Customer Perception 8

PROJECT REPORTON

Brand loyalty of pizza hut and domino’s

Submitted in partial fulfillment of requirement of Bachelor of Business Administration (B.B.A) General

BBA VI Semester (2nd shift, Section -A)Batch 2010-2013

Submitted to: Submitted by:Ms. Palak Gupta Mukesh kumarDesignation 03724501710

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL. KALKAJI

1

Student’s Undertaking

I hereby certify that this is my original work and it has never been submitted elsewhere

by:

Mukesh kumar

2

CONTENTS

Description Page no.

Acknowledgement 4

Executive Summary 5

Certificate of completion 6

Introduction to topic 7

Objectives 11

Literature review 12

Research Methodology 43

Analysis &Interpretation 44

Findings & Techniques 56

Recommendations & conclusions 77

Bibliography 78

3

AKNOWLEDGMENT

I would like to take an opportunity to thank all the people who helped me in collecting

necessary information and making the project. I am grateful to all of them for their time,

energy and wisdom.

Getting a project ready requires the work and effort. I would like to thank all those who

have contributed in completing this project. Specially, I would like to send my sincere

thanks to Ms. Palak Gupta for her helpful hand in the completion of my project.

NAME:

MUKESH KUMAR

4

EXECUTIVE SUMMARY

The study aims to study Pizza Hut started out as a pizza parlor opened up by two

brothers in Topeka, Kansas.   Today, the company has restaurants all over the world

and its annual sales are in the billions.   The growth of the company was due to a good

product being delivered at a good price and offering perceived value.   The company

has adjusted to new entrants into the market and has managed to stay ahead of the

competition.

The philosophy for growth is simple: Take care of the customer, and the customer will

take care of you.   Pizza hut focused on providing good customer service in order to

create customer loyalty.   In return, the customer will return and more importantly, the

customer will become an advocate.

Customer feedback programs were put into place in order to measure the customer

experience and also to uncover opportunities.   The restaurant managers are paid

bonuses based on the result from their respective customers.   The problem was that

the company noticed that managers of underperforming locations where receiving

bonuses while managers of extremely profitable locations were not.   Recommendations

have been made in order to fine tune the bonus plan so that manager incentives will be

balance between profits and customer service.

Pizza Hut is a pioneer and continues innovation with its service initiatives and product

lineup.   As long as the company keeps focusing on its customers, then the company

will still be a leader for generations to come.

DOMINO’S

Domino's Pizza is the largest pizza deliverer in the United States, with stores in over 50 countries. Recently, Domino's competition has come from other pizza places like Papa John's, Pizza Hut, and Little Caesar. In order to better their brand image, a marketing campaign was created that changed their recipe due to poor customer reviews. The hope is that the new and improved recipe means new and more frequent customers.

Research was conducted to see if Domino's pizza's new taste and campaign had an effect on Chicago's pizza market. Chicago's pizza business consists of brands like Giordano's, Uno's, and Connie's. These chains defined the quality expected

5

of all pizza in Chicago. Nearly 75% of Chicago land people surveyed have not had Domino's in over six months to over a year, proving that the new campaign Domino's started is not working.

In our focus group taste test, the pizza was widely construed as terrible, but not bad for the quantity of pizza. Domino's is seen as a “value” meal, as people order our pizza en masse for large groups because it is more cost-effective than other pizza delivery places. In an open-ended survey question, more people in Chicago preferred Giordano's pizza than to any other pizza, delivery or dine in.

Domino's aims to create a new restaurant chain that can compete with well

- established pizza franchises like Giordano’s. We have a good grasp on people who want to eat for cheap, but now energy should be focused on the dine in restaurant service

-

6

CERTIFICATE OF COMPLETION

This is to certify that MUKESH KUMAR of BBA VI A (E) has prepared this project

sincerely and satisfactorily under my guidance. The project is complete to the best of

my knowledge and worth appreciation.

Project guide:

Ms. PALAK GUPTA

7

INTRODUCTION

Fast food is one of the world’s largest fast growing industry types. India’s fast food industry is growing by

40%. The 6000 corer fast food retail industry is mainly dominated by the multinational

players and the key players which are active in the research of the food retailing.

Because of the availability of raw material for fast food, global chains are flooding into

the country. The percentage share held by foodservice of total consumer expenditure

on food has increased from a very low base to stand at 2.6% in 2001. Eating at home

remains very much ingrained in Indian culture and changes in eating habits are very

slow moving with barriers to eating out entrenched in certain sectors of Indian society.

The growth in nuclear families, particularly in urban India, exposure to global media and

western cuisine and an increasing number of women joining the workforce have had an impact on

eating out trends.

Major players in fast food are:  

McDonald’s 

KFC 

Pizza hut

Dominos pizza 

Café coffee day 

Barista

Subway

Papa John’ 

Smoking joeys

8

OBJECTIVES

  To find out the market strateg ices of both the brands.

To find out the various forces and their results on the industry. 

To find out the comparative analysis between Pizza-hut and dominos-pizza.  

To check out the preferences of the people or the consumers.  

To find out which factors are more preferred by the customers.

9

LITERATURE

REVIEW

10

BRAND LOYALTY

Brand Loyalty is a scenario where the consumer fears purchasing and consuming product from another brand which he does not trust. It is measured through methods like word of mouth publicity, repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc. Brand loyalty is the extent to which a consumer constantly buys the same brand within a product category. The consumers remain loyal to a specific brand as long as it is available. They do not buy from other suppliers within the product category. Brand loyalty exists when the consumer feels that the brand consists of right product characteristics and quality at right price. Even if the other brands are available at cheaper price or superior quality, the brand loyal consumer will stick to his brand.

Brand loyal consumers are the foundation of an organization. Greater loyalty levels lead to less marketing expenditure because the brand loyal customers promote the brand positively. Also, it acts as a means of launching and introducing more products that are targeted at same customers at less expenditure. It also restrains new competitors in the market. Brand loyalty is a key component of brand equity.

Brand loyalty can be developed through various measures such as quick service, ensuring quality products, continuous improvement, wide distribution network, etc. When consumers are brand loyal they love “you” for being “you”, and they will minutely consider any other alternative brand as a replacement. Examples of brand loyalty can be seen in US where true Apple customers have the brand's logo tattooed onto their bodies. Similarly in Finland, Nokia customers remained loyal to Nokia because they admired the design of the handsets or because of user- friendly menu system used by Nokia phones.

Brand loyalty can be defined as relative possibility of customer shifting to another brand in case there is a change in product’s features, price or quality. As brand loyalty increases, customers will respond less to competitive moves and actions. Brand loyal customers remain committed to the brand, are willing to pay higher price for that brand, and will promote their brand always. A company having brand loyal customers will have greater sales, less marketing and advertising costs, and best pricing. This is because the brand loyal customers are less reluctant to shift to other brands, respond less to price changes and self- promote the brand as they perceive that their brand have unique value which is not provided by other competitive brands.

Brand loyalty is always developed post purchase. To develop brand loyalty, an organization should know their niche market, target them, support their product, ensure

11

easy access of their product, provide customer satisfaction, bring constant innovation in their product and offer schemes on their product so as to ensure that customers repeatedly purchase the product.

Pizza hutPizza Hutwas founded in 1958 by brothers Dan and Frank Carney in theirhometown of Wichita, Kansas. When a friend suggested opening a pizza parlor--thena rarity--they agreed that the idea could prove successful, and they borrowed $600from their mother to start a business with partner John Bender. Renting a smallbuilding at 503 South Bluff in downtown Wichita and purchasingsecondhand equipment to make pizzas, the Carneys and Bender opened the first Pizza Hut restaurant. A year later, in 1959, Pizza Hut was incorporated in Kansas, and DickHassur opened the first franchise unit in Topeka, Kansas.

in the early 1960s Pizza Hut grew on the strength of aggressive marketing of thepizza restaurant idea. In 1962, the Carney brothers bought out the interest held byBender, and Robert Chisholm joined the company as treasurer. In 1966, when thenumber of Pizza Hut franchisee units had grown to 145, a home office wasestablished to coordinate the businesses from Wichita. Two years later, the firstPizza Hut franchise was opened in Canada. This was followed by the establishmentof the International Pizza Hut Franchise Holders Association (IPHFHA). It aimed atacquiring 40 percent of the company's franchise operations, or 120 stores, andadding them to the six outlets wholly owned by Pizza Hut.In early 1970 Frank Carney decided that the business strategy was inadequate, andthat a more developed, long-term business plan was necessary. The turning pointoccurred when Pizza Hut went public and began growing at an unprecedented pace.In 1970 Pizza Hut opened units in Munich, Germany, and Sydney, Australia. Thatsame year, the chain's 500th restaurant opened, in Nashville, Tennessee.In 1971 Pizza Hut became the world's largest pizza chain, according to sales andnumber of restaurants. A year later the chain gained a listing on the New York StockExchange. Pizza Hut also achieved, for the first time, a one million dollar sales weekin the U.S. market.At the end of 1972 Pizza Hut made its long-anticipated offer of 410,000 shares of common stock to the public. The company expanded by purchasing threerestaurant divisions: Taco Kid, Next Door, and the Flaming Steer.In 1973 Pizza Hut expanded further by opening outlets in Japan and Great Britain. Three years later the chain had more than 100 restaurants outside the UnitedStates and two thousand units in its franchise network.In 1977 Pizza Hut merged with PepsiCo, becoming a division of the global soft drinkand foodconglomerate. Sales that year reached $436 million, and a new $10 milliondollar headquarters office opened in Wichita. The 1980s brought new competitors to Pizza Hut, all challenging its number oneposition in the pizza restaurant trade, then worth $15billionin sales annually in theUnited States alone. Also, to raise its profile, Pizza Hut introduced "Pan Pizza" in1980 throughout its network.In 1984 Steven Reinemund was appointed president and chief executive officer of Pizza Hut. In 1986 Pizza Hut opened its 5,000th franchise unit, in Dallas, Texas,

12

andbegan its successful home delivery service. By the 1990s the delivery andcarryout business had grown to account for approximately 25 percent of the company's totalsales.By 1986 there were 100 restaurants in UK and 5000 worldwide.In 1990 Pizza Hut opened its first restaurant in Moscow. The Moscow locationquickly established itself as Pizza Hut's highest volume unit in the world.Restaurants just behind in total volume served were found in France, Hong Kong,Finland, and Britain.PepsiCo took advantage of global change following the end of the Cold War,expanding Pizza Hut into new and emerging markets. In 1991 PepsiCo hadrestaurant outlets in 80 countries and by 1997, Pizza Hut restaurants had spread to90 countries.In 1994 several changes resulted in the company's first decline in operating profitsin 15 years. The pizza market was no longer growing; fast food rivals cut prices; andinvestment in new outlets was draining corporate resources. PepsiCo's restaurantdivision saw sales in restaurants open at least one year fall six percent in 1994,contributing to a drop in profits of 21 percent (to $295 million).Some indicators were promising: market share rose from 25.6 to 27 percent; 1995sales increased 16 percent to $5.2 billion; and operating income rose to $414million, up 40 percent from the year before.In 1996 Pizza Hut planned to introduce

a major new product each year and two orthree line extensions. In 1996 Pizza Hut

accounted for 17 percent of PepsiCo's totalsales and 13 percent of its operating profit.In the late 1990s, PepsiCo drew together its restaurant businesses, including PizzaHut, Taco Bell, and KFC. In January 1997 the company announced plans to spin off this restaurant division, creating an independent publicly traded company called

Tricon Global Restaurants, Inc. The formal plan, approved by the PepsiCo boardof directors in August 1997, stipulated that each PepsiCo shareholder would receiveone share of Tricon stock for every ten shares of PepsiCo stock owned. The planalso required Tricon to pay a one-time distribution of $4.5 billion at the time of thespinoff   . If approved by the Securities and Exchange Commission, the spinoff wouldtake place on October 6, 1997.In July 2000, Pizza Hut became the first company in historyto place its logo on the world’s largest proton rocket.In 2002, Tricon Global became YUM! BRANDS INC.In 2006, Whitbread sold their shares to the joint venture to Yum! Brands Inc. Also as a result, Pizza Hut Inc. UK was100% owned by Yum!

  Lastly, up to date in 2008, Pizza hut owners have boughtGodfather’s Pizza with 28 stores in Ireland.Enrico, who had risen to the position of PepsiCo CEO,explained the move: "Our goal in taking these steps is todramatically sharpen PepsiCo's focus. Our restaurantbusiness has tremendous financial strength and a verybright future. However,

13

given the distinctly different dynamics of restaurants andpackaged goods, we believe all our businesses can better flourish with two separate and distinct managements and corporate structures."

Pizza Hut’s Mission Statement “To be the first choice among restaurants and delivering brands by developing ourpeople capability to deliver maniacal service, product quality , 100% customersatisfaction, innovation and building great look and feel restaurants to provideattractive returns to our stake holders.”And also known through the P.E.A.R.L.S conceptP.E.A.R.L.SP ASSION for excellence in doing everything.E XECUTE with positive energy and urgency.A CCOUNTABLE for growth in customer satisfaction and profitability.R ECONGNIZE the achievement of others and have fun doing it.L ISTEN and importantly, respond to the voice of the customers.

ENVIRONMENTAL AND INTERNAL ANALYSIS OF PIZZA HUTIn our visit to Pizza Hut we conducted research on Economical, Social and Technological Analysis.

ECONOMICAL FACTORS:If the country’s economy is strong, hence the GDP of the country will bepowerful also, this is a green signal for the business as the per capita incomeif the people will be increased and they will spend more money. In our surveywe came to know that most of the people in the beginning of the monthsspend more and they visit pizza hut very often. When the inflation rateincreases the cost of raw material also increases and this leads towards highprices of the products and vice versa.

SOCIAL FACTORS:  

Pizza hut is multinational. It has basically originated fromAmerica, so the organization is overwhelmed by the westernculture. There are social forms of society which consist of upper class, middle class and lower class. Every country hascultural norms, values, beliefs and religious obligationswhich can affect the organization.

14

 TECHNOLOGICAL FACTORS:Now a day’s technology is improving, where as baking and heating ovens willbe of new and efficient technology and will provide efficient service. Due tonew technology there are new ways of marketing like: internet, telemarketingand the organization can advertise their products with much faster pace.Computer based customer data is MIS (managing information systems) helpsin collecting customer data, daily transactions, future forecasting anddecision making. New vehicles will make their service more efficient.

 STRATEGIES ADOPTED BY PIZZA HUT:

A business’s strategy is the pattern of decisions and actions that are taken by the business to achieve its goals. A business has a variety of goals and objectives. All businesses need to organize their business activities in order to achieve their business objectives. Running a business involves planning the current as well as the future activities. Hence, in order to achieve the business objectives, all business organizations adopt different strategies. Similarly, Pizza Hut has adopted many strategies which help achieve the targets set by the main office. Changes are the external as well as internal environment has led Pizza Hut to rethink their past strategies and has therefore designed new strategies after noticing the changes in the environment. These environmental changes are seen through the SWOT analysis. After considering all the factors, Pizza Hut has decided upon the strategies and their current strategies are divided into five main categories and further have sub-parts. The strategies are as below:-

Functional Strategies: These are strategies designed to improve the efficiency of a business’s operations. They often focus on an area, such as marketing, human resources and etc. All business organizations adopt strategies at functional level and as the function all level is achieved, corporate objectives become easy. In order to make the functional strategy efficient, Pizza Hut has made all the functional departments cooperate with each other.

Total Quality Management (TQM): This is the most important factor for a food chain like Pizza Hut. All the employees ’back-of-the-house i.e. the kitchen assistants are trained accordingly. They are given extra classes in order to meet the quality standards set by Pizza Hut, around the world. This strategy is important in order to satisfy the customers. This strategy is strictly implemented in Pizza Hut in order to fulfill the quality standards. Different quality management staff is also present at Pizza Hut. The shift managers have the task to observe whether the quality standards are met or not, whereas there is a total quality standards department at the main office in Karachi. This department has the task to implement quality standards and know whether they are achieved or not.

  Business Level Strategy:-

15

Business level strategies are plans made to gain a competitive advantage over its rivals in a market. Hence, all the businesses need to adopt business level strategies in order to compete in a competitive environment. If we take a look at the Pakistani market, there are no large competitors of Pizza Hut, but unlimited small competitors exist in the market. The threat of competitors is very low as there is no international food chain offering pizza in Pakistan at present. Therefore, present strategies adopted by Pizza Hut are keeping in consideration the present competition. Whereas, in the future this competition will increase and Pizza Hut will have to change all its business level strategies in order to compete with its rivals. Now as Domino’s has opened in varies cities of Pakistan, it will result as a threat for Pizza Hut and hence, their strategies are to be taken into consideration for further modifications.

Pricing Strategy:The level of competition a business faces determines its pricing strategy. Sometimes a business has the scope to set its price and other times it does not. When a business has the scope to set its prices this is a number of pricing strategies or policies it might choose. As there are no such competitors of Pizza Hut which could compete with the quality of pizza produced at Pizza Hut, therefore, the pricing strategy adopted by Pizza Huts ‘market skimming’. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza hut is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. They satisfy the target market as the food quality is worth the price paid. The pricing strategy is not just to get the worth of quality but also to gain maximum profits before any competitor enters because then Pizza Hut will have to change its pricing strategy. Although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are not home-produced. They are imported

from different countries keeping in view the best quality.Market Share:As there are dozens of Pizza Suppliers globally providing services in different parts of the world, but Pizza Hut is the one who got the bigger market shares globally. This is a survey taken bywww.survey.comthat pizza hut is having 48% of overall Pizza market in the world. After that Dominos is leading with a percentage of 20%,while the rest 32% is divided in the remaining pizza provides globally.

  WHO IS THE FRANCHISER?Pizza Hut represents a strong brand that has demonstrated economic stability over time. Pizza Hut is one of the flagships brands of YUM!Restaurant Int.

16

Which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. YUM! BRANDS:  Yum! Brands, Inc., based in Louisville, Ky.- it is the world’s largest restaurant company in terms of system restaurants with more than 36,000restaurants in over 110 countries and territories and more than 1 million associates. Yum! is ranked #239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. Four of our restaurant brands –KFC,Pizza Hut,  Taco Bell andLong John Silver's– are the global leaders of the chicken, pizza, and Mexican-style food and quick-service seafood categories. In October 1997, Yum! Brands were spun off from PepsiCo as Trico Global Restaurants, Inc. At that moment it established as a singular goal from which they never wavered: To be the best in the world at building great brands and running great restaurants. Now At present Yum! Brands is the worldwide leader in Multi-branding, offering consumers choice, convenience, and value by combining two brands under one roof. Multi-brand opportunities still exist across America and offer franchisees a competitive edge as well as many advantages.

17

18

The Yum! System includes three operating segments: - U.S., International (Yum!Restaurants International) and China Division (includes mainland China, Thailand and KFC Taiwan). Outside the United States in 2008, the Yum! System opened more than four new restaurants each day of the year, making us the largest retail developer in the world.Franchise HistoryWhen did the first Pizza Hut open?1957When did Pizza Hut start Franchising?1959

YEAR U.S.A CANADA INTERNATIONAL CORPORATE

2003 4725 N/A 2562 2544

2002 5901 N/A 3571 2493

2001 6126 N/A 3509 2508

2000 4277 N/A N/A 2469

How Much Does a Pizza Hut Franchise Cost?If you have a budget of between $1.3 million to $3 million and a net worth of $1 million with $360,000 in liquid assets, you can be in business within a year, but there are other requirements as well. You must commit to building at least 3restaurants over 3 years. Pizza Hut is part of an organization that offers tremendous franchise support including advertising, business coaching, training, development, and cooperative sourcing. Performance Improvement Programs and support are also offered to each new franchisee along with 12-16 weeks of required training.

What We Like Yum! Brands offer the power of multi-branding that includes two National Media Budgets, two Category Leading Brands, and two menus. This can broaden customer appeal, which has the potential to increase the average check size. Field offices are located throughout the U.S. to support franchise and company restaurant operations.

Pros•Ranking- Ranked No. 1 in its category in 2008.

19

•Multi-Branding

- Yum! Brand is the worldwide leader in Multi-branding.

Cons•Operations- Can take up to 46 weeks to open the first store, but it’s probably worth the wait

 Today, in the Franchise 5oo®Rank , Pizza hut falls#7in the list whereas, in2008

itwas#4 In the list of Fastest-Growing Franchisesit is listed #65 as of 2009 and in 2008 it was #23. And in the America’s Top Global Franchises it is ranked #7 in the year 2009 and in the past year it was at #9.Pizza Hut has built a strong reputation of its brand through giving quality products and has earned respect from its customers. Its innovation and quality has elevated them to higher standards during the past few years. But still the company is planning to encapsulate more market shares. In addition, Pizza Hut has diverse targets set for them and they have adopted different strategies to successfully achieve those targets set which will help them rank #1 in all categories in the near future.

20

Domino’s Domino's Pizza is an American restaurant chain and international franchise pizza delivery corporation headquartered in Ann Arbor Township, Michigan, United States, near Ann Arbor, Michigan.[1][2] Founded in 1960, Domino's is the second-largest pizza chain in the United States (after Pizza Hut)[3] and has more than 10,000 corporate and franchised stores[4] in 70 countries[5] and all 50 U.S. states. Domino's Pizza was sold to Bain Capital in 1998 and went public in 2004.

Early years

Tom Monaghan and his brother, James, purchased DomiNick's,[6] a small pizza store in Ypsilanti, Michigan, near Eastern Michigan University. The deal was secured by a US$75 down payment and the brothers borrowed $500 to pay for the store.[7] Eight months later, James traded his half of the business to Tom for a used Volkswagen Beetle.[7] As sole owner of the company, Monaghan renamed the business Domino's Pizza, Inc. in 1965. In 1967, the first Domino's Pizza franchise store opened in Ypsilanti, Mich.[7] The company logo was originally planned to add a new dot with the addition of every new store, but this idea quickly faded as Domino's experienced rapid growth. The three dots represent the stores that were open at the time (1969).[8] By 1978, the franchise opened its 200th store.[9][10]

In 1975, Domino's faced a lawsuit by Amstar Corporation, maker of Domino Sugar, alleging trademark infringement and unfair competition. On May 2, 1980, a federal appeals court found in favor of Domino's Pizza

International expansion

Domino's Outlet in India.

21

On May 12, 1983, Domino's opened its first international store, in Winnipeg, Manitoba, Canada.[12] That same year, Domino's opened its 1,000th store overall. In 1985, they opened their first store in the United Kingdom in Luton [13] Also in 1985, Domino opened their first store in Tokyo, Japan. By 1995 Domino's had 1,000 international locations. In 1997, Domino's opened its 1,500th international location, opening seven stores in one day across five continents.[9] Within the last five years, Domino's has also expanded to India with numerous locations, of at least 1,000.[14]

Sale of company

In 1998, after 38 years of ownership, Domino's Pizza founder Tom Monaghan announced his retirement, sold 93 percent of the company to Bain Capital, Inc. for about $1 billion and ceased being involved in day-to-day operations of the company. [15] A year later, the company named David A. Brandon Chairman and Chief Executive Officer.[16]

Current era

The exterior of a Domino's Pizza store in Spring Hill, Florida.

In 2004, after 44 years as a privately held company, Domino's began trading common stock on the New York Stock Exchange under the ticker symbol "DPZ".[17]

Industry trade publication Pizza Today magazine named Domino's Pizza "Chain of the Year" in 2003,[18] 2010,[19] and 2011.[20] In a simultaneous celebration in 2006, Domino's opened its 5,000th U.S. store in Huntley, Illinois, and its 3,000th international store in Panama City, making 8,000 total stores for the system.[21] Also that year, the Domino's Pizza store in Tallaght, Dublin, Ireland, became the first in Domino's history to hit a turnover of $3 million (€2.35 million) per year.[22] As of September 2006, it has 8,238 stores which totaled US$1.4 billion in gross income.[23]

In 2007, Domino's introduced its Veterans, Delivering the Dream franchising programs and also rolled out its online and mobile ordering sites.[10] In 2008, Domino's introduced the Pizza Tracker, an online application that allows customers to view the status of their order in a simulated "real time" progress bar.[24] In addition, the first Domino's with a dining room opened in Stephenville, Texas, giving the customers the option to either eat in or take their pizza home. Since 2005, the voice of Domino's Pizza's US phone ordering service 1-800-DOMINOS has been Kevin Railsback.[25]

22

In a 2009 survey of consumer taste preferences among national chains by Brand Keys, Domino's was last — tied with Chuck E. Cheese's. In December that year, Domino's announced plans to entirely reinvent its pizza. It began a self-flogging ad campaign in which consumers were filmed criticizing the pizza's quality and chefs were shown developing the new product.[26][27] The new pizza was introduced that same month, and the following year, Domino's 50th anniversary, the company acquired J. Patrick Doyle as its new CEO and experienced a historic 14.3% quarterly gain. While admitted not to endure, the success was described by Doyle as one of the largest quarterly same-store sales jumps ever recorded by a major fast-food chain.[28][29]

Products

Domino's Pizza (Malaysia), Chicken Pepperoni, New York Crust.

A makeline at a Domino's

The current Domino's menu features a variety of Italian-American entrees and side dishes. Pizza is the primary focus, with traditional, specialty and custom pizzas available in a variety of crust styles and toppings. In 2011, Domino's launched Artisan style pizzas that offer a base blend of rich flavors to complement chef inspired toppings.

23

Additional entrees include pasta, bread bowls and oven-baked sandwiches. The menu offers chicken side dishes, breadsticks, as well as beverages and desserts.[30]

From its founding until the early 1990s, the menu at Domino's Pizza was kept simple relative to other fast food restaurants, to ensure efficiency of delivery.[31] Historically, Domino's menu consisted solely of one pizza in two sizes (12-inch and 16-inch), 11 toppings, and Coca-Cola as the only soft drink option.[32]

The first menu expansion occurred in 1989, with the debut of Domino's deep dish, or pan pizza. Its introduction followed market research showing that 40% of American pizza customers preferred thick crusts. The new product launch cost approximately $25 million, of which $15 million was spent on new sheet metal pans with perforated bottoms.[33] Domino's started testing extra-large size pizzas in early 1993, starting with the 30-slice, yard-long "The Dominator".[34]

Domino's tapped into a market trend toward bite-size foods with spicy Buffalo Chicken Kickers, as an alternative to Buffalo Wings, in August 2002. The breaded, baked, white-meat fillets, similar to chicken tenders,[35] are packaged in a custom-designed box with two types of sauce to "heat up" and "cool down" the chicken.[36]

In August 2003, Domino's announced its first new pizza since January 2000, the Philly Cheese Steak Pizza. The product launch also marked the beginning of a partnership with the National Cattlemen's Beef Association, whose beef Check-Off logo appeared in related advertising.[37] Domino's continued its move toward specialty pizzas in 2006, with the introduction of its "Brooklyn Style Pizza", featuring a thinner crust, cornmeal baked in to add crispness, and larger slices that could be folded in the style of traditional New York-style pizza.[38]

In 2008, Domino's once again branched out into non-pizza fare, offering oven-baked sandwiches in four styles, intended to compete with Subway's toasted submarine sandwiches. Early marketing for the sandwiches made varied references to its competition, such as offering free sandwiches to customers named "Jared," a reference to Subway's spokesman of the same name.[39]

The company introduced its American Legends line of specialty pizzas in 2009, featuring 40% more cheese than the company's regular pizzas, along with a greater variety of toppings.[40] That same year, Domino's began selling its BreadBowl Pasta entree, a lightly seasoned bread bowl baked with pasta inside,[41] and Lava Crunch Cake dessert, composed of a crunchy chocolate shell filled with warm fudge. Domino's promoted the item by flying in 1,000 cakes to deliver at Hoffstadt Bluffs Visitor Center near Mount St Helens.[42]

In 2010, shortly after the company's 50th anniversary, Domino's changed its pizza recipe "from the crust up",[43] making significant changes in the dough, sauce and cheese used in their pizzas. Their advertising campaign admitted to earlier problems with the public perception of Domino's product due to issues of taste.[44][45]

24

After a stock low in late 2009, the company's stock had grown 233 percent by late 2011. Even as the economy has suffered and unemployment has risen, Domino's has seen its sales rise dramatically through its efforts to rebrand and retool its pizza.[46]

Domino's serves Coca-Cola products, and as of January 2012 is the only "Big Four" pizza chain to do so. Rivals Papa John's Pizza and Little Caesars sold Coca-Cola in the past (Pizza Hut, due to its previous ownership by PepsiCo, has a lifetime contract to sell Pepsi products), but both switched to Pepsi in 2012 and 2007, respectively. Domino's Pizza in Mexico switched to Pepsi in November 2012.

In September 2012, Domino's announced it was going to roll out pan pizza on September 24, 2012.[47] It should be noted that following this move, Deep Dish was discontinued after 23 years of being on the menu.

Corporate governance

Headquarters of Domino's

Domino's management is led by J. Patrick Doyle, CEO from March 2010, formerly president of Domino's USA. Previous chief executive David Brandon, made athletic director of the University of Michigan in January 2010, remains chairman.[48] Among 11 executive vice presidents are Michael Lawton, CFO; Asi Sheikh, Team USA; Scott Hinshaw, Franchise Operations and Development; and Kenneth Rollin, General Counsel.[49] Domino's operations are overseen by a board of directors led by Brandon. Other members of the board are Andrew Balson, Diana Cantor, Mark Nunnelly, Robert Rosenberg and Bud Hamilton.[50]

Charitable activities

In 2001, Domino's launched a two-year national partnership with the Make-A-Wish Foundation of America. That same year, the company stores in New York City and Washington D.C. provided more than 12,000 pizzas to relief workers following the September 11 attacks on the World Trade Center and The Pentagon. Through a matching funds program, the corporation donated $350,000 to the American Red Cross' disaster relief effort.[9] In 2004, Domino's began its current partnership with St. Jude

25

Children's Research Hospital, participating in the hospital's "Thanks and Giving" campaign since it began in 2004, raising more than $1.3 million in 2006.[51]

Advertising and sponsorship

Arie Luyendyk's Lola-Chevrolet which won the 1990 Indianapolis 500 for Doug Shierson Racing.

In the 1980s, Domino's Pizza was well known for its advertisements featuring The Noid. That concept was created by Group 243 Inc. who then hired Will Vinton Studios to produce the television commercials that they created. The catchphrase associated with the commercials was "Avoid the Noid."

Due to a glitch on the Domino's website, the company gave away nearly 11,000 free medium pizzas in March 2009. The company had planned the campaign for December 2008 but dropped the idea and never promoted it. The code was never deactivated though and resulted in the free giveaway of the pizzas across the United States after someone discovered the promotion on the website by typing in the word "bailout" as the promotion code and then shared it with others on the Internet. Domino's deactivated the code on the morning of March 31, 2009 and promised to reimburse store owners for the pizzas.[52]

Domino's sponsored CART's Doug Shierson Racing, which was driven by Arie Luyendyk, and the team won the 1990 Indianapolis 500. In 2003, Domino's teamed up with NASCAR for a multi-year partnership to become the "Official Pizza of NASCAR." [53]

Domino's also sponsored Michael Waltrip Racing and driver David Reutimann during the 2007 season in the NASCAR Sprint Cup Series.

Domino's Pizza was seen in the final scene of the 1985 film The Goonies. The character of Lawrence "Chunk" Cohen exclaims it is his favorite after his mother brings him one on the beach after escaping the pirate cave. Domino's Pizza sponsored The Super Mario Bros. Super Show! in 1989, and was briefly seen in the 1990 film Teenage Mutant Ninja Turtles. Furthermore, from 1998 to 2008 the company provided funding for the American cartoon sitcom The Simpsons.[54]

26

30-minute guarantee

Starting in 1973, Domino's Pizza had a guarantee that customers would receive their pizzas within 30 minutes of placing an order, or they would receive the pizzas free. The guarantee was reduced to $3 off in the mid 1980s. In 1992, the company settled a lawsuit brought by the family of an Indiana woman who had been killed by a Domino's delivery driver, paying the family $2.8 million. In another 1993 lawsuit, brought by a woman who was injured when a Domino's delivery driver ran a red light and collided with her vehicle, the woman was awarded nearly $80 million, but accepted a payout of $15 million.[55] The guarantee was dropped that same year because of the "public perception of reckless driving and irresponsibility", according to Monaghan.[55]

In December 2007, Domino's introduced a new slogan, "You Got 30 Minutes", alluding to the earlier pledge but stopping short of promising delivery in a half hour.[56]

The company continues to offer "30 minute or Free" guarantee for orders placed in its stores situated in Colombia, India[citation needed], Malaysia*, Vietnam, Mexico, Singapore* and Turkey.

*A "Free Regular Pizza Voucher" is given in these markets instead if later than 30 minutes.[57][58]

International operations

Map showing Domino's Pizza's global locations.

Domino's Pizza has locations in more than 60 countries.[59][60] In most cases, Domino's has master franchise agreements with one company per country, but three companies have acquired multiple master franchise agreements, covering a number of countries:

The rights to own, operate and franchise branches of the chain in Australia, New Zealand, France, Belgium, the Netherlands and Monaco are currently owned by Australian Domino's Pizza Enterprises, having bought the master franchises from the parent company in 1993 (Australian and New Zealand) and 2006.

The master franchises for the UK and Ireland were purchased in 1993 by the British publicly listed Domino's Pizza Group, [61] which in 2011 also acquired the

27

master franchise for Germany,[62] and in August 2012 the company also added Switzerland, Liechtenstein and Luxembourg by buying the Swiss master franchise holder, with an option to acquire the Austrian master franchise as well. [63]

The master franchises for India, Nepal, Sri Lanka and Bangaladesh are currently owned by the Indian company Jubilant FoodWorks.

Mission and Vision

The Mission

Maintaining high standards of the international chain of pizza delivery in Mexico and provide the experience of an excellent product with excellent customer service.

Exceptional People serving the best pizza in the world.

Sell more pizza.

Have more fun.

The Vision To be the best operator Domino's Pizza system with the best talent. Number one in pizza.

Number one in people.

28

Values

Treat people as you’d like to be treated. Produce the best for less.

Measure, manage and share what’s important.

Think big and grow.

Incentivise what you want to change.

Set the bar high, train, never stop learning.

Promote from within.

We are not ordinary, we are exceptional.

Employees

Distributor

Salary previously as (every 15 days).Your payment is with target.8 hours and hours a day of rest, (but after you get your 8 hours to wash the dishes, mop or whatever you send the manager).You have to wash the bike all the time.They do not charge the pizza if you're late, but I scold you are the one out of the oven and the pizza must be cut.

29

There are times when you just gather orders leave like 5 minutes to get home from the store.

Pizzas preparerCare for expiration dates.Learn to make a pizza in less than 3 minutes.Learning you a lot of code.

Telephonist

learning to use computers to program their codeshave good customer relationsyour work area cleanclean roomclean toilets

ManagerIs the person responsible for seeing that in a production process of the pizza meets the objectives and the production plan providing solutions to problems presented as soon as possible by ensuring that employees comply and commit to their duties.

30

RESEARCH METHODOLOGY

This data has been taken from secondary source of information.

Secondary Data is data or information that is already available. This data is collected by

a person or organization other than the use of the data.

Advantages of secondary data :

it is cheap and inexpensive.

It is easily accessible.

It is already available. It saves time and efforts..

It avoids data collection problems and it provides a basis for comparison.

This data is collected from various sources:

Books,

Magazines,

websites,

Already published reports, ,

Journals and publications, Research papers etc.

31

Analysis & Interpretation

Domino's and Pizza Hut, the two big US fast food chains entered India in 1996. Each claimed it had the original recipe as the Italians first wrote it and was trying desperately to create brand loyalty. Domino's and Pizza Hut - tried to grab as large a slice of the pizza pie as possible. While Pizza Hut relied on its USP of "dining experience", Domino's USPwas a 30-minutedelivery frame. To penetrate the market, both the players redefined their recipes to suit the Indian tastes. Domino's went a step ahead by differentiating regions and applying the taste-factor accordingly. Domino's also made ordering simpler through a single toll-free number throughout the country. Domino’s and Pizza Hut expanded their market ever since they entered India .Pizza Hut is the world's largest casual dining restaurant chain with over 13,000 restaurants across 97 countries and 143 stores across 34 cities in India., including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune , and Chandigarh and Yum! is in the process of opening Pizza Hut restaurant sat many more locations to service a larger customer base across the country. Today Domino's Pizza India has grown into a countrywide network of more than 300 stores with a team of over 9,000 people. According to the India Retail Report 2009, Domino’s were the largest Pizza chain in India and the fastest growing multinational fast food chain between 2006-2007 and 2008-2009 in terms of number of stores

Market shares and major playersIndian taste buds are demanding more and pizza industry ± one of the most intensive industry is all gearing on.People across the country are consuming over three million pizzas a month currently, and the monthly sales figures are projected to double in the next four years. According to industry data, of the total branded quick service restaurant market make a sale of over Rs1,200 Crore, the pizza chains contribute around 50 per cent of the sales i.e. worth Rs. 600 Crore.The major players of thePizza industry are:-Pizza Hut Domino’s

Smoking joe’s

32

 Garcia’s Papa john’s Us pizzaMarket share as on 1999

33

Threat of new entrants

With the economic reforms and liberalization, many new entrants also want the revenue of the200 billion Indian fast food industries.

34

There are many new entrants in the branded pizza industry some of them are 

Papa john’s pizza 

Us pizza

Some Indian brands are:- 

Pizza Express 

Pizza Corner  Slice of Italy They have captured a lot of customers with their new style and discount offers.Much young crowd flock their restaurants and their taste buds are getting modified. Now the new entrants are also likely to enter the small cities and make their presence. Thus pizza hut and dominos have to rethink their strategies so as to retain their customers. They have to constantly differentiate their services from the newer entrants

SubstitutesThere are lots of substitutes which are available to choose with respect to the fast food industry some of them are McDonald’s Barista Cafe coffee day Chinese restaurants(main land china) Other restaurants Largely it depends upon the customers what they want to have. Generally it is assumed that when people dine outside, they think of having pizza at least 25% of time. Thus if the brand recall of a particular company is good, more people will tend to go there. Higher the quality of food, service, higher will be product recall and sales

Buyer’s bargaining power

Pizza hut and dominos have higher market reach and greater visibility in the market with respect to the pizza industry and hence they command supplies at lower rate. However their counterparts, competitors cannot command such lower prices. Thus the muscle power of pizza hut and dominos is way beyond the others.

35

Supplier’s growing bargaining power

Supplies till now were not a problem but with the advent of the rising food costs(raw material inflation).

Suppliers are not ready to supply items at the normal rate. Thus supplier’s muscle power grew only doe to inflation. Thus the company either has to increase the menu costs or reduce the operational costs to recover. Failing to do this will make the company into losses or to lose out in the industry. 

Trends in the Indian market

Marketing to children Fast food outlets in India target children’s as their major customers. They introduce varieties of things that will attract the children’s attention and by targeting children’s they automatically target their parents because children’s are always accompanied by their parents.

Low level customer commitment Because of the large number of food retail outlets and also because of the tendency of customer to switch from one product to other, this industry faces low level customer commitment.

Attracting different segments of the marketFast food outlets are introducing varieties of products in order to cater the demands of each and every segment of the market. They are introducing all categories of product so that people of all age, sex, class, income group etc can come and become a customer of their food line

Competitors of the Pizza Hut and Dominos Pizza corner 

  McDonald’s

Barista

Cafe coffee Day

Subway

Papa john’s 

KFC

36

STP Analysis

37

Segmentation Pizza hut Geographic

Region- pizza hut outlet its in different countries is a way of segmenting the ir market according to region and finding out potential markets.

City- they also segment the cities as classic lassie, metros, small towns

DemographicAnnual income –below 10yrs , 10 to 18yrs ,18 to 25yrs , 25 to 40yrs Family income –middle class , upper class , high class  

Targeting Pizza hut

  In geographic segment they targeted countries where there were no pizza hut

outlets. Initially opened in class i cities and then have now moved to metros.

In demographic segment their main target is the young adults ranging from 25 years to40 years and also dual income earners family. They aim basically at the upper middleclass and the high class income families. 

In psychographic segmentation they targeted a1, a2, b1 socio-economic classes. 

In behavioral segmentation they targeted for occasions such as birthday bashes, corporate lunches. It was also found that they were targeting the first time users because they felt that their quality and taste would automatically make them a loyal customer.

Dominos

38

In geographic segment they targeted countries where there were no dominos outlets. Initially opened in class ii cities and then have now moved to class i, metros and smaller towns.

In demographic segment their main target is the teenagers and college students (13 to21years), young adults ranging from 21 years to 35 years. They aim basically at the middle class, upper middle class income families.

In psychographic segmentation they targeted a2, b1, b2 socio-economic classes. 

In behavioral segmentation it was found that they were targeting the first time users and also their regular users.

Positioning

Points of differenceThe major point of difference between pizza hut and dominos is that pizza hut concentrates onion-restaurant dining. The ambience and decor of all pizza hut outlets are good and the outlets are spacious. When customers think of party and decide to have pizza, pizza hut only comes into their mind.Pizza hut also arranges kitty parties, birthday parties and business meetings in their outlets.Pizza hut has customized birthday party invites with different themes for the customers to choose and use it as invitations. Dominos aims at fast home delivery of pizza. Whenever customers want to have pizza at home, they think of calling dominos and ordering for it because they are experts in home delivery of pizza.³We earn 60% of our revenue from home delivery of  pizzas and 40% from the restaurant sales´ , saysMr.navamani, manager of dominos, coimbatorev.o.c.Park outlet. In case of pizza hut, the major revenue is from restaurant sales.

Points of parity

Category points of parity ± the main food item that is sold in pizza hut and dominos is pizza. As we all know, pizza comes under the fast food category of foods, both the companies must be good in speed of making and service. Irrespective of the cost, both pizza hut and dominos has to deliver or serve pizza in less time as compared to other main course food items served in other restaurants.

Competitive points of parity

39

competitive points of parity in case of pizza hut is that, even though pizza hut is costlier than dominos, they have their own customers, who do not bother about spending, but look for quality and personalized service. When we visit pizza hut, they have restaurant hostess who will assign us tables and introduce the steward who will be taking care of us. This is generally a procedure that is followed in five star category hotels and pizza hut is also following it to emphasize on service quality. In case of dominos, they are not costly as pizza hut and do not offer great ambience to customers, but offer good pizzas at nominal price. They concentrate on turnover of covers and cater to customers who don’t have time to spend on food and just stop over for refreshment.Moreover, dominos mainly looks into home delivery of  pizzas and are experts in it.

MARKETING STRATEGIESOverall both the companies achieve what they want to as for Dominos they have achieved in positioning themselves as the fastest serving pizza outlet and quenching the hunger.Pizza Hut has come to become synonymous with the µbest pizzas under one roof¶. They have positioned themselves for their unique dining experience.Thus from the market feedback, it can be seen that even customers feel the same as what thecompany wants them to.

Strategic FormulationOverall Cost Leadership, Differentiation and FocusThis is achieved very effectively by Dominos as they do not intend to lose their focus fromdelivering pizzas at home

Dominos Brand thus relates mainly to service & delivery neither they promote their indining experience nor they spend revenue for it.

Domino's vision is focused on” Exceptional people on a mission to be the best pizzadelivery company in the world!́  “

 Thus Dominos are able to provide good pizzas at relatively lower rate as they don¶t spend muchfor the restaurant

Pizza Hut¶s Premium price

Pizza Hut is committed for providing uncompromising product quality, offering customers thehighest value for money and giving service that is warm, friendly and

40

personal  They stress heavily on the dining experience and the ambience

  Thus at each point company charges a premium

Thus Pizzas from Pizza Hut costs a premium hence their customers also changes to high income groups

Creation, Communication and Capturing ValueDomino¶s

Domino'sPizza constantly strives to develop products that suit the tastes of its consumers andhence delighting them. Domino's believes strongly in the strategy of ³Think global and act local. Thus, time and again Domino's Pizza has been innovating with delicious new productssuch as crusts, toppings and flavors suitable to the taste buds of Indian Consumers. Further, providing value for money at affordable products to the consumers has been Dominos motto.Initiatives such as Fun Meal and PizzaMania have been extremely popular with consumers.The BrandPositioning of ³Khushiyon ki Home Delivery´ (Happiness Home delivered) is theemotional benefit Dominos offer to consumers.Delicacies that do not rip wallets have always got the crowd coming back to the Dominosalthough its ambience is not up to that of its competitors. They have the maximum offers withrespect to the discounts they offer throughout the year. Thus the customer has the maximumincentive to come back to Dominos.³Hungry Kya? ,́ promotion where hunger gets quelled inless than 30 minutes was a great value proposition . All other activities, be it new variants, greatservice, timely deliveries or more for the same price the effort of Dominos has always beendirected towards making its customers happy, creating, communicating and delivering value.

Pizza HutWorkforce of Pizza Hut is chosen with the motto³Together we grow´ with primary concern being quality of service, be it in terms of delivery or quality of pizzas.A critical factor inPizza Hut¶s success has been a menu that has constantly evolved andexpanded to cater to the changing needs and specific preferences of customers in different partsof the world. In having understood the pulse of the customers in India,

Pizza Hut has clearlyestablished itself as a brand with an Indian heart. Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India in

41

Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all rootbasedingredients. Moreover Pizza Hut is not just a hangout zone for youngsters. It organizes birthday bashes, kitty parties and corporate lunches They also have a variety of combinations of menuitems which a customer can choose so that both the customer and the company can have a win-win situation. The company can have the maximum of the consumer surplus at the same time theconsumer might feel that this was the best offer.From the menu card one can see the family size variants and the different pizza combinations inthe same one pizza are all the different ways of pricing. The company attains the maximum profit in the meat items, so they give the selection of pizzas slices of different varieties and theyare clubbed together to form a single pizza.Once the customer dines/orders @ home, normally discount coupons are given to the customer so that there is an incentive for the customer to order from pizza hut. Thus customers are forcedto maintain loyalty towards pizza hut

SWOT Analysis of Pizza Hut n SWOT Analysis of Dominos

42

43

4p’s of dominos and pizza hut

Pizza hut

PRODUCT

Worldwide and in India, Pizza Hut has come to become synonymous with the‘best pizzas under one roof’. This is because at Pizza Hut the belief is thatevery pizza has its own magic, thus making it a destination product –whicheveryone seeks.

44

A critical factor in Pizza Hut’s success has been its unique dining experience. Pizza hut product line can be divided into:Sides: pasta and rollsPizza’s Appetizers & BeverageDessert

PRICE •Pizza Hut has successfully used the high/lowpricing strategy when setting the retail price of its products

Pan Pizzas start at just Rs 65, which is probablyamong the lowest in the world.

Place 

The ambience is vibrant and casual whichappeals to young people.

The seats, couches are comfortable to sit.

Nice music is being played in the background.

Last but not the least- THE BELL

the pizza huttradition to say thank you when you ring thebell.

45

RESULTS AND ANALYSIS

46

Based on the type of data collected and the target segment with the appropriate statistical methods, inference should be made. The response set of one variable is compared with another set of variable to ensure a detailed analysis of data.One should be able to recognize what type of data is appropriate for each statistic and one should be able to recognize the level of measurement for the scales that you are analyzing.

Data Analysis done with the help of various IT tools like MS Excel and SPSS Software

Frequency distribution tables and Graphs.

AGE

Figure 1

ANALYSIS

below 20

20-24

25-34

35-39

40 and above

Age

47

Majority of the respondents in our survey consisted of people in the age group of 20-24 which was 47.60% and between 25-34 which was 43%. 3.20% respondents were in the age group 35-39 while below 20 age group had 2.60% respondents.

GENDER

Figure 2 ANALYSIS

We were surprised to find out that out of total respondents who filled out the questionnaire male to female ratio was almost equal which depicted that females were equally interested like males to fill out the questionnaire which says about their keen interest towards search engines. Moreover, we can also say that women are at par with men.

CITY

Male

Female

Gender

Pies show counts

48

Figure 3

ANALYSIS

We carried on our survey both online and offline in around 25 cities like Delhi, Gurgaon, Noida, Indore, Mumbai, Chennai, Ahmedabad, Bangalore, and other cities across India. While Off liners in Abn-Amro bank-noida, Amity University, Fidelity-gurgoan, Hcl-noida.

EDUCATION

Agra

Ahmedabad

Bangalore

ChennaiChandigarh

Delhi

Faridabad

Gurgaon

Hyderabad

Jaipur

Kolkata

LucknowMumbai

Noida

Pune

Others

City

0.80%

3.20%

26.20%

2.40%

3.20%

20.00%

0.80%

0.80%

4.80%2.40%

0.80%

0.80%

18.00%

1.80%2.80%

11.20%

49

Figure 4

ANALYSIS

Out of the people whom we targeted highest number of responses came from post graduates which was followed by graduates and then the under graduates which shows the decreasing trend of awareness.

OCCUPATION

Under Graduate Graduate Post Graduate

Education

25

50

75

100

125

Co

un

t

50

Education

Advertising

Research and analysis

Manager

Banking

Business

Consultancy

Doctor

Engineer

Homem

aker

HR Insurance

IT JournalismLaw

yer

Marketing

MediaReal Estate

Student

others

Occupation

0

10

20

30

40P

erce

nt

Figure 5

ANALYSIS

The maximum respondents were students who were keen to fill out the questionnaires which show their level of curiosity in search engines. These were followed by advertising, IT, educations which was further followed by researchers, managers and marketing people.

51

FINDINGS AND

TECHNIQUES

52

Some interesting facts :

44% of Internet users believe that a film's online participation influences

their judgment in watching a movie reinforcing the need for movie houses

to be present online.

73% of Internet users spend less than Rs 500 on a visit to the cinema

indicating an affluent demographic. The 18-35 age group are the biggest

spenders.

33% of Internet users have a penchant to buy movie merchandise online

& this frequency is likely to grow as we are reaching to households

owning DVD Players & Recorders (35%), VCD Players (56%)

94% of users are susceptible to mobile marketing. Moreover, there is high

propensity to talk, share amongst friends.

47% of Internet users would pay for mobile content like alerts, ringtones,

wallpaper etc.

The results of a survey of global chief executive officers portend significant Internet

growth and business usage over the next five years, with 92 percent of executives

projecting revenues derived from E-commerce. Although the information technology that

supports electronic marketing currently accounts for just 8 percent of the United States’

53

total economic output, over the last five years it has fueled more than one-third of

economic growth in the United States. The remarkable growth and impact of the

Internet and World Wide Web have spurred almost every business to explore E-

marketing strategies to enrich relationships with customers, employees, and suppliers.

In fact, the characteristics and availability of the E-commerce infrastructure are driving

strategic planning.

Internet marketing to simply equate to Search Engine Marketing, but while this is

important this scope is too narrow to take full advantage of digital media.

These techniques are used to support objectives of acquiring new customers and

providing services to existing customers that help develop the customer relationship.

However, for Internet marketing to be successful there is still a necessity for integration

of these techniques with traditional media such as print, TV and direct mail. This is

multi-channel E-marketing.

Online shopping or online retailing is a form of electronic commerce which allow

consumers to directly buy goods or services from a seller over the Internet without

intermediary service. Other names for an online shop are: e-shop, e-store, Internet

shop, web-shop, web-store, online store, and virtual store. The concept of an online

scope evokes the physical analogy of buying products or services at a bricks-and-

mortar retailer or shopping center; the process is called business-to-consumer (B2C)

online shopping. In the case where a business buys from another business, the process

is called business-to-business (B2B) online shopping. The largest of these online

retailing corporations are E-Bay and Amazon.com, both of which are based in the

United States.

Online customers must have access to the internet and a valid method of payment in

order to complete a transaction.

Generally, higher levels of education, occupation of the head of the household and

income correspond to more favorable perceptions of shopping online. Increased

54

exposure to technology also increases the probability of developing favorable attitudes

towards new shopping channels.

In a December 2011 study, Equation Research found that 87% of tablet users made

online transactions with their tablet devices during the early holiday shopping season

Users between the age of 18-35 are the biggest segment in India accounting for 50% of

all users on the Internet.

55

A Taxonomy of Consumer Online Shopping Attitudes

and Behavior

A total of 35 empirical studies are analyzed in this study. Of these, 29 of them used

survey method. Other research methods such as lab experiments and free simulation

experiments are occasionally employed. Each of these studies addresses some aspect

of online shopping attitudes and behavior. Our goal is to develop a taxonomy

representing factors/aspects related to online shopping attitudes and behavior covered

in the existing empirical IS literature.

After examining the 35 empirical studies, we identify a total of ten interrelated factors for

which the empirical evidences show significant relationships. These ten factors are

external environment, demographics, personal characteristics, vender/service/ product

characteristics, attitude towards online shopping, intention to shop online, online

shopping decision making, online purchasing, and consumer satisfaction. Five (external

environment, demographics, personal characteristics, vendor/service/product

characteristics, and website quality) are found to be ordinarily independent and five

(attitude toward online shopping, intention to shop online, decision making, online

purchasing, and consumer satisfaction) are ordinarily dependent variables in the

empirical.

External

Environment

Demographics

Personal

Characteristics

Vender/Service/

Product

56

Characteristics

Website

Quality

Attitude

towards

Online

Shopping

Consumer Satisfaction

Intention

to Shop

Online

Decision

Making

Online

Purchasing

Antecedents

Few of the 35 studies examined cover all ten factors, and there is some inconsistency in

the empirical results of those that include similar factors. Nevertheless, for the sake of

discussion, we integrate these ten factors in a model (Figure 1) in which the expected

relationships among them are depicted. The five factors identified as antecedents are

normally independent variables, although some studies have treated Website Quality

as a dependent variable. These five factors directly determine attitude towards online

shopping. Attitude and intention to shop online have been clearly identified and

57

relatively widely studied in the existing empirical literature. Decision-making is the stage

before consumers commit to online transaction or purchasing, and is sometimes

considered to be a behavioral stage. The depicted relationships among attitude,

intention, decision-making, and online purchasing are based on the theory of reasoned

action (Fishbein and Ajzen 1975), which attempts to explain the relationship between

beliefs, attitudes, intentions, and actual behavior. Consumer satisfaction is considered

to be a separate factor in this study. It can occur at all possible stages depending on

consumers. involvement during the online shopping process. The relationships between

satisfaction, attitude, intention, decision making and online purchasing are proposed to

be two-way relationships due to the reciprocal influences of each on the other. In

addition, two of the antecedents, vendor/service/product characteristics and Website

quality, have been found to have direct impact on consumer satisfaction.

External Environment

Only two out of 35 studies discuss the influence of external environment on online

shopping. External environment refers to those contextual factors that impact

consumers. online shopping attitudes and behavior. It includes three dimensions. The

first is the existing legal framework that protects the consumers from any kind of loss in

online transactions. The second is the system of the Third Party Recognition in which

many third party certification bodies are working to ensure the trustworthiness of online

vendors (Borchers 2001). These two factors are positively associated with consumers.

trust attitude to the online stores. The third factor is the numbers of competitors, which

can be defined as .the number of Internet stores that provide the same service and

products. (Lee et al. 2000, p.307). Lee and colleagues (2000) argue that the fewer the

competing vendors, the greater the possibility of opportunistic behavior on the part of

existing vendors so as to maximize profits. This increases transaction costs for the

consumer, decreasing intention to revisit a specific online store.

58

Demographics

Eight of 35 studies examine the impact of demographics on online shopping attitudes

and behavior. Demographics include such variables as age, gender, level of education,

income, and time online. Bellman and colleagues (1999, p. 33) report that .Internet Li &

Zhang/Consumer Online Shopping Attitudes & Behavior 2002 . Eighth Americas

Conference on Information Systems 511 surveys agree that the online population is

relatively younger, more educated, wealthier, although the gaps are gradually closing..

They argue that demographics appear to play an important role in determining whether

people use the Internet, however once people are online, demographics do not seem to

be key factors affecting purchase decisions or shopping behavior. Bhatnagar and

colleagues (2000) provide evidence that demographics are not relevant factors in

determining which store to patronize or how much to spend, though men and women do

tend to buy different types of products or services via the Internet. In summary, the

literature suggests that the impact of demographics on Internet buying behavior is not

strong.

Personal Characteristics

Personal characteristics have drawn the attention of fourteen studies. It can be defined

as a group of specific customer features that may influence their online shopping

attitudes and behavior, such as their Internet knowledge, need specificity, and cultural

environment.

Li and colleagues (1999) found that customers who purchase Internet stores more

frequently are more convenience-oriented and less experience-oriented. These

consumers regard convenience during shopping as the most important factor in

purchase decisions, because they are time-constrained and do not mind buying

products without touching or feeling them if they can save time in this way. Potential

consumers are often prevented from shopping online by their concern for security (Han

et al. 2001). However, perceived risk can be reduced by knowledge, skill, and

experience on the Internet, computer, and online shopping (Ratchford et al. 2001;

Senecal 2000; Sukpanich and Chen 1999; Ha et al. 2001). In another study, Bellman

59

and colleagues (1999) propose that people living a wired lifestyle patronize e-stores

spontaneously. These consumers use the Internet as a routine tool to receive and send

emails, to do their work, to read news, to search information, or for recreational

purposes. Their routine use of the Internet for other purposes leads them to naturally

use it as a shopping channel as well. Other factors found to impact consumers. online

shopping attitudes and behavior include cultural environment, need specificity, product

involvement, disposition to trust, the extent to which they would like to share values and

information with others, the extent to which they like being first to use new technologies,

and tendency to spend money on shopping (Borchers 2001; Koufaris et al.2002; Lee et

al.2000; Kimery and McCord 2002; Bellman et al 1999).

Vender/Service/Product Characteristics

Sixteen out of the 35 studies examine the relationship between vender/service/product

characteristics and other factors. Vender/service/product characteristics refer to

features of the Internet stores, the products they sell, and the service they provide to

support the transactions. These factors are found to influence customers. online

shopping attitudes and behavior significantly. Measures employed to value vender

characteristics in the empirical studies include (1) real existence of the store/physical

location, (2) store reputation, (3) store size, (4) reliability, (5) number of Internet

store .entrances., (6) assurance-building mechanisms (e.g., seals, warranties, news

clips), and (7) use of testimonials (van der Heijden et al. 2001; Liang and Lai 2000;

Bhatnagar et al. 2000; Kim et al. 2001; Lowengart and Tractinskky 2001; Grazioli and

Wang 2001; Pavlou 2001; Jarvenpaa et al. 2000; Lee et al. 2000). Among product

features that impact customers. online shopping behavior are (1) variety of goods, (2)

product quality/performance/product uncertainty, (3) product availability, (4) price, (5)

social presence requirement, (6) product presence requirement, (7) dependability of

product, (8) possibility of customized products, and (9) brand (Jahng et al. 2001; Liang

and Huang 1998; Kim et al. 2001; Cho et al. 2001; Lowengart and Tractinskky 2001;

Muthitacharoen 1999). In addition, researchers examine different aspects of service

provided by the venders through the online shopping process. Service factors related to

online shopping attitudes and behavior include

60

(1) customer communication channels/ease of vendor contact,

(2) response to customer needs,

(3) accessibility of sales people,

(4) reliability of the purchasing process/process uncertainty,

(5) timeliness of orders or services/waiting time,

(6) availability of personalized services,

(7) ease of return and refunds,

(8) fraud,

(9) delivery (speed, tracking and tracing),

(10) transaction costs,

(11) peripheral costs, and

(12) promotion (Ho and Wu 1999;

Website Quality

Twenty studies investigate the relationship between website quality and consumers

online shopping attitudes and behavior from different points of view. For example,

Gefen and Straub (2000) investigate the impact of perceived ease of use (PEOU) and

perceived usefulness (PU) on e-commerce adoption using 202 MBA students as

subjects. They report that while PU affects intended use when a Web site is used for a

purchasing task, PEOU only has an indirect influence on online shopping behavior by

directly influencing PU. Lee et al. (2001) obtain the similar findings in their recent study

of design factors affecting consumer loyalty. In one study, Song and Zahedi (2001)

classify website quality elements into five categories according to their purpose: for

promotion, service, informational influence, self-efficacy, and resources facilitation.

These investigators find that each of the five significantly and positively reinforces the

consumers. perceptions in these factors, which in turn positively influence consumer

61

online shopping attitudes and behavior. Zhang, von Dran, Small, and Barcellos (1999,

2000), and Zhang and von Dran (2000) make an attempt to evaluate website quality

from user satisfaction and dissatisfaction perspective. Their studies show that website

design features can be regarded as hygiene and motivator factors that contribute to

user dissatisfaction and satisfaction with a website. Hygiene factors are those whose

present make a website functional and serviceable, and whose absence causes user

dissatisfaction. Some of the categories of hygiene factors are: Privacy and Security,

Technical Aspect, Navigation, Impartiality, and Information Content. Motivator factors

are those that add value to the website by contributing to user satisfaction. Five

categories of motivation factors are: Enjoyment, Cognitive Outcome, User

Empowerment, Credibility, Visual Appearance, and Organization of Information Content.

In their continued effort, they further discover that the most important website quality

factors ranked by e-commerce consumers are hygiene factors (von Dran and Zhang

1999; Zhang et al. 2000; Zhang and von Dran 2001a, 2001b; Zhang et al. 2001). Liang

and Lai (2000) review website quality factors influencing Internet buying behavior by

categorizing them into three groups, two of them are also named motivators and

hygiene factors, and third media richness factors. In their opinion, motivators are those

who support the transaction process directly while hygiene factors protect the

consumers from risks or unexpected events in the transaction process. Media richness

factors .add more information channels or richness in information presentation. (Liang

and Lai 2000, p. 2). They suggest that providing good transaction support will help

Internet venders to beat their electronic competitors, while the hygiene factors need to

be paid attention if they want to attract consumers from traditional stores.

Overall, the measures employed to value website quality by the researchers include the

websites. information content, information presentation, interaction between customers

and venders, navigation, searching mechanism, security, site technical feature, media

richness, and so forth

In summary, a variety of factors related to website quality have been demonstrated to

significantly influence consumers. Online shopping attitudes and behavior.

62

Attitudes Towards Online Shopping

Consumers. attitudes toward online shopping have gained a great deal of attention in

the empirical literature, with 22 out of 35 papers focusing on it. Consistent with the

literature and models of attitude change and behavior (e.g., Fishbein and Ajzen 1975), it

is believed that consumer attitudes will affect intention to shop online and eventually

whether a transaction is made. This is a multidimensional construct that has been

conceptualized in several different ways in the existing literature. First, it refers to the

consumers. acceptance of the Internet as a shopping channel (Jahng et al. 2001).

Secondly, it refers to consumer attitudes toward

a specific Internet store (i.e., to what extent consumers think that shopping at this store

is appealing). These first two dimensions are negatively associated with the third,

customers. perceived risk. According to Lee and colleagues (2001), two main

categories of perceived risk emerge in the process of online shopping. The first is the

perceived risk associated with product/service and includes functional loss, financial

loss, time loss, opportunity loss, and product risk. The second is the perceived risk

associated with context of online transactions, and includes risk of privacy, security, and

nonrepudiation. Among them, the influence of financial risk, product risk, and concern

for privacy and security is significant (Senecal 2000; Borchers 2001; Bhatnagar et al.

2002). However, the fourth dimension of attitude, consumers. trust in the stores, can

reduce perceived risk. In addition, perceived control/users. empowerment,

enjoyment/playfulness, and perceived real added-value from membership have also

been shown to be important dimensions of consumers. attitudes towards online

shopping

Intention to Shop Online

Consumers. intention to shop online is studied by 13 out of the 35 papers. Consumers.

intention to shop online refers to their willingness to make purchases in an Internet

store. Commonly, this factor is measured by consumers. willingness to buy and to

return for additional purchases. The latter also contributes to customer loyalty.

Jarvenpaa and colleagues (2000) assess consumers. intention to shop online by asking

63

a series of questions assessing the likelihood of returning to a store.s website, the

likelihood of purchasing from the store within the next three months, the likelihood of

purchasing within the next year, and general the likelihood of ever purchasing from a

particular store again.

Consumers. intention to shop online is positively associated with attitude towards

Internet buying, and influences their decision-making and purchasing behavior. In

addition, there is evidence of reciprocal influence between intention to shop online and

customer satisfaction.

Online Shopping Decision Making

Online shopping decision-making includes information seeking, comparison of

alternatives, and choice making. The results bearing on this factor directly influence

consumers. purchasing behavior. In addition, there appears to be an impact on users.

satisfaction. Though it is important, there are only five studies that include it. According

to Haubl and Trifts (2000), potential consumers appear to use a two-stage process in

reaching purchase decisions. Initially, consumers typically screen a large set of

products in order to identify a subset of promising alternatives that appears to meet their

needs. They then evaluate the subset in greater depth, performing relative comparisons

across products based on some desirable attributes and make a purchase decision.

Using a controlled experiment, these authors discover that the .interactive tools

designed to assist consumers in the initial screening of available alternatives and to

facilitate in-depth comparisons among selected alternatives in an online shopping

environment may have strong favorable effects on both the quality and the efficiency of

purchase decisions.

Online Purchasing

64

Fourteen studies discuss online purchasing, which refers to consumers. actions of

placing orders and paying. This is the most substantial step in online shopping activities,

with most empirical research using measures of frequency (or number) of purchases

and value of online purchases as measures of online purchasing; other less commonly

used measures are unplanned purchases of the relationship between online purchasing

behavior, perceived ease of use, perceived usefulness, perceived risk of the

product/service, and perceived risk in the context of the transaction, the measures used

are total amount spent and frequency in last 6 months.

Online purchasing is reported to be strongly associated with the factors of personal

characteristics, vendor/service/product characteristics, website quality, attitudes toward

online shopping, intention to shop online, and decision making

Consumer Satisfaction

Consumer satisfaction is the focus of the investigation in only three articles. It can be

defined as the extent to which consumers. Perceptions of the online shopping

experience confirm their expectations. Most consumers form expectations of the

product, vendor, service, and quality of the website that they patronize before engaging

in online shopping activities. These expectations influence their attitudes and intentions

to shop at a certain Internet store, and consequently their decision-making processes

and purchasing behavior. If expectations are met, customers achieve a high degree of

satisfaction, which influences their online shopping attitudes, intentions, decisions, and

purchasing activity positively. In contrast, dissatisfaction is negatively associated with

these four variables

65

Advantages of Shopping Online

Saves Time

If you already know what you're looking for, shopping online can save you a significant amount of time. With just a few clicks of the mouse, you can place your order and move on to other things.

2. Price Comparisons

While shopping online, it is very easy to do price comparisons for a given item. Once you have determined what you want to purchase, you can see if you are getting the best deal with just a few clicks. And making it even easier, there are now search engines specifically designed for price comparisons, and these sites will often even calculate and include any shipping charges, so you get to compare the actual, total cost of the item.

3. Saves Fuel

Fuel prices have been up and down in recent years, but no matter how expensive or inexpensive gasoline might be at any given time, shopping online does not require any driving, so it doesn't consume any fuel, no matter what the cost.

Larger Inventory

With online retailers, it is much easier to find the item, model number, color, style, and size you want. You can also quickly determine whether the item is "in stock" or not. Also, online shopping does not restrict you geographically -- the pool of products and available inventory for you to choose from is vastly larger than those available to you via local retailers within driving distance.

Shop 24/7

Online stores are available twenty-four hours a day, seven days a week, all year long. The same claim cannot be made by most (if any) retail stores. Online shopping allows you to shop whenever you want, at your convenience.

No Waiting

When purchasing online, there are no long lines that you are forced to stand in line just to make a purchase. In fact, when you purchase online, your wait time will simply be the time required to display the website ordering page.

66

Convenience

Online stores are usually available 24 hours a day, and many consumers have Internet access both at work and at home. Other establishments such as internet cafes and schools provide internet access as well. In contrast, visiting a conventional retail store requires travel and must take place during business hours.

In the event of a problem with the item (e.g., the product was not what the consumer ordered, the product was not satisfactory), consumers are concerned with the ease of returning an item in exchange for either the correct product or a refund. Consumers may need to contact the retailer, visit the post office and pay return shipping, and then wait for a replacement or refund. Some online companies have more generous return policies to compensate for the traditional advantage of physical stores. For example, the online shoe retailer Zappos.com includes labels for free return shipping, and does not charge a restocking fee, even for returns which are not the result of merchant error. (Note: In the United Kingdom, online shops are prohibited from charging a restocking fee if the consumer cancels their order in accordance with the Consumer Protection (Distance Selling) Act 2000).[22]

Information and reviews

Online stores must describe products for sale with text, photos, and multimedia files, whereas in a physical retail store, the actual product and the manufacturer's packaging will be available for direct inspection (which might involve a test drive, fitting, or other experimentation).

Some online stores provide or link to supplemental product information, such as instructions, safety procedures, demonstrations, or manufacturer specifications. Some provide background information, advice, or how-to guides designed to help consumers decide which product to buy.

Some stores even allow customers to comment or rate their items. There are also dedicated review sites that host user reviews for different products. Reviews and even some blogs give customers the option of shopping for cheaper purchases from all over the world without having to depend on local retailers.

In a conventional retail store, clerks are generally available to answer questions. Some online stores have real-time chat features, but most rely on e-mails or phone calls to handle customer questions.

Price and selection

67

One advantage of shopping online is being able to quickly seek out deals for items or services provided by many different vendors (though some local search engines do exist to help consumers locate products for sale in nearby stores). Search engines, online price comparison services and discovery shopping engines can be used to look up sellers of a particular product or service.

Shipping costs (if applicable) reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of sales tax may compensate for this.

Shipping a small number of items, especially from another country, is much more expensive than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially those selling small, high-value items like electronics) offer free shipping on sufficiently large orders.

Another major advantage for retailers is the ability to rapidly switch suppliers and vendors without disrupting users' shopping experience.

Problems faced by customer on E – retail websites

Shipping Costs

Unless you purchase digital products, there will sometimes be an additional expense to

ship your purchases. The shipping cost will often depend on the size and the weight of

the item. Many online retailers offer "free" shipping, but only if the cost of your order

reaches a certain minimum amount. The additional shipping costs can make the overall

cost of purchasing online, especially for larger and heavier items, much less attractive

than buying locally.

2. Lack Of Instant Gratification

Unlike retail stores, purchasing online will require some patience after you place your

order, while you wait for your order to be packed, shipped, and delivered to you. Unless

you are purchasing digital goods that can be "downloaded" immediately, you will have

to wait a few days for your order to arrive. You simply can't walk out of the store with

your newly acquired item in-hand.

68

3. See It, Touch It, Feel It

Some shoppers like being able to see and feel an item, and to test it or try it on prior to

purchasing. By actually seeing the item, and being able to physically feel and inspect

the item, the purchaser can often make a far more reasonable assessment of the

quality. This is difficult to do if you are just looking at an online photo of the item.

Personal Data

Some people are concerned about the potential security risks of storing and sharing of

their personal data and credit card numbers with online retailers. While this risk is also

an issue for local retail stores (and some security experts say an even greater risk),

many people feel that purchasing online is an added security risk that they are just not

willing to take.

No Relationship

When you purchase online, you rarely have the opportunity to build a relationship with

the seller. On the other hand, local retail stores are far more likely to form relationships

with their customers, simply because of the personal interaction between buyer and

seller.

Support

Online support may be limited, or even non-existent, for items purchased online.

Defective Items

When trying to deal with defective items purchased online, quite often the only option is

to pack the item up and ship it back to the online retailer for a credit or replacement.

And the customer is often responsible for any return shipping costs. After waiting a few

days for your item to arrive in the first place, this adds even more time to the overall

process.

69

Fraud and security concerns

Given the lack of ability to inspect merchandise before purchase, consumers are at

higher risk of fraud than face-to-face transactions. Merchants also risk fraudulent

purchases using stolen credit cards or fraudulent repudiation of the online purchase.

However, merchants face less risk from physical theft by using a warehouse instead of

a retail storefront.

Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card

numbers being intercepted in transit between the consumer and the merchant.

However, one must still trust the merchant (and employees) not to use the credit card

information subsequently for their own purchases, and not to pass the information to

others. Also, hackers might break into a merchant's web site and steal names,

addresses and credit card numbers, although the Payment Card Industry Data Security

Standard is intended to minimize the impact of such breaches. Identity theft is still a

concern for consumers. A number of high-profile break-ins in the 2000s has prompted

some U.S. states to require disclosure to consumers when this happens. Computer

security has thus become a major concern for merchants and e-commerce service

providers, who deploy countermeasures such as firewalls and anti-virus software to

protect their networks.

Phishing is another danger, where consumers are fooled into thinking they are dealing

with a reputable retailer, when they have actually been manipulated into feeding private

information to a system operated by a malicious party. Denial of service attacks are a

minor risk for merchants, as are server and network outages.

Quality seals can be placed on the Shop web page if it has undergone an independent

assessment and meets all requirements of the company issuing the seal. The purpose

of these seals is to increase the confidence of online shoppers. However, the existence

of many different seals, or seals unfamiliar to consumers, may foil this effort to a certain

extent. A number of resources offer advice on how consumers can protect themselves

when using online retailer services. These include:

70

Sticking with known stores, or attempting to find independent consumer reviews

of their experiences; also ensuring that there is comprehensive contact

information on the website before using the service, and noting if the retailer has

enrolled in industry oversight programs such as a trust mark or a trust seal.

Before buying from a new company, evaluate the website by considering issues

such as: the professionalism and user-friendliness of the site; whether or not the

company lists a telephone number and/or street address along with e-contact

information; whether a fair and reasonable refund and return policy is clearly

stated; and whether there are hidden price inflators, such as excessive shipping

and handling charges.

Ensuring that the retailer has an acceptable privacy policy posted. For example

note if the retailer does not explicitly state that it will not share private information

with others without consent.

Ensuring that the vendor address is protected with SSL (see above) when

entering credit card information. If it does the address on the credit card

information entry screen will start with "HTTPS".

Using strong passwords, without personal information. Another option is a "pass

phrase," which might be something along the lines: "I shop 4 good a buy!!" These

are difficult to hack, and provides a variety of upper, lower, and special

characters and could be site specific and easy to remember.

Although the benefits of online shopping are considerable, when the process goes

poorly it can create a thorny situation. A few problems that shoppers potentially face

include identity theft, faulty products, and the accumulation of spyware. Whenever users

purchase a product, they are required to put in their credit card information and

billing/shipping address. If the website is not secure, customer information can be

accessible to anyone who knows how to obtain it. Most large online corporations are

inventing new ways to make fraud more difficult. However, criminals are constantly

responding to these developments with new ways to manipulate the system. Even

though online retailers are making efforts to protect consumer information, it is a

71

constant fight to maintain the lead. It is advisable to be aware of the most current

technology and scams protect consumer identity and finances.

Product delivery is also a main concern of online shopping. Most companies offer

shipping insurance in case the product is lost or damaged. Some shipping companies

will offer refunds or compensation for the damage, but this is up to their discretion.

Lack of full cost disclosure

The lack of full cost disclosure may also be problematic. While it may be easy to

compare the base price of an item online, it may not be easy to see the total cost up

front. Additional fees such as shipping are often not be visible until the final step in the

checkout process. The problem is especially evident with cross-border purchases,

where the cost indicated at the final checkout screen may not include additional fees

that must be paid upon delivery such as duties and brokerage. Some services such as

the Canadian based Wishabi attempts to include estimates of these additional cost, but

nevertheless, the lack of general full cost disclosure remains a concern.

Privacy

Privacy of personal information is a significant issue for some consumers. Different legal

jurisdictions have different laws concerning consumer privacy, and different levels of

enforcement. Many consumers wish to avoid spam and telemarketing which could result

from supplying contact information to an online merchant. In response, many merchants

promise to not use consumer information for these purposes, or provide a mechanism

to opt-out of such contacts.

Many websites keep track of consumer shopping habits in order to suggest items and

other websites to view. Brick-and-mortar stores also collect consumer information.

Some ask for a shopper's address and phone number at checkout, though consumers

may refuse to provide it. Many larger stores use the address information encoded on

consumers' credit cards (often without their knowledge) to add them to a catalog mailing

list. This information is obviously not accessible to the merchant when paying in cash.

72

Hands-on inspection

Typically, only simple pictures and/or descriptions of the item are all a customer can rely

on when shopping on online stores. If the customer does not have prior exposure to the

item's handling qualities, they will not have a full understanding of the item they are

buying. However, written and video reviews are readily available from consumers who

have purchased similar items in the past. These can be helpful for prospective

customers but can also be based on personal preferences. Hence, reviews from other

consumers may not reflect end-user satisfaction once the item has been received.

Because of this, many consumers have begun going to real-world stores to view a

product, before purchasing online, a practice known as showrooming (using the store as

a showroom for the online merchant). Brick-and-mortar merchants have responded with

various countermeasures. For example, Target has requested distributors give them

equally low prices, or alternatively, products available exclusively from their store.

CONCLUSION

73

BIBLIOGRAPHY

Websites

74

www.shoppingnavigator.co.uk

www.ezinearticles.com

www.theretailersadvantage.net

www.retailresearch.org

www.retailsurvey.org

Books

E retailing , Charles E. Dennis, Tino Fenech, Bill Merrilees

Retailing Management (Hardcover) by Michael Levy (shelved 2 times as retail-business)

Retail Analytics: The Secret Weapon (Hardcover) by Emmett Cox (shelved 1

time as retail -business )

Basics Marketing 01: Consumer Behaviour By: DR Hayden Noel Publisher: AVA

Publishing

The role of perception in consumer behavior, Diplomkaufmann (FH) Marco Erlenkamp

75