 6 2 1 5 10 8 3 9 4 7 8 7 2 1 8 5 10 6 9 7 4 3 8 2 1 10 9 8 7 6 5 3 4 9 2 1 6 7 10 9 8 4 5 3 10 2 3 8 4 6 9 7 1 5 10 11 2 1 3 10 9 4 5 6 7 8 12 4 1 3 10 6 8 7 9 5 2 13 2 1 7 8 6 5 9 4 3 10 14 2 1 4 7 3 5 10 6 9 8 15 3 1 8 7 9 4 6 5 10 2 16 4 1 5 3 6 8 7 9 10 2 17 6 9 6 8 7 4 9 9 7 9 18 1 1 4 8 5 3 5 2 3 6 19 1 8 10 7 6 5 2 9 3 4

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20 2 1 9 10 8 6 7 5 4 3 21 1 2 5 9 6 4 8 3 7 2 22 2 1 0 10 6 6 6 4 4 5 23 2 1 5 7 8 3 4 6 9 10 24 2 1 5 10 7 3 6 8 9 4 25 7 1 6 10 8 4 5 2 9 3 26 2 1 3 9 7 5 8 4 10 6 27 2 1 6 10 8 9 6 5 4 3 28 4 3 7 6 1 9 8 2 10 5 29 8 10 3 7 1 2 6 9 5 4 30 4 1 7 6 8 5 3 9 10 2 31 2 1 7 10 9 8 3 6 5 4 32 2 1 7 10 6 9 5 3 4 8 33 8 10 3 1 7 4 5 6 2 9 34 3 1 6 8 7 9 4 5 10 2 35 1 3 8 3 2 6 1 4 5 1 36 3 2 8 10 9 7 4 1 5 6 37 6 1 8 3 7 5 4 2 9 10 38 1 1 8 9 10 5 3 7 6 4 39 2 1 5 8 7 3 6 9 10 4 40 3 1 0 0 0 0 0 0 4 2 41 3 4 6 2 5 9 7 8 10 1 42 1 2 3 6 5 6 2 3 8 3 43 4 1 2 6 7 8 3 5 10 9 44 1 1 5 5 3 2 1 1 6 2 45 10 1 1 10 1 1 1 1 10 1 46 3 1 4 10 5 9 8 6 7 2 47 1 2 9 7 10 6 8 5 4 3 48 2 1 6 8 9 10 7 3 5 4 49 5 1 2 6 3 10 9 7 8 4 50 9 10 1 3 2 8 6 4 5 7

Average Rank 3.10 2.30 5.42 7.32 6.44 5.86 5.68 4.94 6.64 4.86

The ranks are rounded to the nearest whole number and given against each factor

as the final average rank as follows:

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5.1.1. Vegetables & Fruits:

The following are the ranks given to each of the factors:

Price 3

Product Quality 2

Ambience 5

Parking Space 7

Display 6

Fast Billing and Quicker Shopping 6

Customer Service 6

Location 5

Discounts / Offers / Benefits 7

Availability of all brands / products 5

The top 3 factors that customers consider as important while buying vegetables &

fruits are:

Product Quality, Price followed by Availability of all brands/products,

Location and Ambience

5.1.2. Dairy Products:


Price 3

Product Quality 2

Ambience 6

Parking Space 7

Display 6


Customer Service 6

Location 5

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The top 3 factors that customers consider as important while buying dairy products

are:

Product Quality, Price, Availability of all brands/products, Location

5.1.3. Bakery Items:


Price 3

Product Quality 2

Ambience 5

Parking Space 9

Display 6


Customer Service 6

Location 5



The top 3 factors that customers consider as important while buying bakery items

are:

Product Quality, Price, Ambience, Availability of all brands/products,

Location

5.1.4. Personal Care Products:


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Price 3

Product Quality 3

Ambience 6

Parking Space 8

Display 6


Customer Service 6

Location 6



The top 3 factors that customers consider as important while buying personal care

products are:

Product Quality, Price, Availability of all brands/products

5.1.5. Cleaning Products:


Price 3

Product Quality 3

Ambience 7

Parking Space 7

Display 6


Customer Service 6

Location 6



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The top 3 factors that customers consider as important while buying cleaning

products are:


5.1.6. Confectionaries:


Price 3

Product Quality 3

Ambience 6

Parking Space 8

Display 6


Customer Service 6

Location 6



The top 3 factors that customers consider as important while buying confectionaries

are:


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5.1.7. TESTING THE HYPOTHESES:

Each hypothesis is being tested, analysed and proved:

5.1.7.1. Hypothesis 1 – Is there a difference in the factors based on which

male and female customers choose a retail store for buying

FMCG?

The respondents are classified based on their gender and this hypothesis is tested.

The average ranking found using Microsoft Excel, of the male and female

respondents respectively are compared below:

Vegetables & Fruits:

Factors Male Female

Price 3 3

Product Quality 2 3

Ambience 5 6

Parking Space 7 8

Display 6 8

Fast Billing and Quicker Shopping 6 6

Customer Service 6 6

Location 5 5

Discounts / Offers / Benefits 7 6

Availability of all brands / products 4 6

Dairy Products:

Factors Male Female

Price 3 3

Product Quality 2 3

Ambience 5 6

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Parking Space 7 8

Display 6 7



Location 5 5



Bakery Items:

Factors Male Female

Price 3 4

Product Quality 2 3

Ambience 5 6

Parking Space 7 8

Display 6 6



Location 5 6



Personal Care Products:

Factors Male Female

Price 3 3

Product Quality 3 4

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Ambience 5 7

Parking Space 7 8

Display 5 6



Location 6 7



Cleaning Products:

Factors Male Female

Price 3 3

Product Quality 3 3

Ambience 6 7

Parking Space 7 8

Display 6 7



Location 6 6



Confectionaries:

Factors Male Female

Price 3 4

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Product Quality 3 3

Ambience 6 6

Parking Space 7 8

Display 6 6



Location 6 7



Yes, there is difference in the factors that male and female customers prefer in a

retail outlet while they shop for FMCG, but a very negligible difference.

Both men and women prefer a good price and product quality as their most

preferred factors, the third important factor is the preference for availability of all

brands/products in almost all the six categories of FMCG products under study. The

other facts that can be noticed are that:

1. Women prefer location of the store as an important factor while buying

vegetables & fruits

2. Men prefer ambience, location and availability while women donot consider

ambience but take into account all other factors while buying dairy products.

3. Women prefer all the factors except parking space as important criteria while

buying bakery items.

4. Men prefer ambience and display as important while buying personal care

products.


customers of different age groups choose a retail store for buying

FMCG?


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Factors Less than

30

More

than 30

Price 3 4

Product Quality 2 3

Ambience 6 5

Parking Space 8 6

Display 7 6



Location 5 5



Dairy Products:

Factors Less than

30

More

than 30

Price 3 4

Product Quality 2 2

Ambience 6 5

Parking Space 8 6

Display 7 6



Location 5 5



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Bakery Items:

Factors Less than

30

More than

30

Price 3 3

Product Quality 2 2

Ambience 6 5

Parking Space 9 6

Display 6 5



Location 6 5




Factors Less than

30

More than

30

Price 3 3

Product Quality 3 3

Ambience 6 5

Parking Space 9 6

Display 6 5



Location 6 6

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Cleaning Products:

Factors Less than

30

More than

30

Price 2 3

Product Quality 3 3

Ambience 7 6

Parking Space 9 6

Display 7 5



Location 6 5



Confectionaries:

Factors Less than

30

More than

30

Price 3 3

Product Quality 3 3

Ambience 6 6

Parking Space 9 6

Display 6 5



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Location 6 6



There is very very minimal difference in the factors considered by the less than 30

years age group and the more than 30 years age group. The following facts have

ben observed:

1. Apart from price & quality, the less than 30 years olds prefer location of the

retail store while the more than 30 years olds prefer customer service and

availability of the products while buying vegetables and fruits.

2. The less than 30 years olds prefer location and availability as important while

the more than 30 years prefer only availability as important while buying

dairy products.

3. The more than 30 year old people expect more customer service while

buying bakery items and personal care products.


working women and housewives choose a retail store for buying

FMCG?


Factors Working

Women

House

Wives

Price 4 2

Product Quality 3 1

Ambience 5 7

Parking Space 7 8

Display 7 9


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Location 5 5



Dairy Products:

Factors Working

Women

House

Wives

Price 4 2

Product Quality 3 1

Ambience 6 7

Parking Space 7 7

Display 7 9



Location 4 7



Bakery Items:

Factors Working

Women

House

Wives

Price 5 3

Product Quality 3 1

Ambience 7 6

Parking Space 7 7

Display 6 5

30



Location 5 7




Factors Working

Women

House

Wives

Price 4 3

Product Quality 4 2

Ambience 6 9

Parking Space 7 9

Display 6 6



Location 6 7



Cleaning Products:

Factors Working

Women

House

Wives

Price 4 2

Product Quality 4 2

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Ambience 7 9

Parking Space 7 9

Display 6 7



Location 6 7



Confectionaries:

Factors Working

Women

House

Wives

Price 5 2

Product Quality 4 2

Ambience 7 6

Parking Space 8 8

Display 6 6



Location 6 7



When comparing the preferences of working women and house wives, the following

are noted:

1. Working women fast billing and quicker shopping while buying vegetables &

fruits and bakery items.

32

2. Working women consider location as very important while buying dairy

products.

3. While house wives expect discounts on personal care products and cleaning

products from retail stores.


customers who are singles, married and married with kids choose

a retail store for buying FMCG?


Factors Single Married Married

with Kids

Price 3 4 3

Product Quality 2 3 2

Ambience 6 7 5

Parking Space 8 8 7

Display 6 8 6

Fast Billing and Quicker Shopping 6 6 6

Customer Service 5 7 5

Location 5 5 5

Discounts / Offers / Benefits 7 8 6

Availability of all brands / products 4 7 5

Dairy Products:


with Kids

Price 3 3 3

33


Ambience 5 7 5

Parking Space 9 8 7

Display 5 8 7



Location 5 6 5



Bakery Items:


with Kids

Price 3 4 3


Ambience 5 7 5

Parking Space 9 8 7

Display 5 8 7



Location 5 6 5





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with Kids

Price 3 5 3


Ambience 5 7 5

Parking Space 9 8 7

Display 5 7 5



Location 5 6 6



Cleaning Products:


with Kids

Price 3 4 3


Ambience 6 7 6

Parking Space 9 8 7

Display 6 7 6

Fast Billing and Quicker

Shopping

6 7 6


Location 5 7 6


Availability of all brands /

products

4 5 4

35

Confectionaries:


with Kids

Price 3 4 3


Ambience 5 7 6

Parking Space 8 8 7

Display 5 7 5



Location 6 7 7



When considering the difference in the prefences of single and married people and

married with kids, it can be seen that the preferences are almost similarly. It is

quite interesting to note that married people with kids prefer a retail store with

good ambience as against the ones without good ambience.


customers customers of different income levels choose a retail

store for buying FMCG?


Factors No

Income

Less

than

300

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

36

Price 2 2 3 2 4 2 5

Product Quality 2 1 1 3 3 2 3

Ambience 8 6 6 6 5 6 5

Parking Space 8 10 9 8 8 6 6

Display 8 6 7 8 6 7 6

Fast Billing and

Quicker

Shopping

6 7 8 7 5 5 8

Customer

Service

7 7 5 6 5 6 6

Location 6 3 5 6 5 5 5

Discounts /

Offers /

Benefits

4 5 7 7 7 7 7

Availability of

all brands /

products

4 4 4 6 5 5 5

Dairy Products:

Factors No

Income

Less

than

300

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

Price 2 3 6 2 4 2 5


Ambience 7 6 5 6 5 6 5


37

Display 8 7 4 7 6 6 6

Fast Billing and

Quicker

Shopping

5 7 6 7 6 5 9

Customer

Service

7 8 8 6 6 6 6

Location 6 3 3 6 5 5 4

Discounts /

Offers /

Benefits

5 5 8 7 7 7 7

Availability of

all brands /

products

5 3 5 6 4 5 6

Bakery Items:

Factors No

Income

Less

than

300

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

Price 3 2 3 3 3 3 5


Ambience 7 5 6 6 5 6 5


Display 6 4 4 7 5 5 6

Fast Billing and

Quicker

Shopping

7 6 8 7 6 6 9

Customer

Service

6 7 6 7 6 5 6

Location 6 6 5 6 5 5 4

38

Discounts /

Offers /

Benefits

6 5 8 6 7 7 7

Availability of

all brands /

products

5 6 5 5 5 5 6


Factors No

Income

Less

than

300

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

Price 2 2 5 2 3 3 5


Ambience 9 5 6 6 5 5 5


Display 6 6 5 7 5 5 6

Fast Billing and

Quicker

Shopping

6 6 7 6 6 6 9

Customer

Service

8 8 6 6 6 6 6

Location 6 6 8 6 6 6 4

Discounts /

Offers /

Benefits

4 6 6 7 5 6 7

Availability of

all brands /

products

4 2 4 5 4 3 6

39

Cleaning Products:

Factors No

Income

Less

than

3070

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

Price 2 2 4 2 3 2 4


Ambience 9 6 5 7 6 6 6


Display 7 7 5 7 5 6 6

Fast Billing and

Quicker

Shopping

6 7 8 7 6 6 9

Customer

Service

8 7 6 6 5 6 6

Location 6 4 7 6 6 6 4

Discounts /

Offers /

Benefits

4 5 7 6 5 7 6

Availability of

all brands /

products

4 4 4 4 4 3 6

Confectionaries:

Factors No

Inco

Less

than

301-

500

501-

1000

1001-

3000

3001-

5000

5001-

10000

40

me 300

Price 2 2 5 3 3 3 4


Ambience 7 6 5 6 6 6 6


Display 6 5

4 6 5 6 5

Fast Billing and

Quicker Shopping

7 6 8 6 6 5 9

Customer Service 8 6 7 7 6 6 6

Location 7 6 5 6 7 7 5

Discounts / Offers

/ Benefits

4 5 7 7 6 7 7

Availability of all

brands / products

4 2 3 4 4 3 6

There is no great difference in the factors that the different income level –

respondents considered while choosing a retail store for FMCG. The most important

factors are price, product quality and availability. It is interesting to note that the

income groups ’501-1000 US $’, ’501-1000 US $’ and ’5001-10000’ expect a good

ambience when buying vegetables and fruits. Location and availability are

considered as important by almost all the income groups. For personal care

products the income levels above 501 US$ expect a good ambience.

41

5.2. PROBLEMS ENCOUNTERED

The problems faced during the thesis work are:

1. The distribution and emailing of the questionnaire was a very tedious work

and even more tough was getting back the response. Eventhough it would

take just a few minutes to fill up the questionnaire.

2. Some respondents had not completely filled up the questionnaire and hence

these responses had to be discarded.

5.3. LIMITATIONS

Though the thesis work has been done with atmost sincerity and worked with in

detail, due to time limits, the number of responses received has been less than

expected. Out of the 100 questionnaires distributed as prints and via email, only 50

responses were received. Though the 50 responses received are good enough to

find the basic factors, if there had been more responses, many other facts could’ve

been understood regarding retailing FMCG.

42

6. CHAPTER 6

6.1. CONCLUSION

This research on the factors that the respondents consider as important while

choosing a retailer and being a loyal customer to the same retailer has revealed

that no matter what the background of the customer, Price, Product Quality and

Availability of all brand and products are the three main factors that determine the

same.

Analysis of all the hypotheses shows that there is either no difference or minimal

difference only in the choice of factors by customers of different demographics such

as age, gender, income level, marital status etc.

The anaysis of the demographics of the customers has revealed the following facts:

1.Women prefer location of the store as an important factor while buying

vegetables & fruits.

2.Men prefer ambience, location and availability while women donot consider

ambience but take into account all other factors while buying dairy products.

3.Women prefer all the factors except parking space as important criteria while

buying bakery items.

4. Men prefer ambience and display as important while buying personal care

products.

5.Apart from price & quality, the less than 30 years olds prefer location of the retail

store while the more than 30 years olds prefer customer service and availability of

the products while buying vegetables and fruits.

6.The less than 30 years olds prefer location and availability as important while the

more than 30 years prefer only availability as important while buying dairy

products.

43

7.The more than 30 year old people expect more customer service while buying

bakery items and personal care products.

8.Working women prefer fast billing and quicker shopping while buying vegetables

& fruits and bakery items.

9.Working women consider location as very important while buying dairy products.

10.While house wives expect discounts on personal care products and cleaning

products from retail stores.

11. Married people with kids prefer a retail store with good ambience as against the

ones without good ambience.

12. It is interesting to note that the income groups ’501-1000 US $’, ’501-1000 US

$’ and ’5001-10000’ expect a good ambience when buying vegetables and fruits.

Location and availability are considered as important by almost all the income

groups.

13. For personal care products the income levels above 501 US$ expect a good

ambience.

14. No matter what the income level, good price, quality and availability are

expected by all income levels.

6.2. RECOMMENDATIONS

Based on the research and conclusion arrived by analysis, the following are

recommended for retailers as well as FMCG manufacturers:

1. Price and Quality are very important for any customer and hence great

care should be taken by the retailers as well as the manufacturers.

2. Ambience plays a very important role for selling personal care

products since customers who fall under all income levels prefer the same.

Hence retailers should make sure that the same is provided at their store.

3. Working women prefer fast billing and quick shopping and hence seperate

counters for women, or for lesser quantity buyers or for cash only are

recommended.

6.3. FUTURE WORK

44

This thesis can be further proceeded by finding out if there would be differences in

the factors between customers from different cultural backgrounds. This would be a

very interesting study but would require time and channels though which different

people around the world can be contacted for responses.

REFERENCES

PAPERS:

Lesley Chiou, Empirical Analysis of Retail Competition: Spatial Differentiation at

Wal-Mart, Amazon.com, and Their Competitors, May 2005

Huddleston, P., J. Whipple, and A. VanAuken. “Food Store Loyalty: Application of

a Consumer Loyalty Framework.” Journal of Targeting, Measurement and

Analysis for Marketing 12 (No. 3, 2004): 213-230.

Messinger, P.R., and C. Narasimhan. “A Model of Retail Formats Based on

Consumer’s Economizing on Shopping Time.” Marketing Science 16 (No. 1,

1997): 1-23.

Bai, Junfei , Wahl, Thomas I. and McCluskey, Jill J.(2008) 'Consumer Choice of

Retail Food Store Formats in Qingdao, China', Journal of International Food &

Agribusiness Marketing, 20: 2, 89 — 109

Joseph F.Dash, Leon G.Schiffman, and Conrad Berenson, Risk - and Personality

- Related Dimensions of Store Choice, Journal of Marketing, Vol. 40 (January

1976) pp. 32-39

Kahn, B.E., and D.C. Schmittlein. “Shopping Trip Behavior: An Empirical

Investigation.” Marketing Letters 1 (1989): 55-70.

Bawa, K., and A. Ghosh. “A Model of Household Grocery Shopping Behavior.”

Marketing Letters 10 (No. 2, 1999): 149-160.

Kim, B.D., and K. Park. “Studying Patterns of Consumer’s Grocery Shopping

Trip.”Journal of Retailing 73 (No. 4, 1997): 501-517.

Ackerman, D., and G. Tellis. “Can Culture Affect Prices? A Cross-Cultural Study

of Shopping and Retail Prices.” Journal of Retailing 77 (2001): 57- 82.

45

Kim, J., and B. Jin. “Korean Consumers’ Patronage of Discount Stores: Domestic

vs. Multinational Discount Store Shoppers’ Profiles.” The Journal of Consumer

Marketing 18 (No. 3, 2001): 236-255.

Bhatnagar, A., and B.T. Ratchford. “A Model of Retail Format Competition for

Non-durable Goods.” International Journal of Research in Marketing 21 (2004):

39-59.

Fox, E.J., A.L. Montgomery, and L.M. Lodish. “Consumer Shopping and Spending

Across Retail Formats.” The Journal of Business 77 (No. 2, 2004): s25-s60.

D’Haese, M., and G. van Huylenbroeck. “The Rise of Supermarkets and

Changing Expenditure Patterns of Poor Rural Households Case Study in the

Transkei Area, South Africa.” Food Policy 30 (2005): 97-113.

Seiders, K., C. Simonides, and D. Tigert. “The Impact of Supercenters on

Traditional Food Retailers in Four Markets.” International Journal of Retail &

Distribution Management 28 (No. 4/5, 2000): 181-193.

Carlson, A., J. Kinsey, and C. Nadav. “Consumers’ Retail Source of Food: A

Cluster Analysis.” Family Economics and Nutrition Review 14 (2002) 11-20.

Books:

Retailing in the 21st Century by Edward J.Fox and Raj Sethuraman June 2005

46

APPENDICES

7.1. Preliminary Questionnaire:

Dear All,

I am doing my final thesis for an online course that I have enrolled in. I need your inputs for

developing a questionnaire for my thesis. I would like you to answer just one question in

that regard:

Question: Please write down (Tell me) atleast 5 aspects that make you choose a retail

store for buying Fast Moving Consumer Goods (example vegatables, dairy products,

personal care products). It could be the parking space or the display or any 5 aspects that

come to your mind. Please reply to me as soon as possible.

Regards,

Poornima

47

7.2. Final Questionnaire:

Questionnaire for Final Project for Online MBA programme

at Blekinge Tekniska Högskola, Sweden

Please fill up the below questionnaire with your response. I assure

you that the information given by you will be considered confidential

and shall not be shared with any other party.

I. Respondent’s Details:

Name: ____________________________

Age: ________ years

Gender (please choose): Male / Female

Profession (please choose):

If Employed, then,

In Govt Service:

In Private Sector:

In Public Sector:

IF Unemployed, then,

Student:

Seeking Employment:

House Wife:

Monthly Salary Range (please choose):

48

Less than US $ 300

US $ 301 – 500

US $ 501 – 1000

US $ 1001 – 3000

US $ 3001 – 5000

US $ 5001 - 10000

More than US $ 10001

Marital Status (please choose):

Single:

Widowed/Seperated:

Widowed/Seperated with kid(s):

Married:

Married with Kid(s):




II.

1. Please rank the following factors (from 1 to 10 :- 1 being most

important and 10 being least important) based on which you think

are important in a retail store when buying vegetables & fruits

Factors Rank

Price

Product Quality

Ambience

Parking Space

Display

Fast Billing and Quicker Shopping

Customer Service

Location

Discounts / Offers / Benefits

Availability of all brands / products



are important in a retail store when buying dairy products (like

milk, yogurt etc)

Factors Rank

Price

Product Quality




Ambience

Parking Space

Display


Customer Service

Location





are important in a retail store when buying bakery items (like

cakes, bread etc)

Factors Rank

Price

Product Quality

Ambience

Parking Space

Display


Customer Service

Location








are important in a retail store when buying personal care

products (like soap, shampoo)

Factors Rank

Price

Product Quality

Ambience

Parking Space

Display


Customer Service

Location








are important in a retail store when buying cleaning products (like

washing powder, toilet cleaner etc)

Factors Rank

Price

Product Quality

Ambience

Parking Space

Display


Customer Service

Location





are important in a retail store when buying confectionaries (like

chocolates)

Factors Rank

Price

Product Quality

Ambience




Parking Space

Display


Customer Service

Location



Documents

Factors Influencing Customer Loyalty and Choice of ...830779/FULLTEXT01.pdf · 3.2.1. Preliminary questionnaire: The factors based on which customers choose retail stores to buy FMCG