Retail Strategy in India-II (Understanding Customer)

Author: Jethendra

Author: Jethendra

Understanding a Retail Customer

Any retailers growth and survival in the highly competitive market depends on how well it understands its customers and responds to their current and potential needs. In the retail industry, understanding the retail customers plays an important role in the success of a retail store. The development of technology and globalization has led to a new era of consumerism where retailers focus completely on meeting the needs, wants and priorities of a consumer. To understand the strategies of understanding the retail customer, the blog has been handled in three sections namely: 1. Structure and nature of buying population 2. Consumer buying behaviour 3. Buying influences 1. Structure and nature of buying population Structure of buying population The buying population structure of a country is developed based on different age groups and also on males and females(demographics of population is very important). The common method to show the structure is by a population pyramid. From this structure, we get the percentage of gender and age group ranges. Understanding gender and age range helps retailers to develop specific strategies on planning for production, promotions, investments etc. For example, in recent years the population bulge in India, with its characteristic age and family constitution, needs to be taken directly into account while developing specific strategies. Nature of buying population In this era of competition, understanding the consumer is a necessity for retailers. Consumer needs and preferences are continuously changing, given the changes in factors like demographics and lifestyles. These changes can become great business opportunities for alert retailers, and threats for retailers who fail to adapt. Consumers go through several cognitive and behavioural processes while making their purchase and consumption decisions. The knowledge of how they decide on one brand instead of another and what factors influence their decision-making is crucial for retailers, not only to cater to the existing needs of their consumers but also to prepare for their future needs. This knowledge is also essential to make various business decisions related to packaging, pricing, distribution, promotions, etc. 2. Consumer Buying Behaviour What Consumers Buy? Consumers make choices by assessing some of the aspects of product like product tangibility, product durability and product availability. Product tangibility Strategies built on tangibility helps the image of a product or retail firm and on what they are into. The tangibility of promotional products makes them particularly strong in building and supporting a deserved image. Also, the quality of the items to be given should be considered as part of the image building process. Sometimes most promotional products have quality variations, and the lowest price is not always the best value. Hence strategies on product tangibility are specifically designed on the objectives, the target audience, and the image the company is trying to build. Product durability In the retail industry, demand depends on user reliability, functionality and technical durability of products. Such demands need to be combined with cost-effectiveness and shorter lead times. But how long the product (would) to be durable, in the market? Economists differ on whether market structure affects product durability and consequently, on whether planned obsolescence strategies pay. Many studies have found that efficient durability can emerge when firms compete on price. Hence strategies developed on durability help retailer to understand the market and have knowledge on sales. Product availability What is the optimal level of product availability a retailer should have in a store? The level of product availability is an important component of any supply chains responsiveness. A supply chain can use a high level of product availability to improve its responsiveness and attract customers. This increases revenue for the supply chain. However, a high level of product availability requires large inventories, and large inventories tend to raise costs for the supply chain. Therefore, a supply chain needs to achieve a balance between the level of availability and the cost of inventory. The optimal level of product availability is one that maximizes supply chain profitability. 3. Buying influences Why do they buy? Assessment of consumers buying preferences can be understood by looking at personal and social factor. Personal factor It assesses the influence of customers characteristics on their approach on buying task. With the help of recent advancement on PC-based packages, experimental designs on different buyer characteristics and the relative importance that individual buyers place on different product attributes, it has been possible for many retailers to draw some pertinent conclusions as to how the buying task is approached. Social factor Socially constructed marketing strategies which vary across consumer groups, help retailers to understand consumers choices and decisions. Still, human and retailing technologies interactions are rarely evaluated from a social practice perspective. We can believe that we know where the world should go. But unless were in touch with our customers, our model of the world can diverge from reality. Theres no substitute for innovation, of course, but innovation is no substitute for being in touch, either. - Steve Ballmer, CEO, Microsoft Corporation Contd.. Jethendra. B. K

Retail Consultant CustoLogix Solutions

CustoLogix with its experience on retail strategy consulting, help the retailers across globe to develop strategies on sales units and profits. To know more about retail strategy consulting opportunities please visit CustoLogix at www.custologix.com/serviceAbout the Author:

Retail Consultant,

Lead Business Analyst

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