Key to Success Enhancement of the business from customer at a profit to the company. “ Customer Satisfaction”
Who is Who?? Who is a customer?? A person or organization that buys goods or services from a store or business. Who is a consumer?? A person who purchases goods and services for personal use
The need of the hour.. A retailer should work upon the two important concepts: Provide value to the customers Maintain relationship with the channel members and customers
What is Value? From the perspective of the manufacturer, wholesaler, and retailer: It is the totality of tangible and intangible products and customer service offered to the customers. From the perspective of the customer: It is the customer’s view of all the benefits received versus price paid.
Why “Value” is important? Customers’ develop a trust on the brand when they get value for their money. Provides differentiation to the brand name so that the firm is not perceived as a “me too” brand. Retailers work too hard in order to make their customers perceive the level of value provided in the same manner the firms intends. Value is desired by all the customers.
What is a Value Chain? It is total bundle of the benefits offered to consumers through a channel of distribution. It includes store location, parking, ambience, level of customer service, products carried, product quality, retailer’s in-stock position, shipping, prices, retailer’s image and other elements. There are 3 aspects to value-retailer strategy: Expected : minimum value chain elements that the customer segment expects from a retailer. Augmented : Includes extra elements in a value chain that differentiate one retailer from the other. Potential : comprises value chain elements not yet perfected by a competing firm in the retailer’s category.
What is Relationship Retailing? It is a kind of retailing whereby the customer tries to maintain long term bonds with customers, rather than act as if each sales transaction is a new encounter with them. In relationship retailing there are 4 factors to keep in mind: Customer base Customer service Customer satisfaction Loyalty program
Customer BaseCustomer base needs to be analyzed in terms of-1. Demographics: objective, quantifiable, easily identifiable, and measurable population data. It includes: – Market size: How many people are in the potential target market? – Gender – Age: Prime age group – Household size – Marital (married/ single) and family status (do they have children) – Income – Retail Sales- What is the area’s sales forecast for the retailer’s goods/services category? – Mobility of target customers – Distance between the residential area and the store – Employment status – Education
2. Consumer Lifestyle Lifestyles are the ways in which individual consumers and families (household) live and spend time and money. It is based on social and psychological factors, and influenced by demographics. The social factors that are used in identifying consumers lifestyle are: Culture: A series of beliefs, norms and customs that passes on from generation to generation. Social class: Informal ranking of people based on income, occupation, education etc.
Contd.. Reference groups: It influences people’s thought and behaviour ○ Aspirational group- A person does not belong to it but wishes to join ○ Membership group- A person does belong ○ Dissociative group- A person does not want to belong ○ Face-to-Face group- Includes family and friends, this group has the major impact Family life cycle: How a person has moved from bachelorhood to children to retirement. What changes has he/she gone through in terms of attitudes, needs, purchases and income change. Time utilization: Activities in which the person is involved and the amount of time allocated to them.
The psychological factors that are used in identifying consumerslifestyle are: Personality: Sum total of an individual’s traits, which make that individual unique. It includes a person’s level of self-confidence, innovativeness, sociability, emotional stability and assertiveness. Class consciousness: The extend to which a person desires and pursues social status Attitudes: The positive, neutral and negative feelings a person has about different topics. Perceived risk: Do potential customers feel risk in connection with the retailer? Which goods and services have the greatest perceived risk? The importance of purchase: It affects the amount of time consumer will spend to make a decision and the range of alternatives considered.
3. Consumer Needs and Desires Before developing the retail strategy, a retailer needs to study the target market profile thoroughly. The profiling includes the reason of their certain behaviour. Some questions to be answered includes: How far will the customers travel to get the product? How important is the convenience? What hours are desired? Are evening and weekend hours required? What level of customer service is preferred? How extensive a goods/service assortment is desired? What level of goods/service quality is preferred? How important is price to the customers? Do different market segments have different and special needs? If yes, then what they are?
4. The Consumer Decision Process• A retailer should also be aware of how people make decisions.• He should remain familiar with the consumer behaviour which is a process of determining What a customer wants? Where they want? When they want? Why they want? How will they get it?• The consumer decision process can be divided into two different perspective:a) What good or service the consumer is thinking about buying?b) From where, will he/she purchase it?
Contd.. The consumer decision process has six steps: Stimulus Problem Information Evaluation Purchase Post awareness Search of purchase alternatives behaviour Demographics Demographics Lifestyle Lifestyle All blue arrows connect all the elements of decision making process and show the impact of demographics and lifestyle upon the process. Yellow arrow between lifestyle and demographics shows the impact of lifestyle on certain demographics such as: family size, location, marital status etc. The other one shows the impact of a purchase on elements of lifestyle, such as social class, reference groups, social performance etc.
Contd..1. Stimulus: It is a cue (social or commercial) or a drive that is meant to motivate a person to act.2. Problem awareness: Recognizes that the good/service under consideration may solve the problem of shortage or unfulfilled desire.3. Information search: It has 2 parts- – Determining the alternatives that will solve the problem at hand and, – Ascertaining the characteristics of each alternative.
Contd..4. Evaluation of alternatives: Person selects one option that is superior than all the other available.5. Purchase: It is further dependent on 3 things- – Place of purchase – Purchase terms – Availability6. Post Purchase Behaviour: It falls under two categories- – Further purchases – Re-evaluation
Types of Consumer Decision Making1. Extended decision making: It occurs when a consumer makes full use of the decision process. A lot of time is spent gathering information and evaluating alternatives. Perceived risk is high. Consumer traits such as class consciousness, education, age and income play a major role in decision making.2. Limited decision making: A consumer uses each step in the purchase process but does not spend a great deal of time on each of them. This category includes items that have been bought before but not regularly.
Contd..• Perceived risk is moderate.• Relevant to retailers such as: department stores, specialty stores and non-store retailers.• Shopping environment and assortment plays an important role.3. Routine decision making:• It takes place when the consumer buys out of habit and skips steps in the purchase process.• This category includes items that are bought regularly.• Perceived risk if very little.• Problem awareness is very important as it leads to a purchase.
Customer Service It refers to the identifiable, but sometimes intangible activities undertaken by a retailer in conjunction with the goods and services it sells. In consistency with the value chain concept, the two concepts of customer service: Expected : The level of service that customers want to receive from any retailer. Augmented : Activities that enhance the shopping experience and give retailer a competitive advantage.
Vital Decisions What customer services are expected and what customer services are augmented for a particular event? What level of customer service is proper to complement a firm’s image? Should there be a choice of customer services? Should customer services be free? Measure the benefits of providing customer services against their costs? Can customer services be terminated?
Customer Satisfaction Customer Satisfaction occurs when the value and customer service provided by a retailer, through a retailing experience meet or exceed consumer expectations. In retail satisfaction consists of 3 categories: Shopping system satisfaction which includes availability and types of outlets Buying system satisfaction which includes selection and actual purchasing of products Consumer satisfaction which is derived from the use of the product
Contd.. To continuously improve upon the customer satisfaction, retailers should take care of the following- Focus on customer concerns Empower frontline employees Show that you are listening to the customers Express sincere understanding Apologize and rectify the situation
Customer Loyalty Programs It reward a retailer’s best customer. These rewards stimulate the short and long run purchases. Make the customers feel ‘special’. Loyal customers contribute to the retailers image by spreading a positive word of mouth. Adds a lot to a retailers success.