Category: Management Notes

Management Notes

Factors to Consider in Preparing a Business Plan

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Whether you have just started your business or developing it day-by-day, a business plan is what you would need throughout your journey. The crucial factors that you would write down on a piece of paper will help you going towards your desired success. So, the question that arises here is How to write an effective business plan that will take your company to the expected height?

Basically, your business plan should be nothing but your answers to a comprehensive question list. To begin with, ask yourself:

Where do you want your business to go?

Find out how would you like to see your business in the next five, ten, or fifteen years down the lines?

What is your expected revenue and profit in future?

How many employees will you hire?

How would you like to expand your business?

And the list goes on.

Similar to the plan of long-term, create a short-term plan that would be applied to a shorter period of time, particularly a year. For example: What are your goals for the current year? What are the targets that you must accomplish to reach that ultimate goal?

Seven important factors to consider before starting a business

  1. A great idea

“No business can develop in the absence of a great idea. A great and a practical idea is the only thing on which the development of your business will depend. Moreover, as a lot of companies are involved in the market, you need to have a unique idea that stands out.”

Not sure what your great idea is? Explore our business ideas hub and get inspired.

  1. Funding and budget

“The next important factor that should be considered involves the funding of your business. You need to properly identify the sources through which you will be able to get the funding for your business. Moreover, it is better to have a plan so that the budget of a company can be properly maintained.”

What are the options for funding your business? Discover the different ways of raising finance.

  1. Analysis of competitors

“You need to know what your competitors are doing and what are their strategies? With this knowledge, you will be able to take appropriate decisions about your company. It will also help you in developing a much more effective strategy for your business.”

  1. An effective business plan

“No business can develop fully in the absence of a business plan. Writing a business plan can help you determine if your idea is feasible and provide direction. With a business plan, you will be able to know every next step that should be taken.”

  1. Legal documentation

“The next factor that needs to be considered is the completion of legal documents. For the sale of some specific products and services, there are some requirements for the preparation of legal documents. Make sure you have already done all the legal documentations for your business.”

Our legal issues section can help you to understand some of the common concerns.

  1. Positive attitude

“It is one of the most important things that will help you in passing all the challenges and difficulties. There will be a lot of risks and hurdles you will face in this process and the only thing that can save you will be your positive attitude. You will have to work hard to develop a company of your own.”

  1. Know when you need help

“The development of a business is not a matter of seconds, it will involve a lot of time that is spent with hard work. However, in this process, you will be needing the help of some experts. Make sure you already have an adviser who can provide you with the best advice at the hour of need.

“These are the seven most important factors you need to consider while starting a business of your own.”

Management Notes

Retail Planning Process

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In the retail planning process, a retailer decides about the planning strategies of the retail business, learn about the competition in the market, and create and implement strategies accordingly.

Retail planning is crucial for every retail business. Otherwise, you will always find yourself to dilemma while making decisions for your store.

Seven Steps involved in Retail Planning Process

  1. Set objectives

Setting Objectives is important for the success of the business. It is not necessary that the goal of a business is to maximize sales. An organization can pursue multiple goals at the same for example, expansion of business in a year, revenue generation, and more product lines, etc. it is apparent that all goals mentioned above are focused on multiplying sales.

Broadly the objective of an organization can be divided into two categories:

(i) External Objectives

The external objectives of an organization include the performance of the organization in an external environment focused on customers.

Such as providing customer satisfaction and increasing their loyalty for the products, selling quality products at lower prices, providing better customer service, etc.

(ii) Internal Objectives

On the other hand, internal objectives consist of sales goals, revenue generation, maximizing the sales using existing resources, etc.

Both objectives are important for an organization. But only clear objectives can be easy to achieve, and planning can be done accordingly to attain these objectives. Therefore, it is important for a retailer to set annual objectives to ensure success and to measure it.

  1. Analysis of the market

After the objective for the organization is defined. The next step is to analyze the situation of the market you are planning to enter.

The analysis can help you to make an effective decision. you can learn about the competitors’ strategies and plan your strategies accordingly, what are the expectations of your customers and how you can fulfill them, how you can stay ahead in competition in the market, etc.

The analysis can help you to learn about the threats and opportunities in the market and what actions you should take. In addition to this, analysis can help you to learn about the strengths and weaknesses of your own business.

In this way, you can work on to strengthen your strengths and work on your weaknesses to turn them into your strengths. You can make decisions about how you can use your resources such as financial resources, human resources, intangible and physical resources, etc.

  1. Analysis of Customers

Analysis of customers is the most important activity of the retail planning process. You can’t simply like a product, design it and throw in the market and expect customers to buy it and like it.

By analyzing the customers, you need that what are the expectations and requirements of customers and you select a segment of potential customers who are most likely to buy your products. You can plan your business strategies better if you know your customers.

You can optimize your marketing mix to satisfy your customers. Customers analysis helps the organization to innovate and create services to satisfy its customers and retain them for a long period.

Hence, you avoid the chances of getting out of fashion as you keep updating your strategies with the changing demands and requirements of customers.

  1. Frame Retail Strategies

After you have decided key objectives and learned about the market situation and customers’ requirement, next, you should prepare your retail strategy for marketing positioning and retail mix.

The market strategies should be prepared based on kind of products sold in your store or the segmentation of the market you are dealing with.

The meaning of retail mix is to have the balanced amalgamation of retail activities, and the meaning of retail positioning is the strategy of the retailer to enter the target market and establish his business to compete with the competitors.

It is important to pay attention to these processes to grab the attention of your potential customers and make establish a positive image of your retail business.

You need to prepare effective retail strategies to stay ahead in the game of retailing. Work on various elements such as the location of the store, pricing policy, merchandise assortment, advertisement, customer service, etc. for example, you can attract customers by offering good quality of products at lower prices than your competitors or central location of the store can be a key element to attract more customers.

  1. Strategic Short-term Planning

In the next step, the retailer must think and plan about the short-term plans to grow your business. For example, you can attract more customers in your store during the festive season by using tactic advertising and marketing strategies.

You can run a short-term TV advertisement or can circulate advertising pamphlets in the local market. Strategic short-term plans are important for boosting sales instantly. Therefore, you should start planning short-term plans before the beginning of the festive season.

Your planning should be as per the requirement of the event. For example, an advertisement plan for valentine’s day can’t be the same as the advertisement plan for Christmas.

  1. Implementation of the Strategies

Once you have decided strategies, the final step is to implement those strategies and control them. In this step, you will also check whether your strategies are working or not and how much they have helped in boosting the sales.

Implementing strategies is not easy, it requires thorough planning, and you need to make changes in the store, and you may also need to change the role of your employees.

You might face some reluctance from your employees but if you plan smartly. You can divide the work among your employees in such a way so that they don’t feel burdened. In addition to this, you can also give them a bonus if their work pays off.

  1. Analyzing the performance of the strategies

Your job does not end with the implementation of strategies. You should analyze its performance and see where did you face most difficulties and what kind of issues did you face. Learn about them and take your lessons and implement them in your future strategy planning.

Management Notes

Customer Satisfaction Meaning, Definition, Scope, Importance, Challenges

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Customer Satisfaction refers to the measure of how products and services supplied by a company meet or surpass customer expectation. It is a crucial indicator of consumer purchase intentions and loyalty. In a competitive business environment, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. By gauging customer satisfaction, companies can determine the effectiveness of their offerings, services, and interactions from the consumer’s perspective. This assessment often involves collecting feedback through surveys, direct feedback, and other communication channels. High levels of customer satisfaction are typically linked to customer retention, loyalty, and advocacy, which are vital for sustained business success and growth. Understanding and improving customer satisfaction can lead to enhanced customer relationships and a stronger competitive position.

Definition of Customer Satisfaction:

  1. Philip Kotler

Philip Kotler, a prominent figure in marketing, defines customer satisfaction as “a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.”

  1. American Marketing Association (AMA)

The American Marketing Association defines customer satisfaction as “the state that occurs when an individual’s perception of a product or service meets or exceeds their expectations.”

  1. Fornell et al., 1996

According to Fornell and his colleagues, customer satisfaction is “the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.”

  1. Oliver, 1980

Richard Oliver defines it as “a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment.”

  1. Hill, Nigel

Nigel Hill, an expert in customer satisfaction and loyalty, describes it as “the extent to which a product’s perceived performance matches a buyer’s expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the buyer is satisfied or delighted.”

  1. ISO 9000

ISO 9000, the set of standards related to quality management systems and designed to help organizations ensure they meet the needs of customers and other stakeholders, refers to customer satisfaction as “The customer’s perception of the degree to which the customer’s requirements have been fulfilled.”

Scope of Customer Satisfaction:

  • Product Quality

Customer satisfaction is heavily influenced by the perceived quality of a product. High-quality products that meet or exceed expectations tend to generate higher customer satisfaction levels, contributing to brand loyalty and positive word-of-mouth.

  • Service Delivery

The quality, efficiency, and friendliness of service delivery play critical roles in shaping customer satisfaction. This includes every interaction during the service process, from initial contact through post-service support.

  • Pricing Strategy

The perception of whether a product or service offers value for money can significantly affect customer satisfaction. Competitive and transparent pricing that aligns with customer expectations of product value helps in maintaining high satisfaction levels.

  • Customer Expectations Management

Managing and sometimes shaping customer expectations is vital for achieving satisfaction. This involves clear communication, setting realistic expectations, and consistently meeting or exceeding those expectations.

  • Customer Feedback and Resolution

The scope of customer satisfaction also includes how businesses handle customer feedback, complaints, and queries. A responsive, fair, and quick resolution process is crucial for maintaining high satisfaction levels.

  • Brand Image and Reputation

Customer satisfaction is closely tied to a brand’s image and reputation. Brands perceived as trustworthy and customer-centric are more likely to enjoy higher customer satisfaction scores.

  • Loyalty Programs

Loyalty programs that reward repeat customers can enhance customer satisfaction by making customers feel valued and appreciated. Effective loyalty programs can increase customer retention rates and promote positive referral behavior.

  • Market Position and Competitiveness

In highly competitive markets, customer satisfaction can be a key differentiator. Companies that excel in satisfying their customers often achieve better market positions and have a competitive edge over those that do not prioritize customer satisfaction.

  • Innovation and Improvement

Organizations that continuously innovate and improve their products and services in response to customer feedback tend to see higher levels of customer satisfaction. This proactive approach can help companies stay relevant and desirable in their markets.

  • Employee Engagement

Employee satisfaction and engagement also play a crucial role in customer satisfaction. Engaged employees are more likely to provide superior service and contribute positively to the customer experience.

Importance of Customer Satisfaction:

  • Customer Retention

Satisfied Customers are more likely to remain loyal to a brand, leading to higher customer retention rates. Retaining existing customers is generally more cost-effective than acquiring new ones, making customer satisfaction a crucial factor in reducing churn and maintaining a stable revenue stream.

  • Brand Loyalty

High levels of customer satisfaction foster strong brand loyalty. Loyal customers are more likely to repurchase from the same brand, choose it over competitors, and recommend it to others. This loyalty enhances brand reputation and increases customer lifetime value.

  • Positive Word-of-Mouth

Satisfied Customers become brand advocates, sharing positive experiences with friends, family, and peers. Word-of-mouth recommendations from satisfied customers can significantly influence purchasing decisions and contribute to brand awareness and credibility.

  • Revenue Growth

Customer Satisfaction is closely linked to revenue growth. Satisfied customers tend to spend more, make repeat purchases, and are willing to pay premium prices for products or services they perceive as valuable. As a result, businesses with high customer satisfaction levels often experience increased sales and profitability.

  • Reduced Marketing Costs

Satisfied Customers require less marketing effort to convince them to repurchase or engage with the brand again. By focusing on retaining existing customers through exceptional service and experiences, businesses can reduce marketing expenses associated with acquiring new customers.

  • Competitive Advantage

In today’s competitive marketplace, customer satisfaction can serve as a significant differentiator. Businesses that consistently deliver exceptional customer experiences outperform competitors, attract more customers, and gain a sustainable competitive advantage.

  • Improved Customer Relationships

Positive Customer experiences foster stronger relationships between businesses and their customers. By prioritizing customer satisfaction, organizations can build trust, loyalty, and mutual respect, leading to long-term partnerships and collaborations.

  • Continuous Improvement

Customer feedback is invaluable for identifying areas of improvement and innovation. By listening to customer concerns, preferences, and suggestions, businesses can refine their products, services, and processes to better meet customer needs and stay ahead of the competition.

  • Enhanced Employee Satisfaction

Satisfied Customers contribute to a positive work environment by providing recognition and appreciation for employees’ efforts. Happy and engaged employees are more likely to deliver exceptional customer service, creating a cycle of satisfaction that benefits both customers and employees.

  • Regulatory Compliance and Reputation Management

Meeting or exceeding customer expectations is essential for maintaining regulatory compliance and safeguarding the reputation of the business. Satisfied customers are less likely to file complaints or negative reviews, helping businesses maintain a positive public image and avoid reputational damage.

Challenges of Customer Satisfaction:

  • High Customer Expectations

Customer expectations are continually evolving and often increasing. With the rise of digital technology, customers expect quick responses, personalized services, and innovative solutions. Meeting these high standards consistently across all touchpoints can be challenging for businesses.

  • Maintaining Consistency Across Channels

Customers engage with brands through multiple channels — in-store, online, via social media, etc. Providing a consistent experience across all these platforms is essential for customer satisfaction but can be difficult to achieve due to varied channel dynamics and operational capabilities.

  • Diverse Customer Needs

Customers have diverse preferences, needs, and values. Tailoring services and products to match the specific expectations of different customer segments requires deep insights and flexible operational capabilities, which can be resource-intensive.

  • Balancing Cost and Quality

Maintaining high-quality customer service and products while also managing costs is a persistent challenge. Businesses need to find cost-effective ways to deliver value without compromising the quality that customers expect.

  • Handling Negative Feedback

Negative feedback and complaints are inevitable, regardless of how effective a business is. The challenge lies in addressing these issues promptly and effectively without letting them damage the business’s reputation.

  • Technological Integration

Incorporating new technologies to improve customer experience is essential but can be fraught with challenges. These include high implementation costs, the complexity of integration with existing systems, and ensuring that all staff are trained to use new technologies effectively.

  • Data Management and Privacy

Collecting and utilizing customer data to enhance satisfaction is critical, yet it poses privacy and security risks. Businesses must navigate these challenges while ensuring compliance with data protection regulations, which vary by region.

  • Cultural Differences

For global businesses, cultural differences can pose significant challenges in maintaining customer satisfaction. Practices that please customers in one part of the world may not be effective or even acceptable in another.

  • Employee Training and Motivation

Ensuring that all employees are adequately trained and motivated to deliver excellent customer service is crucial. However, achieving this can be difficult, particularly in larger organizations or those with high employee turnover rates.

  • Economic Fluctuations

Economic downturns can tighten customers’ spending and elevate their expectations simultaneously. Businesses must adapt to these changes swiftly to maintain customer satisfaction without drastically impacting profitability.

Management Notes

Customer Service

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Customer satisfaction (CSAT) is a metric used to quantify the degree to which a customer is happy with a product, service, or experience. This metric is usually calculated by deploying a customer satisfaction survey that asks on a five or seven-point scale how a customer feels about a support interaction, purchase, or overall customer experience, with answers between “highly unsatisfied” and “highly satisfied” to choose from.

Customer service is the direct one-on-one interaction between a consumer making a purchase and a representative of the company that is selling it. Most retailers see this direct interaction as a critical factor in ensuring buyer satisfaction and encouraging repeat business.

Even today, when much of customer care is handled by automated self-service systems, the option to speak to a human being is seen as necessary to most businesses. It is a key aspect of servant-leadership.

Basics of Good Customer Service

Successful small business owners understand the need for good customer service instinctively. Larger businesses study the subject in-depth, and they have some basic conclusions about the key components:

  • Timely attention to issues raised by customers is critical. Requiring a customer to wait in line or sit on hold sours an interaction before it begins.
  • Customer service should be a single-step process for the consumer. If a customer calls a helpline, the representative should whenever possible follow the problem through to its resolution.
  • If a customer must be transferred to another department, the original representative should follow up with the customer to ensure that the problem was solved.

Customer Services Job Requirements

Much is expected of customer service representatives. Yet the pay for the job is low. The average salary in 2018 was about $33,750, according to the Bureau of Labor Statistics.

Some of the job expectations:

  • Customer service representatives must be accessible, knowledgeable, and courteous. They require excellent listening skills and a willingness to talk through a resolution. Training in conflict resolution can be beneficial.
  • Strong speaking skills are important. For phone staff, this means speaking clearly and slowly while maintaining a calm demeanor even if the customer doesn’t.

Employer Responsibilities

Poor management can doom any customer service operation. A couple of important tips for managers:

  • Make sure your customer service representatives are fully informed and have the latest information and the company’s products and policies.
  • Periodically assess the customer service experience you are providing to ensure that it’s an asset to the company.
  • Consider conducting regular surveys to give customers the chance to provide feedback about the service they receive and suggest areas for improvement.

Using Mobile Services Effectively

In recent years, studies of customer service have centered on creating the perfect online experience.

The first and most difficult factor is the multiplicity of channels. Today’s customers expect to get service through whatever app or device they happen to be using at the moment. That may be a mobile device or a laptop, a social media site, text app, or live chat.

Once again, the focus has been on packaging how-to content and related resources that are designed for self-service. Increasingly sophisticated data analytics also are being used to identify dissatisfied or low-engagement customers.

But, as always, the most effective customer service apps need to incorporate human contact, if only as a last resort.

  • Customer service is the interaction between the buyer of a product and the company that sells it.
  • Good customer service is critical to business success, ensuring brand loyalty one customer at a time.
  • Recent innovations have focused on automating customer service systems but the human element is, in some cases, indispensable.
Management Notes

Customer Shopping Behaviour

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Consumer Buying Behavior refers to the actions taken (both on and offline) by consumers before buying a product or service. This process may include consulting search engines, engaging with social media posts, or a variety of other actions. It is valuable for businesses to understand this process because it helps businesses better tailor their marketing initiatives to the marketing efforts that have successfully influenced consumers to buy in the past.

A variety of factors go into the consumer buyer behavior process, but here we offer just a few. Taken separately, they may not result in a purchase. When put together in any number of combinations, the likelihood increases that someone will connect with a brand and make a purchase. Four factors influencing consumer buying behavior are:

  • Cultural Factors: Culture is not always defined by a person’s nationality. It can also be defined by their associations, their religious beliefs or even their location.
  • Social Factors: Elements in a person’s environment that impact the way they see products.
  • Personal Factors: These may include someone’s age, marital status, budget, personal beliefs, values, and morals.
  • Psychological Factors: A person’s state of mind when they are approached with a product will often determine how they feel not only about the item itself but the brand as a whole.

Studying consumer behavior is important because this way marketers can understand what influences consumers’ buying decisions. By understanding how consumers decide on a product they can fill in the gap in the market and identify the products that are needed and the products that are obsolete. Studying consumer behaviour also helps marketers decide how to present their products in a way that generates maximum impact on consumers. Understanding consumer buying behaviour is the key secret to reaching and engaging your clients, and convert them to purchase from you.

A consumer behavior analysis should reveal:

  • What consumers think and how they feel about various alternatives (brands, products, etc.);
  • What influences consumers to choose between various options;
  • Consumers’ behavior while researching and shopping;
  • How consumers’ environment (friends, family, media, etc.) influences their behavior.

Consumer behavior is often influenced by different factors. Marketers should study consumer purchase patterns and figure out buyer trends. In most cases, brands influence consumer behavior only with the things they can control; like how IKEA seems to compel you to spend more than what you intended to every time you walk into the store.

Factors affects consumer behavior

Many things can affect consumer behavior, but the most frequent factors influencing consumer behavior are:

  1. Marketing campaigns

Marketing campaigns influence purchasing decisions a lot. If done right and regularly, with the right marketing message, they can even persuade consumers to change brands or opt for more expensive alternatives. Marketing campaigns can even be used as reminders for products/services that need to be bought regularly but are not necessarily on customers’ top of mind (like insurance for example). A good marketing message can influence impulse purchases.

  1. Economic conditions

For expensive products especially (like houses or cars) economic conditions play a big part. A positive economic environment is known to make consumers more confident and willing to indulge in purchases irrespective of their personal financial liabilities. Consumers make decisions in a longer time period for expensive purchases and the buying process can be influenced by more personal factors at the same time.

  1. Personal preferences

Consumer behavior can also be influenced by personal factors, likes, dislikes, priorities, morals, and values. In industries like fashion or food personal opinions are especially powerful. Advertisement can, of course, help but at the end of the day consumers’ choices are greatly influenced by their preferences. If you’re vegan, it doesn’t matter how many burger joint ads you see, you’re probably not gonna start eating meat because of that.

  1. Group influence

Peer pressure also influences consumer behavior. What our family members, classmates, immediate relatives, neighbors, and acquaintances think or do can play a significant role in our decisions. Social psychology impacts consumer behaviour. Choosing fast food over home-cooked meals, for example, is just one of such situations. Education levels and social factors can have an impact.

Four types of Buyers

  1. The Analytical Buyer

Motivated by logic and information, this buyer will look at all the data on competing brands and products before making an informed decision.

  1. The Amiable Buyer

Warm and friendly, this buyer just wants everyone to be happy. That is why they are often paralyzed by big decisions when there is the perception of a win/lose outcome.

  1. The Driver Buyer

Drivers are most concerned with how others view them and whether they follow. The trendsetters, Drivers are most concerned with their appearance rather than the relationships that are formed during a transaction.

  1. The Expressive Buyer

Relationships are key to the Expressive Buyer. They cannot stand feeling isolated or ignored during a transaction. Instead, they want to feel like your most important asset.

It’s hard to distill something as complex as consumer buying behavior into four neat and tidy categories. Most people will find they are a combination of these types of consumer buying behavior.

Management Notes

Individual Factors Affecting Consumer Behaviour

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The Personal Factors are the individual factors to the consumers that strongly influences their buying behaviors. These factors vary from person to person that results in a different set of perceptions, attitudes and behavior towards certain goods and services.

Some of the important personal factors are:

  1. Age

The consumer buying behavior is greatly influenced by his age, i.e. the life cycle stage in which he falls. The people buy different products in different stages of the life cycle. Such as the purchase of confectionaries, chocolates is more when an individual is a child and as he grows his preferences for the products also changes.

Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold etc. An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure.

  1. Income

The income of the person influences his buying patterns. The income decides the purchasing power of an individual and thus, the more the personal income, the more will be the expenditure on other items and vice-versa.

  1. Occupation

The occupation of the individual also influences his buying behavior. The people tend to buy those products and services that advocate their profession and role in the society. For example, the buying patterns of the lawyer will be different from the other groups of people such as doctor, teacher, businessman, etc.

  1. Lifestyle

The consumer buying behavior is influenced by his lifestyle. The lifestyle means individual’s interest, values, opinions and activities that reflect the manner in which he lives in the society. Such as, if the person has a healthy lifestyle then he will avoid the junk food and consume more of organic products.

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individual’s lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.

  1. Personality

An individual’s personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows etc.

  1. Economic Condition

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival.

These are some of the personal factors that influence the individual’s buying behavior, and the marketer is required to study all these carefully before designing the marketing campaign.

Management Notes

Influence of Group on Buying Decisions Process

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Consumers are a tribal bunch, and the groups they choose to belong to are significant to how those consumers view themselves and live their lives. Much the way they pick like-minded friends, consumers also purchase brands they believe represent standards they relate to. This is a key component of reference group marketing. Convincingly associating your product or service with a group your target market admires is how you can use group influence to boost your brand’s sales.

Consumers Trust Reference Groups

Consumers are influenced by different types of reference groups they believe they are a part of or aspire to be. Group influence goes both ways; sometimes, consumers avoid brands they believe would put them into a group they don’t want to be included in. People buy things to help form and express their self-concept and their connections with like-minded people. Many things a person buys, especially showy items such as clothing, accessories, vehicles, restaurants or club memberships, are symbolic of what he thinks is acceptable to a certain reference group such as his family, social circle, workplace, community or culture.

An individual buyer might make purchases that appeal to a few different types of reference groups. For example, a consumer who wants to appear eco-friendly may purchase a Toyota Prius. That same consumer might also feel connected to Nintendo’s gaming community and opt to buy Nintendo consoles over Sony or Microsoft products. Group influence comes from many directions and in most cases, different types of reference groups do not clash in the buyer’s mind because the products that signify them are in completely separate categories.

Branded Upbringings Make Lifetime Buyers

Kids influence their parents’ purchases, and reference group marketing can be quite effective with children and teenagers. Marketers aim their messages at children via television, apps and internet to establish early brand familiarity and inspire direct sales. While parents may refer to other parents and groups for the final decision on household purchases, teens and children are typically driving forces behind their parents’ purchasing decisions.

Consumers Buy Peer Status

Wealthy consumers influence non-wealthy consumers. Certain brands keep luxury consumers believing they’re part of an elite club. The trick for marketers of high-end luxury goods and services is to appeal to the wealthier consumers who want to feel distinguished from the non-wealthy while at the same time appealing to the larger audience of consumers who want to emulate the wealthy, according to research on consumer behavior. For example, a high-end watchmaker may release a limited edition luxury watch for its targeted consumers followed by a more affordable version of the product, under the same brand name, for a wider market.

Cause Affiliations and Purchasing

Movements in society can influence consumer behavior. Media reports associated with a brand can fuel consumer activism for or against it, making social media an important asset for any brand engaging in reference group marketing. For example, an injustice involving a manufacturer that is publicized in the media may trigger a consumer to join a boycott of the manufacturer’s brand. Conversely, a company’s association with a charitable cause or heroic deed may compel the consumer to purchase the company’s brand just to show support. People favor brands that resonate with what they believe in and what they think like-minded believers accept.

Management Notes

Buying Decision Process and its Implication on Retailing

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Buying decision process, also known as the consumer decision-making process, is a series of steps that individuals go through when making purchasing choices. Understanding this process is crucial for retailers as it helps them tailor their marketing strategies, enhance customer experiences, and influence consumers at each stage of the journey.

The buying decision process typically involves five stages: Problem recognition, Information search, Evaluation of alternatives, Purchase decision, and Post-purchase behavior.

Understanding the intricacies of the buying decision process is fundamental for retailers aiming to succeed in a competitive marketplace. By aligning marketing strategies, product offerings, and customer experiences with the various stages of consumer decision-making, retailers can enhance their appeal, build customer loyalty, and drive sustainable business growth. The integration of technology, the emphasis on personalization, and a commitment to ethical practices further contribute to a positive and impactful retailing experience.

1. Problem Recognition

This is the initial stage where consumers recognize a need or problem that can be satisfied by making a purchase. It could be triggered by internal stimuli (e.g., running out of a product) or external stimuli (e.g., advertising).

Implications for Retailing:

  • Retailers must understand the factors influencing problem recognition and identify triggers that prompt consumers to consider a purchase.
  • Effective advertising, promotions, and product displays can stimulate the recognition of needs.

2. Information Search

Once the need is recognized, consumers seek information to find possible solutions. This can involve internal sources (memory, past experiences) and external sources (friends, family, online reviews).

Implications for Retailing:

  • Retailers should provide accessible and relevant information through multiple channels, including websites, social media, and in-store displays.
  • Reviews and recommendations play a crucial role, so encouraging and showcasing positive customer feedback is beneficial.

3. Evaluation of Alternatives

Consumers evaluate various product options based on attributes such as quality, price, brand reputation, and features. They create a consideration set of alternatives.

Implications for Retailing:

  • Retailers need to ensure their products or services stand out in terms of quality, value, and uniqueness.
  • Creating product bundles, offering discounts, or providing personalized recommendations can influence the evaluation process.

4. Purchase Decision

At this stage, the consumer makes the final decision and selects a particular product or service. Factors like pricing, availability, and promotions influence this decision.

Implications for Retailing:

  • Retailers should optimize pricing strategies, provide transparent information about costs, and offer convenient purchasing options (online, in-store, mobile).
  • Promotions, discounts, and loyalty programs can be effective in nudging consumers towards a purchase.

5. Post-Purchase Behavior

After the purchase, consumers assess their satisfaction. If expectations are met or exceeded, it leads to positive post-purchase behavior; otherwise, dissatisfaction may occur.

Implications for Retailing:

  • Ensuring a positive post-purchase experience is critical for customer loyalty and repeat business.
  • Effective customer service, easy returns, and follow-up communication can enhance customer satisfaction.

Additional Considerations:

Digital and Omnichannel Influences:

  • The digital landscape has transformed the buying decision process. Consumers often use online channels for information search, reviews, and comparisons.
  • Retailers must have a strong online presence, ensuring that their websites are user-friendly and mobile-optimized.

Social Media Influence:

  • Social media platforms play a significant role in shaping consumer perceptions and decisions.
  • Retailers should engage with customers on social media, use influencers, and leverage user-generated content to enhance brand image.

Personalization and Customer Relationship Management (CRM):

  • Personalized experiences cater to individual preferences, enhancing the overall customer journey.
  • Retailers can use CRM systems to track customer interactions, personalize marketing messages, and offer targeted promotions.

Supply Chain and Inventory Management:

  • An efficient supply chain ensures product availability, reducing the likelihood of consumers choosing alternatives due to stockouts.
  • Retailers need robust inventory management systems to optimize stock levels and fulfill customer demands promptly.

Post-Purchase Communication:

  • Continued communication post-purchase, through newsletters or loyalty programs, can reinforce the customer’s decision.
  • Retailers should encourage customer feedback and address any concerns promptly to build trust.

Customer Reviews and Ratings:

  • Online reviews heavily influence the evaluation stage of the buying process.
  • Retailers should actively manage and respond to customer reviews, showcasing a commitment to customer satisfaction.

Sustainability and Ethical Considerations:

  • Growing consumer awareness about sustainability and ethical practices impacts purchasing decisions.
  • Retailers adopting sustainable practices and communicating these efforts can appeal to environmentally conscious consumers.

Challenges and Opportunities for Retailers

  • Increased Consumer Empowerment

Consumers now have access to vast information and options, making it challenging for retailers to influence decisions. However, it also provides opportunities to engage and educate consumers through effective marketing and communication.

  • Rise of E-commerce

The growing prominence of online shopping has altered traditional retail dynamics. Retailers must invest in seamless online experiences and omnichannel strategies to remain competitive.

  • Data Privacy Concerns

While personalized experiences can enhance the buying process, concerns about data privacy and security are on the rise. Retailers need to be transparent about data usage and implement robust security measures.

  • Globalization and Cultural Sensitivity

Retailers expanding internationally must be mindful of cultural differences and adapt their strategies to resonate with diverse consumer preferences.

  • Dynamic Consumer Trends

Rapid changes in consumer preferences and trends require retailers to stay agile and responsive. Regular market research and monitoring of industry trends are essential.

Management Notes

International Perspective in Retail Business

indiafreenotesby indiafreenotes2

Retail internationalization is the transfer of retail operations outside the home market. It involves the international transfer of retail concepts, management skills, technology and even the buying function.

International trade and commerce has existed for centuries and played a very important part in the World History. However International Retailing has been in existence and has gained ground in the past two to three decades. The economic boom in several countries, coupled with globalization have given way to Organizations looking at setting up retailing across borders. The advent of internet and multimedia has further changed the dimensions as far as International Retailing is concerned.

The international perspective in retail business involves understanding and navigating the complexities of operating in diverse global markets. Retailers expanding internationally must consider cultural nuances, regulatory environments, consumer behaviors, and economic conditions unique to each country.

The international perspective in retail business involves a nuanced understanding of diverse markets and the ability to adapt strategies to local conditions. Successful global retailers prioritize cultural sensitivity, comply with local regulations, and leverage technology to navigate the complexities of operating on a global scale. By combining a deep understanding of local markets with a strategic and flexible approach, retailers can establish a strong international presence and capitalize on global opportunities.

Factors involved in International Retailing

A careful examination of the definition for international retailing reveals certain concepts which are key to the process of international retailing. These include operations, concepts, management expertise, technology and buying.

  1. Operations

Retail internationalization is the expansion of a retailer’s operations into a foreign market. The store format may or may not be similar to that in the home market. Identical operations may well trade under a different brand than that operated in the domestic market. This decision is largely dependent upon the method of market entry. On the acquisition of a foreign retail operation, the new owner may retain the original brand if it is a respected brand.

For example, in 1999 Wal-Mart (the retail giant) bought UK grocery chain ASDA and retained the original ASDA brand. When a retailer enters a new market by franchise, it may transfer an established domestic brand. Sometimes, a new foreign brand is perceived as more fashionable than its competitors.

  1. Concepts

Retail concepts lay emphasis on innovations in the industry. The self service concept first emerged in California in 1912. Later, the concept was followed in a number of international markets in the next two decades. Similarly, the convenience store format which originated in USA in 1920s was taken up in Europe in the 1970s. Now, the focus in on globalization. The retail concept currently by operated by retailers may also become successful in a foreign market.

The internationalization of “the body shops” popularized the idea of environmentally sensitive products. The success of such concepts have been adopted by competitors spawning of similar retail offers in natural toiletries and cosmetics.

  1. Management expertise

The transfer of concepts is linked with the internationalization of management expertise. This encompassed the internationalization of skills and techniques used in the management of the business. Formation of alliances is an important means of transferring management functions. Retail alliances are prompted by operational synergies, buying economies of scale, increased retailer power over manufacturer, the development of retailer own labels and joint defense building against the market entry of foreign competitors.

International retail alliances are the direct outcome of growing globalization. Successful alliance management rests on close cooperation, communication, synergistic performance measures and an agreement to common objectives.

  1. Technology

Retailers who operate internationally require the use of technology advances. Use IT in central management of retail operations has improved its decision making in areas such as finance, personnel and logistics. Technologies such as EPOS (Electronic Point of Sale) are also used at operational levels of retail stores.

Generally, internationalization will employ relatively advanced technology. It is preferable for retailers to move into a market where they have a technological advantage. Technological advantage in turn, would confer a competitive advantage over indigenous retailers.

  1. Buying

The proportion of consumer expenditure on retail is considerably important. As the population becomes more wealthy a greater proportion of income is spent on non-essentials. Only a small percentage of total spend goes on food and clothing. A higher share of spending power is directed towards non-essentials such as holidays and leisure activities. In retail operations the function of buying is indeed sourcing. Sourcing has had the greatest impact in terms of internationalization.

Alliances are formed to attain efficiency and leverage in sourcing. International retailers use their collective influence with suppliers to reduce prices and improve quality. For example, the European alliance EMD has stated exerting the combined purchasing power of its members as its primary objective.

Reason for Internationalization of retailing

  1. Inadvertent internationalization

Inadvertent internationalization is due to political instability. Sometimes, changes in the demarcation of national borders take place. This may mean a retail company is operating in a different market although its stores have not physically moved. Changes in Eastern Europe are the examples of this kind. The US retailer KMart entered Czechoslovakia. Within a year it found itself operating in two district markets, the Czech and Slovak republics.

  1. Non-commercial reasons

Non-commercial reasons of political, personal, ethical or social responsibility have motivated retailers to move into foreign markets. For example, retailers foray into markets for reasons of social and environmental responsibility. Notably, the Body Shop’s “trade not aid” sourcing policy helped develop infrastructures in order to stabilize economics.

  1. Commercial objectives

It include entering the market which gives retailers competitive edge. Gaining important market knowledge before moving in on a larger scale learning about innovations may be other commercial objectives of retail internationalization.

  1. Government regulations

Government regulations influence the choice of market by retailers. It is not a prerequisite to internationalization. Retailers prefer the markets with fewer restrictions on their growth. Severe regulations at home push retailers into the international arena. Loi Royer in France severely restricted the development of large out of town stores. As a result the French hypermarkets turned to less restrictive markets to continue their expansion.

  1. Growth potential

Retailers seek the best growth potential possible. If they perceive profitable opportunities in overseas markets, they are likely to capitalize on them.

International Perspective in Retail Business

  1. Globalization and Market Expansion:

  • Market Entry Strategies:

Retailers may choose from various entry strategies, including franchising, joint ventures, acquisitions, or establishing wholly-owned subsidiaries, depending on the level of control desired and the nature of the market.

  • Global Supply Chains:

Managing global supply chains is crucial, involving coordination of sourcing, production, and distribution across different countries. Retailers often optimize supply chain efficiency to reduce costs and enhance flexibility.

  1. Cultural Sensitivity and Localization:

  • Understanding Cultural Differences:

Cultural factors significantly impact consumer preferences, shopping habits, and communication styles. Successful retailers adapt their strategies to align with local cultural norms and values.

  • Localization of Products and Services:

Retailers often tailor their product offerings and services to meet local tastes and preferences. This may involve adapting packaging, marketing messages, and even the assortment of products.

  1. Regulatory and Legal Considerations:

  • Compliance with Local Regulations:

International retailers must navigate diverse regulatory landscapes, including tax laws, employment regulations, and trade restrictions. Understanding and complying with local laws are critical for sustained success.

  • Trade Barriers and Tariffs:

Retailers need to be aware of trade barriers, tariffs, and import/export regulations that may impact the cost and availability of goods.

  1. Economic Conditions:

  • Currency Fluctuations:

Global retailers face exposure to currency fluctuations, which can impact pricing, profitability, and financial performance. Hedging strategies may be employed to manage currency risk.

  • Economic Stability:

Economic conditions in different countries influence consumer purchasing power and spending behavior. Retailers must be adaptable to economic fluctuations and tailor strategies accordingly.

  1. Technology and E-commerce:

  • E-commerce and Digital Platforms:

The growth of e-commerce enables retailers to reach international consumers without significant physical infrastructure. Online platforms provide opportunities for market entry and global reach.

  • Technology Adoption:

The adoption of technology varies globally. Retailers need to assess the digital maturity of each market and adapt their technology strategies accordingly.

  1. Competitive Landscape:

  • Local and Global Competition:

Retailers face competition from both local players and other international brands. Understanding the competitive landscape is crucial for market positioning and differentiation.

  • Partnerships and Collaborations:

Forming strategic partnerships with local businesses or entering collaborations with established players can facilitate market entry and enhance competitiveness.

  1. Consumer Behavior and Trends:

  • Diverse Consumer Behaviors:

Consumer preferences and behaviors differ across countries. Retailers must conduct thorough market research to understand local trends, shopping habits, and preferences.

  • Global Trend Impact:

Some consumer trends, such as sustainability and ethical consumption, have global resonance. Retailers can leverage such trends for consistent messaging across international markets.

  1. Social and Environmental Responsibility:

  • CSR and Sustainability:

Social and environmental responsibility are increasingly important globally. Retailers are expected to demonstrate commitment to sustainable and ethical practices, aligning with global expectations.

  1. Logistics and Distribution:

  • Efficient Distribution Networks:

Establishing efficient logistics and distribution networks is critical for timely and cost-effective delivery of products. Retailers often optimize distribution strategies based on the geography and infrastructure of each market.

  • Last-Mile Challenges:

Last-mile delivery challenges can vary significantly, and retailers must address them to provide a seamless customer experience.

  1. Adaptability and Agility:

  • Agile Business Models:

International retailers need to adopt agile business models to respond to changing market conditions, consumer preferences, and competitive landscapes.

  • Crisis Management:

Effective crisis management is essential for navigating unexpected challenges, such as geopolitical events, economic downturns, or public health crises.

Management Notes

Influencing Factors Present: Indian Retail Scenario

indiafreenotesby indiafreenotes1

Retail Business today is one of the quickly growing channels & playing an important role in emerging economic growth of the country. In the recent times customers are getting more & more attracted towards Retail Markets. Change in income structure, consumer tastes & preference, demographic & geographic profile are some of the key factors that are driving towards growth in Retail Business.

Some other main factors responsible for the growth in Retail Industry are as follows:

  1. Growth of Consumers

Nowadays there is tremendous growth in number of consumers in India, especially the middle class. Consumer demand & income structure has also increased further raising their expectations for quality products at reasonable prices. Retail outlets offer a wide variety of products & services to the customers to meet their demands thus resulting into the growth of Retail Sector.

  1. Working Population

In recent times the graph of working population has seen a steep increase in urban as well as rural areas thus changing their spending habits & income structure. It becomes very difficult for the working people to spend enough time in shopping at different locations. This enables a retailer to provide them various products at one place, creating a platform for development.

  1. Value for Money

Big & organized retail outlets basically deal in volumes & can offer a good range of products at reasonable price thus attracting customers at a very large scale. This in return also creates a good opportunity for retailers to get more profits & enables new business groups to enter into this sector.

  1. Rural Market

Today’s Indian Retail market has entered in rural areas creating a big competition, as the rural population has become more literate & quality conscious. These high potential rural populations have thus enabled the retailers to enter rural market & develop new products & strategies to meet their demands. Also it has created employment opportunities for the rural people thus heading towards growth & development.

  1. Corporate Sector

Corporate sectors have also entered into the retail business to cater the customers demand & provide them better quality products at reasonable price. This is one of the reasons that have brought revolution to the retail sector thus driving it towards the growth.

  1. Foreign Retailers

Rapid expansion & the race to cater the demand of every customer is catching the interest of foreign retailers to enter the market &provide good quality products & services through joint ventures or franchising. This will further boost the retail sector & will help in developing economy of the country.

  1. Technological Impact

Advance technology has made it easier for the retailers to handle large scale business & cater the needs of consumers. With the introduction of computerized billing system, electronic media & marketing techniques, barcode system has changed the face of retailing in providing products & services to customers. Also the use of online market has driven the retail sector towards advanced growth structure.

  1. Income Structure

Increase in the number of working population has resulted in increase in the income structure in cities as well as remote areas. This has further led to increase in the demand for quality products & services. People nowadays tend to try new things & improve their look thus increasing the spending habits & giving an opportunity to grow & expand their business.

The rise and growth of the Indian retail industry

Over the years, retailing in India has been one of the most dynamic and fast paced industries, which has travelled through different phases. Origins of retailing in India can be traced back to the emergence of kirana and mom & pop stores, but with Indian economy getting liberalised in early 1990s, many indigenous franchise stores propped up. Many domestic players like Raymond, Bombay Dyeing etc. started to forward integrate from manufacturing to retailing thereby catering to a larger base of customers.

In the backdrop of evolutionary times coupled with day to day disruptions, retail outlets like Shoppers Stop, Planet M, Crosswords, Pantaloons etc. entered the market in the 1990s, followed by a few shopping malls, department stores and supermarkets. Thus, from early 90s to about 2005, shoots of organized retail started emerging in India. 2005 onwards marked a phase of growth and stabilization where large corporates like Reliance, Aditya Birla, Godrej etc. entered and grew their retail business. Retail became the ‘buzzword’ and the industry to be in. In the decade the industry saw many ups and downs and a few groups also exited retail who were not being able to grow and compete in the sector. A large number of International brands and retailers also entered India during this phase, many of them like Zara and H&M becoming extremely successful while the others still struggle to find a foothold.

Currently, driven by strong macroeconomic factors, India is one of the fastest growing economies globally and the fourth largest retail market in the world. It thus holds a very strong position as far as its market potential is concerned. It provides a strong platform for consumers, distributors, manufacturers and ancillary sectors like transportation, logistics, cold chains etc. Retailers are continuously trying to fully tap the depth of this potential by making use of latest technologies along with next gen tools like data analytics, social commerce, CRM solutions etc. which form the backbone of modern retailing.

The burgeoning millennial population, growing middle income households and increasing women workforce provide a highly positive outlook for the retail businesses in India. Fuelled by these factors, the Indian retail industry is expected to grow from US$ 790 billion in FY 2019 to US$ 1400 billion by FY 2024, as the overall economy crosses the US$ 5 trillion mark.

As internet penetration increases, more international retailers set up shops in India and established Indian brands and retailers set themselves on a high growth trajectory, the share of organised retail market is expected to increase from 12 percent in FY 2019 to 25 percent in FY 2024.The e-commerce market itself is estimated to grow from US$ 24 billion in FY 2019 to US$ 98 billion in FY 2024. Going forward, given the strong retail and consumer outlook, India is expected to witness redefining trends which will shape the future of the retail market.

Consumer experience will be the key focus of the retailers, while technology will play an important part in increasing sales as well as facilitating the enhancement of consumer experience throughout their shopping journey. The next 10-12 years will be the defining years for Indian retail as the market will mature and organized retail will penetrate deeper into smaller cities and towns. While on one side more international brands and retailers across categories and formats will aggressively enter and grow the Indian business, India will become the key growth market for the ones already present. Technology will replace many ‘human roles’ in retail and new ways to emotionally connect with consumer will evolve. New markets will develop, and new channels will disrupt and reshape the markets.

This article focuses on the some of the above points and throws light on trends expected to disrupt Indian retail industry in the near future.

Growth of Indian Economy & Consumption

Just days after coming to power, the current government spelt out its key priorities, which were focused on laying the foundation for making India a US$ 5 trillion economy by FY 2024. As per IMF too, India’s GDP will grow at 7.4 percent in FY 2020, with medium term growth projection expected to remain strong at 8 percent due to ongoing structural reforms and a favourable demographic dividend.

These factors are largely scripted on the strength of India’s growing domestic consumption. This high rate of growth in consumption is accompanied by a substantial decline in India’s poverty rate and increase in formal employment, due to growing proportion of jobs in services and declining share of employment in agriculture. The growing contribution of services sector towards India’s overall GDP, has resulted in creating improved working conditions and better income for Indian households. As a result of this, India’s GDP per capita has crossed US$ 2,000 mark in FY 2019.

The government now intends to focus on the manufacturing sector to create new jobs and has launched many initiatives like “Make in India” for this. This will further help in increasing the GDP per capita, thereby putting more money into the hands of people to improve their lifestyle, thereby supporting consumption and the retail market.

It has been seen in the case of China that when the per capita GDP reaches US$ 2,000 mark and the basic requirements of shelter, food and clothing are met, people start spending many other categories and the retail market consumption prospects improve and investment momentum increases significantly. At this level of per capita income, basic needs are met and income available for discretionary spend increases. As India has crossed this US$ 2,000 mark in FY 2019, it can be expected that Indian retail has reached its inflexion point. With rapidly growing economy and higher GDP per capita, it can be assumed that Indian retail industry has started to change its gears, just like China did in the last 15 years.

Indian retail is thus expected to reach US$ 1400 billion by FY 2024 from US$ 790 billion in FY 2019, growing at a CAGR of 12 percent.

Growth of Organized Retail

Due to the sharp rise and changing consumption pattern of Indian consumers, share of organized segment is growing rapidly. While traditional formats or unorganized retail formats continue to dominate the retail market, organized retail is growing at a faster pace and eating up into traditional retail. A major driver of this high growth trajectory has been online retail which is projected to grow at a CAGR of 33 percent between FY 2019-24. Growth in online retail is majorly attributed to factors including:-

  • Increasing internet penetration
  • Growth in number of smartphone users
  • Growing number of online shoppers

Although mobile, tablets and electronics as a category continue to be the dominant one in the online market of India, new breed of online players are targeting other categories like food & grocery, pharmacy etc. These will be the categories where we will see 40 percent plus year on year growth in the online space.

Factors Driving the Growth of Indian Retail Market

Indian consumption and retail market growth is largely supported by the following factors:

  1. Burgeoning Millennial Population and Changing Outlook towards Spending

With median age of 27 years, India is home to world’s largest Millennial population. With 440 million of them, they make 34 percent of the total population in India. Further, their contribution to the Indian workforce is significantly higher at nearly 48 percent in FY 2019.

This set of consumers are more confident of future success and earning at a much younger age than their parents. As they are more urban in their approach, these consumers are career driven and well-travelled people. They aspire high, with fewer things seems to be out of bound for them. Millennials no longer feel guilty about spending too much on self, instead they believe in investing towards fulfilling their needs more thoroughly. They spend on things that make them look good in a “selfie” world. They also spend on things that improve their lives and their “image”. The focus is shifting from high capex items like house and cars that the last generation saved and spent on, to spending more on experiences and on day to day things, buying better products and brands in a more convienent way.

Also, Millennials are known to be marrying late, with average age of marriage for women in urban India increasing from 20-22 years to 25-26 years, while for men it has increased from 25-26 years to 29-30 years in the past few years. This has resulted in young Millenials having more disposable income to spend on “self”, therby growing various categories like personal gadgets, solo holidays etc.

  1. Increasing Women Workforce

With changing societal mind set and increasing gender equality at office, women entering workforce has been on the rise in past few years. From FY 2014 to FY 2019, women workforce in India has increased from 5 million to 7 million respectively and is expected to reach 10 million by FY 2024. This has led to the increase in earning members and family income, thereby giving rise to discretionary spending. Today, women in India are getting independent in terms of their purchase decisions. This coupled with increasing time pressures and aspirations to spend on self-development, is giving rise to the consumption of new categories like personal care, readymade products etc.‘ Convenience’ is again a theme that comes up very strongly here. Across categories, products and brands that can make the consumer life more convenient will continue to grow very rapidly.

  1. Growing Wallet Share and Price Trade-Off

With growing GDP per capita and higher disposable incomes, consumers have become more aspirational and are open to buying new categories. This hasled to a change in wallet share of Indian consumers. Earlier wallet share of Indian consumers was largely dominated by food and clothing only, but with evolving buying behaviour, new categories like mobile and communication, beauty & grooming, personal gadgets etc. have now become a part of Indian consumer’s wallet share.

Many new categories of spend have thus emerged in the last few years and many others have redefined themselves.

Consumers have traded “durability” for “price” and “fashion”. E.g. in the 80s and 90s, consumers purchased a TV or a refrigerator or furniture only once or twice in their lifetime, largely when the older product became irrepairable. However, Millenials buy these products every 5-7 years as products with new features and designs are launched. Thus, the market for these products has grown tremendously as first-time buyers purchase these products driven by greater affordability and there is a high replacement driven demand. There is also a great growth in the second-hand market, which is also becoming online with many online players entering the market.

  1. Growth of Markets

With online players now delivering to the smallest of towns, consumers in these cities are aware of many international and indigenous brands available in the market. This spells a big opportunity for the modern retailers who are looking to enter into Tier III & IV markets. Many consumers living in Tier III &IV towns have now experienced the brands, through online purchases. Leading national brands are now looking at 500 plus cities as their market and are already opening stores. Other international and indigenous brands are planning expansion into these cities based on factors like changing lifestyle, digital connectivity etc.

  1. Growth of Malls

With wide variety of international and domestic brands available and with growing consumer desire to own these brands at a more organised, better and bigger destinations, there has been a sharp rise in the number of malls operating in India. Earlier the mall development was confined to top tier cities like Delhi- NCR, Mumbai, Hyderabad, Chennai, Pune etc. However the next round of mall development is expected to come from Tier III cities like Allahabad, Coimbatore, Jamshedpur, Panaji, Udaipur etc.

Malls have also progressively become bigger and are considered to be destinations or experience centres instead of just shopping or transactional places. Today, malls are focusing more to become a community or public interaction centres by creating meeting places, entertainment areas, providing better shopping experiences through enhanced ambience, brand selection etc. By bidding farewell to the categories like books and music, and mobile, that have moved online, malls have started to focus on the growing significance of offering a good line-up of experiential categories like food and beverage, entertainment options like multiplexes, gaming centres along with other amusement options to encourage greater footfalls and more return visits.

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